SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-
6(e)(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)ss.240.14a-11(c) or Section
240.14a-12ss.240.14a-12
Cintas Corporation
-------------------------------------------------------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identity the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
FRONT OF CARD
CINTAS CORPORATION PROXY FOR ANNUAL MEETING
6800 CINTAS BLVD., P.O. BOX 625737, CINCINNATI, OHIO 45262-5737
The undersigned hereby appoints RICHARD T. FARMER, ROBERT J. KOHLHEPP,
and WILLIAM C. GALE, or any of them, proxies of the undersigned, each with the
power of substitution, to vote all shares of Common Stock which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of Cintas
Corporation to be held October 21, 1998, at 9:00 a.m. (Eastern Time) at The
Fifth Third Bank, 38 Fountain Square, Fifth Floor, Cincinnati, Ohio 45202 and at
any adjournment of such Meeting as specified below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS:
1. Authority to establish the number of Directors to be elected at the Meeting
at eight.
FOR AGAINST ABSTAIN
2. Authority to elect eight nominees listed below.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) listed below
Richard T. Farmer; Robert J. Kohlhepp; Gerald V. Dirvin; Scott D. Farmer; James
J. Gardner; Roger L. Howe; Donald P. Klekamp; John S. Lillard
WRITE THE NAME OF ANY NOMINEE(S) FOR ----------------------
WHOM AUTHORITY TO VOTE IS WITHHELD ----------------------
(Continued on other side)
BACK OF CARD
3. Amendment to Articles of Incorporation to increase authorized shares of
Common Stock to 300 million shares.
FOR AGAINST ABSTAIN
4. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
___________________________, 1998 ------------------------------
Important: Please sign exactly
as name appears hereon indicating,
where proper, official position or
representative capacity. In the
case of joint holders, all should
sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We are pleased to invite you to attend our 19971998 Annual Shareholders'
Meeting. The meeting will be held at 10:9:00 a.m., Eastern Time, at the Company's
Corporate Headquarters, 6800 Cintas Boulevard,The Fifth Third
Bank, 38 Fountain Square, Fifth Floor, Cincinnati, Ohio, on Wednesday, October
22, 1997.21, 1998.
The purposes of this Annual Meeting are:
1. To establish the number of Directors to be elected at eight;
2. To elect eight Directors;
3. To act upon a shareholder proposal;amend the Articles of Incorporation to increase authorized shares
of Common Stock to 300 million shares;
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Following the formal meeting, we will discuss the Company's operations
during the last year and our plans for the future and answer your questions
regarding the Company. Board members and other officers of the Company will also
be available to discuss the Company's business with you.
Yours truly,
David T. Jeanmougin
Secretary
Dated: September 12, 1997August 31, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, SIGN AND PROMPTLY
RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. PROXIES MAY BE REVOKED AT ANY
TIME PRIOR TO THE MEETING BY WRITTEN NOTICE OF REVOCATION DELIVERED TO THE
COMPANY'S SECRETARY, THE SUBMISSION OF A LATER PROXY OR BY ATTENDING THE MEETING
AND VOTING IN PERSON.
CINTAS CORPORATION
6800 CINTAS BOULEVARD
P.O. BOX 625737
CINCINNATI, OHIO 45262-5737
TELEPHONE (513) 459-1200
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P R O X Y S T A T E M E N T
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 22, 199721, 1998
INTRODUCTION
The enclosed Proxy is solicited by the Board of Directors of Cintas
Corporation for use at the Annual Meeting of Shareholders to be held on October
22, 1997,21, 1998, and at any adjournment of the meeting. The approximate mailing date of
the Proxy Statement and the accompanying proxy card is September 12, 1997.August 31, 1998.
VOTING AT ANNUAL MEETING
GENERAL
- -------
Shareholders may vote in person or by proxy at the Shareholders' Meeting.
Proxies given may be revoked at any time prior to the meeting by filing with the
Company's Secretary either a written revocation or a duly executed proxy bearing
a later date, or by appearing at the meeting and voting in person. All shares
will be voted as specified on each properly executed proxy. If no choice is
specified, the shares will be voted as recommended by the Board of Directors.
As of August 25, 1997,21, 1998, the record date for determining shareholders
entitled to notice of and to vote at the meeting, Cintas had 48,569,934104,879,612 shares
of Common Stock outstanding. Each share is entitled to one vote on each matter
to be presented at the meeting. Only shareholders of record at the close of
business on August 25, 1997,21, 1998, will be entitled to vote at the meeting. A quorum
consists of the presence in person or by proxy of a majority of all shares
entitled to vote at the meeting.
- 2 --2-
PRINCIPAL SHAREHOLDERS
- ----------------------
The following persons are the only shareholders known by the Company to own
beneficially 5% or more of its outstanding Common Stock as of the record date:
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ------------------- -------------------- ----------------------------- -----------
Richard T. Farmer(1) 12,856,211(2) 26.5%25,505,4552 24.3%
James J. Gardner(1) 3,840,569(3) 7.9%7,663,9653 7.3%
Joan A. Gardner(1) 3,840,569(3) 7.9%7,663,9653 7.3%
- ------------------
(1) The address of Richard T. Farmer, James J. Gardner and Joan A. Gardner
is Cintas Corporation, 6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, Ohio
45262-5737.
(2) Includes 36,03053,560 shares owned by Mr. Farmer's wife, 1,648,5923,371,534 shares
held in trust for Mr. Farmer's children, 34,29068,580 shares owned by a corporation
controlled by Mr. Farmer and 20,0030,000 shares which may be acquired pursuant to
stock options which are exercisable within 60 days.
(3) Includes the following shares considered to be beneficially owned by
both Mr. & Mrs. Gardner: 87,547165,733 shares held by a charitable trust established
by Mr. Gardner, 955,000 shares held in various trusts for the benefit of Mr.
Gardner's children, 32,79165,582 shares held by a corporation that is controlled by Mr.
Gardner, 2,704,8095,887,422 shares held by a family partnership, 850,000 shares owned by
Mrs. Gardner, 210,000 shares held in trust for Mr. Gardner's children and 1,2504,500
shares which may be acquired pursuant to stock options exercisable within 60
days.
- 3 -
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
- ------------------------------------------------------
The following table sets forth the beneficial ownership of the Company's
Common Stock by its directors, the named executive officers in the Summary
Compensation Table of the Proxy Statement and all directors and executive
officers as a group, as of August 25, 1997:
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS21, 1998:
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
- ------------------------ -------------------- --------
Richard T. Farmer 12,856,21125,505,455 (1) 26.5%24.3%
Robert J. Kohlhepp 1,283,8612,436,862 (2) 2.6%2.3%
Gerald V. Dirvin 6,65015,300 (3) *
James J. Gardner 3,840,5697,663,965 (1) 7.9%7.3%
Roger L. Howe 350,478 702,956 (3)(4) *
Donald P. Klekamp 91,050 (4)143,236 (3)(5) *
John S. Lillard 64,704131,408 (6) *
Scott D. Farmer 215,393458,454 (7) *
David T. Jeanmougin 13,35240,740 (8) *
Robert R. Buck 61,392126,424 (9) *
William C. Gale 120 *
All Directors and Executive
Officers as a Group (13 persons) 18,851,21237,354,220 (10) 38.8%35.6%
*Less than 1%
(1) See Principal Shareholders.
(2) Includes 20,00040,000 shares held in trust for members of Mr. Kohlhepp's family,
696,347127,344 shares held by businessesa corporation that is controlled by Mr. Kohlhepp,
1,265,350 shares held by a family partnership and options for 16,00044,500 shares
which are exercisable within 60 days.
(3) Includes options for 4,2504,500 shares which are exercisable within 60 days.
(4) Includes options for 1,250107,648 shares which are exercisable within 60 days.owned by a limited partnership.
(5) Includes 59,690118,516 shares owned by Mr. Klekamp's wife and 20,000 shares as to
which she is trustee.wife.
- 4 -
(6) Includes options for 7503,500 shares which are exercisable within 60 days.
Does not include 8,00016,000 shares held in a charitable foundation controlled
by Mr. Lillard, of which Mr. Lillard disclaims beneficial ownership.
(7) Includes 45,70091,400 shares held in trust for members of Mr. Farmer's family,
11,5532,692 shares owned by his immediate family, 55,920 held by a limited
partnership and options for 31,60060,200 shares which are exercisable within 60
days.
(8) Includes options for 11,20036,400 shares which are exercisable within 60 days.
(9) Includes options for 1,6006,800 shares which are exercisable within 60 days.
(10) Includes options for 102,150215,200 shares which are exercisable within 60 days.
PROPOSAL NO. 1 AND NO. 2 - ELECTION OF DIRECTORS
- ------------------------------------------------
The By-laws of the Company call for the Board of Directors to have at least
three members with the specific number to be elected at the meeting established
by shareholders. At the present time, the Board consists of eight Directors, and
the Board is recommending that this number be retained.
The Board is nominating for reelection all current Directors, namely
Richard T. Farmer, Robert J. Kohlhepp, Gerald V. Dirvin, Scott D. Farmer, James
J. Gardner, Roger L. Howe, Donald P. Klekamp and John S. Lillard.
Proxies solicited by the Board will be voted for the election of the eight
nominees shown above. All Directors elected at the Annual Shareholders' Meeting
will be elected to hold office until the next Annual Meeting or until their
successors are elected and qualified.
Should any of the nominees become unable to serve, proxies will be voted
for any substitute nominee designated by the Board. The Company has no reason to
believe that any nominee for election will be unable or unwilling to serve if
elected.
RECOMMENDATION OF THE BOARD OF DIRECTORS
- ----------------------------------------
The Board of Directors recommends a vote in favor of Proposal No.1 and the
election of the eight nominees proposed by the Board.
VOTE REQUIRED
- -------------
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES VOTING AT THE MEETING IS
REQUIRED TO APPROVE PROPOSAL NO. 1. ABSTENTIONS AND BROKER NON-VOTES WILL HAVE
NO EFFECT ON THIS VOTE. THE EIGHT NOMINEES RECEIVING THE HIGHEST NUMBER OF VOTES
CAST FOR THE POSITIONS TO BE FILLED WILL BE ELECTED.
- 5 -
PROPOSAL NO. 3 - SHAREHOLDER PROPOSAL REGARDING "SOFT DOLLAR" POLITICAL
CONTRIBUTIONS
------------------------------------------------------
Your Board of Directors recommends a vote "Against" this proposal.
The National Electrical Benefit Fund, 1125 15th Street, N.W., Washington,
D.C. 20005, advises that it holds 22,700 shares of Cintas Common Stock, and that
it intends to present the following proposal for action at the Annual Meeting:
WHEREAS: The American political election process is the cornerstone of the
country's democratic system of government, serving as the central means by
which all citizens can participate in the public debate of ideas and elect
representatives to protect and promote our collective interests; and
WHEREAS: The integrity of the American political election process is of
critical importance to all citizens; and
WHEREAS: There has been a significant increase in the amount of money
injected into the political election process in the form of "soft dollar"
contributions from private sector contributors. (Soft dollar contributions
are those financial contributions given by individuals or institutions to
national and state political parties for "party building" purposes); and
WHEREAS: The significant increase in the amount of money injected into the
political election system in the form of "soft dollar" contributions from
private sector contributors has contributed to increasing public cynicism
towards an electoral process in which a declining percentage of citizens
are participating; and
WHEREAS: The direct contribution of corporate assets, held in the
collective interests of all corporation shareholders, into the political
election process without written contribution guidelines or contribution
reporting to shareholders is inappropriate; therefore be it
RESOLVED: That the shareholders of Cintas Corporation ("Company") urge the
Board of Directors to establish corporate political contribution guidelines
and reporting provisions that include the following features:
1. Contribution Guidelines:AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED SHARES OF COMMON STOCK
- -----------------------------------------------------------
The Board of Directors would present
written contribution guidelines inof the Company's annual reportCompany has approved, and Form 10-K that clearly defineis recommending to
the issuesshareholders for approval at the Annual Meeting, an amendment to Article
Five of the Articles of Incorporation to increase the number of authorized
shares of Common Stock from 120 million to 300 million. As of May 31, 1998,
104,610,716 shares were issued and interests thatoutstanding and the Company had 1,210,700
additional shares reserved for issuance pursuant to stock option plans.
At the current level of authorized shares, the Company is seekingunable to promote with its "soft dollar"
political contributions;declare
any meaningful stock split. The Company has regularly utilized Common Stock in
acquisitions and
- 6 -
2. Contribution Reporting: Comprehensive political contribution
reporting would be provided in the Company's annual report and
Form 10-K documenting all the entitiesintends to continue that were the recipients
of the Company's political "soft dollar" contributions during the
previous twelve month period.
We urge you to vote for this proposal.
(This completes the proposal and recommendation by the National
Electrical Benefit Fund. The "Statement in Opposition by Board of
Directors" that follows contains the recommendation of the Cintas
Board of Directors to vote "Against" this proposal.)
STATEMENT IN OPPOSITION BY BOARD OF DIRECTORS
After receiving this proposal, Cintas notified the National Electrical
Benefit Fund that Cintas does not make, and has no plans to make, soft dollar
contributions. Nevertheless, the Fund insisted on presenting this matter to
shareholders.practice. The Board of Directors
believes that adoptionthe increase in authorized shares of this proposal would
involveCommon Stock will enable the
Company to retain its flexibility in connection with possible future issuances
of stock.
Holders of Common Stock have no preemptive or other rights to subscribe for
additional shares. Additional shares may be issued without shareholder approval.
Further issuance of additional shares of Common Stock might dilute, under
certain circumstances, either shareholders= equity or voting rights. The
authorized but unissued shares of Common Stock could be used to discourage or
make more difficult an attempt to effect a wastechange of time and money by Cintas and, therefore, urges you to reject
it by voting "Against"control of the proposal.Company.
VOTE REQUIRED
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST PROPOSAL
NO. 3 UNLESS OTHERWISE INDICATED. APPROVAL OF THIS PROPOSAL WILL REQUIRE- -------------
THE AFFIRMATIVE VOTE OF A MAJORITYTWO-THIRDS OF VOTES CAST AT THE MEETING. ABSENTIONSSHARES ELIGIBLE TO VOTE ON THE
PROPOSED AMENDMENT IS REQUIRED FOR APPROVAL. ABSTENTIONS AND BROKER NON-VOTES
WILL HAVE NOTHE SAME EFFECT ON THIS VOTE.AS A VOTE AGAINST THE PROPOSAL.
OTHER MATTERS
- -------------
Any other matters considered at the meeting including adjournment will
require the affirmative vote of the majority of shares voting with abstentions
and broker non-votes having no effect.
VOTING BY PROXY
- ---------------
All proxies properly signed will, unless a different choice is indicated,
be voted "FOR" the establishment of the number of Directors at eight, "FOR" the
election of all eight nominees proposed by the Board unless authority is
withheld to vote for some or all of those nominees, and "AGAINST""FOR" the shareholder proposal regarding "soft dollar" political contributions.amendment to
the Articles of Incorporation to increase the authorized shares of common stock.
If any other matters come before the meeting or any adjournment, each proxy
card will be voted in the discretion of the proxies named therein.
- 76 -
SHAREHOLDER PROPOSALS
- ---------------------
Shareholders who desire to have proposals included in the Notice for the
19981999 Shareholders' Meeting must submit their proposals in writing to Cintas at
its offices on or before April 24, 1998.May 3, 1999.
The form of Proxy for the Company's Annual Meeting of Shareholders grants
authority to the designated proxies to vote in their discretion on any matters
that come before the meeting except those set forth in the Company's Proxy
Statement and except for matters as to which adequate notice is received. In
order for a notice to be deemed adequate for the 1999 Shareholders' Meeting, it
must be received prior to July 19, 1999.
APPOINTMENT OF INDEPENDENT AUDITORS
- -----------------------------------
The Board of Directors appointed Ernst & Young LLP as its certified public
accountants for fiscal 1998.1999. Ernst & Young LLP has served as certified public
accountants for the Company in the past. A member of Ernst & Young LLP will be
present at the meeting to make a statement if desired and to answer questions of
shareholders.
- 87 -
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
The Directors and Executive Officers of Cintas Corporation are:
Position
Name and Age Position
Since
- ------------------------------------------------------------------------------------------------------- --------------------------------------
Richard T. Farmer(1) Chairman of the Board
1968
6263
Robert J. Kohlhepp(1) Chief Executive Officer 1984
53 and Director
54
Gerald V. Dirvin(3) Director
1993
6061
James J. Gardner(1&2)Gardner(1)(2) Director
1969
6465
Roger L. Howe(2&3)Howe(2)(3) Director
1979
6263
Donald P. Klekamp(2) Director
1984
6566
John S. Lillard(3) Director
1978
6768
Scott D. Farmer President, Chief Operating Officer
3839 and Director 1997
Robert R. Buck Senior Vice President and
4950 President - Uniform Rental Division 1997
Karen L. Carnahan Vice President and Treasurer
1997
4344
William C. Gale Vice President and Chief
4546 Financial Officer 1995
David T. Jeanmougin Senior Vice President and Secretary
1991
5657
John S. Kean III Senior Vice President
1986
5758
Ages are as of September 1, 1997.1998.
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
- 98 -
Richard T. Farmer has been with the Company and its predecessors since 1957
and has served in his present position with the Company since 1968. Prior to
August 1, 1995, Mr. Farmer also served as Chief Executive Officer. He is also a
Director of Fifth Third Bancorp and its subsidiary The Fifth Third Bank,
Cincinnati, Ohio, a NASDAQ company, and
Safety Kleen Corp., Chicago, Illinois, a business service entity and a NYSENational Market (NASDAQ) company. He is also the Chairman of
Summerhill, Inc.
Robert J. Kohlhepp has been a Director of the Company since 1979. He has
been employed by the Company since 1967 serving in various executive capacities
including Vice President - Finance until 1979 when he became Executive Vice
President. He served in that capacity until October 23, 1984, when he was
elected President, by the Board, a position he held until July 1997. Mr. Kohlhepp was elected
to his present position of Chief Executive Officer on August 1, 1995. He is also
a Director of The Mead Corporation, Dayton, Ohio, a New York Stock Exchange
(NYSE) company.
Gerald V. Dirvin was elected a Director of Cintas in 1993. Mr. Dirvin
joined The Procter & Gamble Company, a Cincinnati-based consumer goods marketing
company and a NYSE company, in 1959 and served in various management positions.
He retired as Executive Vice President and as a Director in 1995.1994. Mr. Dirvin is
also a Director of Fifth Third Bancorp, Cincinnati, Ohio, a NASDAQ company, and
Northern Telecom Limited, Toronto, Canada, a NYSE company.
James J. Gardner served in various management positions with Cintas from
1956 until his retirement in 1988. Mr. Gardner has served as a Director of the
Company since 1969.
Roger L. Howe has been a Director of Cintas since 1979. He was the Chairman
of the Board of U.S. Precision Lens, Inc., a manufacturer of optics for the
instrument, photographic and television industries, until his retirement on
September 1, 1997. Mr. Howe had held that position in the firm for over five
years. Mr. Howe is a Director of Star Banc Corporation, Cincinnati, Ohio, a NYSE
company, and its subsidiary Star Bank, National Association; Cincinnati Bell
Inc., a NYSE Company;company; and Baldwin Piano and Organ Company, a Loveland, Ohio,
based company which is the largest domestic manufacturer of keyboard musical
instruments and a NASDAQ company.
Donald P. Klekamp was elected a Director of Cintas in 1984. Mr. Klekamp is
a senior partner in the Cincinnati law firm of Keating, Muething & Klekamp,
P.L.L., which serves as counsel for the Company.
John S. Lillard has been a Director of Cintas since 1978. He is Chairman of
Wintrust Financial Corporation, a bank holding company in Illinois. He was a
Founder of JMB Institutional Realty Corporation, a registered investment
advisor, where he served as President from 1978 to 1991. In 1991, he became
Chairman-Founder until his retirement in June 1996. He is also a Director of
Stryker Corporation, a medical equipment company, and a Director of Lake Forest
BancorporationBank and Wintrust Financial Corporation,Trust Company, a bank holding companies.company.
Scott D. Farmer joined Cintas in 1981. He has served in various management
positions including President of Cintas Sales Corporation, Vice President -
National Account Division and Vice President - Marketing and Merchandising. He was
elected a Director of Cintas in 1994. In July 1997, he was elected President and
Chief Operating Officer of the Company.
Robert R. Buck joined Cintas in 1982. He served as Senior Vice President -
Finance and Chief Financial Officer from 1982 to 1991, and Senior Vice President
- - Midwest Region from 1991 to 1997. In July 1997, he was elected President -
Uniform Rental Division.
Karen L. Carnahan joined Cintas in 1979. She has held various accounting
and finance positions with the Company. In March 1992, she was elected Treasurer
of the Company and was elected Vice President of the Company in July 1997.
- 109 -
William C. Gale joined Cintas in April 1995. He is presently responsible
for the areas of finance, accounting and accounting.administration. Prior to joining
Cintas, Mr. Gale was associated with International Paper, a forest products,
paper and packaging company and a NYSE company where he served as auditor since
February 1994. Mr. Gale has also held various financial executive positions between
1982 and1994 with Occidental Petroleum Corporation, an oil products and chemical
concern and a NYSE company.
David T. Jeanmougin joined Cintas in August 1991 as Senior Vice President
- -
Finance and was responsible for the areas of finance, accounting and
administration. He served in that capacity until April 1995, when he was named
Secretary of the Company and Senior Vice President. In this capacity he is
responsible for the areasarea of manufacturing, distribution, management information
systems, acquisitions and several other key administrative
areas.
John S. Kean III joined Cintas in August 1986 upon the acquisition of Red
Stick Services where he served as President. He was appointed Senior Vice
President in 1986 and is responsible for operations in Louisiana, Mississippi,
Alabama, Arkansas and Tennessee.
James J. Gardner is the brother-in-law of Richard T. Farmer. Scott D.
Farmer is the son of Richard T. Farmer. None of the other Executive Officers and
Directors are related.
BOARD ACTIONS AND COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
- ----------------------------------------------------------------
The Board of Directors met on four occasions in fiscal 1997 and took
action by written consent on one occasion.1998. The Executive
Committee is entitled through authorization by the Board of Directors and by
Washington law to perform substantially all of the functions of the Board of
Directors between meetings of the Board. The Executive Committee took action by
written consent on tenthirty-seven occasions in fiscal 1997.1998.
The Audit Committee reviews the Company's internal accounting operations,
monitors relationships between the Company and its independent accountants and
recommends the employment of independent auditors. The Audit Committee met on
two occasions in fiscal 1997.1998.
The Compensation Committee establishes compensation levels for all
executives and administers the Company's stock option plans. This Committee met
on one occasion and took action by written consent on twenty-oneten occasions in fiscal
1997.1998.
The Company does not have a nominating committee.
Outside directors are paid an annual fee of $9,200 plus $1,625 for each
Board meeting attended and $900 for each Committee meeting attended. Directors
who are executive officers are not paid Directors' fees nor do they participate
in the 1994 Directors' Stock Option Plan.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. These persons
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
received by it, or written representation from certain reporting persons that no
Form 5's were required for those persons, the Company believes that during the
period of June 1, 1996,1997, through May 31, 1997,1998, all filing requirements of such
persons were met.
- 1110 -
EXECUTIVE COMPENSATION
- ----------------------
The following table summarizes the annual and long-term compensation of the
Company's Chief Executive Officer and each of the Company's other four most
highly compensated Executive Officers for the years ended May 31, 1998, 1997 1996 and
1995.1996.
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------ ------------
OTHER
ANNUAL SHARES
COMPEN- UNDERLYING
NAME AND SALARY BONUS SATION OPTION ALL OTHER
PRINCIPAL POSITION YEARAnnual Long Term
Compensation Compensation
-------------------- -------------
Shares
Other Annual Underlying All Other
Name and Principal Salary Bonus Compensation Option Compensation
Position Year ($) ($) ($) GRANTSGrants (#) COMPENSATION ($)(1)
- --------------------- ---- ------------------------------ ------- -------- ----------- --------------------------- ------------ ------------ ------------
RICHARDRichard T. FARMERFarmer 1998 300,000 120,828 48,699(2) -- 179,562
Chairman of the 1997 286,867 188,759 48,522(2) 5,000 SHS10,000 195,827
CHAIRMAN OF THEBoard 1996 278,512 207,813 61,061(2) 10,000 SHS20,000 209,340
BOARD 1995 278,512 222,810 ---- 5,000 SHS 220,568
ROBERTRobert J. KOHLHEPPKohlhepp 1998 300,000 246,667 58,650(3) -- 52,718
Chief Executive 1997 275,391 207,461 ---- 5,000 SHS-- 10,000 55,454
CHIEF EXECUTIVEOfficer and Director 1996 267,370 174,202 ---- 50,000 SHS-- 100,000 58,277
OFFICER AND 1995 222,809 155,966 69,215(3) 5,000 SHS 60,319
DIRECTOR
ROBERTScott D. Farmer 1998 250,000 165,556 -- 60,000 7,139
President, Chief 1997 180,000 32,563 -- 10,000 5,738
Operating Officer 1996 150,000 23,866 -- 10,000 6,183
and Director
Robert R. BUCKBuck 1998 250,000 194,450 -- 40,000 7,019
Senior Vice President 1997 230,000 185,745 ---- 5,000 SHS-- 10,000 6,210
SENIOR VICEand President - 1996 200,000 161,869 ---- 5,000 SHS-- 10,000 6,699
PRESIDENT AND 1995 190,000 126,810 ---- ---- 5,987
PRESIDENT - UNIFORM
RENTAL DIVISION
DAVIDUniform Rental
Division
David T. JEANMOUGINJeanmougin 1998 229,237 82,780 -- 10,000 6,976
Senior Vice President 1997 220,420 72,518 ---- ------ -- 6,068
SENIOR VICEand Secretary 1996 214,000 69,715 ---- 5,000 SHS-- 10,000 6,571
PRESIDENT AND 1995 200,000 70,000 ---- 5,000 SHS 6,044
SECRETARY
WILLIAM C. GALE 1997 175,100 57,608 ---- 5,000 SHS 5,983
VICE PRESIDENT AND 1996 170,000 55,381 ---- 10,000 SHS 46,918
CHIEF FINANCIAL 1995 21,538(4) --- ---- 5,000 SHS ----
OFFICER
(1) THE COMPANY MAINTAINS A SPLIT-DOLLAR LIFE INSURANCE PROGRAM FOR MESSRS.
FARMER AND KOHLHEPP. UNDER THIS PROGRAM, THE COMPANY HAS PURCHASED
INSURANCE POLICIES ON THE LIVES OF MR. FARMER AND HIS WIFE AND MR. KOHLHEPP
AND HIS WIFE. MESSRS. FARMER AND KOHLHEPP ARE RESPONSIBLE FOR A PORTION OF
THE PREMIUMS AND THE COMPANY PAYS THE REMAINDER. UPON THE DEATH OF MESSRS.
FARMER OR KOHLHEPP AND THEIR SPOUSES, THE COMPANY WILL RECEIVE THAT PORTION
OF THE BENEFITS PAID THAT EQUALS THE PREMIUMS PAID BY THE COMPANY ON THAT
POLICY. THE LIFE INSURANCE TRUST ESTABLISHED BY THE DECEDENT WILL RECEIVE
THE REMAINDER OF THE DEATH BENEFITS. THE ACTUARIALLY PROJECTED CURRENT
DOLLAR VALUE OF THE BENEFIT TO MESSRS. FARMER AND KOHLHEPP OF THE PREMIUMS
PAID TO THE INSURER UNDER THESE POLICIES FOR THE FISCAL YEARS ENDED MAYThe Company maintains a split-dollar life insurance program for Messrs. R.
Farmer and Kohlhepp. Under this program, the Company has purchased insurance
policies on the lives of Mr. R. Farmer and his wife and Mr. Kohlhepp and his
wife. Messrs. R. Farmer and Kohlhepp are responsible for a portion of the
premiums and the Company pays the remainder. Upon the death of Messrs. R. Farmer
or Kohlhepp and their spouses, the Company will receive that portion of the
benefits paid that equals the premiums paid by the Company on that policy. The
life insurance trust established by the decedent will receive the remainder of
the death benefits. The actuarially projected current dollar value of the
benefit to Messrs. R. Farmer and Kohlhepp of the premiums paid to the insurer
under these policies for the fiscal years ended May 31, 1998, 1997 and 1996 AND 1995 ISis
$172,046, $189,185 and $202,007, AND $214,669, RESPECTIVELY, FOR
MR. FARMER ANDrespectively, for Mr. R. Farmer and $45,363,
$49,483 and $51,348 AND $54,357, RESPECTIVELY, FOR MR.
KOHLHEPP. THESE AMOUNTS ARE INCLUDED ABOVE.respectively, for Mr. Kohlhepp. These amounts are included
above.
- 1211 -
THE CINTAS PARTNERS' PLAN IS A NON-CONTRIBUTORY EMPLOYEE STOCK OWNERSHIP
PLAN AND PROFIT SHARING PLAN WITH A 401(K) SAVINGS FEATURE WHICH COVERS
SUBSTANTIALLY ALL EMPLOYEES. INCLUDED ABOVE ARE THE DOLLARS CONTRIBUTED BY
THE COMPANY PURSUANT TO THE PARTNERS' PLAN.
INCLUDED FOR MR. GALE INThe Cintas Partners' Plan is a non-contributory employee stock ownership
plan and profit sharing plan with a 401(k) savings feature which covers
substantially all employees. Included above are the dollars contributed by the
Company pursuant to the Partners' Plan.
(2)Represents compensation associated with the use of the Company's
aircraft ($18,134, $20,078 and $52,766 in 1998, 1997 and 1996, IS A $45,862 REIMBURSEMENT OF MOVING EXPENSES
AND THE RESULTING INCOME TAX LIABILITY.
(2) REPRESENTS COMPENSATION ASSOCIATED WITH THE USE OF THE COMPANY'S AIRCRAFTrespectively),
financial planning ($20,078 AND $52,766 IN20,000 and $18,330 in 1998 and 1997 AND 1996, RESPECTIVELY)respectively) and other
expense reimbursements.
(3)Represents compensation associated with the use of the Company's
aircraft ($33,202), FINANCIAL PLANNINGfinancial planning ($18,330 IN 1997) AND OTHER EXPENSE REIMBURSEMENTS.
(3) REPRESENTS COMPENSATION ASSOCIATED WITH THE USE OF THE COMPANY'S AIRCRAFT
($59,663) AND OTHER EXPENSE REIMBURSEMENTS.
(4) MR. GALE'S EMPLOYMENT WITH THE COMPANY BEGAN IN APRIL 1995.15,000) and other expense
reimbursements.
STOCK OPTIONS
- -------------
The following table sets forth information regarding stock options granted
to the executives named in the Summary Compensation Table during the fiscal year
ended May 31, 1997:1998:
OPTION GRANTS IN LAST FISCAL YEAR
Percent of
Total Potential Realizable
Number of of TotalOptions Value at Assumed
Shares OptionsNumber of Granted Annual Rates of Stock
Underlying GrantedShares to Exercise Price Appreciation for
OptionsUnderlying Employees in Price ExpirationExercise Option Term ($)
Options In Fiscal Price Expiration -----------------------------
Name Granted Fiscal 1997 ($/Sh.) Date 5% 10%
- ------------------- ---------- ------------ ------------------- ---------- --------- ------------------- ----------- ------
Richard T. Farmer 5,000 1.3% 50.50 07/29/01 69,761 154,154
Robert J. Kohlhepp 5,000 1.3% 50.50 07/28/06 158,741 402,249
Robert R. Buck 5,000 1.3% 50.50 07/28/06 158,741 402,249
David T. Jeanmougin ---__ N/A N/A N/A N/A N/A
William C. Gale 5,000 1.3% 50.50Farmer
Robert J. -- N/A N/A N/A N/A N/A
Kohlhepp
Scott D. 60,000 5.5% 35.3125 07/28/06 158,741 402,24907 1,332,470 3,376,742
Farmer
Robert R. 40,000 3.7% 35.3125 07/28/07 888,314 2,251,161
Buck
David T. 10,000 .9% 35.3125 07/28/07 222,078 562,790
Jeanmougin
- 1312 -
The following table sets forth information regarding stock options
exercised by the executives named in the Summary Compensation Table during
fiscal 19971998 and the value of in-the-money unexercised options held by them as of
May 31, 1997:1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Shares Value of Unexercised
In-
Underlying Unexercised the-MoneyIn-the-Money Options at
Shares OptionsOption at May 31, 19971998 May 31, 1997($1998($)(1)
Acquired on Value ----------------------- --------------------------------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ------------------------------- ------------ ----------- ----------- ------------- ----------- -------------
Richard T. Farmer ---- ---- 12,500 17,500 399,688 395,93820,000 665,000 20,000 20,000 537,344 490,781
Robert J. Kohlhepp ---- ---- 11,000 84,000 527,500 2,340,6251,500 46,000 30,500 158,000 1,166,594 4,432,750
Scott D. Farmer 7,000 212,042 56,200 102,000 2,094,462 1,794,375
Robert R. Buck ---- ---- 800 18,200 31,600 477,650--- --- 3,200 74,800 110,200 1,372,175
David T. Jeanmougin ---- ---- 5,200 39,800 206,750 1,414,875
William C. Gale ---- ---- ---- 20,000 ---- 408,125--- --- 22,400 77,600 771,200 2,276,050
- -----------------
(1)Value is calculated as the difference between the fair market value of
the Common Stock on May 31, 19971998 ($62.0045.6875 per share) and the exercise price of
the options.
REPORT OF THE COMPENSATION COMMITTEE
- ------------------------------------
The Compensation Committee of the Board of Directors is composed of three
independent, outside directors. The members of the Committee for fiscal 19971998
were Messrs. Dirvin, Howe and Lillard. The Committee has the overall
responsibility of reviewing and recommending specific compensation levels for
executive officers and key management to the full Board of Directors. The
Committee is also charged with reviewing the performance of the executive
officers in relation to overall Company performance. The Company's stock option
plans are also administered by the Committee. Compensation decisions for fiscal
19971998 followed the same pattern as fiscal 1996.1997.
The Company's executive compensation policies are designed to support the
corporate objective of maximizing the long term value of the Company to its
shareholders and employees. To achieve this objective, the Committee believes it
is important to provide competitive levels of compensation to attract and retain
the most qualified executives, to recognize individuals who exceed expectations
and to link closely overall corporate performance and executive pay. The methods
by which the Committee believes the Company's long term objectives can be
achieved are through incentive compensation plans and the issuance of options to
purchase the Company's common stock.
- 1413 -
The Committee has established three primary components of the Company's
executive compensation plan. The three components are:
o- base compensation
o- performance incentive compensation
o- stock-based performance compensation through stock option grants
The Omnibus Budget Reconciliation Act of 1993 provides that compensation in
excess of $1,000,000 per year paid to the chief executive officer of a company
as well as the other executive officers listed in the compensation table will no
longer be deductible unless the compensation is performance-based and approved
by shareholders. This law was not considered by the Committee in determining
fiscal 19971998 compensation since compensation levels were not in excess of the
amounts deductible under the law.
BASE COMPENSATION
- -----------------
The Committee annually reviews base salaries of executive officers. Factors
which influence decisions made by the Committee regarding base salaries are
levels of responsibility and potential for future responsibilities, salary
levels offered by competitors and overall performance of the Company. The
Committee's practice in establishing salary levels is based in part upon overall
Company performance and is not based upon any specific objectives or policies
but reflects the subjective judgment of the Committee. However, specific annual
performance goals are established for each executive officer. Based on the
Committee's comparison of the Company's overall compensation levels as a percent
of revenues and net income to comparable companies in the industry, the
Committee believes its overall compensation levels are in the middle of the
range.
PERFORMANCE INCENTIVE COMPENSATION
- ----------------------------------
The performance incentive compensation, which is paid out in the form of an
annual cash bonus, was established by the Committee to provide a direct
financial incentive to achieve corporate and operating goals. The basis for
determining performance incentive compensation is strictly quantitative in
nature. At the beginning of each fiscal year, the Committee establishes a target
bonus for certain executives based on target levels of increases in earnings per
share. Cash bonuses paid to other executives are based on a percentage of
operating profits of the particular division served by that officer. Those
percentages are not disclosed because they could be used to determine divisional
operating profits which are otherwise not publicly available.
STOCK OPTION GRANTS
- -------------------
Executive compensation to reward past performance and to motivate future
performance is also provided through stock options granted under the 1992 Stock
Option Plan. The purpose of the plan is to encourage executive officers to
maintain a long-term stock ownership position in the Company in order that their
interests are aligned with those of the Company's shareholders. The Committee in
its discretion has the authority to determine participants in the plan, the
number of shares to be granted and the option price and term. The Committee has
not established specific stock option target awards for participants.
Consideration for stock option awards are evaluated on a subjective basis and
granted to participants until an ownership position exists which is consistent
with the participant's current responsibilities. Options granted to executive
officers in 1997Fiscal 1998 can be found on page 1211 under the Option Grants Table.
- 1514 -
CHIEF EXECUTIVE OFFICER COMPENSATION
- ------------------------------------
The Committee establishes Mr. Kohlhepp's base salary based primarily on a
subjective evaluation of the Company's prior year's financial results, past
salary levels and compensation paid to other chief executive officers in the
Company's industry. Based on the Committee's comparison of the Company's overall
compensation level for Mr. Kohlhepp as a percent of revenuesrevenue and net income to
comparable companies in the industry, the Committee believes his overall
compensation level is in the middle of the range. The Committee also establishes
at the beginning of each year a performance incentive bonus arrangement for Mr.
Kohlhepp. Based on the Company's belief that shareholder value is best enhanced
by increases in earnings per share, the Committee based this arrangement on
target levels of increases in earningearnings per share. The program provided for no
bonus if earnings per share did not exceed a minimum threshold of a 10% increase
over the prior year's earnings per share, which was $1.60.$1.91 (prior to restatement
for stock split). The bonus potential ranged from 10% of base salary if earnings
per share increased by seventeennineteen cents over the prior year up to a maximum of 90%
if earnings per share increased by fortyforty-eight cents over the prior year.
John S. Lillard - Chairman
Gerald V. Dirvin
Roger L. Howe
- 1615 -
Common Stock Performance GraphCOMMON STOCK PERFORMANCE GRAPH
- ------------------------------
The following graph summarizes the cumulative return on $100 invested in
the Company's Common Stock, the S & P 500 Stock Index and the common stocks of a
representative group of companies in the uniform related industry (the "Peer
Index"). The companies included in the Peer Index are Angelica Corporation, G &
K Services, Inc., National Service Industries, Inc., UnifirstUniFirst Corporation and Unitog Company. National Service
Industries which is no longer in the same line of business as the peer group is
no longer included in the peer group. Total shareholder return was based on the
increase in the price of the stock and assumed reinvestmentinvestment of all dividends.
Further, total return was weighted according to market capitalization of each
company. The companies included in the Peer Index are not the same as those considered by
the Compensation Committee.
Cintas Corporation 5 year Cumulative Total Shareholder Return
Measurement Period
(Quarter End) Cintas Corp.MEASUREMENT CINTAS S&P 500 Index Peer GroupPEER
PERIOD CORP INDEX GROUP
(QUARTER END)
- ------------------- ------------ ------------- ----------
Measurement Point:
May, 92 $100 $100 $100
August, 92 88------ ------- -----
MAY, 93 100 100 November, 92 98100
AUG, 93 106 104 105
NOV, 93 105 104 February, 93 97111
FEB, 94 115 106 116
MAY, 94 114 104 114
AUG, 94 116 109 115
NOV, 94 126 105 109
FEB, 95 139 114 May, 93 97 112 114
August, 93 103 116 115
November, 93 101 116 115
February, 94 112 118 128
May, 94 111 116 122
August, 94 113 122 127
November, 94 122 117 121
February,110
MAY, 95 135 127 125 May,119
AUG, 95 123 140 136
August,139 133 133
NOV, 95 135 148169 144 November, 95 164141
FEB, 96 178 153 155
MAY, 96 198 161 158
February,180
NOV, 96 173 171 172
May, 96 192 180224 184 185
FEB, 97 199 193 166
MAY, 97 230 208 169
AUG, 97 259 222 187
NOV, 97 289 237 197
August, 96 194 176 190
November, 96 218 205 190
February, 97 193FEB, 98 317 261 216
190
May, 97 223 232 208MAY, 98 341 272 203
OTHER MATTERS
Cintas knows of no other matters to be presented at the meeting other than
those specified in the Notice.
By order of the Board of Directors.
David T. Jeanmougin
Secretary
FRONT OF CARD
CINTAS CORPORATION PROXY FOR ANNUAL MEETING
6800 CINTAS BLVD., P.O. BOX 625737, CINCINNATI, OHIO 45262-5737
The undersigned hereby appoints RICHARD T. FARMER, ROBERT J. KOHLHEPP,
and WILLIAM C. GALE, or any of them, proxies of the undersigned, each with the
power of substitution, to vote all shares of Common Stock which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of Cintas
Corporation to be held October 22, 1997, at 10:00 a.m. (Eastern Time) at the
Company's Corporate Headquarters, 6800 Cintas Boulevard, Cincinnati, Ohio 45262
and at any adjournment of such Meeting as specified below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. Authority to establish the number of Directors to be elected at the Meeting
at eight.
FOR AGAINST ABSTAIN
2. Authority to elect eight nominees listed below.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed below
below)
Richard T. Farmer; Robert J. Kohlhepp; Gerald V. Dirvin; Scott D. Farmer;
James J. Gardner; Roger L. Howe; Donald P. Klekamp; John S. Lillard
WRITE THE NAME OF ANY NOMINEE(S) FOR --------------------------------
WHOM AUTHORITY TO VOTE IS WITHHELD --------------------------------
(Continued on other side)
BACK OF CARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOLLOWING PROPOSAL:
3. Shareholder proposal to urge the Board of Directors to establish
contribution and reporting guidelines regarding "soft dollar" political
contributions.
FOR AGAINST ABSTAIN
4. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3.
___________________________, 1997 ----------------------------------
----------------------------------
Important: Please sign exactly as
name appears hereon indicating,
where proper, official position or
representative capacity. In the case
of joint holders, all should sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS