G&K SERVICES, INC.
5995 Opus Parkway Minnetonka, Minnesota 55343 Notice of Annual Meeting of Shareholders, Thursday, November 4, 2010 |
1. | to elect the three Class III directors named in the attached proxy statement to serve for terms of three years; | |
2. | to approve our Restated Equity Incentive Plan (2010); | |
3. | to ratify the appointment of Ernst & Young LLP, independent registered public accounting firm, as our independent auditors for fiscal 2011; and | |
4. | to transact any other business as may properly come before the meeting or any adjournment or postponement thereof. |
1. | to elect the three Class III directors named in this proxy statement to serve for terms of three years; | |
2. | to approve our Restated Equity Incentive Plan (2010); | |
3. | to ratify the appointment of Ernst & Young LLP, independent registered public accounting firm, as our independent auditors for fiscal 2011; and | |
4. | to transact any other business as may properly come before the meeting or any adjournment or postponement thereof. |
Name (and age) of |
Principal Occupation, Past Five Years |
Director |
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Director/Nominee | Business Experience and Directorships in Public Companies | Since | ||||||
Class III Nominees:
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John S. Bronson (62)
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Mr. Bronson is a director of the company and serves as a member of the Compensation and Corporate Governance Committees of our Board of Directors. Mr. Bronson was Senior Vice President, Human Resources for Williams-Sonoma, Inc., a specialty retailer of home furnishings, from 1999 to 2003. Prior to his employment with Williams-Sonoma, Inc., Mr. Bronson held several senior human resource-related management positions with PEPSICO, from 1979 to 1999, most recently as its Executive Vice President, Human Resources Worldwide for Pepsi-Cola Worldwide. | 2004 | ||||||
Mr. Bronsons 24 years in human resource-related positions with Williams Sonoma and PEPSICO and its related entities provides him with substantial experience and knowledge with respect to the many complex issues surrounding human resources, benefits and compensation. Mr. Bronson offers us a unique perspective on leadership development, employee relations and compensation issues. Mr. Bronson also has extensive international business experience, and he understands the complexities of managing a route distribution system. Mr. Bronson has a deep understanding of the diverse and complex issues that must be addressed by a large public company. | ||||||||
Wayne M. Fortun (61)
|
Mr. Fortun is a director and serves as Chair of the Compensation Committee of our Board of Directors. In 1983, Mr. Fortun was elected director, President and Chief Operating Officer of Hutchinson Technology, Inc. (NASDAQ: HTCH), a world leader in precision manufacturing of suspension assemblies for disk drives, and was appointed its Chief Executive Officer in May 1996, a position he continues to hold today. Mr. Fortun also serves as a director of C.H. Robinson Worldwide, Inc. (NASDAQ: CHRW), a global provider of multimodal transportation services and logistics solutions, where he serves as the chair of the Compensation Committee and serves on the Governance Committee. | 1994 | ||||||
As the longest-serving member of our board, Mr. Fortun has abundant knowledge of our company and its business. Mr. Fortuns significant experience with Hutchinson Technology provides him with critical knowledge of the management, financial and operational requirements of a large company. Mr. Fortun also provides our board with insight into international business issues. In addition, as a result of his long tenure as a director of another large public company, Mr. Fortun is well possessed with a deep understanding of the roles and responsibilities of public company board members. | ||||||||
Ernest J. Mrozek (57)
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Mr. Mrozek is a director and serves as a member of the Audit Committee of our Board of Directors. Mr. Mrozek is also one of our Audit Committee Financial Experts. Mr. Mrozek served as Vice Chairman and Chief Financial Officer of The ServiceMaster Company, a residential and commercial service company, from November 2006 until his retirement in March 2008. Mr. Mrozek also served as President and Chief Financial Officer of The ServiceMaster Company from January 2004 to November 2006 and as its President and Chief Operating Officer from 2002 to January 2004. He served as President and Chief Operating Officer of ServiceMaster Consumer Services, ServiceMasters largest segment, from January 1997 until 2002. Mr. Mrozek joined ServiceMaster in 1987 and has held various senior positions in general management, operations and finance, in addition to those specifically noted above. Prior to joining ServiceMaster, Mr. Mrozek spent 12 years with Arthur Andersen & Co. Mr. Mrozek previously served on the board of Chemed Corporation (NYSE: CHE) until May 2010 and currently serves on the board of IDEX Corporation (NYSE: IEX), where he is a member of the Audit Committee. | 2005 | ||||||
Mr. Mrozeks executive positions with The ServiceMaster Company and his other board service provide him with a keen understanding of the management, financial and operational requirements of a large public company, as well as an understanding of the roles and responsibilities of board members of such companies. Additionally, Mr. Mrozek is able to draw upon his public accounting experience and financial oversight positions as he evaluates our financial results and our financial reporting process in general. Mr. Mrozek also assists our board in its understanding of risk management and internal control over financial reporting. | ||||||||
Director |
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Name | Age | Title | Term Expires | ||||||||||
Douglas A. Milroy
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51 | Chief Executive Officer and Director (Class II) | 2012 | ||||||||||
Jeffrey L. Wright
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48 | Executive Vice President, Chief Financial Officer and Director (Class II) | 2012 | ||||||||||
Robert G. Wood
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62 | President, G&K Services Canada Inc. | | ||||||||||
Jeffrey L. Cotter
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43 | Vice President, General Counsel and Corporate Secretary | | ||||||||||
Timothy N. Curran
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49 | Senior Vice President, U.S. Field | | ||||||||||
John S. Bronson
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62 | Director (Class III) | 2010 | ||||||||||
Lynn Crump-Caine
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54 | Director (Class I) | 2011 | ||||||||||
J. Patrick Doyle
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47 | Director (Class I) | 2011 | ||||||||||
Wayne M. Fortun
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61 | Director (Class III) | 2010 | ||||||||||
Ernest J. Mrozek
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57 | Director (Class III) | 2010 | ||||||||||
M. Lenny Pippin
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63 | Director, Chairman of the Board and Presiding Director (Class I) | 2011 | ||||||||||
Alice M. Richter
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57 | Director (Class II) | 2012 | ||||||||||
| approving the design and implementation of our executive compensation program; |
| regularly reporting on committee actions and recommendations at board meetings; |
| working with the Audit and Corporate Governance Committees of our Board of Directors, as appropriate; and |
| reviewing NEO compensation and making recommendations to our board, which is responsible for approving all NEO compensation. |
| reviews Compensation Committee agendas and supporting materials in advance of each meeting; |
| as requested, attends Compensation Committee meetings; |
| makes recommendations on companies to include in our peer group, analyzes the selected peer group information and reviews other survey data for competitive comparisons; |
| reviews our executive compensation programs and competitive positioning for reasonableness and appropriateness; |
| reviews our total executive compensation program and advises the Compensation Committee of plans or practices that might be changed to improve effectiveness; |
| oversees survey data on executive pay practices and amounts that come before the Compensation Committee; |
| provides market data and recommendations on Chief Executive Officer compensation without prior review by management, except for necessary fact checking; |
| provides market data and recommendations on director compensation; |
| reviews any significant executive employment or change-in-control provisions in advance of being presented to the Compensation Committee and/or the board for approval; |
| periodically reviews the Compensation Committees charter and recommends changes; |
| advises the Compensation Committee on best-practice ideas for board governance as it pertains to executive compensation as well as areas of risk in our compensation program; |
| as requested, advises the Compensation Committee on management proposals; and |
| undertakes other projects at the request of the Compensation Committee. |
| reviewed our peer group and made recommendations on changes thereto; |
| participated in review and design of our long-term incentive and equity programs; |
| reviewed Board of Director compensation (in fiscal 2010, no changes were made to our boards compensation package); and |
| conducted market analysis of Chief Executive Officer compensation and made recommendations on changes to Mr. Milroys total compensation package. |
| Mr. Milroy recommends compensation actions with respect to our NEOs, other than for himself, and submits those recommendations to the Compensation Committee for review; |
| Mr. Milroy provides his perspective on recommendations provided by the compensation consultant regarding compensation program design issues; |
| our Senior Vice President, Human Resources plays an active role by providing input on plan design, structure and cost, and assessing the implications of all recommendations on recruitment, retention and motivation of company employees, as well as company financial results; and |
| when requested by the Compensation Committee, other executive officers, such as the Executive Vice President and Chief Financial Officer, Vice President and Controller, and our Vice President, General Counsel and Corporate Secretary, may also review recommendations on plan design, structure and cost, and provide a perspective to the Compensation Committee on how these recommendations may affect recruitment, retention and motivation of our employees, as well as our financial results. |
1. | What are the objectives of our compensation program? | |
2. | What is our compensation program designed to reward? | |
3. | What is each element of compensation? | |
4. | Why do we choose to pay each element? | |
5. | How do we determine the amount/formula for each element? | |
6. | How does each element and our decision regarding that element fit into our overall compensation objectives and affect decisions regarding other elements? |
| provide competitive levels of compensation that link compensation to the achievement of our annual objectives and long-term goals; |
| reward the achievement of company performance objectives; and |
| recognize and reward strong individual initiative and team performance. |
| achieve year-over-year growth in revenue and earnings; |
| drive strong cash flow; |
| maintain financial strength and flexibility; and |
| reward strong individual performance that is aligned with company goals and objectives. |
| base salary; |
| annual management incentive compensation (referred to as our MIP); |
| long-term equity-based compensation; |
| benefits and perquisites; and |
| severance and change-in-control benefits. |
Target Incentive |
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Position | (as a % of Base Salary) | |||
Chief Executive Officer
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75 | % | ||
Executive Vice President and Chief Financial Officer
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60 | % | ||
President, G&K Services Canada
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50 | % | ||
Senior Vice President, US Rental Operations
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50 | % | ||
Vice President, General Counsel and Corporate Secretary
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40 | % | ||
| Quantitative Financial Measures: revenue and earnings benchmarks were chosen as the key financial measures for the MIP because they best represent our primary short-term growth goals and align with and support the attainment of our long-term strategy. |
| Individual Discretionary: discretionary assessment of performance, which considers all dimensions of performance over the year, including individual performance, functional leadership, teamwork and collaboration and results achieved on assigned tasks or projects. |
Performance Targets |
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Weights |
for Financial Measures |
Results(5) |
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EVP, President |
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G&K Canada, |
Payout |
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Plan Measures |
CEO |
SVP and VP |
Threshold- |
Target- |
Maximum- |
Achievement |
Factor |
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Company Financial Measures:
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(4) | 30% Payout | 100% Payout | 200% Payout | ||||||||||||||||||||||||
Revenue
Achievement(1)
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32% | 28 | % | Period 1 | 400.7 | 417.4 | 434.1 | 98.65 | % | 76.44% | ||||||||||||||||||
Period 2 | 405.6 | 422.5 | 439.4 | 97.33 | % | 53.28% | ||||||||||||||||||||||
EPS
Achievement(2)
|
48% | 42 | % | Period 1 | 0.34 | 0.41 | 0.55 | 114.63 | % | 142.86% | ||||||||||||||||||
Period 2 | 0.71 | 0.82 | 1.04 | 91.46 | % | 55.45% | ||||||||||||||||||||||
Individual Discretionary
|
20% | 30 | % |
0% Payout |
100% Payout |
200% Payout |
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(3) | (3 | ) | ||||||||||||||||||||||||||
Total
|
100% | 100 | % | |||||||||||||||||||||||||
(1) | In order to earn a payout for the company revenue growth objective, performance must be achieved at or above the threshold level. |
(2) | In order to earn a payout for the company earnings per share growth objective, performance must be achieved at or above the threshold level. |
(3) | The actual payouts for the discretionary component of the MIP achieved for each NEO for fiscal 2010, expressed as a percentage of the applicable target incentive referenced in the preceding table, were as follows: Mr. Milroy 25%, Mr. Wright 30%, Mr. Curran 36%, Mr. Wood 33% and Mr. Cotter 33%. |
(4) | Due to the dynamic nature of the fiscal year 2010 economic environment, our MIP design was divided into two measurement periods for financial goals. Achievement was calculated at the end of both periods and combined to determine overall performance. |
(5) | Certain adjustments, including gains on asset sales and divestitures and income from the accounting change were excluded for purposes of calculating incentive compensation. |
Douglas A. Milroy
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leadership of development and
implementation of our new strategic game plan;
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fostering the development of
organizational skills and capabilities;
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responsibility for ongoing day-to-day
execution of key business initiatives; and
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effective management of our leadership
transition.
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Jeffrey L. Wright
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active role in development and
implementation of our new strategic game plan;
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active responsibility for all financial,
accounting and financial reporting obligations;
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management of the companys overall
corporate finance and capital structure needs;
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careful cost management; and
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in-depth financial analysis of our
business.
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Robert G. Wood
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active role in development and
implementation of our new strategic game plan;
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leadership and strategic direction of
our Canadian corporate and field operations;
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leadership of process improvement
initiatives throughout our Canadian field operations; and
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careful cost management and significant
improvements in underperforming locations.
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Timothy N. Curran
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active role in development and
implementation of our new strategic game plan;
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leadership and strategic direction of
our U.S. field operations;
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leadership of process improvement
initiatives throughout our U.S. field operations; and
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careful cost management and significant
improvements in underperforming locations.
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Jeffrey L. Cotter
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active role in development and
implementation of our new strategic game plan;
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effective legal support for company-wide
business initiatives;
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leadership of our enterprise risk
management process; and
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attendance to our ongoing legal and
compliance needs.
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| Non-Qualified Stock Options each stock option represents the right to purchase a specified number of shares of our common stock at a price equal to the fair market value of the common stock on the date of grant. Options vest and become exercisable in equal installments over three years and have a term of ten years. |
| Restricted Stock restricted stock represents the right to own common stock after the time restrictions lapse. Restrictions on restricted stock generally lapse in equal installments over five years |
| Stock Options: (percentage allocated to stock options x target grant level)/Black Scholes value |
| Restricted Stock: (percentage allocated to restricted stock x target grant |
level)/per share value of our common stock as of the date of the calculation. |
| Supplemental Executive Retirement Plan (SERP) (this plan was frozen as of January 1, 2007; therefore Messrs. Milroy and Cotter do not participate, nor does Mr. Wood, as he is not covered by the plan) |
| Executive Deferred Compensation Plan (DEFCO) |
| Executive long-term disability insurance |
| Financial planning services |
n | Chief Executive Officer $7,500 each year | |
n | All other NEOs $5,000 each year |
| Executive physical |
| Leased automobiles for certain NEOs, which are in the process of being phased out and replaced with a weekly taxable car allowance. During fiscal 2010, the company provided Mr. Milroy with a leased vehicle through December 2009. No other NEO had a leased vehicle. Additionally, Mr. Cotter does not receive a car allowance. The following NEOs currently receive the following weekly car allowance: Mr. Milroy $375, Mr. Wood $413 CAD, Mr. Wright $375 and Mr. Curran $231. |
Compensation |
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Committee |
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Meeting |
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Held In: | Agenda | |
February
|
Review and approve the peer group composition | |
May
|
Review market data, establish equity guidelines, review MIP design and establish preliminary company financial performance targets for the upcoming fiscal year | |
June
|
Approve MIP design and company financial performance targets for the upcoming fiscal year | |
August
|
Review performance for prior year and approve merit increases, MIP payouts and equity grants, provided our board approves all compensation actions for NEOs | |
November
|
Review executive equity holdings and review director compensation | |
| proxy data from a peer group of publicly-traded companies with similar industry sector (business services), similar size (revenue, capitalization, number of employees) and geographic proximity to our company; and |
| general survey data based on similar sized companies. |
| ADC Telecommunications, Inc. |
| Apogee Enterprises, Inc. |
| Casella Waste Systems, Inc. |
| Cintas Corporation |
| Clean Harbors, Inc. |
| Deluxe Corporation |
| Donaldson Company, Inc. |
| H.B. Fuller Company |
| Graco, Inc. |
| Rollins, Inc. |
| Stericycle, Inc. |
| Tennant Company |
| The Toro Company |
| TrueBlue Inc. |
| UniFirst Corporation |
| size and scope of the position and level of responsibility; |
| experience and capabilities of the NEO; |
| the NEOs performance and potential; |
| internal equity (pay of other NEOs); |
| unique market premiums for key positions; |
| the NEOs compensation history; and |
| business complexity. |
John S. Bronson J. Patrick Doyle Wayne M. Fortun |
Change in |
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Pension Value |
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and Nonqualified |
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Restricted |
Non-Equity |
Deferred |
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Stock |
Stock |
Incentive |
Compensation |
All Other |
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Salary |
Bonus |
Awards |
Options |
Compensation |
Earnings |
Compensation |
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NEO | Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($)(7) | Total ($) | |||||||||||||||||||||||||||
Douglas A. Milroy, Chief Executive Officer |
2010 | 560,577 | | 555,250 | 174,780 | 383,146 | | (8) | 94,736 | 1,768,488 | ||||||||||||||||||||||||||
2009 | 348,821 | | 682,818 | 383,144 | 100,000 | | 78,781 | 1,593,564 | ||||||||||||||||||||||||||||
2008 | 301,995 | 45,000 | 254,450 | 261,750 | 135,664 | | 54,108 | 1,052,967 | ||||||||||||||||||||||||||||
Jeffrey L. Wright,
|
2010 | 364,205 | | 255,748 | 69,878 | 191,620 | 82,044 | 72,841 | 1,036,336 | |||||||||||||||||||||||||||
Executive Vice President and Chief
|
2009 | 355,154 | | 532,205 | 101,540 | 78,594 | 15,178 | 90,546 | 1,173,217 | |||||||||||||||||||||||||||
Financial Officer
|
2008 | 341,348 | | 276,550 | 335,789 | 265,594 | | (9) | 87,286 | 1,306,567 | ||||||||||||||||||||||||||
Robert G. Wood,
|
2010 | 412,582 | | 158,579 | 43,295 | 197,331 | | (10) | 60,673 | 872,460 | ||||||||||||||||||||||||||
President, G&K Services Canada
|
2009 | 369,260 | | 160,898 | 92,299 | 46,157 | | 59,483 | 728,097 | |||||||||||||||||||||||||||
2008 | 423,207 | | 210,250 | 318,024 | 154,607 | | 91,251 | 1,197,339 | ||||||||||||||||||||||||||||
Timothy N. Curran,
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2010 | 280,492 | | 158,579 | 43,295 | 131,171 | 25,052 | 50,758 | 689,347 | |||||||||||||||||||||||||||
Senior Vice President, U.S. Field
|
2009 | 264,363 | | 72,652 | 80,314 | 44,000 | 4,667 | 106,408 | 572,404 | |||||||||||||||||||||||||||
2008 | | | 120,057 | 32,074 | | | | 152,131 | ||||||||||||||||||||||||||||
Jeffrey L. Cotter,
|
2010 | 256,483 | | 90,284 | 24,672 | 92,397 | | (8) | 27,272 | 491,108 | ||||||||||||||||||||||||||
Vice President, General Counsel and
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2009 | 220,742 | | 51,062 | 29,270 | 31,501 | | 20,608 | 353,184 | |||||||||||||||||||||||||||
Corporate Secretary
|
2008 | | | 36,634 | 5,090 | | | | 41,724 | |||||||||||||||||||||||||||
(1) | The annual base salary set by the Compensation Committee for fiscal 2010 (effective September 1, 2009) for each NEO was as follows: Mr. Milroy $550,000; Mr. Wright: $357,245; Mr. Wood: $427,137 CAD (in the table above, Mr. Woods fiscal 2010 base salary has been converted to USD using an average exchange rate for fiscal 2010 of 0.9477); Mr. Curran $275,000; Mr. Cotter $250,000. The annual base salary set by the Compensation Committee for fiscal 2009 (effective September 1, 2008) for each NEO was as follows: Mr. Milroy $318,206, adjusted to $550,000 effective as of May 7, 2009; Mr. Wright: $357,245; Mr. Wood: $427,137 CAD (in the table above, Mr. Woods fiscal 2009 base salary has been converted to USD using an average exchange rate for fiscal 2009 of 0.8645); Mr. Curran $275,000; Mr. Cotter $225,000. The annual base salary set by the Compensation Committee for fiscal 2008 (effective September 1, 2007) for each NEO was as follows: Mr. Wright: $345,164; Mr. Wood: $427,137 CAD (in the table above, Mr. Woods fiscal 2008 base salary was converted to USD using an average exchange rate for fiscal 2008 of 0.9908); and Mr. Milroy: $304,504. Messrs. Curran and Cotter were not executive officers prior to the beginning of fiscal 2009; thus, their base salaries were not determined by the Compensation Committee. Annual base salary rates reflect 52 weeks of pay. Our fiscal 2010 calendar included 53 weeks; thus, the actual earnings are slightly higher than the referenced base salaries. |
(2) | Our MIP is performance-based. In accordance with SEC requirements, these amounts are reported in the Non-Equity Incentive Compensation table and column. In fiscal 2008, Mr. Milroy received a discretionary bonus equal to 15% of his base salary, or $45,000, for his significant contributions involving the implementation of SAP software into Lion Uniform Group; the development of a revised plan for the introduction of Dockers® apparel in the company utilizing existing facilities; and for playing a key advisory role on a key new project affecting the companys service organization, which was in addition to his other assigned responsibilities. |
(3) | The dollar amounts represent the aggregate grant date fair value of restricted stock awards granted during each of the years presented. The grant date fair value of a restricted stock award is measured in accordance with FASB ASC Topic 718. See Note 11 to our audited financial statements for the year ended July 3, 2010. Accounting estimates of forfeitures are not included in these figures. |
(4) | The dollar amounts represent the aggregate grant date fair value of option awards granted during each of the years presented. The grant date fair value of an option award is measured in accordance with FASB ASC Topic 718. See Note 11 to our audited financial statements for the year ended July 3, 2010. Accounting estimates of forfeitures are not included in these figures. |
(5) | Includes MIP performance amounts earned for performance in fiscal years 2010, 2009 and 2008. |
(6) | We do not pay above market earnings on deferred compensation. Therefore, no amounts are reported in this column for deferred compensation. For qualified and non-qualified plan benefits this represents (i) the actuarial present value of the accrued benefit as of June 30, 2010 and valued as of June 30, 2010, minus (ii) the actuarial present value of the accrued benefit as of June 30, 2009 and valued as of June 30, 2009. The benefits have been valued assuming benefits commence at age 65 and using FAS 87 assumptions for mortality, assumed payment form and discount rates in effect at the measurement dates. Mr. Wood is not eligible to participate in our Pension Plan, SERP, DEFCO, or 401(k) plan. Instead, he participates in a Canadian pension program and a retirement compensation arrangement. |
(7) | The value of perquisites and other personal benefits is provided in this column (see table below). |
(8) | Messrs. Milroy and Cotter do not participate in our SERP or our Pension Plan. |
(9) | For fiscal year 2008, the change in value for Mr. Wright was ($2,944) under our Pension Plan and ($13,741) under our SERP. |
(10) | Mr. Wood is not covered by our U.S. qualified and non-qualified retirement plans. |
All Other Compensation | ||||||||||||||||||||||||||||||||
401(k) |
DEFCO |
Taxable |
Executive |
Total All Other |
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NEO | Year | Perquisites(1) | Match ($)(2) | Match ($)(3) | Life ($)(4) | Pension ($)(5) | LTD ($)(6) | Compensation | ||||||||||||||||||||||||
Douglas A. Milroy
|
2010 | 18,390 | 13,690 | 62,655 | | | | 94,736 | ||||||||||||||||||||||||
2009 | 18,286 | 10,762 | 49,733 | | | | 78,781 | |||||||||||||||||||||||||
2008 | 16,058 | 5,068 | 32,982 | | | | 54,108 | |||||||||||||||||||||||||
Jeffrey L. Wright
|
2010 | 22,692 | 9,553 | 40,596 | | | | 72,841 | ||||||||||||||||||||||||
2009 | 18,711 | 9,917 | 61,918 | | | | 90,546 | |||||||||||||||||||||||||
2008 | 34,393 | 10,043 | 42,850 | | | | 87,286 | |||||||||||||||||||||||||
Robert G. Wood
|
2010 | 20,767 | | | 939 | 37,054 | 1,913 | 60,673 | ||||||||||||||||||||||||
2009 | 17,247 | | | 871 | 40,333 | 1,032 | 59,483 | |||||||||||||||||||||||||
2008 | 47,778 | | | 1,040 | 41,250 | 1,183 | 91,251 | |||||||||||||||||||||||||
Timothy N. Curran
|
2010 | 16,252 | 9,610 | 24,897 | | | | 50,758 | ||||||||||||||||||||||||
2009 | 72,091 | 10,562 | 23,755 | | | | 106,408 | |||||||||||||||||||||||||
2008 | | | | | | | | |||||||||||||||||||||||||
Jeffrey L. Cotter
|
2010 | 4,625 | 10,196 | 12,451 | | | | 27,272 | ||||||||||||||||||||||||
2009 | 192 | 10,289 | 10,127 | | | | 20,608 | |||||||||||||||||||||||||
2008 | | | | | | | | |||||||||||||||||||||||||
(1) | Amounts for fiscal 2010 reflect the following: Mr. Milroy $500 for financial planning, $8,515 for the cost of his leased vehicle for the months of July through December (calculated based on the cost of the leased vehicle to the company, including lease, insurance, gas and maintenance) and $9,375 for his car allowance from January through June; Mr. Wright $2,726 for financial planning, $19,875 for his car allowance and $91 in tax gross-ups paid in connection with a company recognition event; Mr. Wood $20,767 for his car allowance; Mr. Curran $3,930 for financial planning, $12,231 for his car allowance and $91 in tax gross-ups paid in connection with a company recognition event; and Mr. Cotter $4,625 for financial planning. |
(2) | Includes company match on 401(k) and non-elective contributions. |
(3) | Includes company match on DEFCO and non-elective contributions. |
(4) | Includes fees paid by us for taxable life insurance. |
(5) | Includes a company match to a Canadian retirement plan for Mr. Wood and contributions by us to a Canadian retirement compensation arrangement for Mr. Wood. |
(6) | Includes fees paid by us for an executive long-term disability plan for Mr. Wood. |
All Other |
All Other |
Grant |
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Stock |
Option |
Exercise |
Date Fair |
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Awards: |
Awards: |
or Base |
Value of |
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Estimated Possible Payouts |
Estimated Future |
Number of |
Number |
Price of |
Stock and |
|||||||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive |
Payouts Under Equity |
Shares of |
of Shares |
Option |
Options |
|||||||||||||||||||||||||||||||||||||||||||
Approval |
Plan Awards ($)(1)(2) | Incentive Plan Awards |
Stock or |
of Stock |
Awards |
Awards |
||||||||||||||||||||||||||||||||||||||||||
Grant Date | Date | Minimum | Target | Maximum | Threshold | Target | Maximum | Units(3) | or Units(4) | ($)(5) | ($)(6) | |||||||||||||||||||||||||||||||||||||
Douglas A. Milroy
|
| 412,500 | 825,000 | |||||||||||||||||||||||||||||||||||||||||||||
08/20/09 | 08/20/09 | 25,000 | 35,000 | 22.21 | 730,030 | |||||||||||||||||||||||||||||||||||||||||||
Jeffrey L. Wright
|
| 214,347 | 428,694 | |||||||||||||||||||||||||||||||||||||||||||||
08/20/09 | 08/20/09 | 11,515 | 15,354 | 22.21 | 325,626 | |||||||||||||||||||||||||||||||||||||||||||
Robert G. Wood
|
| 202,399 | 404,797 | |||||||||||||||||||||||||||||||||||||||||||||
08/20/09 | 08/20/09 | 7,140 | 9,513 | 22.21 | 201,874 | |||||||||||||||||||||||||||||||||||||||||||
Timothy N. Curran
|
| 137,500 | 275,000 | |||||||||||||||||||||||||||||||||||||||||||||
08/20/09 | 08/20/09 | 7,140 | 9,513 | 22.21 | 201,874 | |||||||||||||||||||||||||||||||||||||||||||
Jeffrey L. Cotter
|
| 100,000 | 200,000 | |||||||||||||||||||||||||||||||||||||||||||||
08/20/09 | 08/20/09 | 4,065 | 5,421 | 22.21 | 114,955 | |||||||||||||||||||||||||||||||||||||||||||
(1) | These columns reflect minimum, target, and maximum payouts under our MIP for fiscal 2010. Mr. Woods target was converted to USD using an exchange rate of 0.9477. The maximum payouts for NEOs and other executives reporting to the CEO were determined based on a formula for the financial measures, as follows: for each 5% above the EPS target, the payout factor increased by 15% in period one and 19% in period two, and for each 1% of company total revenue above target, the payout factor increased by 25% in both periods. The actual amount earned by each NEO is reported under the Non-Equity Incentive Compensation column in the Summary Compensation table. Over the past three years, the payout percentage has ranged from 0% to 146% of each executive participants target award opportunity for these measures, with an average payout percentage equal to approximately 77% of the target award opportunity. MIP payouts are currently capped at 200% of target. |
(2) | Subject to the provisions of Section 162(m) of the Internal Revenue Code, we may pay some or the entire quantitative portion of any incentive payments to Mr. Milroy under the terms of our 2006 Equity Incentive Plan. |
(3) | The stock awards granted to NEOs in fiscal 2010 were restricted stock awards. Each share of restricted stock represents the right to receive a share of our common stock on the vesting date. Restricted stock vests in five equal installments beginning on the first anniversary of the grant date, except that the 15,000 restricted shares granted to Mr. Wright on May 7, 2009 all vest on the third anniversary of the grant date. Dividends are paid on these shares. |
(4) | Each stock option granted to an NEO in fiscal 2010 represents the right to purchase a share of our common stock at a specified exercise price subject to the terms and conditions of the option agreement. These options have a ten year term and vest and become exercisable in three equal installments beginning on the first anniversary of the grant date. |
(5) | The exercise price is the fair market value of our common stock on the day the option was granted. Fair market value is set based on the closing price on the grant date. |
(6) | This column represents the grant date fair value of each equity award granted during fiscal 2010, which is calculated in accordance with FASB ASC Topic 718. See Note 11 to our audited financial statements for the fiscal year ended July 3, 2010. None of the options or other equity awards granted to our NEOs was re-priced or otherwise modified. For information regarding our equity compensation grant practices, see the Compensation Discussion and Analysis on page 10. |
Option Awards | ||||||||||||||||||||||||
Number of |
Number of |
Stock Awards | ||||||||||||||||||||||
Securities |
Securities |
Number of |
Market Value of |
|||||||||||||||||||||
Underlying |
Underlying |
Shares or Units |
Shares or Units |
|||||||||||||||||||||
Unexercised |
Unexercised |
Option |
Option |
of Stock that |
of Stock That |
|||||||||||||||||||
Options |
Options |
Exercise |
Expiration |
Have Not |
Have Not |
|||||||||||||||||||
Exercisable | Unexercisable | Price ($) | Date(1) | Vested(2) | Vested ($)(3) | |||||||||||||||||||
Douglas A. Milroy
|
9,000 | | 39.97 | 11/20/16 | 50,918 | 1,054,003 | ||||||||||||||||||
4,256 | 2,128 | (4) | 39.82 | 08/23/17 | ||||||||||||||||||||
| 25,000 | (5) | 41.17 | 11/15/14 | ||||||||||||||||||||
5,428 | 10,856 | (6) | 34.27 | 08/21/18 | ||||||||||||||||||||
13,334 | 26,666 | (7) | 23.68 | 05/07/19 | ||||||||||||||||||||
| 35,000 | (8) | 22.21 | 08/20/19 | ||||||||||||||||||||
Jeffrey L. Wright
|
2,639 | | 28.50 | 09/01/10 | 37,994 | 786,476 | ||||||||||||||||||
3,220 | | 27.95 | 09/01/11 | |||||||||||||||||||||
10,000 | | 35.69 | 01/02/13 | |||||||||||||||||||||
10,002 | | 32.57 | 08/25/13 | |||||||||||||||||||||
5,700 | | 36.41 | 08/31/14 | |||||||||||||||||||||
9,501 | | 42.97 | 09/01/15 | |||||||||||||||||||||
12,120 | | 33.11 | 09/01/16 | |||||||||||||||||||||
4,626 | 2,313 | (4) | 39.82 | 08/23/17 | ||||||||||||||||||||
| 25,000 | (5) | 41.17 | 11/15/14 | ||||||||||||||||||||
4,593 | 9,186 | (6) | 34.27 | 08/21/18 | ||||||||||||||||||||
| 15,354 | (8) | 22.21 | 08/20/19 | ||||||||||||||||||||
Robert G. Wood
|
6,000 | | 35.69 | 01/02/13 | 16,188 | 335,092 | ||||||||||||||||||
6,000 | | 32.57 | 08/25/13 | |||||||||||||||||||||
7,300 | | 36.41 | 08/31/14 | |||||||||||||||||||||
6,150 | | 42.97 | 09/01/15 | |||||||||||||||||||||
1,350 | | 39.09 | 02/22/16 | |||||||||||||||||||||
7,731 | | 33.11 | 09/01/16 | |||||||||||||||||||||
3,516 | 1,758 | (4) | 39.82 | 08/23/17 | ||||||||||||||||||||
| 25,000 | (5) | 41.17 | 11/15/14 | ||||||||||||||||||||
4,175 | 8,350 | (6) | 34.27 | 08/21/18 | ||||||||||||||||||||
| 9,513 | (8) | 22.21 | 08/20/19 | ||||||||||||||||||||
Timothy N. Curran
|
3,000 | | 39.19 | 01/26/14 | 12,010 | 248,607 | ||||||||||||||||||
4,000 | | 36.41 | 08/31/14 | |||||||||||||||||||||
4,002 | | 42.97 | 09/01/15 | |||||||||||||||||||||
5,481 | | 33.11 | 09/01/16 | |||||||||||||||||||||
2,004 | 1,002 | (4) | 39.82 | 08/23/17 | ||||||||||||||||||||
1,885 | 3,770 | (6) | 34.27 | 08/21/18 | ||||||||||||||||||||
1,667 | 3,333 | (9) | 35.92 | 09/23/18 | ||||||||||||||||||||
| 9,513 | (8) | 22.21 | 08/20/19 | ||||||||||||||||||||
Jeffrey L. Cotter
|
1,000 | | 39.44 | 02/03/16 | 5,909 | 122,316 | ||||||||||||||||||
492 | | 33.11 | 09/01/16 | |||||||||||||||||||||
318 | 159 | (4) | 39.82 | 08/23/17 | ||||||||||||||||||||
1,324 | 2,648 | (6) | 34.27 | 08/21/18 | ||||||||||||||||||||
| 5,421 | (8) | 22.21 | 08/20/19 | ||||||||||||||||||||
(1) | For each option shown, the expiration date is the tenth anniversary of the date the option was granted, except for those options referenced in footnote 5. |
(2) | The following table indicates the dates when the shares of restricted stock held by each NEO vest and are no longer subject to forfeiture: |
Vesting Date | Douglas A. Milroy | Jeffrey L. Wright | Robert G. Wood | Timothy N. Curran | Jeffrey L. Cotter | |||||||||||||||
08/20/10
|
5,000 | 2,303 | 1,428 | 1,428 | 813 | |||||||||||||||
08/21/10
|
1,221 | 1,033 | 939 | 424 | 298 | |||||||||||||||
08/23/10
|
1,278 | 1,389 | 1,056 | 603 | 184 | |||||||||||||||
09/01/10
|
1,907 | 1,222 | 816 | 50 | ||||||||||||||||
11/20/10
|
600 | |||||||||||||||||||
02/22/11
|
90 | |||||||||||||||||||
05/07/11
|
4,000 | |||||||||||||||||||
08/20/11
|
5,000 | 2,303 | 1,428 | 1,428 | 813 | |||||||||||||||
08/21/11
|
1,221 | 1,033 | 939 | 424 | 298 | |||||||||||||||
08/23/11
|
1,278 | 1,389 | 1,056 | 603 | 184 | |||||||||||||||
09/01/11
|
1,273 | 812 | 549 | 50 | ||||||||||||||||
11/20/11
|
600 | |||||||||||||||||||
05/07/12
|
4,000 | 15,000 | ||||||||||||||||||
08/20/12
|
5,000 | 2,303 | 1,428 | 1,428 | 813 | |||||||||||||||
08/21/12
|
1,221 | 1,033 | 939 | 424 | 298 | |||||||||||||||
08/23/12
|
1,278 | 1,389 | 1,056 | 603 | 184 | |||||||||||||||
05/07/13
|
4,000 | |||||||||||||||||||
08/20/13
|
5,000 | 2,303 | 1,428 | 1,428 | 813 | |||||||||||||||
08/21/13
|
1,221 | 1,033 | 939 | 424 | 298 | |||||||||||||||
05/07/14
|
4,000 | |||||||||||||||||||
08/20/14
|
5,000 | 2,303 | 1,428 | 1,428 | 813 | |||||||||||||||
Total
|
50,918 | 37,994 | 16,188 | 12,010 | 5,909 | |||||||||||||||
(3) | Calculated by multiplying the number of restricted shares by $20.70, the closing price of our common stock on July 2, 2010, the last business day of the fiscal year. Dividends are paid on these shares. |
(4) | The remaining shares became exercisable on August 23, 2010. |
(5) | These options cliff vest and become exercisable on November 15, 2010, assuming continued employment. |
(6) | These options continue to vest and the remaining shares become exercisable in two equal installments on August 21, 2010 and 2011, assuming continued employment. |
(7) | These options continue to vest and the remaining shares become exercisable in two equal installments on May 7, 2011 and 2012, assuming continued employment. |
(8) | These options continue to vest and the remaining shares become exercisable in two equal installments on August 20, 2010, 2011 and 2012, assuming continued employment. |
(9) | These options continue to vest and the remaining shares become exercisable in three equal installments on September 23, 2010 and 2011, assuming continued employment. |
Option Awards | ||||||||||||||||
Number of Shares |
Stock Awards | |||||||||||||||
Acquired on |
Value Realized on |
Number of Shares |
Value Realized on |
|||||||||||||
Exercise | Exercise ($) | Acquired on Vesting | Vesting ($)(1) | |||||||||||||
Douglas A. Milroy
|
| | 7,099 | 170,340 | ||||||||||||
Jeffrey L. Wright
|
| | 4,719 | 109,414 | ||||||||||||
Robert G. Wood
|
| | 3,307 | 76,597 | ||||||||||||
Timothy N. Curran
|
| | 1,843 | 42,683 | ||||||||||||
Jeffrey L. Cotter
|
| | 532 | 12,158 | ||||||||||||
(1) | Calculated by multiplying the closing price on the date of vesting times the number of shares. |
Number of Years of |
||||||||||||||||
Service Credited |
||||||||||||||||
Under Plan at FAS |
Present Value of |
Payments During |
||||||||||||||
Measurement Date |
Accumulated Benefit |
Last Fiscal Year |
||||||||||||||
Plan Name | (#) | ($) | ($) | |||||||||||||
Douglas A.
Milroy(1)
|
G&K Services Pension Plan | N/A | N/A | N/A | ||||||||||||
G&K Services SERP | N/A | N/A | N/A | |||||||||||||
Jeffrey L. Wright
|
G&K Services Pension Plan | 8.00 | 70,349 | | ||||||||||||
G&K Services SERP | 8.00 | 170,388 | | |||||||||||||
Robert G.
Wood(2)
|
G&K Services Pension Plan | N/A | N/A | N/A | ||||||||||||
G&K Services SERP | N/A | N/A | N/A | |||||||||||||
Timothy N. Curran
|
G&K Services Pension Plan | 3.00 | 29,912 | | ||||||||||||
G&K Services SERP | 3.00 | 46,696 | | |||||||||||||
Jeffrey L.
Cotter(3)
|
G&K Services Pension Plan | N/A | N/A | N/A | ||||||||||||
G&K Services SERP | N/A | N/A | N/A | |||||||||||||
(1) | Mr. Milroy does not participate in our Pension Plan or our SERP. |
(2) | Mr. Wood is not covered by our U.S. qualified and non-qualified retirement plans. |
(3) | Mr. Cotter does not participate in our Pension Plan or our SERP. |
| Eligibility if a participant had an accrued benefit under the Pension Plan as of December 31, 1988, and the participant was not a Highly Compensated Employee during the 1989 plan year, the participant is eligible to continue to earn benefits under the 1988 pension formula until the earliest of December 31, 2006, termination of employment, or the end of the year preceding the plan year in which the participant became a Highly Compensated Employee. |
| Formula 50% of the participants average compensation, less 75% of the estimated primary social security benefit, multiplied by years of benefit accrual service at December 31, 2006 (or termination of employment, if earlier), not to exceed 30, divided by 30. |
| benefits were assumed to commence at age 65; |
| for the June 30, 2009 and June 30, 2010 measurement dates, for the SERP benefit and the Pension Plan benefit, 65% of the participants are assumed to elect the life only payment option at benefit commencement, and 35% are assumed to elect payment in the 100% joint and survivor payment form. Values for earlier measurement dates assume 100% of the participants elect the life only payment option; |
| all values were determined as of June 30, 2008, 2009 or 2010, as appropriate; |
| the discount rate used to determine values was 7.2%, 6.9% and 5.6% as of June 30, 2008, 2009 and 2010, respectively; and |
| no pre-retirement mortality, retirement, withdrawal or disability was assumed. |
| benefits were assumed to commence at age 65; |
| for the June 30, 2009 and June 30, 2010 measurement dates, for the SERP benefit and the Pension Plan benefit, 65% of the participants are assumed to elect the life only payment option at benefit commencement, and 35% are assumed to elect payment in the 100% joint and survivor payment form. Values for earlier measurement dates assume 100% of the participants elect the life only payment option; |
| all values were determined as of June 30, 2008, 2009 or 2010 as appropriate; |
| the discount rate used to determine values was 7.05%, 6.9% and 5.5% as of June 30, 2008, 2009 and 2010, respectively; and |
| no pre-retirement mortality, retirement, withdrawal or disability was assumed. |
Executive |
Registrant |
Aggregate |
||||||||||||||||||
Contributions in |
Contributions in |
Aggregate Earning |
Withdrawals/ |
Aggregate |
||||||||||||||||
Last FY ($)(1) | Last FY ($)(2) | in Last FY ($)(3) | Distributions ($) | Balance ($)(4) | ||||||||||||||||
Douglas A. Milroy
|
107,836 | 62,655 | 49,630 | | 551,099 | |||||||||||||||
Jeffrey L. Wright
|
43,584 | 40,596 | 86,342 | | 694,465 | |||||||||||||||
Robert G. Wood
|
| | | | | |||||||||||||||
Timothy N. Curran
|
27,500 | 24,897 | 20,786 | | 271,633 | |||||||||||||||
Jeffrey L. Cotter
|
8,828 | 12,451 | 1,102 | | 36,900 | |||||||||||||||
(1) | Amounts in this column reflect salary deferrals by the NEO in fiscal year 2010. These amounts are also included in the Salary column of the Summary Compensation Table. We match 50% of the NEOs deferral election up to 10% of both base salary and incentive pay. We make company retirement contributions equal to 2.5% of each NEOs cash compensation, including pay that exceeds the IRS compensation limit, to the NEOs DEFCO account. If an NEOs pay exceeds the IRS compensation limit, we will also make a company retirement contribution equal to 4% of the NEOs cash compensation over the IRS compensation limit. |
(2) | Amounts in this column represent contributions made by us during fiscal year 2010. These amounts are also reflected in the All Other Compensation that is reported in the Summary Compensation Table. |
(3) | The amounts in this column are not included in the Summary Compensation Table because they are not above-market or preferential earnings on deferred compensation. Earnings are based on indices of widely available mutual funds. |
(4) | Amounts reported in this column for each NEO include amounts previously reported in the Summary Compensation Table in previous years when earned if that NEOs compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, salary and incentive and company matching contributions. This total reflects the cumulative value of each NEOs deferrals and matching contributions and investment experience. |
| we must provide the executive with 30 days written notice of termination; |
| if the executive signs and does not revoke a release, we must pay to such executive, as separation pay, an amount equal to 11 months of such executives monthly base salary in effect as of the actual date of termination (or, in the case of Mr. Milroy, an amount equal to 1.99 times his annual base salary in effect as of the actual date of termination), such separation pay being made in weekly payments, subject to the terms of such release; some payment may be subject to a delay of six months to comply with Section 409A of the Internal Revenue Code; |
| if such executive (or any individual receiving group health plan benefits through him) is eligible under applicable law to continue participation in our group health plan and elects to do so, we will, for a period of up to 17 months commencing as of the actual date of termination, continue to pay our share of the cost of such benefits as if such executive remained in our continuous employment, but only while such executive or such person is not eligible for coverage under any other employers group health plan; |
| we will, for a period of at least one year commencing as of the actual date of termination, pay directly to the service provider or reimburse such executive for all reasonable expenses of a reputable outplacement organization selected by such executive, such payments not to exceed $12,000 in the aggregate; |
| we will pay a lump sum payment equal to six times the monthly automobile allowance, if applicable; and |
| we will pay to such executive any unpaid management incentive bonus earned by such executive and to which such executive is entitled (provided such executive was employed by us as of the last day of the fiscal year prior to the actual date of termination), such payment being made in accordance with the terms of the related plan. |
| anyone attains control of 30% of our voting stock; |
| challengers replace a majority of our Board of Directors within two years; or |
| a merger or consolidation with, or disposal of all or substantially all of our assets to, someone other than the company. |
| a substantial adverse involuntary change in the executives status or position as an executive with the company; |
| a material reduction by the company in the executives base salary as in effect on the day before the Change in Control; |
| material adverse change in physical working conditions, interfering with the executives work; |
| a requirement to relocate, other than on intermittent basis, more than 35 miles from corporate headquarters as a condition of employment; |
| failure by the company to obtain from any successor an assumption of the executives employment agreement; |
| attempted termination other than pursuant to the executives employment agreement; or |
| any material breach of the executives employment agreement. |
| we must provide the executive with 30 days written notice of termination; |
| we will pay the executive an amount equal to 17 months of such executives base salary (or, in the case of Mr. Milroy, an amount equal to 1.99 times his annual base salary), subject to certain limitations; |
| if such executive (or any individual receiving group health plan benefits through him) is eligible to continue participation in our group health plan and elects to do so, we must, for a period of up to 17 months, continue to pay the employers share of the cost of such benefits as if such executive remained in our continuous employment, subject to certain limitations; |
| we will, for a period of at least one year, pay directly or reimburse such NEO for all reasonable outplacement expenses, such payments not to exceed $12,000; |
| we will pay the executive the amount necessary to acquire and obtain full title to any personal automobile leased by us for the executive or, if the executive does not have the use of a personal automobile but has been given an automobile allowance, we will pay the executive a lump sum payment equal to three times the annual automobile allowance such executive is then receiving; |
| we will pay for financial planning and tax preparation expenses, not to exceed $5,000 (or in the case of Mr. Milroy, $7,500), for 17 months; and |
| we will pay any management incentive bonus earned by the executive and to which the executive is entitled (provided the executive was employed by us as of the last day of the fiscal year prior to the actual date of termination), such payment being made in accordance with the terms of the related plan. |
| the restrictions on any previously issued shares of restricted stock will immediately lapse; |
| all outstanding options and stock appreciation rights will become immediately exercisable; and |
| all performance criteria for all performance shares will be deemed to be met and immediate payment made. |
Termination by Us |
Change of Control |
|||||||||||
Payment Type | Without Cause ($) | Termination ($) | Disability ($) | |||||||||
Severance
|
1,094,500 | (1) | 1,094,500 | (1) | 320,833 | (2) | ||||||
Health Benefits
|
11,111 | (3) | 11,111 | (3) | 4,744 | (4) | ||||||
Outplacement(5)
|
12,000 | 12,000 | | |||||||||
Car
|
9,750 | (6) | 58,500 | (7) | 11,375 | (8) | ||||||
Financial
Planning(9)
|
7,500 | 7,500 | | |||||||||
Deferred Compensation
|
461,646 | (10) | 551,099 | (11) | 461,646 | (10) | ||||||
Accelerated Vesting of Options
|
| | (12) | | ||||||||
Accelerated Vesting of Restricted Stock
|
| 1,054,003 | (13) | | ||||||||
Total
|
1,596,507 | 2,788,712 | 798,599 | |||||||||
(1) | Reflects 1.99 times base salary. |
(2) | Reflects seven months of base salary (one month for the notice period plus six months pay). |
(3) | Reflects 17 months of health benefits. |
(4) | Reflects seven months of medical and dental benefits (one month for the notice period plus six months pay). |
(5) | Outplacement is capped at $12,000. |
(6) | Reflects six times the monthly car allowance at an annual rate of $19,500. |
(7) | Reflects three times the annual car allowance at an annual rate of $19,500. |
(8) | Reflects 7 months of the annual car allowance at an annual rate of $19,500. |
(9) | Financial planning is capped at $7,500. |
(10) | Includes $402,011 of Mr. Milroys contribution account and $59,635 of the companys contribution account. |
(11) | Includes $402,011 of Mr. Milroys contribution account and $149,087 of the companys contribution account. Pursuant to the DEFCO, acceleration of vesting would require acquisition by a third party of 50% of our stock, rather than the 30% threshold stated in Mr. Milroys employment agreement. Mr. Milroys DEFCO account will become fully vested upon a Change in Control. |
(12) | No value reflected; all unvested stock options as of July 3, 2010 had an exercise price greater than the closing price of $20.70 on such date. |
(13) | Reflects the value of 50,918 currently unvested shares of restricted stock, had the vesting of such shares accelerated on July 3, 2010, when the closing price of our common stock was $20.70. |
Termination by Us |
Change of Control |
|||||||||||
Payment Type | Without Cause ($) | Termination ($) | Disability ($) | |||||||||
Severance
|
327,474 | (1) | 506,097 | (2) | 208,393 | (3) | ||||||
Health Benefits
|
6,849 | (4) | 6,849 | (4) | 2,989 | (5) | ||||||
Outplacement(6)
|
12,000 | 12,000 | | |||||||||
Car
|
9,750 | (7) | 58,500 | (8) | 11,375 | (9) | ||||||
Financial
Planning(10)
|
5,000 | 5,000 | | |||||||||
Deferred
Compensation(11)
|
694,465 | 694,465 | 694,465 | |||||||||
Accelerated Vesting of Options
|
| | (12) | | ||||||||
Accelerated Vesting of Restricted Stock
|
| 786,476 | (13) | | ||||||||
Total
|
1,055,538 | 2,069,386 | 917,222 | |||||||||
(1) | Reflects 11 months of base salary |
(2) | Reflects 17 months of base salary. |
(3) | Reflects seven months of base salary (one month for the notice period plus 6 months pay). |
(4) | Reflects 17 months of health benefits. |
(5) | Reflects seven months of medical and dental benefits (one month for the notice period plus six months pay). |
(6) | Outplacement is capped at $12,000. |
(7) | Reflects six times the monthly car allowance rate at an annual rate of $19,500. |
(8) | Reflects three times the annual car allowance at an annual rate of $19,500. |
(9) | Reflects 7 months of the annual car allowance at an annual rate of $19,500. |
(10) | Financial planning is capped at $5,000. |
(11) | Includes $417,414 of Mr. Wrights contribution account and $277,050 of the company contribution account. Mr. Wrights DEFCO account is fully vested. |
(12) | No value reflected; all unvested stock options as of July 3, 2010 had an exercise price greater than the closing price of $20.70 on such date. |
(13) | Reflects the value of 37,994 currently unvested shares of restricted stock, had the vesting of such shares accelerated on July 3, 2010, when the closing price of our common stock was $20.70. |
Termination by Us |
Change of Control |
|||||||||||
Payment Type | Without Cause ($) | Termination ($) | Disability ($) | |||||||||
Severance
|
371,064 | (1) | 573,463 | (2) | 236,132 | (3) | ||||||
Health Benefits
|
2,321 | (4) | 2,321 | (4) | 956 | (5) | ||||||
Outplacement(6)
|
12,000 | 12,000 | | |||||||||
Car
|
10,188 | (7) | 61,127 | (8) | 11,886 | (9) | ||||||
Financial
Planning(10)
|
5,000 | 5,000 | | |||||||||
Deferred
Compensation(11)
|
| | | |||||||||
Accelerated Vesting of Options
|
| | (12) | | ||||||||
Accelerated Vesting of Restricted Stock
|
| 335,092 | (13) | | ||||||||
Total
|
400,573 | 989,002 | 248,974 | |||||||||
(1) | Reflects 11 months of base salary. |
(2) | Reflects 17 months of base salary. |
(3) | Reflects seven months of base salary (one month for the notice period plus six months pay). |
(4) | Reflects 17 months of health benefits. |
(5) | Reflects seven months of medical and dental benefits (one month for the notice period plus six months pay). |
(6) | Outplacement is capped at $12,000. |
(7) | Reflects six times the monthly car allowance at an annual rate of $21,500 CAD (converted to US dollars using an exchange rate of 0.9477). |
(8) | Reflects three times the annual car allowance at an annual rate of $21,500 CAD (converted to US dollars using an exchange rate of 0.9477). |
(9) | Reflects seven times the monthly car allowance at an annual rate of $21,500 CAD (converted to US dollars using an exchange rate of 0.9477). |
(10) | Financial planning is capped at $5,000. |
(11) | Mr. Wood is not covered by the DEFCO. |
(12) | No value reflected; all unvested stock options as of July 3, 2010 had an exercise price greater than the closing price of $20.70 on such date. |
(13) | Reflects the value of 16,188 currently unvested shares of restricted stock, had the vesting of such shares accelerated on July 3, 2010, when the closing price of our common stock was $20.70. |
Termination by Us |
Change of Control |
|||||||||||
Payment Type | Without Cause ($) | Termination ($) | Disability ($) | |||||||||
Severance
|
252,083 | (1) | 389,583 | (2) | 160,417 | (3) | ||||||
Health Benefits
|
11,111 | (4) | 11,111 | (4) | 4,744 | (5) | ||||||
Outplacement(6)
|
12,000 | 12,000 | | |||||||||
Car
|
9,750 | (7) | 58,500 | (8) | 11,375 | (9) | ||||||
Financial
Planning(10)
|
5,000 | 5,000 | | |||||||||
Deferred Compensation
|
227,053 | (11) | 271,633 | (12) | 227,053 | (11) | ||||||
Accelerated Vesting of Options
|
| | (13) | | ||||||||
Accelerated Vesting of Restricted Stock
|
| 248,607 | (14) | | ||||||||
Total
|
516,997 | 996,435 | 403,589 | |||||||||
(1) | Reflects 11 months of base salary |
(2) | Reflects 17 months of base salary. |
(3) | Reflects seven months of base salary (one month for the notice period plus six months pay). |
(4) | Reflects 17 months of health benefits. |
(5) | Reflects seven months of medical and dental benefits (one month for the notice period plus six months pay). |
(6) | Outplacement is capped at $12,000. |
(7) | Reflects six times the monthly car allowance at an annual rate of $19,500. |
(8) | Reflects three times the annual car allowance at an annual rate of $19,500. |
(9) | Reflects seven times the monthly car allowance at an annual rate of $19,500. |
(10) | Financial planning is capped at $5,000. |
(11) | Includes $160,182 of Mr. Currans contribution account and $66,871 of the company contribution account. |
(12) | Includes $160,182 of Mr. Currans contribution account and $111,451 of the company contribution account. Pursuant to the DEFCO, acceleration of vesting would require acquisition by a third party of 50% of our stock, rather than the 30% threshold stated in Mr. Currans employment agreement. Mr. Currans DEFCO account will become fully vested upon a change of control. |
(13) | No value reflected; all unvested stock options as of July 3, 2010 had an exercise price greater than the closing price of $20.70 on such date. |
(14) | Reflects the value of 12,010 currently unvested shares of restricted stock, had the vesting of such shares accelerated on July 3, 2010, when the closing price of our common stock was $20.70. |
Termination by Us |
Change of Control |
|||||||||||
Payment Type(1) | Without Cause ($) | Termination ($) | Disability ($) | |||||||||
Severance
|
229,167 | (2) | 354,167 | (3) | 100,000 | (4) | ||||||
Health Benefits
|
7,190 | (5) | 11,111 | (6) | 1,877 | (7) | ||||||
Outplacement(8)
|
12,000 | 12,000 | | |||||||||
Financial Planning
|
| | ||||||||||
Deferred Compensation
|
21,414 | (9) | 36,900 | (10) | 21,414 | (9) | ||||||
Accelerated Vesting of Options
|
| | (11) | | ||||||||
Accelerated Vesting of Restricted Stock
|
| 122,316 | (12) | | ||||||||
Total
|
269,770 | 536,494 | 123,291 | |||||||||
(1) | We have not entered into an employment agreement with Mr. Cotter; however, if Mr. Cotter experiences a change in control termination or is severed from the company without cause, which termination requires 30 days notice from the company, he would be entitled to certain benefits under our Executive Severance and Change in Control Policy. |
(2) | Reflects 11 months of base salary |
(3) | Reflects 17 months of base salary. |
(4) | Reflects thirteen weeks of base salary at 100% and thirteen weeks of base salary at 60%, pursuant to our Short-Term Sickness and Accident Plan. |
(5) | Reflects 11 months of health benefits |
(6) | Reflects 17 months of health benefits. |
(7) | Reflects twelve weeks of medical and dental benefits. |
(8) | Outplacement is capped at $12,000. In the event of a termination without cause, outplacement expenses will be paid at the companys discretion; in the event of a Change in Control termination, the company will be required to pay outplacement expenses, subject to a cap of $12,000. |
(9) | Includes $11,091 of Mr. Cotters contribution account and $10,324 of the company contribution account. |
(10) | Includes $11,091 of Mr. Cotters contribution account and $25,809 of the company contribution account. Pursuant to the DEFCO, acceleration of vesting would require acquisition by a third party of 50% of our stock. Mr. Cotters DEFCO account will become fully vested upon a change of control. |
(11) | No value reflected; all unvested stock options as of July 3, 2010 had an exercise price greater than the closing price of $20.70 on such date. |
(12) | Reflects the value of 5,909 currently unvested shares of restricted stock, had such shares vested on July 3, 2010, when the closing price of our common stock was $20.70 |
Fees Earned or Paid |
Stock |
Option |
||||||||||||||
in Cash (1) ($) | Awards (2) ($) | Awards (3) ($) | Total ($) | |||||||||||||
Paul
Baszucki(4)
|
36,600 | 30,624 | 15,456 | 82,680 | ||||||||||||
John S. Bronson
|
51,500 | 30,624 | 15,456 | 97,580 | ||||||||||||
J. Patrick Doyle
|
47,500 | 30,624 | 15,456 | 93,580 | ||||||||||||
Wayne M. Fortun
|
52,500 | 30,624 | 15,456 | 98,580 | ||||||||||||
Ernest Mrozek
|
48,500 | 30,624 | 15,456 | 94,580 | ||||||||||||
M. Lenny Pippin
|
96,000 | 30,624 | 23,184 | 149,808 | ||||||||||||
Alice M. Richter
|
58,500 | 30,624 | 15,456 | 104,580 | ||||||||||||
Lynn Crump-Caine
|
48,500 | 30,624 | 15,456 | 94,580 | ||||||||||||
(1) | Includes amounts deferred at the directors election. As discussed above, directors can elect to defer all or part of their compensation. |
(2) | The dollar amounts represent the aggregate grant date fair value of stock awards granted during each of the years presented. The grant date fair value of a stock award is measured in accordance with FASB ASC Topic 718. See Note 11 to our audited financial statements for the year ended July 3, 2010. Wayne M. Fortun and Lynn Crump-Caine elected to defer the January 4, 2010 stock award until the date of termination from the board. |
(3) | The dollar amounts represent the aggregate grant date fair value of option awards granted during each of the years presented. The grant date fair value of an option award is measured in accordance with FASB ASC Topic 718. See Note 11 to our audited financial statements for the year ended July 3, 2010. Accounting estimates of forfeitures are not included in these figures. On January 4, 2010, each director received an annual grant of 2,400 options, with the exception of M. Lenny Pippin who received a grant of 3,600 options, with a fair value of $6.44 per option. Assumptions used in the valuation of stock option and stock awards are set forth in Note 11 to our audited financial statements for the year ended July 3, 2010. Mr. Baszuckis January 2010 option grant had not vested by his retirement from the board in May 2010; therefore, the award was forfeited. |
(4) | Mr. Baszucki retired from our board on May 6, 2010. |
| the plan prohibits repricing without shareholder approval; |
| the plan prohibits reload options; |
| the plan requires options for shares to be priced at not less than the fair market value of the shares on the grant date; |
| the requested number of authorized shares covers a relatively short expected duration, which: |
n | minimizes undesirable consequences of share overhang, i.e., the total number of shares related to outstanding options and other equity awards, plus shares available for grant, in relation to the total number of shares outstanding; and | |
n | gives shareholders the right to approve or reject future plans in the near term to prevent undesirable dilution or excessive share overhang; |
| the flexible nature of the plan gives us the ability to respond to market trends by enabling us to grant a wide variety of awards and adjust the mix of awards between options and restricted stock; |
| the plan does not include liberal share recycling provisions; |
| the plan does not allow the re-grant of shares that are used for tax withholding or awards that are settled in cash (other than performance units that can never be settled in stock); |
| the plan authorizes the compensation committee to include claw back provisions in grants; and |
| awards of stock appreciation rights, restricted stock, restricted stock units, deferred stock units and stock cannot exceed one-third of the total authorized shares. |
| to prescribe, amend and rescind rules and regulations relating to the plan and to define terms not otherwise defined in the plan; |
| to determine which persons are eligible to participate, to which of such participants, if any, awards shall be granted and the timing of any such awards; |
| to grant awards to participants and determine the terms and conditions of the awards, including the number of shares subject to awards and the exercise or purchase price of such shares and the circumstances under which awards become exercisable or vested or are forfeited or expire, and the extent to which reimbursement to the company or any affiliate of any payment of cash or shares under any award shall be required; |
| to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any award; |
| to prescribe and amend the terms of the agreements or other communications evidencing awards made under the plan (which need not be identical) and the terms of or form of any document or notice required to be delivered to us by participants under the plan; |
| to determine whether, and the extent to which, adjustments are required as a result of any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off or stock dividend; |
| to interpret and construe the plan, any rules and regulations under the plan and the terms and conditions of any award granted under the plan, and to make exceptions to any such provisions in good faith and for our benefit; and |
| to make all other determinations deemed necessary or advisable for the administration of the plan. |
| cash flow; |
| earnings per share; |
| earnings before interest, taxes and amortization; |
| share price performance; |
| return on capital; |
| return on assets or net assets; |
| revenue; |
| net earnings or net income; |
| operating income or net operating income; |
| operating profit or net operating profit; |
| operating margin or profit margin; |
| return on operating revenue; |
| return on invested capital; |
| market segment share; |
| brand recognition/acceptance; |
| customer satisfaction; |
| return on equity; |
| total shareholder return; |
| growth in sales; |
| productivity ratios; |
| expense targets; |
| working capital targets; or |
| operating efficiencies. |
| asset write-down; |
| litigation or claim judgments or settlements; |
| the effect of changes in or under provisions of tax laws, accounting principles or other such laws or provisions affecting reported results; |
| accruals for reorganizations or restructuring programs; and |
| any extraordinary nonrecurring items described in FASB Accounting Standards Codification 255-20, formerly Accounting Principles Board Opinion No. 30, and/or in managements discussion and analysis of financial condition and results of operations appearing in our annual report to shareholders for the applicable year. |
ISS Suggested |
||||||||
Three-Year |
G&K Three-Year |
|||||||
Fiscal Year | Burn Rate (%) | Burn Rate (%) | ||||||
2008
|
4.05 | 3.27 | ||||||
2009
|
4.01 | 3.21 | ||||||
2010
|
2.89 | 3.68 | ||||||
Number of |
||||||||||||
Securities |
||||||||||||
Remaining |
||||||||||||
Available for |
||||||||||||
Future Issuance |
||||||||||||
Number of |
Under Equity |
|||||||||||
Securities to be |
Weighted- |
Compensation |
||||||||||
Issued Upon |
Average Exercise |
Plans (Excluding |
||||||||||
Exercise of |
Price of |
Securities |
||||||||||
Outstanding |
Outstanding |
Reflected in |
||||||||||
Options (A) | Options ($) | Column (A)(1)) | ||||||||||
Equity compensation plans approved by security
holders(2):
|
||||||||||||
Employee
Plans(3)
|
628,842 | 34.94 | | |||||||||
1996 Directors Stock Option Plan
|
40,500 | 35.79 | | |||||||||
2006 Equity Compensation Plan
|
811,735 | 33.40 | 817,158 | |||||||||
Total
|
1,481,077 | 817,158 | ||||||||||
Equity compensation plans not approved by stockholders:
|
||||||||||||
None
|
| | | |||||||||
Total
|
| | | |||||||||
(1) | In our Annual Report on Form 10-K filed for our fiscal year ended July 3, 2010, in Item 5 and in the Share Based Payment Plans footnote to our financial statements, we inadvertently misstated the number of equity awards remaining available for grant as 541,196. This number should have been 817,158, as is stated above. Additionally, in August 2010, we granted 122,002 shares of restricted stock and options covering 257,011 shares of common stock to our employees. As a result, as of September 7, 2010, only 442,054 shares remained available for future issuance under the 2006 Plan. |
(2) | See Note 11 to the audited financial statements for the fiscal year ended July 3, 2010. |
(3) | Includes our 1989 Stock Option and Compensation Plan and 1998 Stock Option and Compensation Plan. |
Fiscal Year |
Fiscal Year |
|||||||
Ended |
Ended |
|||||||
July 3, 2010 ($) | June 27, 2009 ($) | |||||||
Audit
Fees(1)
|
548,986 | 753,789 | ||||||
Audit-Related
Fees(2)
|
9,424 | 9,173 | ||||||
Tax
Fees(3)
|
372,600 | 209,446 | ||||||
All Other Fees
|
7,840 | | ||||||
Total
|
938,850 | 972,408 | ||||||
(1) | Represents amounts related to the audit of our annual consolidated financial statements and internal control over financial reporting and the review of our consolidated financial statements included in our Quarterly Reports on Form 10-Q. |
(2) | Represents amounts reasonably related to the performance of the audit or review of our consolidated financial statements which are not reported under the Audit Fees category. |
(3) | Represents fees related to tax compliance and tax planning services. |
Class A Common Stock | ||||||||
Number of |
Percent |
|||||||
Name of Beneficial Owner(1) | Shares | of Class | ||||||
Wright, Jeffrey
L.(2)
|
140,482 | * | ||||||
Milroy, Douglas
A.(3)
|
138,382 | * | ||||||
Wood, Robert
G.(4)
|
86,529 | * | ||||||
Curran, Timothy
N.(5)
|
54,103 | * | ||||||
Fortun, Wayne
M.(6)
|
26,535 | * | ||||||
Pippin, M.
Lenny(7)
|
21,200 | * | ||||||
Cotter, Jeffrey
L.(8)
|
19,452 | * | ||||||
Bronson, John
S.(9)
|
19,000 | * | ||||||
Richter, Alice
M.(9)
|
18,500 | * | ||||||
Doyle, J.
Patrick(10)
|
17,000 | * | ||||||
Mrozek, Ernest
J.(10)
|
17,000 | * | ||||||
Crump-Caine,
Lynn(11)
|
5,600 | * | ||||||
All executive officers and directors as a group
(12 persons)(12)
|
563,783 | 3.04 | % | |||||
Dimensional Fund Advisors,
Inc.(13)
6300 Bee Cave Road Austin, TX 78746 |
1,562,448 | 8.41 | % | |||||
Barclays Global Investors
NA(13)
400 Howard Street San Francisco, CA 94105 |
1,401,367 | 7.55 | % | |||||
T. Rowe Price Associates,
Inc.(13)
100 East Pratt Street Baltimore, MD 21202 |
1,240,240 | 6.68 | % | |||||
* | Indicates an amount less than 1%. |
(1) | Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares shown opposite the name of such person or group. |
(2) | Includes 71,786 shares subject to stock options that are exercisable within 60 days and 42,306 shares of unvested restricted stock. Also includes 21,930 shares for which Mr. Wright shares voting power with his spouse. |
(3) | Includes 51,241 shares subject to stock options that are exercisable within 60 days and 67,065 shares of unvested restricted stock. Also includes 3,000 shares for which Mr. Milroy shares voting power with his spouse. |
(4) | Includes 51,326 shares subject to stock options that are exercisable within 60 days and 22,019 shares of unvested restricted stock. Also includes 4,720 shares pledged as security against a line of credit. |
(5) | Includes 29,764 shares subject to stock options that are exercisable within 60 days and 19,215 shares of unvested restricted stock. |
(6) | Includes 13,700 shares subject to stock options that are exercisable within 60 days. |
(7) | Includes 18,300 shares subject to stock options that are exercisable within 60 days. |
(8) | Includes 6,424 shares subject to stock options that are exercisable within 60 days and 11,563 shares of unvested restricted stock. |
(9) | Includes 12,700 shares subject to stock options that are exercisable within 60 days. |
(10) | Includes 11,700 shares subject to stock options that are exercisable within 60 days. |
(11) | Includes 4,400 shares subject to stock options that are exercisable within 60 days. |
(12) | Includes 295,741 shares subject to stock options that are exercisable within 60 days and 162,168 shares of unvested restricted stock. |
(13) | Based solely upon the most recent report filed with the Securities and Exchange Commission pursuant to Rule 13f-1 of the Securities Exchange Act of 1934, as amended. |
1. |
Purpose. The purpose of
the
G&K Services,
Inc.Restated
Equity Incentive Plan
(2010)
( the Plan) is to motivate directors, key
employees and advisors to produce a superior return to the
shareholders
of G&K Services, Inc. by offering them an opportunity to
participate in
stockholdershareholder
gains, by facilitating stock ownership and by rewarding them for
achieving a high level of corporate financial performance. The
Plan is also intended to facilitate recruiting and retaining
talented executives for key positions by providing an attractive
capital accumulation opportunity. The Plan was
initially
adopted by the Board (as defined below)as
the G & K Services, Inc. 2006 Equity Incentive Plan on
August 23, 2006, and approved by the shareholders at the
annual meeting of shareholders held November 16, 2006. The
Plan as restated was adopted by the Board on August 19,
2010, subject to the approval of
shareholders
at the annual meeting of
shareholders
scheduled for November 4,
2010.
|
2.1. | The following terms, whenever used in this Plan, shall have the meanings set forth below: |
(a) | Affiliate means any corporation or limited liability company, a majority of the voting stock or membership interests of which is directly or indirectly owned by the Company, and any partnership or joint venture designated by the Committee in which any such corporation or limited liability company is a partner or joint venturer. | |
(b) | Award means a grant made under this Plan in the form of Performance Shares, Restricted Stock, Restricted Stock Units, Options, Performance Units, Stock Appreciation Rights, or Stock Awards. | |
(c) | Award Agreement means a written agreement or other communication evidencing the terms and conditions of an Award in the form of either an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or a certificate, notice, term sheet or similar communication. | |
(d) | Beneficiary means the person or persons determined in accordance with Section 13. | |
(e) | Board means the Board of Directors of the Company. | |
(f) | Change in Control means the occurrence of any of the following events: |
(i) | any Person within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the Act) (other than the Company or any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner within the meaning of Rule 13d-3 promulgated under the Act of 30% or more of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors; excluding, however, any circumstance in which such beneficial ownership resulted from any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or by any corporation controlling, controlled by, or under common control with, the Company; | |
(ii) |
a change in the composition of the Board since August 23,
2006, (the Effective Date), such that the
individuals who, as of such date, constituted the Board (the
Incumbent Board) cease for any reason to constitute
at least a majority of such Board; provided that any individual
who becomes a director of the Company subsequent to the
Effective Date whose election, or nomination for election by the
Companys shareholders ,
was approved by the vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; and provided further that any individual
who was initially elected as a director of the Company as a
result of an actual or threatened election contest, as such
terms are used in
Rule 14a-12
of Regulation 14A promulgated under the Act, or any other
actual or threatened solicitation of proxies or consents by or
on behalf of any person or entity other than the Board shall not
be deemed a member of the Incumbent Board;
|
|
(iii) | a reorganization, recapitalization, merger or consolidation (a Corporate Transaction) involving the Company, unless securities representing 60% or more of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company or the corporation resulting from such Corporate Transaction (or the parent of such corporation) are held subsequent to such transaction by the person or persons who were the beneficial holders of the outstanding voting securities entitled to vote generally in the election of directors of the Company immediately prior to such Corporate Transaction, in substantially the same proportion as their ownership immediately prior to such Corporate Transaction; or | |
(iv) | the sale, transfer or other disposition of all or substantially all of the assets of the Company. |
(g) | Code means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations issued thereunder. | |
(h) | Committee has the meaning set forth in Section 3. |
(i) | Company means G&K Services, Inc., a Minnesota corporation. | |
(j) | Deferred Stock Units has the meaning set forth in Section 9. | |
(k) | Employee means an individual who is a common law employee (including an officer or director who is also an employee) of the Company or an Affiliate. | |
(l) | Fair Market Value means, on a given date, (i) if there should be a public market for the Shares on such date, the price at which a Share was last sold (i.e., closing market price) on the principal United States market for the Shares, or, if no sale of Shares shall have been reported on such principal United States market on such date, then the immediately preceding date on which sales of the Shares have been so reported shall be used, and (ii) if there should not be a public market for the Shares on such date, the Fair Market Value shall be the value established by the Committee in good faith. | |
(m) | Incentive Stock Option means any Option designated as such and granted in accordance with the requirements of Section 422 of the Code. | |
(n) | Non-Qualified Stock Option means an Option other than an Incentive Stock Option. | |
(o) | Option means a right to purchase Stock awarded under Section 10. | |
(p) | Other Stock-Based Awards means Awards granted pursuant to Section 12. | |
(q) | Participant means a person described in Section 5 designated by the Committee to receive an Award under the Plan. | |
(r) | Performance Cycle means the period of time as specified by the Committee over which Performance Shares or Performance Units are to be earned. | |
(s) | Performance Shares means an Award made pursuant to Section 6 which entitles a Participant to receive Shares, their cash equivalent, or a combination thereof, based on the achievement of performance targets during a Performance Cycle. | |
(t) | Performance Units means an Award made pursuant to Section 6 which entitles a Participant to receive cash, Stock, or a combination thereof, based on the achievement of performance targets during a Performance Cycle. | |
(u) |
Plan means the
G&K Services, Inc. Restated Equity Incentive
Plan
(2010) , as amended from time to time.
|
|
(v) | Qualifying Performance Criteria has the meaning set forth in Section 16.2. | |
(w) | Restricted Stock means Stock granted under Section 7 that is subject to restrictions imposed pursuant to said Section. | |
(x) | Restricted Stock Unit means a grant under Section 9 of the right to receive a Share subject to vesting and such other restrictions imposed pursuant to said Section, together with dividend equivalents with respect to such Share if and as so determined by the Committee. | |
(y) | Share means a share of Stock. | |
(z) | Stock means the Class A Common Stock, $.50 par value per share, of the Company, as such class of Stock may be redesignated or renamed from time to time. | |
(aa) | Stock Appreciation Right means a right awarded to a Participant pursuant to Section 11 that entitles the Participant to receive, in cash, Stock or a combination thereof, as determined by the Committee, an amount equal to or otherwise based on the excess of (a) the Fair Market Value of a Share at the time of exercise over (b) the exercise price of the right, as established by the Committee on the date the Award is granted. | |
(bb) | Stock Award means an award of Stock granted to a Participant pursuant to Section 8. | |
(cc) | Term means the period during which an Option or Stock Appreciation Right may be exercised or the period during which the restrictions placed on a Restricted Stock Unit or Restricted Stock are in effect. |
2.2. | Gender and Number. Except when otherwise indicated by context, reference to the masculine gender shall include, when used, the feminine gender and any term used in the singular shall also include the plural. |
3. | Administration. |
3.1. | Administration of the Plan. The Plan shall be administered by the Compensation Committee of the Board or such other committee selected by the Board and consisting of two or more members of the Board (the Committee). Any power of the Committee may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Act, or cause an Award not to qualify for treatment as performance based compensation under Section 162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control. The Committee may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Affiliate, and/or to one or more agents. |
3.2. | Powers of the Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to take all actions that it determines to be necessary or appropriate in connection with the administration of this Plan, including, without limitation: (i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; (ii) to determine which persons are eligible to be granted Awards under Section 5, to which of such persons, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to grant |
Awards to Participants and determine the terms and conditions of
Awards, including the number of Shares subject to Awards, the
exercise or exercise price of such Shares, and the
circumstances under which Awards become exercisable or vested or
are forfeited or
expire ,
and the extent to which reimbursement to the Company or any
Affiliate of any payment of cash or Shares under any Award shall
be required , which terms may but need not be
conditioned upon the passage of time, continued employment, the
satisfaction of performance criteria, the occurrence of certain
events, or other factors; (iv) to establish and certify the
extent of satisfaction of any performance goals or other
conditions applicable to the grant, issuance, exercisability,
vesting,
and/or
ability to retain any Award; (v) to prescribe and amend the
terms of Award Agreements or other documents relating to Awards
made under this Plan (which need not be identical) and the terms
of or form of any document or notice required to be delivered to
the Company by Participants under this Plan; (vi) to
determine whether, and the extent to which, adjustments are
required pursuant to Section 25; (vii) to interpret
and construe this Plan, any rules and regulations under this
Plan, and the terms and conditions of any Award granted
hereunder, and to make exceptions to any such provisions in good
faith and for the benefit of the Company; and (viii) to
make all other determinations deemed necessary or advisable for
the administration of this Plan.
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3.3. | Determinations by the Committee. All decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan, and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, Beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select. |
4. | Shares Available Under the Plan; Limitation on Awards. |
4.1. | Aggregate Limits. Subject to adjustment
as provided in Section 25, the aggregate number of Shares
issuable pursuant to all Awards under this Plan shall not
exceed 3,000,000
Shares. Awards of Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Deferred Stock Units, and Stock cannot
exceed 1,000,000 Shares
of the 3,000,000 Shares authorized. Awards of Performance
Units that entitle a Participant to a payment only of cash (and
not of Stock) shall not reduce the number of Shares available
for issuance under the Plan. Shares available for issuance under
the Plan may be increased by the number of adjusted
Company Shares available for issuance under any equity incentive
plan assumed by the Company in connection with a merger or other
acquisition but only if and to the extent determined by the
Committee in its sole discretion. The Shares issued pursuant to
Awards granted under this Plan may consist, in whole or in part,
of authorized but unissued Stock or treasury Stock not reserved
for any other purpose.
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4.2. | Issuance of Shares. For purposes of
this Section 4, the aggregate number of Shares available
for Awards under this Plan at any time shall not be reduced by
Shares subject to Awards that have been canceled, expired, or
forfeited, but shall be reduced by the portion of Awards settled
in cash
(other
than Awards of Performance Units that entitle a Participant to a
payment only of cash and not of Stock) or withheld in
connection with the exercise or settlement of an Award. Net
Share counting shall not be used to determine the number of
Shares available for Awards, nor shall Shares tendered in
connection with the exercise of an Award affect the number of
Awards available for issuance under the Plan.
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4.3. | Tax Code Limits. No Participant may be awarded in any calendar year Awards covering an aggregate of more than 250,000 Shares, which limits shall be calculated and adjusted pursuant to Section 25 only to the extent that such calculation or adjustment will not affect the status of any Award theretofore issued or that may thereafter be issued as performance based compensation under Section 162(m) of the Code. The maximum amount payable pursuant to that portion of a Performance Unit granted under this Plan in any calendar year to any Participant that is intended to satisfy the requirements for performance based compensation under Section 162(m) of the Code shall be a dollar amount not to exceed $5,000,000. |
5. | Participation. Participation in the Plan shall be limited to Employees, prospective employees, directors or advisors of the Company or an Affiliate selected by the Committee. Options intending to qualify as Incentive Stock Options may only be granted to Employees of the Company or any subsidiary within the meaning of the Code. Participation is entirely at the discretion of the Committee, and is not automatically continued after an initial period of participation. |
6. | Performance Shares and Performance Units. An Award of Performance Shares or Performance Units, under the Plan shall entitle the Participant to future payments or Shares or a combination thereof based upon the level of achievement with respect to one or more pre-established performance criteria (including Qualifying Performance Criteria) established for a Performance Cycle. |
6.1. | Amount of Award. The Committee shall establish a maximum amount of a Participants Award, which amount shall be denominated in Shares in the case of Performance Shares or in dollars in the case of Performance Units. |
6.2. | Communication of Award. Each Award Agreement evidencing an Award of Performance Shares or Performance Units shall contain provisions regarding (i) the target and maximum amount payable to the Participant pursuant to the Award, (ii) the performance criteria and level of achievement versus the criteria that shall determine the amount of such payment, (iii) the Performance Cycle as to which performance shall be measured for determining the amount of any payment, (iv) the timing of any payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the Award prior to actual payment, (vi) forfeiture provisions and (vii) such further terms and conditions, in each case not inconsistent with |
this Plan, as may be determined from time to time by the Committee. |
6.3. | Performance Criteria. Performance criteria established by the Committee shall relate to corporate, group, unit or individual performance, and may be established in terms of earnings, growth in earnings, ratios of earnings to equity or assets, or such other measures or standards determined by the Committee; provided, however, that the performance criteria for any portion of an Award of Performance Shares or Performance Units that is intended by the Committee to satisfy the requirements for performance-based compensation under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria selected by the Committee and specified at the time the Award is granted. Multiple performance targets may be used and the components of multiple performance targets may be given the same or different weighting in determining the amount of an Award earned, and may relate to absolute performance or relative performance measured against other groups, units, individuals or entities. |
6.4. | Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an Award of Performance Shares or Performance Units on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee shall determine. |
6.5. | Payment of Awards. Following the conclusion of each Performance Cycle, the Committee shall determine the extent to which performance criteria have been attained, and the satisfaction of any other terms and conditions with respect to an Award relating to such Performance Cycle. The Committee shall determine what, if any, payment is due with respect to an Award and whether such payment shall be made in cash, Stock or a combination thereof. Payment shall be made in a lump sum or installments, as determined by the Committee at the time the Award is granted, commencing as promptly as practicable following the end of the applicable Performance Cycle, subject to such terms and conditions and in such form as may be prescribed by the Committee. Payment in Stock may be in Restricted Stock or Restricted Stock Units, as determined by the Committee at the time the Award is granted. |
6.6. | Termination of Employment. Unless the Committee provides otherwise: |
(a) | Due to Death or Disability. If a Participant who is an Employee ceases to be an Employee or if a Participant who is a director ceases to be a director before the end of a Performance Cycle, in either case by reason of death or permanent disability, the Performance Cycle for such Participant for the purpose of determining the amount of Award payable shall end at the end of the calendar quarter immediately preceding the date on which said Participant ceased to be an Employee or director, as the case may be. The amount of an Award payable to a Participant (or the Beneficiary of a deceased Participant) to whom the preceding sentence is applicable shall be paid at the end of the Performance Cycle, and shall be that fraction of the Award computed pursuant to the preceding sentence, the numerator of which is the number of calendar quarters during the Performance Cycle during all of which said Participant was an Employee or director and the denominator of which is the number of full calendar quarters in the Performance Cycle. | |
(b) | Due to Reasons Other Than Death or Disability. Upon any other termination of employment as an Employee or director of a Participant during a Performance Cycle, participation in the Plan shall cease and all outstanding Awards of Performance Shares or Performance Units to such Participant shall be cancelled. |
7. |
Restricted Stock Awards. An Award of
Restricted Stock under the Plan shall consist of
Shares ,
the grant, issuance, retention, vesting
and/or
transferability of which are subject, during specified periods
of time, to such conditions and terms as the Committee deems
appropriate. Restricted Stock granted pursuant to the Plan need
not be identical, but each grant of Restricted Stock must
contain and be subject to the terms and conditions set forth
below.
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7.1. | Award Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement. Each Award Agreement shall contain provisions regarding (i) the number of Shares subject to the Award or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment, (iii) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Restricted Stock as may be determined from time to time by the Committee, (iv) restrictions on the transferability of the Award and (v) such further terms and conditions, in each case not inconsistent with this Plan, as may be determined from time to time by the Committee. Shares issued under an Award of Restricted Stock may be issued in the name of the Participant and held by the Participant or held by the Company, in each case as the Committee may provide. |
7.2. | Vesting and Lapse of Restrictions. The grant, issuance, retention, vesting and/or settlement of Shares of Restricted Stock shall occur at such time and in such installments as determined by the Committee or under criteria established by the Committee. The Committee shall have the right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or settlement of Shares of Restricted Stock subject to continued employment, passage of time and/or such performance criteria as deemed appropriate by the Committee. |
7.3. | Rights as a
StockholderShareholder . Unless
otherwise determined by the Committee, a Participant shall have
all voting, dividend, liquidation and other rights with respect
to Restricted Stock held by such Participant as if the
Participant held unrestricted Stock; provided that the unvested
portion of any award of Restricted Stock shall be subject to any
restrictions on transferability or risks of forfeiture imposed
pursuant to Sections 7.1, 7.2 and 7.4. Unless the Committee
otherwise determines or unless the terms of the applicable Award
Agreement or grant provides otherwise, any non-cash dividends or
distributions paid with respect to shares of unvested Restricted
Stock shall be subject to the same restrictions and vesting
schedule as the Shares to which such dividends or distributions
relate.
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7.4. | Termination of Employment. Unless the Committee provides otherwise: |
(a) | Due to Death or Disability. If a Participant who is an Employee ceases to be an Employee or if a Participant who is a director ceases to be a director prior to the lapse of restrictions on Shares of Restricted Stock, in either case by reason of death or permanent disability, all restrictions on Shares of Restricted Stock held for the Participants benefit shall immediately lapse. | |
(b) | Due to Reasons Other Than Death or Disability. Upon any other termination of employment as an Employee or director prior to the lapse of restrictions, participation in the Plan shall cease and all Shares of Restricted Stock held for the benefit of a Participant shall be forfeited by the Participant. |
7.5. | Certificates. The Committee may require that certificates representing Shares of Restricted Stock be retained and held in escrow by a designated employee or agent of the Company or any Affiliate until any restrictions applicable to Shares of Restricted Stock so retained have been satisfied or lapsed. Each certificate issued in respect to an Award of Restricted Stock may, at the election of the Committee, bear the following legend: |
8. | Stock Awards. |
8.1. | Grant. A Participant may be granted one or more Stock Awards under the Plan. Stock Awards shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. |
8.2. | Rights as a
StockholderShareholder . A
Participant shall have all voting, dividend, liquidation and
other rights with respect to Shares issued to the Participant as
a Stock Award under this Section 8 upon the Participant
becoming the holder of record of the Shares granted pursuant to
such Stock Award; provided that the Committee may impose such
restrictions on the assignment or transfer of Shares awarded
pursuant to a Stock Award as it considers appropriate.
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9. | Restricted Stock Units. Restricted Stock Units are Awards denominated in units under which the issuance of Shares is subject to such conditions and terms as the Committee deems appropriate. Restricted Stock Units granted pursuant to the Plan need not be identical, but each grant of Restricted Stock Units must contain and be subject to the terms and conditions set forth below. Restricted Stock Units may be granted without vesting or forfeiture restrictions. Such Restricted Stock Units may also be called Deferred Stock Units, in the discretion of the Committee. |
9.1. | Award Agreement. Each Award of Restricted Stock Units shall be evidenced by an Award Agreement. Each Award Agreement shall contain provisions regarding (i) the number of Restricted Stock Units subject to such Award or a formula for determining such number, (ii) the purchase price of the Shares subject to the Award, if any, and the means of payment, (iii) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Restricted Stock Units as may be determined from time to time by the Committee, (iv) restrictions on the transferability of the Award, and (v) such further terms and conditions in each case not inconsistent with this Plan as may be determined from time to time by the Committee. |
9.2. | Vesting and Lapse of Restrictions. The grant, issuance, retention, vesting and/or settlement of Restricted Stock Units shall occur at such time and in such installments as determined by the Committee or under criteria established by the Committee. The Committee shall have the right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or settlement of Restricted Stock Units subject to continued employment, passage of time and/or such performance criteria as deemed appropriate by the Committee. |
9.3. | Rights as a
StockholderShareholder . Participants
shall have no voting rights with respect to Shares underlying
Restricted Stock Units unless and until such Shares are
reflected as issued and outstanding shares on the Companys
stock ledger. Shares underlying Restricted Stock Units shall be
entitled to dividends or dividend equivalents only to the extent
provided by the Committee. If an Award of Restricted Stock Units
includes dividend equivalents, an amount equal to the dividends
that would have been paid if the Restricted Stock Units had been
issued and outstanding Shares as of the record date for the
dividends shall be paid to the Participant in cash subject to
applicable withholding taxes in accordance with the terms of the
Award as determined by the Committee,
to
the extent consistent with Section 409A of the
Code.
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9.4. | Termination of Employment. Unless the Committee provides otherwise: |
(a) | Due to Death or Disability. If a Participant who is an Employee ceases to be an Employee or if a Participant who is a director ceases to be a director, in either case by reason of the Participants death or permanent disability, all restrictions on the Restricted Stock Units of the Participant shall lapse in accordance with the terms of the Award as determined by the Committee. | |
(b) | Due to Reasons Other Than Death or Disability. For Awards designated Restricted Stock Units by the Committee, if a Participant ceases employment as an Employee or director for any reason other than death or permanent disability, all Restricted Stock Units of the Participant and all rights to receive dividend equivalents thereon shall immediately terminate without notice of any kind and shall be forfeited by the Participant. The forgoing sentence shall not apply to an Award designated as a Deferred Stock Unit by the Committee unless the Committee provides to the contrary in the Award. |
10. |
Options. The Committee may grant an
Option or provide for the grant of an Option, either from
time-to-time
in the discretion of the Committee or automatically upon the
occurrence of specified events, including, without limitation,
the achievement of performance goals (which may include
Qualifying Performance Criteria). Except to the extent provided
herein, no Participant (or Beneficiary of a deceased
Participant) shall have any rights as
a shareholder
with respect to any Shares subject to an Option granted
hereunder until said Shares have been issued. Options granted
pursuant to the Plan need not be identical, but each Option must
contain and be subject to the terms and conditions set forth
below.
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10.1. | Type of Option; Number of Shares. Each Option shall be evidenced by an Award Agreement identifying the Option represented thereby as an Incentive Stock Option or Non-Qualified Stock Option, as the case may be, and the number of Shares to which the Option applies. |
10.2. | Exercise Price. The exercise price under each Option shall be established by the Committee and shall not be less than the Fair Market Value of the Shares subject to the Option on the date of grant; provided, however, that the exercise price per Share with respect to an Option that is granted in connection with a merger or other acquisition as a substitute or replacement award for options held by optionees of the acquired entity may be less than 100% of the Fair Market Value on the date such Option is granted. |
10.3. | Exercisability. The Committee shall have the right to make the timing of the ability to exercise any Option subject to continued employment, the passage of time and/or such performance requirements as deemed appropriate by the Committee. |
10.4. | Exercise Term. Each Option shall have a Term established by the Committee, provided that no Incentive Stock Option shall be exercisable after ten years from the date of grant. |
10.5. | Payment for Shares. The exercise price of the Shares with respect to which an Option is exercised shall be payable at the time of exercise in accordance with procedures established by the Company. The exercise price of any Option may be paid in cash or, to the extent allowed by the Committee, an irrevocable commitment by a broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery (either physically or by attestation) of previously-owned Shares, or a combination thereof. |
10.6. | No Repricing. Other than in connection
with a change in the Companys capitalization (as described
in Section 25), an Option may not be re-priced without
shareholder
approval (including canceling previously awarded Options and
re-granting them with a lower exercise price).
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10.7. | No Reload Grants. Stock Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of Shares to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option or stock appreciation right. |
10.8. | Incentive Stock Options. In the case of
an Incentive Stock Option, each Option shall be subject to any
terms, conditions and provisions as the Committee determines
necessary or desirable in order to qualify the Option as an
Incentive Stock Option. Notwithstanding anything to the contrary
in this Section 10, in the case of an Incentive Stock
Option (a) if the Participant owns stock possessing more
than 10 percent of the combined voting power of all classes
of stock of the Company (a 10%
Shareholder ),
the exercise price of such Option must be at least
110 percent of the Fair Market Value of the Common Stock on
the date of grant, and the Option must expire within a period of
not more than five years from the date of grant, and
(b) termination of employment will be deemed to occur when
the person to whom an Award was granted ceases to be an employee
(as determined in accordance with Section 3401(c) of the
Code and the regulations promulgated thereunder) of the Company
and its subsidiaries.
Options
designated as Incentive Stock Options may not be issued more
than ten years after the date that the Plan was adopted, or the
date the Plan was approved by shareholders, whichever is later.
If this Plan as restated is approved by the shareholders in
accordance with Minnesota Statute Section 302A.437, at the
next annual meeting, the Plan shall be considered to have been
adopted as of the date of the next annual meeting with respect
to the number of Shares available for issuance as of that
date. |
10.9. | Termination of Employment. |
(a) | Due to Death or Disability. If a Participant who is an Employee ceases to be an Employee or if a Participant who is a director ceases to be a director in either case by reason of death or permanent disability, each outstanding Option shall become exercisable to the extent and for such period or periods determined by the Committee but not beyond the expiration date of said Option. If a Participant dies before exercising all outstanding Options, the outstanding Options shall be exercisable by the Participants Beneficiary. | |
(b) |
Due
to Reasons Other Than Death or
Disability. Unless the Committee provides
otherwise, upon any other termination of employment as an
Employee or director, all rights of the Participant under this
Plan shall immediately terminate without notice of any kind.
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11. | Stock Appreciation Rights. |
11.1. | General. An Award of a Stock Appreciation Right shall entitle the Participant, subject to terms and conditions determined by the Committee to receive upon exercise of the right an amount |
equal to or otherwise based on the excess of (a) the Fair Market Value of a Share at the time of exercise over (b) the exercise price of the right, as established by the Committee on the date the Award is granted. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with, or as a component of, an Option granted under Section 10, other Awards granted under the Plan or stock options granted under any other Company equity compensation plan (tandem SARs) or without reference to other Awards or stock options (freestanding SARs). Any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option. The Committee may provide that the exercise of a tandem SAR will be in lieu of the exercise of the stock option or Award in connection with which the tandem SAR was granted. A tandem SAR may not be exercised at any time when the per Share Fair Market Value of the Shares to which it relates does not exceed the exercise price of the Option associated with the tandem SAR. The provisions of Stock Appreciation Rights need not be the same with respect to each grant or each recipient. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 10, and all tandem SARs shall have the same vesting, exercisability, forfeiture and termination provisions as such Award or stock option to which they relate. Subject to the foregoing sentence and the terms of the Plan, the Committee may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. |
11.2. | Exercise Price. The per Share price for exercise of Stock Appreciation Rights shall be determined by the Committee, but shall be a price that is equal to or greater than 100% of the Fair Market Value of the Shares subject to the Award on the date of grant; provided, however, that the per Share exercise price with respect to a Stock Appreciation Right that is granted in connection with a merger or other acquisition as a substitute or replacement award for stock appreciation rights held by awardees of the acquired entity may be less than 100% of the Fair Market Value on the date such Award is granted. |
11.3. | No Repricing. Other than in connection
with a change in the Companys capitalization (as described
in Section 25), a Stock Appreciation Right may not be
re-priced
without shareholder
approval (including canceling previously awarded Stock
Appreciation Rights and re-granting them with a lower exercise
price).
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11.4. | No Reload Grants. Stock Appreciation Rights shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of Shares to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option or stock appreciation right. |
11.5. | Termination of Employment. |
(a) | Due to Death or Disability. |
(i) | If a Participant who is an Employee ceases to be an Employee or if a Participant who is a director ceases to be a director, in either case by reason of death or permanent disability, each outstanding freestanding SAR shall become exercisable to the extent and for such period or periods determined by the Committee but not beyond the expiration date of said Stock Appreciation Right. | |
(ii) | If a Participant who is an Employee ceases to be an Employee or if a Participant who is a director ceases to be a director, in either case by reason of death or permanent disability, each outstanding tandem SAR shall become exercisable to the extent and for such period or periods determined by the Committee but not beyond the expiration date of said Stock Appreciation Right. If a Participant dies before exercising all tandem SARs, the outstanding tandem SARs shall be exercisable by the Participants Beneficiary. |
(b) |
Due
to Reasons Other Than Death or
Disability. Unless the Committee provides
otherwise, upon any other termination of employment as an
Employee or director, all rights of the Participant under this
Plan shall immediately terminate without notice of any kind.
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11.6 | Payment. Upon exercise of a Stock Appreciation Right, payment shall be made in the form of cash, Shares or a combination thereof as determined by the Committee at the time the Award is granted. However, notwithstanding any other provisions of this Plan, in no event may the payment (whether in cash or Stock) upon exercise of a Stock Appreciation Right exceed an amount equal to 100% of the Fair Market Value of the Shares subject to the Stock Appreciation Right at the time of grant. |
12. | Other Stock-Based Awards. The Committee, in its sole discretion, may grant or sell Awards of Shares and Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares. Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive, or vest with respect to, one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine the number of Shares to be awarded to a Participant under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable). |
13. | Nontransferability of Rights. Unless the Committee provides otherwise, (i) no rights under any Award will be assignable or transferable and no Participant or Beneficiary will have any power to anticipate, alienate, dispose of, pledge or encumber any rights under any Award, and (ii) the rights and the benefits of any Award may be exercised and received during the lifetime of the Participant only by the Participant or by the Participants legal representative. The Participant may, by completing and signing a written beneficiary designation form which is delivered to and accepted by the Company, designate a beneficiary |
to receive any payment and/or exercise any rights with respect to outstanding Awards upon the Participants death. If at the time of the Participants death there is not on file a fully effective beneficiary designation form, or if the designated beneficiary did not survive the Participant, the person or persons surviving at the time of the Participants death in the first of the following classes of beneficiaries in which there is a survivor, shall have the right to receive any payment and/or exercise any rights with respect to outstanding Awards: |
(a) | Participants surviving spouse; |
(b) | Equally to the Participants children, except that if any of the Participants children predecease the Participant but leave descendants surviving, such descendants shall take by right of representation the share their parent would have taken if living; |
(c) | Participants surviving parents equally; |
(d) | Participants surviving brothers and sisters equally; or |
(e) | The legal representative of the Participants estate. |
If a person in the class surviving dies before receiving any payment and/or exercising any rights with respect to outstanding Awards (or the persons share of any payment and/or rights in case of more than one person in the class), that persons right to receive any payment and/or exercise any rights with respect to outstanding Awards will lapse and the determination of who will be entitled to receive any payment and/or exercise any rights with respect to outstanding Awards will be determined as if that person predeceased the Participant. | |
14. | Termination of Employment. |
14.1. | Transfers of employment between the Company and an Affiliate, or between Affiliates, will not constitute termination of employment for purposes of any Award. |
14.2. | Subject to compliance with applicable law, the Committee may specify whether any authorized leave of absence or absence for military or government service or for any other reasons will constitute a termination of employment for purposes of the Award and the Plan. |
15. | Change in Control. In the event of a
Change in Control after the Effective Date, the Committee may
(subject
to Sections
25 and 30), but shall not be obligated to,
(a) accelerate, vest or cause the restrictions to lapse
with respect to, all or any portion of an Award, (b) cancel
Awards for fair value (as determined in the sole discretion of
the Committee) which, in the case of Options and Stock
Appreciation Rights, may equal the excess, if any, of the value
of the consideration to be paid in the Change in Control
transaction to holders of the same number of Shares subject to
such Options or Stock Appreciation Rights (or, if no
consideration is paid in any such transaction, the Fair Market
Value of the Shares subject to such Options or Stock
Appreciation Rights) over the aggregate exercise price of such
Options or Stock Appreciation Rights, and which for Performance
Shares and Performance Units may be determined as if the
Performance Cycle ended as of the close of the calendar quarter
preceding the consummation of the Corporate
Transaction ,
with a pro rata portion of the Award payable based upon the
number of completed calendar quarters in the Performance Cycle,
(c) provide for the issuance of substitute Awards that will
substantially preserve the otherwise applicable terms of any
affected Awards previously granted hereunder as determined by
the Committee in its sole discretion, or (d) provide that
for a period of at least 30 days prior to the Change in
Control, Options or Awards shall be exercisable as to all Shares
subject thereto and that upon the occurrence of the Change in
Control, such Option or Awards shall terminate and be of no
further force and effect.
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16. | Qualifying Performance-Based Compensation. |
16.1. | General. The Committee may specify that all or a portion of any Award is intended to satisfy the requirements for performance-based compensation under Section 162(m) of the Code; provided that the performance criteria for any portion of an Award that is intended by the Committee to satisfy the requirements for performance-based compensation under Section 162(m) of the Code shall be a measure based on one or more Qualifying Performance Criteria selected by the Committee and specified at the time such Award is granted. The Committee shall certify the extent to which any Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements for performance-based compensation under Section 162(m) of the Code. Notwithstanding satisfaction of any performance goals, the number of Shares issued or the amount paid under an Award may be reduced by the Committee on the basis of such further considerations as the Committee shall determine. |
16.2. | Qualifying Performance Criteria. For
purposes of this Plan, the term Qualifying Performance
Criteria shall mean any one or more of the following
performance criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to
a business unit or Affiliate, either individually, alternatively
or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years
results or to a designated comparison group, in each case as
specified and determined by the Committee: (a) cash flow,
(b) earnings per share of the Company, (c) earnings
before interest, taxes and amortization, (d) share price
performance, (e) return on capital, (f) return on
assets or net assets, (g) revenue, (h) net earnings or
net income, (i) operating income or net operating income,
(j) operating profit or net operating profit,
(k) operating margin or profit margin, (l) return on
operating revenue, (m) return on invested capital,
(n) market segment share, (o) brand
recognition/acceptance, (p) customer satisfaction,
(q) return on equity ,
(r) total shareholder return, (s) growth in sales,
(t) productivity ratios, (u) expense targets,
(v) working capital targets, or (w) operating
efficiencies . The Committee may
appropriately adjust any evaluation of performance under a
Qualifying Performance Criteria to exclude any of the following
events that occurs during a Performance Cycle: (i) asset
write-down, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in or under
provisions under tax laws, accounting principles or other such
laws or provisions affecting reported results,
(iv) accruals for reorganizations or restructuring
programs, and (v) any extraordinary nonrecurring items as
described in
FASB
Accounting
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Standards
Codification
255-20,
formerly 30,
and/or in
managements discussion and analysis of financial condition
and results of operations appearing in the Companys annual
report to
shareholders
for the applicable year. Any Qualifying Performance Criteria
must be objectively determinable, must be established by the
Committee while the outcome for the Performance Cycle is
substantially uncertain and while no more than 90 days, or
if less, 25 percent of the number of days in the
Performance Cycle have passed, and must otherwise meet the
requirements of Section 162(m) of the Code.
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17. | Effective Date of the Plan. The Plan
was
initially adopted by the Board on
August 23, 2006,
as
the G & K Services, Inc. 2006 Equity Incentive Plan
and was approved by the shareholders at their November 16,
2006 annual meeting. The Plan as restated herein, including the
increase in the number of Shares available for issuance, was
approved by the Board on August 19, 2010, subject
to approval of the shareholders their
next annual meeting. If this
Plan
as restated is not approved by the
shareholders in accordance with Minnesota Statute
Section 302A.437, at the next annual meeting,
the
Plan
as restated shall be
void,
but the Plan as in existence before its restatement shall remain
in effect . The Plan shall remain available for the
grant of Awards until all shares available for grant have been
awarded and all Awards have been settled. Notwithstanding the
foregoing, the Plan may be terminated at such earlier time as
the Board may determine. Termination of the Plan will not affect
the rights and obligations of the Participants and the Company
arising under Awards theretofore granted and then in effect.
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18. | Right to Terminate Employment. Nothing in the Plan shall confer upon any Participant the right to continue in the employment of the Company or any Affiliate or affect any right which the Company or any Affiliate may have to terminate employment of the Participant. |
19. | Compliance With Laws; Listing and Registration of
Shares. All Awards granted under the Plan
(and all issuances of Stock or other securities under the Plan)
shall be subject to all applicable laws, rules and regulations,
and to the requirement that if at any time the Committee shall
determine that the listing, registration or qualification of the
Shares covered thereby upon any securities exchange or under any
state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the grant of such Award or
the
issueissuance
or purchase of Shares thereunder, such Award may not be
exercised in whole or in part, or the restrictions on such Award
shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
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20. | Conditions and Restrictions Upon Securities Subject to Awards. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any re-sales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation (a) restrictions under an insider trading policy or pursuant to applicable law, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and holders of other Company equity compensation arrangements, and (c) restrictions as to the use of a specified brokerage firm for such re-sales or other transfers. |
21. | Withholding Taxes. The Company or an Affiliate shall be entitled to: (a) withhold and deduct from future wages of a Participant (or from other amounts that may be due and owing to a Participant from the Company or an Affiliate), including all payments under this Plan, or make other arrangements for the collection of (including through the sale of Shares otherwise issuable pursuant to the applicable Award), all legally required amounts necessary to satisfy any and all federal, state, local and foreign withholding and employment-related tax requirements attributable to an Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an Award or a disqualifying disposition of Common Stock received upon exercise of an Incentive Stock Option; or (b) require a Participant promptly to remit the amount of such withholding to the Company before taking any action with respect to an Award. To the extent specified by the Committee, withholding may be satisfied by withholding Stock to be received upon exercise or vesting of an Award or by delivery to the Company of previously owned Stock. In addition, the Company may reasonably delay the issuance or delivery of Shares pursuant to an Award as it determines appropriate to address tax withholding and other administrative matters. |
22. | Deferral of Payments. The Committee may, in an Award Agreement or otherwise, provide for the deferred delivery of Shares upon settlement, vesting or other events with respect to Restricted Stock or Restricted Stock Units, or in payment or satisfaction of an Award of Performance Shares or Performance Units. Notwithstanding anything herein to the contrary, in no event will any deferral of the delivery of Shares or any other payment with respect to any Award be allowed if the Committee determines, in its sole discretion, that the deferral would result in the imposition of additional tax under Section 409A(1)(B) of the Code. Shares that are allocated after the Effective Date in connection with the deferral of an Award under the Director Deferred Compensation Plan (which includes dividend equivalents that are to be allocated under that plan after the Effective Date in connection with deferrals under the 1996 Director Stock Option Plan) or Shares that are allocated after the Effective Date under any other deferred compensation plan allowing for payment in Shares that refers specifically to this Plan, shall be issued under this Plan. Such issuances shall reduce the number of Shares available for Awards under this Plan. |
23. | No Liability of Company. The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, Beneficiary or any other person as to: (a) the non-issuance or sale of Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction over the matter, the authority deemed by the Companys counsel to be necessary to the lawful issuance and sale of any Shares hereunder; (b) any tax consequence to any Participant, Beneficiary or other person due to the |
receipt, exercise or settlement of any Award granted hereunder; or (c) any provision of law or legal restriction that prohibits or restricts the transfer of Shares issued pursuant to any Award. |
24. |
Amendment, Modification and Termination of the
Plan. The Board or Committee may at any time
terminate, suspend or modify the Plan, except that the Board or
Committee will not, without authorization of the
shareholders
of the Company, effect any change (other than through adjustment
for changes in capitalization as provided in
Section 25) which will:
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(a) | increase the total amount of Stock which may be awarded under the Plan; |
(b) | increase the individual maximum limits in Section 4.3; |
(c) | change the class of persons eligible to participate in the Plan; |
(d) | reduce the exercise price of outstanding Options or Stock Appreciation Rights; or |
(e) | otherwise amend the Plan in any manner
requiring shareholder
approval by law or under listing requirements of any exchange or
interdealer quotation system on which the Shares are listed.
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No termination, suspension, or modification of the Plan will adversely affect any right acquired by any Participant or any Beneficiary under an Award granted before the date of termination, suspension, or modification, unless otherwise agreed to by the Participant; but, it will be conclusively presumed that any adjustment for changes in capitalization provided for in Section 25 does not adversely affect any right. | |
25. | Adjustment for Changes in Capitalization. |
(a) | In the event that the number of Shares shall be increased or
decreased through a reorganization, reclassification,
combination of shares, stock split, reverse stock split,
spin-off,
stock
dividend |
(b) | In the event there shall be any other change in the number or
kind of outstanding Shares, or any stock or other securities
into which such Shares shall have been changed, or for which it
shall have been exchanged, whether by reason of a merger,
consolidation or otherwise, then the Committee shall, in its
sole discretion, determine the appropriate adjustment, if any,
to be effected. In addition, in the event of such change
described in
this subsection
the Committee may accelerate the time or times at which any
Award may be exercised and may provide for cancellation of such
accelerated Awards that are not exercised within a time
prescribed by the Committee in its sole discretion.
Notwithstanding anything to the contrary herein, any adjustment
to Options granted pursuant to this Plan intended to qualify as
Incentive Stock Options shall comply with the requirements,
provisions and
restrictions
of the Code, and no change shall be made that would result in
the imposition of additional tax under
Section 409A(1)(B) of the Code.
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(c) | No right to purchase fractional Shares shall result from any adjustment in Awards pursuant to this Section 25. In case of any such adjustment, the Shares subject to the Award shall be rounded down to the nearest whole Share. Notice of any adjustment shall be given by the Company to each Participant, which shall have been so adjusted and such adjustment (whether or not notice is given) shall be effective and binding for all purposes of the Plan. |
26. | Transferability. Unless the Award Agreement (or an amendment thereto authorized by the Committee) expressly states that the Award is transferable, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner, other than by will or the laws of descent and distribution. The Committee may grant an Award or amend an outstanding Award to provide that the Award is transferable or assignable (a) in the case of a transfer without the payment of any consideration, to any family member as such term is defined in Section A.1(a)(5) of the General Instructions to Form S-8 under the Securities Act of 1933, as such may be amended from time to time, and (b) in any transfer described in clause (i) or (ii) of Section A.1(a)(5) of the General Instructions to Form S-8 under the 1933 Act as amended from time to time, provided that following any such transfer or assignment the Award will remain subject to substantially the same terms applicable to the Award while held by the Participant to whom it was granted, as modified as the Committee shall determine appropriate, and as a condition to such transfer the transferee shall execute an agreement agreeing to be bound by such terms; provided further, that an Incentive Stock Option may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance that does not qualify under this Section 26 shall be void and unenforceable against the Company. |
27. | International Participants. With
respect to Participants who reside or work outside the United
States of America and who are not (and who are not expected to
be) covered employees within the meaning of
Section 162(m) of the Code, the Committee may, in its sole
discretion, amend the terms of the Plan or Awards with respect
to such Participants in order to conform such terms with the
requirements of local law or to obtain more favorable tax or
other treatment for a Participant, the Company or an Affiliate.
Notwithstanding
the provisions of Sections 10.2 and 11.2, where applicable
foreign law requires that a compensatory stock right be priced
based upon a specific price averaging method and period, an
Award granted in accordance with such applicable foreign law
will be treated as meeting the requirements of Section 10.2
or 11.2, provided that the averaging period does not exceed
30 days.
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28. | Other Benefit Plans. All Awards shall constitute a special incentive payment to the Participant and shall not be taken into account in computing the amount of salary or compensation of the Participant for the purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company or under any agreement between the Company and |
the Participant, unless such plan or agreement specifically provides otherwise. |
29. | Choice of Law. The Plan shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to conflicts of laws, and except as otherwise provided in the pertinent Award agreement, any and all disputes between a Participant and the Company or any Affiliate relating to an Award shall be brought only in a state or federal court of competent jurisdiction sitting in Minneapolis, Minnesota. |
30. | Section 409A. Notwithstanding other provisions of the Plan or any Award agreements thereunder, no Award shall be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a Participant. In the event that it is reasonably determined by the Committee that, as a result of Section 409A of the Code, payments in respect of any Award under the Plan may not be made at the time contemplated by the terms of the Plan or the relevant Award agreement, as the case may be, without causing the Participant holding such Award to be subject to taxation under Section 409A of the Code, the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK:
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M27204-P01015 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY | ||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
G&K SERVICES, INC. | For | Withhold | For All | To withhold authority to vote for any individual |
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All | All | Except | nominee(s), mark For All Except and write the |
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number(s) of the nominee(s) on the line below. |
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU | ||||||||||||||||||
VOTE FOR THE FOLLOWING: | ||||||||||||||||||
o | o | o | ||||||||||||||||
Vote on Directors | ||||||||||||||||||
1. | Proposal to elect three Class III directors for a term of | |||||||||||||||||
three years. | ||||||||||||||||||
Nominees: | ||||||||||||||||||
01) John S. Bronson | ||||||||||||||||||
02) Wayne M. Fortun | ||||||||||||||||||
03) Ernest J. Mrozek | ||||||||||||||||||
Vote on Proposals | ||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||||||||||||
2. |
Proposal to approve our Restated Equity Incentive Plan (2010).
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o | o | o | ||||||||||||||
3. |
Proposal to ratify the appointment of Ernst & Young LLP, Independent
Registered Public Accounting Firm, as our independent auditors for fiscal 2011.
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o | o | o | ||||||||||||||
In their discretion, the proxies are authorized to vote on such other business
as may properly come before the meeting or any postponement or adjournment thereof.
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(Shareholder must sign exactly as the name appears above. When signed
as a corporate officer, executor, administrator, trustee, guardian,
etc., please give full title as such. Both joint tenants must sign.)
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Signature [PLEASE SIGN WITHIN BOX]
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Date | Signature (Joint Owners) | Date |