August 12, 1994
Securities and Exchange Commission
Proxy Filing Desk
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Cintas Corporation/File No. 0-11399
To whom it may concern:
We are transmitting the preliminary filing of the
Notice, Proxy Statement and Form of Proxy to be
furnished to shareholders of Cintas Corporation for its
Annual Shareholders' Meeting. We have also wire
transferred $125.00 for the filing fee.
The shares covered by the 1994 Directors' Stock Option
Plan will be registered under the Securities Act of
1933 upon approval of the Plan by shareholders. Cintas
plans to release these materials to security holders on
or about August 31, 1994.
If you have any questions, you may contact me at
513/573-4114 or our outside securities counsel, Gary P.
Kreider at 513/579-6411.
Sincerely,
Rhonda Fox
Field Controller
RF/ctb
sec-file.rf
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/[X] Filed by a Party other than the Registrant / /[ ] Check
the appropriate box: /X/[x] Preliminary Proxy Statement / /[ ] Confidential, for Use
of the Commission Only (as permitted by Rule 14a-(e)(2))
[ ] Definitive Proxy Statement
/ /[ ] Definitive Additional Materials
/ /[ ] Soliciting Material Pursuant to 240.14a-11(c)ss.240.14a-11(c) or 240.14a-12ss.240.14a-12
Cintas Corporation
(Name of Registrant as Specified In Its Charter)
Cintas Corporation
(Name of Person(s) Filing Proxy Statement)Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i)(4)
and
0-11.
/ / $500 per each party to the controversy pursuant to
Exchange
Act Rules 14a-6(i)(3).
/ /[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:(1)
4) Proposed maximum aggregate value of transaction:
(1) Set0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined.
/ /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 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
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 19941998 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, 45262, on Thursday,Wednesday, October
13,
1994.21, 1998.
The purposes of this Annual Meeting are:
1. To amend the Articles of Incorporation
concerning Directors;
2. To amend the Articles of Incorporation to adopt
the Washington "Interested Shareholder"
Statute;
3. To adopt the 1994 Directors' Stock Option Plan;
4. To establish the number of Directors to be elected at eight;
5.2. To elect eight Directors;
6.3. To 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,
Robert J. Kohlhepp,
President andDavid T. Jeanmougin,
Secretary
Dated: August 26, 199431, 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.
PAGE
CINTAS CORPORATION
6800 Cintas BoulevardCINTAS BOULEVARD
P.O. BoxBOX 625737
Cincinnati, OhioCINCINNATI, OHIO 45262-5737
TelephoneTELEPHONE (513) 459-1200
______________________________________--------------------------------------
P R O X Y S T A T E M E N T
Annual Meeting of Shareholders
October 13, 1994ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 21, 1998
INTRODUCTION
The enclosed Proxy is solicited by the Board of Directors of Cintas
Corporation ("Cintas" or the
"Company") for use at the Annual Meeting of Shareholders to be held on October
13, 1994,21, 1998, and at any adjournment thereof, pursuant toof the foregoing Notice.meeting. The approximate mailing date of
the Proxy Statement and the accompanying proxy card is August 26, 1994.31, 1998.
VOTING AT ANNUAL MEETING
GeneralGENERAL
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 15, 1994,21, 1998, the record date for determining shareholders
entitled to notice of and to vote at the meeting, Cintas had 46,855,514 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 15, 1994,21, 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.
PAGE
Principal ShareholdersPRINCIPAL 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. Farmer13,427,456 28.7%Farmer1 25,510,9552 24.4%
James J. Gardner1 7,662,4653 7.3%
Joan A. Gardner12,644,892 5.6%Gardner1 7,662,4653 7.3%
- - --------------------------
1 The address of Richard T. Farmer, James J. Gardner13,867,488 8.3%
__________________________
PAGEGardner and Joan A. Gardner is
Cintas Corporation, 6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, Ohio
45262-5737.
2 Includes 53,560 shares owned by Mr. Farmer's wife, 3,377,034 shares held
in trust for Mr. Farmer's children, 68,580 shares owned by a corporation
controlled by Mr. Farmer and 30,000 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: 165,733 shares held by a charitable trust established by Mr.
Gardner, 65,582 shares held by a corporation that is controlled by Mr. Gardner,
5,887,422 shares held by a family partnership, 850,000 shares owned by Mrs.
Gardner, 20,000 shares held in trust for the Gardner's children and 3,000 shares
which may be acquired pursuant to stock options exercisable within 60 days.
Security Ownership of Directors and Executive OfficersSECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of the Company's
Common Stock by its directors, nominee for director, 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 15, 1994:
Amount and
Nature of
Beneficial
Percent
Name of Beneficial Owner Ownership Of
Class21, 1998:
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
Richard T. Farmer 13,427,45625,510,955 (1) 28.7%24.4%
Robert J. Kohlhepp 1,315,2402,436,862 (2) 2.8%2.3%
Gerald V. Dirvin 1,40013,800 (3) *
James J. Gardner 3,867,4887,662,465 (1) 8.3%7.3%
Roger L. Howe 346,228701,456 (3)(4) *
Donald P. Klekamp 69,940141,736 (3)(4)(5) *
John S. Lillard 75,454 (3)129,908 (6) *
Scott D. Farmer 124,244458,454 (7) *
David T. Jeanmougin 2,083 *
John S. Kean III 31,961 (5)38,340 (8) *
Robert R. Buck 58,988 (6)126,424 (9) *
All Directors and Executive
Officers as a Group (ll(13 persons)19,206,651 (7) 41.0% 37,348,620 (10) 35.7%
*Less than 1%
(1) See Principal Shareholders.
(2) Includes 153,50040,000 shares held in trust for members of Mr. Kohlhepp's family,
127,344 shares held by a corporation that is controlled by Mr. Kohlhepp,
1,265,350 shares held by a family partnership and options for 9,72044,500
shares which are exercisable within 60 days.
(3) Includes options for 3,000 shares which are exercisable within 60 days.
(4) Includes 59,690107,648 shares owned by a limited partnership.
(5) Includes 118,516 shares owned by Mr. Klekamp's wife.
(5) Includes options for 3,600 shares which
are exercisable in 60 days.
(6) Includes options for 13,2002,000 shares
which are exercisable in 60 days.
(7) Includes 92,220 shares which may be
acquired pursuant to stock options which are exercisable within 60 days.
Proposal 1. AMENDMENT TO ARTICLES OF INCORPORATION CONCERNING
DIRECTORS
Under the lawsDoes not include 16,000 shares held in a charitable foundation controlled
by Mr. Lillard, of Washington, the Company's statewhich Mr. Lillard disclaims beneficial ownership.
(7) Includes 91,400 shares held in trust for members of incorporation, directors may be removedMr. Farmer's family,
2,692 shares owned by shareholders without ascribing cause. The Board of
Directors is proposing to amend the Articles
of Incorporation to provide that shareholders may remove
directors during their terms of office onlyhis immediate family 55,920 held by establishing causea limited
partnership and options for the removal. Cause is generally
interpreted under corporate law60,200 shares which are exercisable within 60
days.
(8) Includes options for these
purposes to include criminal conduct, fraud, incompetency and
acts adverse to the corporation. The
amendment will also provide that it may not be repealed without
the affirmative vote of two-thirds of
the outstanding34,000 shares of Common Stock of the Company. For a
discussion of reasonswhich are exercisable within 60 days.
(9) Includes options for and the
effects of this proposal, see "Reasons For and Effects of the
Proposals 1 and 2" following Proposal 2.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
PROPOSAL NO.1.
Vote Required to Adopt the Amendment
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING COMMON
STOCK OF
CINTAS IS REQUIRED TO APPROVE6,800 shares which are exercisable within 60 days.
(10) Includes options for 204,100 shares which are exercisable within 60 days.
PROPOSAL NO. 1. THEREFORE,
ABSTENTIONS, BROKER NON-
VOTES AND OTHER SHARES NOT VOTED WILL HAVE THE SAME EFFECT AS
IF VOTED AGAINST
THE PROPOSAL.
Proposal 2. AMENDMENT TO ARTICLES OF INCORPORATION TO ADOPT
THE WASHINGTON
"INTERESTED SHAREHOLDER" STATUTE
The corporation laws of Washington, under which Cintas
is organized, gives Washington
corporations the ability to elect to be governed by the
Washington "Interested Shareholder" Statute.
Washington's Interested Shareholder Statute applies to
certain transactions between a corporation
or its subsidiary and an interested shareholder or an affiliate
of such person. The transactions covered
are those that are required to be authorized pursuant to
provisions of Washington law governing
mergers and share exchanges, sales of assets
other than in the regular course of business and dissolutions.
An interested shareholder
includes any person or group of affiliated persons who
beneficially own 20% or more of the outstanding
voting shares of the corporation. Under the statute, a
transaction covered by the statute between the
corporation and an interested shareholder must be approved by
two-thirds of the votes entitled to be
counted. Votes owned or under control of interested
shareholders are not counted for these purposes.
Application of this statute can be waived by a majority of
the Company's Board of Directors, not
including those directors elected within the two years prior to
such vote or who are themselves an
interested shareholder or affiliated with such persons.
The amendment will also provide that it may not be repealed
without the affirmative vote of two-
thirds of the outstanding shares of Common Stock of the
Company. The text of the Washington
Interested Shareholder Statute is attached as Appendix 1. For
a discussion of reasons for and the
effects of this proposal, see "Reasons For and Effects of the
Proposals 1 and 2".
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
PROPOSAL NO.2.
Vote Required to Adopt the Amendment
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING COMMON
STOCK OF
CINTAS IS REQUIRED TO APPROVE PROPOSAL NO. 2. THEREFORE,
ABSTENTIONS, BROKER NON-
VOTES AND OTHER SHARES NOT VOTED WILL HAVE THE SAME EFFECT AS
IF VOTED AGAINST
THE PROPOSAL.
"REASONS FOR AND EFFECTS OF PROPOSALS 1 AND 2"
Presently, management of the Company owns sufficient Common
Stock to exercise practical
control of the Company through the election of directors. The
Board of Directors believes, however,
that the Company's operating success is largely due to its
management's stability and the freedom
management has to concentrate on business matters without the
distractions of reacting to stock
market conditions, possible takeovers or the necessity of
directing operations to the short-term as
opposed to long-term objectives. The situation could change,
however, in the future through future
stock issuances for acquisitions or for cash or through
substantial sales of stock by major shareholders,
although no such transactions are currently anticipated. The
Board believes that amendment of the
Articles to adopt the proposals relating to the removal of
directors and to adopt Washington's Interested
Shareholder Statute will promote stability in management which
it believes important through
discouraging hostile takeovers which, in many cases, lead to
restructurings, management changes,
payment of premiums to corporate raiders and similar
transactions.
The first of the proposals to amend the Articles of
Incorporation is designed to make it more
difficult for shareholders to remove directors during their
regular term of office. Directors of Cintas are
elected at annual shareholder meetings for one year terms.
Currently, a majority of shareholders could
call a meeting and remove all directors and officers without
cause. If the proposed amendment is
adopted, removal would be more difficult since it would be
necessary for such shareholders to establish
cause for removal. Cause is not defined in the statute but is
generally held to involve serious matters
such as criminal conduct, fraud, incompetency and acts adverse
to the corporation.
Washington's Interested Shareholder Statute is intended to
make it more difficult for a potential
acquirer to engage in transactions with the Company such as
mergers, share exchanges, sales of assets
or to force dissolution of the Company even though such
shareholder or group may own a majority of
the voting power of the Company. By requiring a special
two-thirds vote and not counting the votes
of the interested shareholder, the statute requires a person
seeking to acquire control of the Corporation
with the view of pursuing any of the transactions outlined
above, to either convince the holders of two-
thirds of the remaining shares of such transaction or to
negotiate the transaction in advance with the
Board of Directors to secure a Waiver of application of
statute. Cintas' Articles of Incorporation have
since 1988 contained provisions similar to the Washington
Interested Shareholder Statute but the Board
of Directors has determined that it may be advantageous to the
Company to have the benefit of the
precise statutory protection provided by the Washington law in
addition to the current provisions in the
Articles of Incorporation. In addition, the Articles have
since 1988 also contained provisions requiring
any person acquiring more than 15% of the outstanding Common
Stock to offer to purchase all
remaining Common Stock. Existing provisions of Cintas'
Articles of Incorporation require action
by the shareholders to enable the Washington Statute to apply
to Cintas.
While the Board of Directors in making these proposals
believes that they are in the best
interest of the Company, shareholders should be aware that
their adoption could potentially be
disadvantageous to them because the overall effect of these
proposals as well as provisions currently
in the Articles of Incorporation may be to render more
difficult or discourage the removal of incumbent
management or the assumption of effective control by other
persons.
Proposal 3. PROPOSAL TO ADOPT THE 1994 DIRECTORS' STOCK
OPTION PLAN
The Board of Directors believes that the interests of Cintas
and its shareholders are enhanced
by providing a method whereby outside Directors of Cintas are
encouraged to invest in shares of Cintas
Common Stock and acquire a proprietary interest in Cintas'
progress and growth. Because Cintas'
existing stock option plan is restricted to employees, in July,
1994, the Board of Directors adopted,
subject to shareholder approval, the 1994 Directors' Stock
Option Plan (the "Directors' Plan"). The
following is a summary of the Directors' Plan elected at the
1994 Annual Meeting of Shareholders. The
full text of that plan is attached hereto as Appendix 2.
Pursuant to the provisions of the Directors' Plan, each
non-employee Director of Cintas
("Eligible Director") elected at the 1994 Annual Meeting of
Shareholders will be granted an option to
purchase 1,000 shares of Cintas Common Stock, and, upon each
subsequent election as a director,
another option for 1,000 shares. The total number of shares of
Cintas Common Stock for which
options may be granted under the Plan is 30,000 shares. The
exercise price of each option will be the
last closing sale price reported on the date of grant. The
number of shares issuable pursuant to an
option and the exercise price are subject to adjustment in the
event of stock splits, stock dividends and
other changes in Cintas Common Stock. Each option is for a
term of ten years and becomes
exercisable with respect to 250 shares on each of the first,
second, third and fourth anniversary of the
date of grant.
A person must be an Eligible Director at the time an option is
exercised. An optionee who
ceases to be an Eligible Director for any reason other than
death, disability, retirement or removal for
cause may exercise his option at any time within three months
after the date of such cessation, but
only during the option period and only to the extent that the
option holder was entitled to exercise the
option on the date of such cessation. An option held by an
Eligible Director who is removed for cause
will terminate immediately upon removal. An Eligible Director
who retires as a director pursuant to
Cintas' mandatory director retirement policy may exercise the
option at any time within 90 days after
the date of such retirement as to all shares covered by such
option, notwithstanding the vesting
schedule, but only during the term of the option. If an
optionee ceases to be an Eligible Director as a
result of death or disability, the option may be exercised at
any time within the option period from the
date of such cessation, but only to the extent the option
holder was entitled to exercise the option at
the date of such cessation and only during the option period.
The Directors' Plan is administered by a committee of two or
more Directors. In the absence
of this committee, the Compensation Committee of the Board of
Directors will administer the Directors'
Plan.
Options granted under the Directors' Plan will be
"non-qualified" stock options and are not
intended to qualify as incentive stock options under Section
422 of the Internal Revenue Code. An
Eligible Director will realize no income upon the grant of an
option. Ordinary income will be recognized
when an option is exercised. The amount of such income will be
equal to the excess of the fair market
value on the exercise date of the shares of Common Stock issued
upon exercise over the option price.
The optionee's holding period with respect to the shares
acquired will begin on the date of exercise.
Cintas will be entitled to a deduction for federal income tax
purposes at the same time and in the same
amount as the optionee is considered to have recognized
ordinary income in connection with the
exercise of the option.
The tax basis of the stock acquired upon the exercise of any
option will be equal to the
exercise price of such option, plus the amount included in
ordinary income with respect to exercise of
the option. Any gain or loss on a subsequent sale of the stock
will be either long-term or short-term
capital gain or loss, depending on the optionee's holding
period for the stock disposed of by the
optionee.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL
NO.3.
Vote Required to Adopt the Amendment
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON STOCK VOTING
AND
ABSTAINING ON THIS PROPOSAL IS REQUIRED TO APPROVE PROPOSAL NO. 32 - 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 seven (7)eight
Directors, and the Board is recommending that this number be increased
to eight.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
and the addition of an eighth director, Scott D. Farmer.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 DirectorsRECOMMENDATION OF THE BOARD OF DIRECTORS
RECOMMENDS AThe Board of Directors recommends a vote in favor of Proposal No.1 and the
election of the eight nominees proposed by the Board.
VOTE IN FAVOR OF PROPOSAL
NO. 4 AND
THE ELECTION OF THE EIGHT NOMINEES PROPOSED BY THE BOARD.
Vote RequiredREQUIRED
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES VOTING AT THE MEETING IS
REQUIRED TO SET THE NUMBER OF DIRECTORS.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.
PROPOSAL NO. 3 - AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company has approved, and is recommending to
the shareholders 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 outstanding 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 unable to
declare any meaningful stock split and still maintain the ability to fund its
current Stock Option and 401(k) Plans. The Company has regularly utilized Common
Stock in acquisitions and intends to continue that practice. The Board of
Directors believes that the increase in authorized shares of Common 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 change of control of the Company.
VOTE REQUIRED
The affirmative vote of two-thirds of the shares eligible to vote on the
proposed amendment is required for approval. Abstentions and broker non-votes
have the same effect 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 brokenbroker non-votes having no effect.
VOTING BY PROXY
All proxies properly signed will, unless a different choice is indicated,
be voted "FOR" settingAFOR@ the establishment of the number of directorsDirectors at eight, and "FOR" the
election of all eight nominees proposed by the Board unless authority is
withheld to vote for anysome or all of those nominees.nominees, and "FOR" the 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.
SHAREHOLDER PROPOSALS
Shareholders who desire to have proposals included in the Notice for the
19951999 Shareholders' Meeting must submit their proposals in writing to Cintas at
its offices on or before April 29, 1995.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 Annual Shareholders'
Meeting, it must be received prior to July 19, 1999.
If a shareholder who intends to present a proposal at the 1999 Shareholders'
Meeting does not notify Cintas of such proposal on or before September 6, 1999,
management proxies may use their best judgement in voting on the proposal even
though there is no discussion of the proposal in the proxy statement for the
meeting.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors appointed Ernst & Young LLP as its certified public
accountants for fiscal 1995.1999. 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.
PAGE
MANAGEMENT
Directors and Executive OfficersDIRECTORS AND EXECUTIVE OFFICERS
The Directors nominee for Director and Executive Officers of Cintas Corporation are:
Position
Name and Age Position
Since- - --------------------------------------------------------------------------------
Richard T. Farmer1 Chairman of the Board
and 1968
5963
Robert J. Kohlhepp1 Chief Executive Officer
Robert J. Kohlhepp1 President, Secretary54 and Director
1984
50
Gerald V. Dirvin2Dirvin3 Director
1993
5761
James J. Gardner1&2 Director
1969
6165
Roger L. Howe2&3 Director
1979
5963
Donald P. Klekamp3Klekamp2 Director
1984
6266
John S. Lillard3 Director
1978
6468
Scott D. Farmer Vice President, 1987
35 Nominee forChief Operating Officer
39 and Director
Robert R. Buck Senior Vice President 1991
46and
50 President - Uniform Rental Division
Karen L. Carnahan Vice President and Treasurer
1992
4044
William C. Gale Vice President and Chief
46 Financial Officer
David T. Jeanmougin Senior Vice President-Finance 1991
53President and Secretary
57
John S. Kean III Senior Vice President
1986
5458
Ages are as of September 1, 19941998.
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.
Richard T. Farmer has been with the Company and its predecessors since 1957
and has served in his present positionsposition 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, an OTC company, and Safety Kleen Corp.,
Chicago, Illinois, a business service entity
and 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 of- Finance until 1979 when he became Executive Vice
President. He served in that capacity until October 23, 1984, when he was
appointedelected 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 1994. Mr. Dirvin is
also a Director of Fifth Third Bancorp, Cincinnati, Ohio, an OTC
company;a NASDAQ company, and
Northern Telecom Limited, Toronto, Canada.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 iswas the Chairman
of the Board of U.S. Precision Lens, Inc., a manufacturer of optics for the
instrument, photographic and television industries, and hasuntil 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, ana NYSE
company, and its subsidiary Star Bank, National Association,
Eagle-Picher Industries,Association; Cincinnati Bell
Inc., a Cincinnati-based diversified
industrial products manufacturer; U.S. Shoe
Corporation, a Cincinnati-based company specializing in women's
apparel retailing, optical products and
footwear, and 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.
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 Presidenta
Founder of JMB Institutional Realty Corporation, a registered investment
advisor, where he served as President from its
founding on April 1, 19791978 to 1991. In 1991, he became
Chairman-Founder until May, 1991,
and is currently Chairman - Founder.his retirement in June 1996. He is also a Director of
The Mathers Fund, a no-load mutual fund, a Director of
Stryker Corporation, a medical equipment company, and a Director of Lake Forest
Bancorporation.Bank and Trust Company, a bank holding company.
Scott D. Farmer joined Cintas in 1981. He has served in various management
positions including Vice President - National Account Division and Vice
President - Marketing.Marketing and Merchandising. He is presentlywas elected a Director of Cintas in
charge1994. In July 1997, he was elected President and Chief Operating Officer of recently acquired Cintas operations in the
Northwestern
United States.
Company.
Robert R. Buck joined Cintas in 1982. He is presently in
charge of nineteen Cintas rental
operations in the Midwestern United States. Prior to his
operational responsibilities, he served as Senior Vice President of-
Finance and Chief Financial Officer from 1982 to 1991.1991, 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.
David T. JeanmouginCompany and was elected Vice President of the Company in July 1997.
William C. Gale joined Cintas in August, 1991.April 1995. He is presently responsible
for the areas of finance, accounting and administration. Prior to joining
Cintas, Mr. JeanmouginGale was associated with Philips
Industries, Inc.,International Paper, a Dayton-based manufacturer of diversified
buildingforest products,
paper and industrialpackaging company and a NYSE company where he served as auditor since
February 1994. Mr. Gale also held various financial executive positions between
1982 and1994 with Occidental Petroleum Corporation, an oil products and anchemical
concern and a NYSE company, for at least five years where he most recently servedcompany.
David T. Jeanmougin joined Cintas in August 1991 as Senior Vice President -
Finance and was responsible for the areas of Administration.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 area of 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 Arkansas.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 SectionBOARD ACTIONS AND COMPLIANCE WITH SECTION 16 of the Exchange
ActOF THE EXCHANGE ACT
The Board of Directors met on four occasions in fiscal 1994.1998. 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 eightthirty-seven occasions in fiscal 1994.1998.
The Audit Committee reviews the Company's internal accounting operations,
monitors relationships between the Company and its outsideindependent accountants and
recommends the employment of independent accountants.auditors. The Audit Committee met on
two occasions in fiscal 1994.1998.
The Compensation Committee establishes compensation levels for all
executives and administers the Incentive Stock Option Plan, the 1992 Stock Option Plan and the
1990 Directors' Stock Option Plan.Company's stock option plans. This Committee met
onceon one occasion and took action by written consent on fourten occasions in fiscal
1994.1998.
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 $900 for each Committee meeting attended. Directors
who are executive officers are not paid Directors' fees nor do they participate
in the 1994 Directors' Stock Option Plan.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholdersThese persons
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
PAGE
Based solely on its review of the copies of such forms
received by it, or written representation from certain reporting persons that no
Form 5's were required for those persons, the Company believes that during the
period of June 1, 1993,1997, through May 31, 1994,1998, all filing requirements applicable to its officers, directors,
and greater than ten percent beneficial ownersof such
persons were complied
with except for one late filing each by David
T. Jeanmougin and Scott D. Farmer.
PAGE
Executive Compensationmet.
EXECUTIVE COMPENSATION
The following table summarizes the annual and long-term compensation of
the Company's chief executive
officerChief Executive Officer and each of the Company's other four most
highly compensated executive officersExecutive Officers for the years ended May 31, 1994, 19931998, 1997 and
1992.1996.
SUMMARY COMPENSATION TABLE
Annual Compensation
Long Term
Compensation Compensation
Shares
Other Annual Underlying All Other
Name and Principal Salary Bonus Compensation Option Compensation
Position Year Salary
($) Bonus
($) Other
($)(1)
Stock Option Grants (#) All Other
Compensation $(2)($)(1)
Richard T. Farmer 1998 300,000 120,828 48,699(2) -- 179,562
Chairman of the 1994
267,800
171,392
50,9801997 286,867 188,759 48,522(2) 10,000 shs
220,505195,827
Board and Chief
1993
260,000
221,000
----
----
236,979
Executive Officer
1992
250,000
100,000
----
100,000 shs
244,2791996 278,512 207,813 61,061(2) 20,000 209,340
Robert J. Kohlhepp 1994
214,240
119,9751998 300,000 246,667 58,650(3) -- 52,718
Chief Executive 1997 275,391 207,461 -- 10,000 shs
62,614
President, Secretary
1993
208,000
156,000
----
65,84755,454
Officer and Director 1992
200,0001996 267,370 174,202 -- 100,000 58,277
Scott D. Farmer 1998 250,000 165,556 -- 60,000 7,139
President, Chief 1997 180,000 32,563 -- 10,000 shs
67,7595,738
Operating Officer 1996 150,000 23,866 -- 10,000 6,183
and Director
Robert R. Buck 1994
175,000
97,259
5,000 shs
9,0561998 250,000 194,450 40,000 7,019
Senior Vice President 1993
165,000
53,388
----
6,931
1992
160,000
14,452
4,000 shs
7,3521997 230,000 185,745 -- 10,000 6,210
and President - 1996 200,000 161,869 -- 10,000 6,699
Uniform Rental
Division
David T. Jeanmougin 1994
175,000
52,400
5,000 shs
8,1341998 229,237 82,780 -- 10,000 6,976
Senior Vice President 1993
162,404
57,750
4,000 shs
4,716
-Finance
1992
121,154(3)
20,000(3)
26,000 shs
----
John S. Kean III
1994
175,000
26,805
----
8,795
Senior Vice President
1993
165,000
39,806
----
7,815
1992
155,000
33,620
----
8,360
(1) The amount indicated represents compensation
associated with the use of the Company's aircraft
($42,091)1997 220,420 72,518 -- -- 6,068
and the remainder attributed to club dues
and expense reimbursements.
(2) 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 of the
premiums on the life insurance policies. Upon the
death of Messrs. Farmer or Kohlhepp and their
spouses, the Company will be entitled to receive that
portion of the benefits paid under the life
insurance policy as is equal to the premiums
paid by the Company on that policy. The life
insurance trust established by the descendent 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 May 31, 1994, 1993, and 1992
are $210,317, $227,779 and $234,616,
respectively for Mr. Farmer and $52,859, $56,810 and
$58,268 for Mr. Kohlhepp, respectively,
which are reflected in the Summary Compensation
Table.
Effective June 1, 1991, the Company's employee stock
ownership plan and profit sharing plan were
combined to form the Cintas Partners' Plan. The Plan
is for the benefit of the Company's employees
who have completed one year of service. Effective
June 1, 1993, the Company added a defined
contribution feature to the Plan which covers
substantially all of its employees. The Plan provides
that the Company may match employee contributions up
to a maximum match of twenty percent.
The amounts in the table represent the dollars
contributed by the Company pursuant to the
Company's Partners' Plan.
(3) Represents a partial year's compensation for the
year of hire.Secretary 1996 214,000 69,715 -- 10,000 6,571
Stock Options(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 May 31, 1998, 1997 and 1996 is $172,046, $189,185 and
$202,007, respectively, for Mr. Farmer and $45,363, $49,483 and $51,348
respectively, for Mr. Kohlhepp. These amounts are included above.
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.
(2) Represents compensation associated with the use of the Company's
aircraft ($18,134, $20,078 and $52,766 in 1998, 1997 and 1996, respectively),
financial planning ($20,000 and $18,330 in 1998 and 1997 respectively) and other
expense reimbursements.
(3) Represents compensation associated with the use of the Company's
aircraft ($33,202), financial planning ($15,000) and other expense
reimbursements.
STOCK OPTIONS
The following table sets forth information regarding stock options granted to
the executives named executives underin the Company's 1992 Stock Option PlanSummary Compensation Table during the fiscal year
ended May 31, 1994:1998:
OPTION GRANTS IN LAST FISCAL YEAR
Name
Options
Granted(#)
Percent of
Total Optio nsPotential Realizable
Options Value at Assumed
Number of Granted Annaul Rates of Stock
Shares to Price Appreciation for
Underlying Employees inExercise Option Term ($)
Options In Fiscal 1994
Exercise
Price Expiration -----------------------------
Name Granted 1997 ($/Sh.) Expiration
Date Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term
5%($) 10%($)
Richard T. __ N/A N/A N/A N/A N/A
Farmer
10,000
4.7%
$26.50
07/12/98
73,169
161,674
Robert J. -- N/A N/A N/A N/A N/A
Kohlhepp
10,000
4.7%
$26.50Scott D. 60,000 5.5% 35.3125 07/12/03
166,600
422,16228/07 1,332,470 3,376,742
Farmer
Robert R. 40,000 3.7% 35.3125 07/28/07 888,314 2,251,161
Buck
5,000
2.4%
$26.50
07/12/03
83,300
211,081
David T. Jeanmougin
5,000
2.4%
$26.5010,000 .9% 35.3125 07/12/03
83,300
211,081
John S. Kean III
----
----
----
----
----
----28/07 222,078 562,790
Jeanmougin
PAGE
The following table sets forth information regarding stock options exercised
by the executives named executivesin the Summary Compensation Table during 1994fiscal 1998 and
the value of in-the-money unexercised options held by the named executivesthem as of May 31, 1994:1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL 1994YEAR
AND FISCAL 1994 YEAR END OPTION VALUES
Name
Shares
Acquired on
Exercise(#)
Value
Realized($)
Number of Shares Valueof Unexercised In-the-
on Value Underlying Unexercised Money Options at May 31,
1994(#)
Exercisable Unexercisable
Value of Unexercised In-
the-Money OptionsExercise Realized Option at May 31, 1994($1998 1998($)(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
Richard T. Farmer ----
----
25,000
60,000
217,188
481,25020,000 665,000 20,000 20,000 537,344 490.781
Robert J. Kohlhepp 5,400
143,325
3,360
38,360
84,910
503,9731,500 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 8,760
197,965
9,840
16,680
235,435
243,448--- --- 3,200 74,800 110,200 1,372,175
David T. Jeanmougin ----
----
----
35,000
----
276,313
John S. Kean III
29,880
600,480
----
45,420
----
953,856
(1) Value is calculated as the difference between the
fair market value of the Common Stock on May 31,
1994 ($31.19--- --- 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, 1998 ($45.6875 per share), and the exercise price of
the options.
Report of the Compensation CommitteeREPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the
"Committee") is composed of three
independent, outside directors. The members of the Committee for fiscal 19941998
were Messrs. Gardner,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 the
responsibility of reviewing the performance of the executive
officers andin relation to overall Company performance. The Company's stock option
plans are also administered by the Compensation Committee. Compensation decisions for fiscal
19941998 followed the same pattern as fiscal 1993.1997.
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 method inmethods
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.
The Compensation Committee has established three primary components of the Company's
executive compensation plan. The three components are:
1- base compensation
2- performance incentive compensation
3- 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 Officerchief 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 1994
compensation.
Base Compensation1998 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 its salary levels is based in part upon overall
Company performance and is not based upon any specific objectives or policies
but reflects the subjective judgementjudgment 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 CompensationPERFORMANCE 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 each executive. For fiscal 1994, the target bonus
for the President was expressed as a percentage of his base
pay. The program wascertain executives based on target levels of increases in earnings per
share and 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 ninety-seven cents. The bonus potential
ranged from 10% of base salary if earnings per share increased
by nine cents over the prior year up to a maximum
of 80% of base salary if earnings per share increased by
twenty-three cents over the prior year.share. Cash bonuses paid to other executives wereare 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 GrantsSTOCK 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
termlong-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 19941998 can be found on page 1411 under the option grants table.
CEO CompensationOption Grants Table.
CHIEF EXECUTIVE OFFICER COMPENSATION
The CEO is eligible to participate in the same executive
compensation plans available to other executive
officers. The Compensation Committee establishes the CEO'sMr. 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 the CEOMr. Kohlhepp as a percent of revenuesrevenue and net income to
comparable companies in the industry, the Committee believes itshis overall
compensation level for the CEO is in the middle of the range. The Committee also establishes
at the beginning of each year a performance incentive bonus arrangement for the CEO.Mr.
Kohlhepp. Based on the Company's belief that shareholders'shareholder value is best enhanced
by increases in earnings per share, the Committee based this arrangement on
target levels of increases in earning 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 ninety-seven cents.$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 twenty-threeforty-eight cents over the prior year.
John S. Lillard - Chairman
James J. GardnerGerald V. Dirvin
Roger L. Howe
PAGE
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., Unifirst Corporation and Unitog Company. National Service
Industries Inc., and Unifirst
Corporation.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 reinvestment 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 referred to inconsidered by
the Compensation Committee Report.
Outside directors are paid an annual fee of $8,000 plus
$1,425 for each Board meeting attended and
$800 for each Committee meeting attended. Directors who are
executive officers are not paid Director's fees nor
will they participate in the proposed 1994 Directors' Stock
Option Plan.Committee. [GRAPH OMITTED]
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.
Robert J. KohlheppDavid T. Jeanmougin
Secretary
Appendix 1.
CINTAS CORPORATION
23B.17.020 Transactions Involving Interested
Shareholders
(1.) For purposesCOMMON 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 this section:
(a) An interested shareholder transaction means any
transaction between a
corporation, or any
subsidiary thereof, and an interested shareholder of such
corporation or an affiliated person of an interested
shareholder that must be authorized pursuant to the provisions
of chapters 23B.11 and 23B.14 RCW, or RCW
23B.12.020;
(b) An interested shareholder:
(i) Includes any person orrepresentative group of affiliated
persons who beneficially own twenty percent
or morecompanies in the uniform related industry (the "Peer
Index"). The companies included in the Peer Index are Angelica Corporation, G &
K Services, Inc., Unifirst 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 outstanding voting sharesstock and assumed reinvestment of a corporation. An
affiliated person is any person who either acts jointly
orall dividends.
Further, total return was weighted according to market capitalization of each
company. The companies in concert with, or directly or indirectly controls, is
controlledthe Peer Index are not the same as those considered by
or is under common control with another
person; and
(ii) Excludes any person who, in good faith and not
for the purposeCompensation Committee.
MEASURMENT CINTAS S&P 500 PEER
PERIOD CORP INDEX GROUP
(QUARTER END)
MAY, 93 100 100 100
AUG, 93 106 104 105
NOV, 93 105 104 111
FEB, 94 115 106 116
MAY, 94 114 104 114
AUG, 94 116 109 115
NOV, 94 126 105 109
FEB, 95 139 114 110
MAY, 95 127 125 119
AUG, 95 139 133 133
NOV, 95 169 144 141
FEB, 96 178 153 155
MAY, 96 198 161 180
NOV, 96 224 184 185
FEB, 97 199 193 166
MAY, 97 230 208 169
AUG, 97 259 222 187
NOV, 97 289 237 197
FEB, 98 317 261 216
MAY, 98 341 272 203
OTHER MATTERS
Cintas knows of circumventing this
section, is an agent, bank, broker, nominee, or trustee for
another person, if suchno other person is not an interested
shareholder under (b)(i) of this subsection.
(2.) Except as provided in subsection (3) of this section,
an interested shareholder transaction must be
approved by each voting group entitled to vote
separately on the transaction by two-thirds of the votes
entitledmatters to be counted under this subsection for that
voting group. The votes of all outstanding shares
entitled to vote under this title orpresented at the articles of
incorporation shall be entitled to be counted under this
subsection except that the votes of shares owned by
or voted under the control of an interested
shareholder may not be counted to determine whether
shareholders have approved a transaction for
purposes of this subsection. The votes of shares
owned by or voted under the control of an interested
shareholder, however, shall be counted in determining
whether a transaction is approved undermeeting other
sections of this title and for purposes of
determining a quorum.
(3.) This section shall not apply to a transaction:
(a) Unless the articles of incorporation provide
otherwise, by a corporation with fewer than three
hundred holders of record of its shares;
(b) Approved by a majority vote of the corporation's
board of directors. For such purpose, the votes
of directors who are directors or officers of, or have a
material financial interest in an interested shareholder, or
who
were nominated for election as a director as a result of an
arrangement with an interested shareholder and first
elected as a director within twenty-four months of the proposed
transaction, shall not be counted in determining
whether the transaction is approved by such directors;
(c) In which a majority of directors whose votes are
entitled to be counted under (3)(b) of this
section determines that the fair market value of the
consideration to be received by
noninterested shareholders for shares of any class of which
shares are owned by any interested shareholder is not
less than the highest fair market value of the consideration
paid by any interested shareholder in acquiring shares
of the same class within twenty-four months of the proposed
transaction; or
(d) By a corporation whose original articles of
incorporation have a provision, or whose shareholders
adopt an amendment to the articles of incorporation by
two-thirds of the votes entitled to be counted under this
subsection, expressly electing not to be covered by this
section. The votes of all outstanding shares entitled to
vote under this title or the articles of incorporation shall be
entitled to be counted under this subsection except that
the votes of shares owned by or voted under the control of an
interested shareholder may not be counted to
determine whether shareholders have voted to approve the
amendment. The votes of shares owned by or voted
under the control of an interested shareholder, however, shall
be counted in determining whether the amendment
is approved under other sections of this title and for purposes
of determining a quorum.
4. The requirements imposed by this section are in addition
to, and not in lieu of, requirements imposed
on any transaction by any other provision in this title, the
articles of incorporation, or the bylaws of the corporation,
or otherwise.
PAGE
Appendix 2.
CINTAS CORPORATION
1994 Directors' Stock Option Plan
The purpose of this 1994 Directors' Stock Option Plan is to
advance the interests of Cintas Corporation and
its shareholders by affording non-employee members of the
Company's Board of Directors an opportunity to
increase their proprietary interestthose specified in the Company through the
grantNotice.
By order of options to purchase Common Stock of
Cintas. Cintas believes that this Plan will benefit Cintas by
serving as an incentive to the attraction, retention and
motivations of its non-employee directors.
1. Effective Date of the Plan. This Plan shall become
effective at such time as it is approved by
shareholders at the 1994 Annual Meeting of Shareholders of the
Company.
2. Shares Subject to the Plan. The shares to be issued upon
the exercise of the options granted under
the Plan shall be shares of Common Stock no par value, of the
Company. Either treasury or authorized and
unissued shares of Common Stock, or both, as the Board of Directors shall from time to time determine, may be
so issued. No shares of Common Stock which are the subject of
any lapsed, expired or terminated options may
be made available for reoffering under the Plan.
Subject to the provisions of Section 4, the aggregate number
of shares of Common Stock for which options
may be granted under the Plan shall be 30,000 shares.
3. Administration. The Plan shall be administered by a
committee appointed in accordance with Article
III, Section 6 of the By-Laws and consisting of two or more
directors who may also be eligible to participate in the
Plan.
Subject to the express provisions of the Plan, the Committee
shall have the authority to establish the terms
and conditions of such option agreements, consistent with this
Plan. Such agreements need not be uniform.
4. Adjustments to Common Stock and Option Price.
4.1 In the event of changes in the outstanding Common
Stock of the Company as a result of stock
dividends, split-ups, recapitalizations, combinations or
exchanges, the number and class of shares of Common
Stock authorized to be the subject of options under this Plan
and the number and class of shares of Common Stock
and option price for each option which is outstanding under the
Plan shall be correspondingly adjusted by the
Committee.
4.2 The Committee shall make appropriate adjustments in
the Option Price to reflect any spin-off of assets,
extraordinary dividends or other distributions to shareholders.
4.3 In the event of the dissolution or liquidation of the
Company or any merger, consolidation, exchange,
combination or other transaction in which the Company is not
the surviving corporation or in which the outstanding
shares of Common Stock of the Company are converted into cash,
other securities or other property, each
outstanding option issued hereunder shall terminate as of a
date
fixed by the Committee provided that not less than 20 days'
written notice of the date of expiration shall be given
to each holder of an option. Each such holder shall have the
right during such period following notice to exercise
the option as to all or any part of the option for which it is
exercisable at the time of such notice.
5. Eligible Directors; Grant of Options. An Eligible
Director shall be each director of the Company, now
serving as a director or elected hereafter, who is not also an
employee of the Company.
Each Eligible Director elected as such at the 1994 Annual
Meeting of Shareholders shall be granted an option
for the purchase of 1,000 shares of Common Stock and, upon
each subsequent election as a director, another
option for 1,000 shares. All grants shall be made on the date
of the event giving rise to the option. Such grants
shall continue until the number of shares provided for in this
Plan in Section 2 are exhausted.
6. Price. The purchase price of the shares of Common Stock
which may be acquired pursuant to the
exercise of any option granted pursuant to the Plan shall be
the last closing sale price reported on the date of grant
("Option Price").
7. Period of Option. The term of each option shall be ten
years from the date of grant. Subject to the
provisions of Section 3, each option shall become exercisable
in four equal annual installments commencing on the
first anniversary of the date of grant of the option. This
right of exercise shall be cumulative and shall be
exercisable in whole or in part.
8. Exercise of Options. An option may be exercised by an
Eligible Director as to all or part of the shares
covered thereby by giving written notice to the Company at its
principal office, directed to the attention of its Chief
Financial Officer, accompanied by payment of the Option Price
in full for shares being purchased. The payment
of the Option Price shall be either in cash or, subject to any
conditions set forth in the option agreement, by
delivery of shares of Common Stock of the Company having a fair
market value equal to the purchase price on the
date of exercise of the option, or by any combination of cash
and such shares.
Unless there is in effect at the time of exercise a
registration statement under the Securities Act of 1933
permitting the resale to the public of shares acquired under
the Plan, the holder of the option shall, except to the
extent determined by the Committee that such is not required,
(i) represent and warrant in writing to the Company
that the shares acquired are begin acquired for investment and
not with a view of the distribution thereof, (ii)
acknowledge that the shares acquired may not be sold unless
registered for sale under said Act or pursuant to an
exemption from such registration, and (iii) agree that the
certificates evidencing such shares shall bear a legend to
the effect of clauses (i) and (ii).
9. Conditions of Exercise. Except as provided below, the
holder of an option must be serving as an
Eligible Director at the time the option is exercised. An
optionee who ceases to be an Eligible Director for any
reason other than death, disability, retirement or removal for
cause, may exercise the option at any time within
three months after the date of cessation, but only during the
ten year option period and only to the extent that the
option holder was entitled to exercise the option at the time
of such cessation.
Options may be exercised at any time during their ten year
option period by a director who retires pursuant
to the Company's mandatory retirement policy for directors or
who dies or who ceases to be an Eligible Director
by reason of disability but, in any such case, only to the
extent that the optionee was entitled to exercise the option
at the date of cessation of service as a director.
"Disability" shall have the meaning ascribed to it in Section
105(d)
(4) of the Internal Revenue Code of 1986, as amended.
An option held by an Eligible Director who is removed for
cause shall terminate immediately upon removal
as a director.
The Committee, at its sole discretion, may permit particular
holders of options to exercise an option to a
greater extent than provided herein.
10. Nontransferability of Options. No option granted
under the Plan shall be transferable otherwise than
by will or by the laws of descent and distribution, and an
option may be exercised during the lifetime of the holder
only by him.
11. Rights as a Stockholder. The holder of an option
shall not have any of the rights of a stockholder of
the Company with respect to the shares subject to an option
until a certificate or certificates for such shares shall
have been issued upon the exercise of the option.
12. Amendment and Termination.
12.1 The Plan shall terminate ten years after its
effective date and thereafter no options shall be granted
hereunder. All options outstanding at the time of termination
of the Plan shall continue in full force and effect in
accordance with and subject to the terms and conditions of the
Plan. The Board of Directors of the Company at
any time prior to that date may terminate the Plan or make such
amendments to it as the Board of Directors shall
deem advisable; provided, however, that except as provided in
Section 4, the Board of Directors may not, without
shareholder approval, increase the maximum number of shares as
to which options may be granted under the Plan,
change the class of persons eligible to receive options under
the Plan or change the number of options to be
granted to each eligible person under the Plan. No termination
or amendment of the Plan may, without the consent
of the holder of an option then existing, terminate his or her
option or materially and adversely affect rights under
the option.
12.2 This Plan may not be amended more than once every six
months other than to conform with changes
in the Internal Revenue Code, the Employee Retirement Income
Security Act, or the rules thereunder.
13. Automatic Termination of Option. Notwithstanding
anything contained herein to the contrary, if at any
time a holder of an option granted under this Plan becomes an
employee, officer or director of or a consultant to
an entity which the Committee determines is a competitor of the
Company, such option shall automatically
terminate as of the date such conflicting relationship was
established regardless of whether such option is
exercisable in whole or in part at such time.
PRELIMINARY COPY
FRONT OF CARD
CINTAS CORPORATION PROXY FOR ANNUAL
MEETING
6800 Cintas Blvd., P.O. Box 625737 - Cincinnati, Ohio
45262-5737
The undersigned hereby appoints RICHARDDirectors.
David T. FARMER, ROBERT
J. KOHLHEPP,
and DAVID T. JEANMOUGIN, 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 13, 1994 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. To amend the Articles of Incorporation concerning
Directors;
FOR AGAINST ABSTAIN
2. To amend the Articles of Incorporation to adopt the
Washington "Interested
Shareholder" Statute;
FOR AGAINST ABSTAIN
3. To adopt the 1994 Directors' Stock Option Plan;
FOR AGAINST ABSTAIN
4. Authority to establish the number of Directors to be
elected at the meeting at eight
(8).
FOR AGAINST ABSTAIN
5. Authority to elect eight (8) nominees listed below.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote 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)
PRELIMINARY COPY
BACK OF CARD
3. In their discretion the proxies are authorized to vote
upon such other business
as may
properly come before the meeting.
THIS PROXY WHEN PROPERY 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, 3, 4 and 5..
___________________________, 1994
_______________________________
_______________________________
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
Jeanmougin
Secretary