DEF 14A 1 abm-def14a_20180307.htm DEF 14A abm-def14a_20180307.htm

 

 

 

 


 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. ___)

 

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Definitive Proxy Statement

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ABM Industries Incorporated

 

(Name of Registrant as Specified in Its Charter)

 

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ONE TEAM, ONE MISSION:

TO MAKE A DIFFERENCE, EVERY PERSON,
EVERY DAY

 

 

 

 

 


 

 

 

 

 

 

February 7, 2018

 

 

 

Dear Fellow ABM Shareholders:

 

Our Mission Is to Make a Difference, Every Person, Every Day

At ABM, we are passionate about making a difference, every person, every day. Our team of 130,000 employees enthusiastically delivers exceptional facility services, tailored to the needs of our clients. We continually seek new and innovative ways to enhance our platform and to exceed expectations as we fulfill our 2020 Vision.

 

We Strengthened Our Leadership Position in Facilities Services

2017 was a momentous year for ABM. We operated for the first time under our new vertical industry group structure and made progress in promoting standard operating procedures that foster the ABM Way and drive efficiencies in our organization. On September 1, 2017, we completed the acquisition of GCA Services Group, the largest acquisition in the Company’s history. This strategically increases our capabilities in our education and industrial businesses and strengthens our leadership position.

 

Our Employees Are Fully Engaged in Our 2020 Vision

ABM reported record revenues of approximately $5.5 billion, an increase of 6% for fiscal 2017 compared to fiscal 2016. This performance was driven by a combination of organic revenue growth and acquisitions. In the latter part of our fiscal year, our team continued to navigate the complexities of our business transformation while beginning the integration of GCA Services Group. In addition, we faced external challenges with Hurricanes Harvey, Irma and Maria displacing thousands of our employees and clients. We not only met all of these challenges, but we rose above them, illustrating the strength and character of our people and our ability to drive results.

 

Our Board of Directors Supports Our Strategic Vision

Our Board strongly supports our 2020 Vision. I am very proud of the diversity of our Board. Three of our 10 directors are women, and our directors have varying ethnic and cultural backgrounds. Their different backgrounds and work experience enhance their role in providing oversight to our Company and fostering constructive dialogue. In addition, over the past four years, five new independent directors have joined our Board. The Board values our shareholders’ viewpoints and perspectives and is committed to the highest standards of corporate governance.

 

On behalf of our Board of Directors, our executive team and our entire organization, thank you for being an ABM shareholder.

 

 

Sincerely,

 

 

Scott Salmirs

President and Chief Executive Officer

 

ABM.com

NYSE Symbol: ABM

 


 

NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS

WHEN

Wednesday, March 7, 2018,
10:00 a.m. Eastern Time

PROXY VOTING – CAST YOUR VOTE RIGHT AWAY

Your vote is important. Even if you plan to attend the annual meeting in person, please vote as soon as possible using the Internet or by telephone, or by completing, signing, dating and returning your proxy card.

WHERE

ABM Industries Incorporated
Worldwide Corporate Headquarters
One Liberty Plaza, 7th Floor
New York, New York 10006

Using the Internet and voting at the website listed on the proxy card or the e-proxy notice;

Using the toll-free phone number listed on the proxy card/voting instruction form; or

Signing, dating and mailing the proxy card in the enclosed postage paid envelope.

ITEMS OF BUSINESS

 

1.

Election of four directors to serve three-year terms until the 2021 Annual Meeting and until their successors are duly elected and qualified.

 

2.

Advisory vote to approve executive compensation.

 

3.

Approval of the Amended and Restated 2006 Equity Incentive Plan.

 

4.

Ratification of the appointment of KPMG LLP as ABM’s independent registered public accounting firm for the current year.

 

5.

Transaction of such other business as may properly come before the meeting.

 

RECORD DATE

 

Shareholders of record at the close of business on January 16, 2018 are entitled to notice of, and to vote at the Annual Meeting.

 

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS

 

On or about February 7, 2018, we began mailing this Notice and Proxy Statement dated February 7, 2018, together with a proxy card, to shareholders. The Proxy Statement, Annual Report on Form 10-K for the fiscal year ended October 31, 2017, and the means to vote by Internet are available at www.proxyvote.com.

 

By Order of the Board of Directors,

Andrea R. Newborn

Executive Vice President, General Counsel

and Corporate Secretary

 

 


 

TABLE OF CONTENTS

 

 

 

Page

PROXY STATEMENT SUMMARY

 

1

01

 

 

GOVERNANCE

 

 

PROPOSAL 1–ELECTION OF DIRECTORS

 

7

CORPORATE GOVERNANCE AND BOARD MATTERS

 

13

The Board of Directors

 

13

Corporate Governance

 

13

Identifying and Evaluating Nominees for Directors

 

13

Board Leadership Structure

 

14

Director Independence

 

14

The Board’s Oversight of Risk Management

 

15

Mandatory Retirement

 

15

Committees

 

15

Board and Committee Attendance in Fiscal Year 2017

 

16

Compensation Committee Interlocks and Insider Participation

 

16

DIRECTOR COMPENSATION FOR FISCAL YEAR 2017

 

17

2017 Non-Employee Director Compensation

 

17

2017 Non-Employee Director Compensation Table

 

18

Non-Employee Director Deferred Compensation Plan

 

19

Other Arrangements

 

19

Director Stock Ownership Policy

 

19

02

 

 

EXECUTIVE COMPENSATION

 

 

PROPOSAL 2–ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

21

COMPENSATION DISCUSSION AND ANALYSIS

 

22

Our Compensation Philosophy and Practices

 

22

How We Compensated Our NEOs in 2017

 

26

Other Compensation and Governance-Related Matters

 

35

Compensation Committee Report

 

38

Additional Information About Executive Compensation

 

39

2017 Summary Compensation Table

 

39

Grants of Plan-Based Awards During Fiscal Year 2017

 

40

Outstanding Equity Awards at 2017 Fiscal Year-End

 

41

Option Exercises and Stock Vested in Fiscal Year 2017

 

42

Pension Benefits at 2017 Fiscal Year-End

 

42

Nonqualified Deferred Compensation in Fiscal Year 2017

 

43

Potential Benefits on Termination

 

44

03

 

 

2006 EQUITY INCENTIVE PLAN

 

 

PROPOSAL 3–APPROVAL OF THE AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN

 

49

Proposal Summary

 

49

2006 Equity Incentive Plan Summary

 

50

New Plan Benefits

 

54

04

 

 

AUDIT MATTERS

 

 

PROPOSAL 4–RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

56

AUDIT-RELATED MATTERS

 

57

Audit Committee Report

 

57

Principal Accounting Firm Fees and Services

 

58

Policy on Preapproval of Independent Registered Public Accounting Firm Services

 

58

ABM Industries Incorporated 2018 Proxy Statement     i


 

 

 

ii     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information you should consider. You should read the entire Proxy Statement carefully before voting.

 

 

 

Annual Meeting of Shareholders

 

 

Time and Date:

 

Wednesday, March 7, 2018

10:00 a.m. Eastern Time

 

Place:

 

ABM Industries Incorporated

One Liberty Plaza, 7th Floor

New York, New York 10006

 

 

Record Date:

 

January 16, 2018

 

Stockholders of ABM as of the Record Date are entitled to vote. Each share of ABM common stock is entitled to one vote for each director nominee and one vote for each of the other proposals.

 

Voting Matters

 

Board Proposals

Board Vote

Recommendation

Page Reference

(for more detail)

 

01

 

Election of Directors

 

FOR EACH DIRECTOR NOMINEE

 

7

02

 

Advisory vote to approve executive compensation

 

FOR

 

 

21

 

03

 

Approval of the Amended and Restated 2006 Equity Incentive Plan

 

FOR

 

 

49

04

 

Ratification of the appointment of KPMG LLP as our independent registered public accounting firm

 

FOR

 

 

56

 

Board Nominees

 

The following table provides summary information about each director who is nominated for election.

 

Name

Age

Director

Since

Occupation

Independent

Committee

Assignments

Linda Chavez

70

1997

President, Becoming American Institute

Yes

Compensation;

Governance, Chair

J. Philip Ferguson

72

2009

Former Vice-Chairman, University of Texas Investment Management Company

Yes

Audit;

Governance

Art A. Garcia

56

2017

Executive Vice President and Chief Financial Officer, Ryder System, Inc.

Yes

Audit;

Strategy and Enterprise Risk

Scott Salmirs

55

2015

President and Chief Executive Officer, ABM Industries Incorporated

No

None

ABM Industries Incorporated 2018 Proxy Statement     1


 

 

 

2017 PERFORMANCE AT A GLANCE

 

OUR 2020 VISION: Transforming Our Company

 

 

Our 2020 Vision Continues

 

In 2017, we continued our 2020 Vision transformation. Notably, we:

 

 

began operating under our new vertical industry group structure;

 

made progress in promoting standard operating procedures that foster the ABM Way and drive efficiencies;

 

reported record revenues of $5.5 billion, an increase of 6% for fiscal year 2017 compared to fiscal year 2016;

 

strengthened our senior management team; and

 

divested our non-core Government Services Business.

 

GCA Acquisition

 

On September 1, 2017, we completed the acquisition of GCA Services Group (“GCA”), a leading provider of facility services in the education and commercial industries, specializing in facilities maintenance, janitorial services, grounds management, vehicle services and outsourced workforce solutions. The GCA acquisition strategically increases our capabilities in our education and industrial businesses and strengthens our leadership position in integrated facilities services.

 

Shareholder Value Delivered

 

Over the last five years, ABM’s cumulative total shareholder return exceeded both the S&P 500 Index and the S&P SmallCap 600 Index. The following graph compares the cumulative total shareholder return on ABM common stock for the last five full fiscal years with the cumulative total returns on the S&P 500 Index and the S&P SmallCap 600 Index, assuming that $100 was invested in ABM common stock and in each of the other indices on October 31, 2012, and that all dividends were reinvested. The comparisons in the graph are not intended to forecast the future performance of ABM’s common stock.

 

Comparison of Five-Year Cumulative Total Return*

*This performance graph shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission, or subject to Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.

2     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

CORPORATE GOVERNANCE AND BOARD HIGHLIGHTS

 

Our Board of Directors (the “Board”) is committed to corporate governance practices that drive long-term shareholder value. All of our directors other than our CEO are independent, all committee members are independent and the positions of Chairman of the Board and CEO are separate. At each of our Board meetings, the independent members of the Board meet in executive session as do the members of our Audit, Compensation and Governance Committees during committee meetings. We are also committed to Board refreshment and diversity, with 60% of our Board members having served on the Board for four or fewer years, and 60% of our Board is diverse. All of our Audit Committee members have financial expertise and our Compensation Committee uses an independent compensation consultant. Summary information about our Board is provided below. See Part 1-Governance for more information.

 

The following charts reflect the tenure, age and relevant experience of our Board.

 

Name

Age

Director

since

Independent

Committee memberships

AC

CC

GC

SER

 

 

 

 

Linda Chavez

70

1997

Yes

 

*

 

 

 

 

 

J. Philip Ferguson

72

2009

Yes

 

 

 

 

 

 

Anthony G. Fernandes

72

2007

Yes

*

 

 

 

 

 

 

Art A. Garcia

56

2017

Yes

 

 

 

 

 

 

Thomas M. Gartland

60

2015

Yes

 

*

 

 

 

 

 

Sudhakar Kesavan

63

2012

Yes

 

 

 

 

 

 

 

Lauralee E. Martin

67

2015

Yes

 

 

 

 

 

 

Filippo Passerini

60

2017

Yes

 

 

*

 

 

 

Scott Salmirs

55

2015

No

 

 

 

 

 

 

 

 

Winifred (Wendy) M. Webb

59

2014

Yes

 

 

 

Legend:

AC – Audit Committee

CC – Compensation Committee

GC – Governance Committee

SER – Strategy and Enterprise Risk Committee

* Indicates Committee Chair

 

 

Experience and Expertise

 

 

 Business Leadership

 

 Financial/Investment

10

 

 

 

 

 

 

 

 

 

 

 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industry Experience

 

Risk Oversight

3

 

 

 

 

 

 

 

 

 

 

 10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Public Company Board Experience

 

Global

8

 

 

 

 

 

 

 

 

 

 

 8

 

 

 

 

 

 

 

 

 

 

 

ABM Industries Incorporated 2018 Proxy Statement     3


 

 

 

As reflected in the charts below, 90% of our Board is independent, 60% of our Board is diverse and a majority of our directors have served on the Board four years or less.

 

 

 

 

Independence

Diversity

Tenure

 

 

 

 

EXECUTIVE COMPENSATION HIGHLIGHTS

 

Our Compensation Practices

 

What We Do

 

What We Don’t Do

    Design Compensation Programs to Pay for Performance

 

    No Fixed-Term Employment Agreements

    Use Equity Awards for Long-Term Incentive and Retention

 

    No Gross-Ups for Taxes

    Maintain a Clawback Policy

 

    No Repricing of Stock Options

    Utilize Short-Term and Long-Term Performance-Based Incentives/Measures

 

    No Hedging and Pledging of ABM Stock

    Use an Independent Compensation Consultant

 

    No Guaranteed Bonuses

    Require Significant Share Ownership by Executive Officers

 

 

 

    Limit Perquisites

 

 

 

    Use Double-Trigger Change-in-Control Arrangements

 

 

 

 

 

Our Executive Compensation Programs 

In fiscal year 2017, our compensation programs continued to reflect the compensation philosophy established by our Compensation Committee – one that is intended to align our executives’ compensation with our strategic goals, and motivate and retain executives who are critical to our future success and long-term performance. Key features of our compensation philosophy include:

4     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

 

Market Competitiveness Attract and retain key executives who possess the capability to lead the business forward by providing innovative and effective service to our clients and customers; 

Performance-Based Tie significant portions of compensation to performance metrics that align to our short-term and long-term business goals; and 

Align with Shareholder Interests Align each executive’s interests with shareholders’ interests by requiring significant stock ownership and paying a significant portion of compensation in equity subject to performance conditions and multi-year vesting requirements. 

 

Elements of Total Direct Compensation:

Base Salary – Fixed cash compensation with adjustments tied to individual responsibilities, performance and marketplace dynamics

Annual Cash Incentive Program – Focuses on near-term performance objectives reflecting company strategy

Performance-Based Equity Grants – Aligns business objectives with longer-term shareholder interests

Time-Based Equity Grants – Fosters retention by delivering more stable value and continuity of leadership

 

 

At-Risk Compensation

 

A significant portion of our executives’ compensation is at risk. At-risk compensation includes: annual cash incentive compensation (“bonus”) which is tied to annual financial and individual performance measures; performance-based equity awards which are paid only if performance metrics established at the beginning of the three-year performance period are met; and time-based equity awards which vest over a four-year period (collectively, performance and time-based long-term incentive awards are referred to as “LTIs”). As reflected in the following charts, over 80% of our CEO’s compensation is at risk. Approximately 70% of our other named executive officers’ (“NEOs”) compensation is at risk. Mr. McClure’s compensation was excluded from the information presented with respect to Other NEO Compensation because, due to his retirement on November 1, 2017, he did not receive the regular grant of equity awards in September 2017.

 

CEO Compensation

Other NEO Compensation

 

ABM Industries Incorporated 2018 Proxy Statement     5


 

 

 

 

 

6     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

 

Proposal Summary

 

We are asking our shareholders to elect four nominees to serve on the Board for a three-year term. Information about the Board and each director nominee is included in this section.  

 

Board Recommendation

 

The Board recommends that you vote “FOR” each director nominee.  After consideration of each nominee’s qualifications, skills and experience, as well as his or her prior contributions to our Board, the Board believes that each nominee should continue to serve on the Board.  

 

Voting  

 

Unless contrary instructions are received, the shares represented by a properly executed proxy will be voted “FOR” each of the director nominees presented below. If, at the time of the meeting, one or more of the director nominees has become unavailable to serve, the shares represented by proxies will be voted for the remaining nominees and for any substitute director nominee or nominees designated by the Board unless the size of the Board is reduced. The Board knows of no reason why any of the director nominees will be unavailable or unable to serve.  

 

Director nominees are elected by a majority of the votes cast. This means that the number of shares voted “for” a director’s election must exceed 50% of the number of votes cast for that director’s election. Votes cast include votes “for,” votes “against” and votes to withhold authority with respect to that director’s election, but excludes any abstentions or broker non-votes. Any nominee who does not receive a majority of votes cast “for” his or her election will be required to tender his or her resignation promptly following the failure to receive the required vote. The Governance Committee will then be required to make a recommendation to the Board as to whether the Board should accept the resignation, and the Board will be required to decide whether to accept the resignation.

 

 

Nominees for Election to Serve as Directors for a Term Expiring in 2021

 

Linda Chavez

Director Since 1997

Age 70

President, Becoming American Institute

Ms. Chavez is the president of the Becoming American Institute, a position she has held since 2014. Additionally, she is founder and chairman of the Center for Equal Opportunity, a position she has held since January 2006. Prior to her appointment as chairman, Ms. Chavez served as president of the Center for Equal Opportunity from January 1995 through December 2005. Ms. Chavez was a director of Pilgrim’s Pride Corporation from 2004 to 2008, where she served on the audit committee. Previously, she was a director of Greyhound Lines, Inc. from 1995 to 1999, when it was acquired by another company. Ms. Chavez has held numerous appointed positions, including chief executive officer of the National Commission on Migrant Education from 1988 to 1992, chief executive officer of the U.S. Commission on Civil Rights from 1983 to 1985, and White House director of public liaison in 1985. In 1992, she was elected by the United Nations Commission on Human Rights to serve a four-year term as U.S. Expert to the U.N. Sub-Commission on the Prevention of Discrimination and Protection of Minorities. She is a 2006 graduate of the UCLA Anderson Graduate School of Management Director Training and Certification Program and served on the advisory board of the Outstanding Directors Exchange in 2008 and 2009. Ms. Chavez serves on the board of Research Electro-Optics, a privately held company. Ms. Chavez also serves or has served on numerous nonprofit boards. She is an author and nationally syndicated columnist and television commentator and writes extensively about public policy issues.

 

Ms. Chavez’s qualifications to serve on our Board include her extensive knowledge of, and experience in, government relations and her leadership skills and corporate governance experience gained during her service as a public company director and her involvement with nonprofit organizations. Ms. Chavez brings valuable public company board experience, compensation expertise, financial experience, public policy experience, and government and government relations experience to our Board.

ABM Industries Incorporated 2018 Proxy Statement     7


 

 

 

 

J. Philip Ferguson

Director Since 2009

Age 72

Former Vice-Chairman, University of Texas Investment Management Company

Mr. Ferguson has spent over 45 years in the investment management business, currently serving on the board of managers of Salient Partners, on the investment committee for Silver Ventures, on the investment board for San Manuel Band of Mission Indians, and as non-executive chair of the investment committee of Ascendant Advisors. Mr. Ferguson served until April 2012 on the board of directors of the University of Texas Investment Management Company (UTIMCO), a position he held since August 2003. He chaired the UTIMCO compensation committee and served on its risk and policy committees. Mr. Ferguson also serves on the advisory committee of the MBA Investment Fund at the McCombs School of Business at the University of Texas - Austin, a position held since March 2005, and is a member of the Investment Committee for Houston Endowment Inc. Mr. Ferguson held various executive positions with AIM Capital Management, Inc. (now Invesco AIM) from 2000 to 2007, serving most recently as president and chief investment officer. Previously, he held senior positions at several investment management firms, including: managing partner at Beutel, Goodman & Company; senior vice president at Lehman Brothers, Inc.; and vice president of Goldman, Sachs & Company. Mr. Ferguson also serves or has served on various investment and civic boards, including the Investment Advisor Association, the Houston Ballet, the Memorial Hermann Foundation, Museum of Fine Arts, Houston, and on the Chancellor’s Advisory Council of Texas Christian University.

 

Mr. Ferguson’s qualifications to serve on our Board include his extensive business and financial experience gained from working in the investment management industry for over 45 years. Mr. Ferguson brings valuable operations, mergers and acquisitions, sales and marketing, government and government relations, compensation, strategic transactions, investor relations and public company board experience to our Board.

 

 

Art A. Garcia

Director Since 2017

Age 56

Executive Vice President and Chief Financial Officer, Ryder System, Inc.

Mr. Garcia is the executive vice president and chief financial officer of Ryder System, Inc., a $6.8 billion commercial fleet and supply chain management solutions company, a position held since 2010. He is a member of Ryder’s executive leadership team. Prior to that, Mr. Garcia served as senior vice president, controller and chief accounting officer of Ryder from 2005 to 2010. Mr. Garcia joined Ryder in 1997 as senior manager of corporate accounting. He later served as director of corporate accounting and, subsequently, as group director of accounting services. Prior to joining Ryder, Mr. Garcia spent 14 years with the Miami office of the accounting firm Coopers & Lybrand LLP as senior manager of business assurance.

 

Mr. Garcia’s qualifications to serve on our Board include his extensive business, financial and management experience and his experience as a senior financial officer. Mr. Garcia brings valuable accounting, financial management and supply chain experience to our Board.

8     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

 

Scott Salmirs

Director Since 2015

Age 55

President and Chief Executive Officer, ABM Industries Incorporated

Mr. Salmirs is president and chief executive officer of the Company, a position held since March 2015. Previously, he served as executive vice president of the Company from September 2014 to March 2015, with global responsibility for the Company’s aviation division and all international activities. Mr. Salmirs served as executive vice president of ABM Janitorial Services – Northeast from 2003 to December 2014. Prior to joining the Company, Mr. Salmirs held various leadership positions at Goldman, Sachs & Company, Lehman Brothers, Inc., and CBRE. Mr. Salmirs also serves on the board of Outreach, a New York nonprofit organization dedicated to rehabilitating teen drug users, is a founding board member of Donate Eight, a nonprofit group associated with LiveOnNY, and also serves on the Business Advisory Council for the business program at SUNY Oneonta.

 

Mr. Salmirs’ qualifications to serve on our Board include his experience in the facility services industry, and his knowledge of and perspective on the Company as its president and chief executive officer. Mr. Salmirs brings valuable leadership skills and operations, financial management, industry, mergers and acquisitions, sales and marketing, and global operations experience to the Board.

 

 

Directors Whose Terms Expire in 2020

 

Anthony G. Fernandes

Director Since 2007

Age 72

Former Chairman, Chief Executive Officer and President of Philip Services Corporation

Mr. Fernandes served as chairman, chief executive officer and president of Philip Services Corporation from August 1999 to April 2002. Prior to joining Philip Services Corporation, Mr. Fernandes had a 30-year career with the Atlantic Richfield Company (ARCO), serving as executive vice president and director of ARCO from 1994 to 1999; president of ARCO Coal, a subsidiary of ARCO, from 1990 to 1994; and corporate controller of ARCO from 1987 to 1990. He was a member of the ARCO board of directors and chairman of ARCO Chemical Company, a NYSE company 80% owned by ARCO. Additionally, he was a director of Tower Automotive, Inc. from 2003 to 2007, a director of Black and Veatch from 1999 to 2016, a director of Cytec Industries from 2002 to 2015, and a director of Baker Hughes Incorporated from 2001 to 2017. He also currently serves as a director of Envirosystems, Inc., a privately held Canadian company.

 

Mr. Fernandes’ qualifications to serve on our Board include his leadership and management experience as a chief executive officer, his experience as a senior financial officer, and his experience as a director of other public companies. Mr. Fernandes brings valuable operations, compensation, public company board, leadership, financial management, mergers and acquisitions and global operations experience to the Board.

ABM Industries Incorporated 2018 Proxy Statement     9


 

 

 

 

Thomas M. Gartland

Director Since 2015

Age 60

Former President, North America of Avis Budget Group, Inc.

Mr. Gartland retired in December 2014 from his role as president, North America for Avis Budget Group, Inc., a publicly traded leading global provider of vehicle rental services, a position he held from October 2011 to December 2014. Previously, he was executive vice president, Sales, Marketing and Customer Care at Avis Budget Group, Inc. from April 2008 to October 2011, where he developed the overall strategic direction for marketing and sales. Mr. Gartland was employed by JohnsonDiversey, Inc. from 1994 to 2008, in various high-level capacities, including as president of the company’s North American region from 2003 to 2008, vice president, Sales, Health and Hospitality from 2002 to 2003, vice president, Business Development from 1998 to 2002, with various positions of increasing responsibility within the company from 1994 to 1998. Prior to that, Mr. Gartland served as vice president and director of national accounts at Ecolab, Inc. from 1980 to 1994. Mr. Gartland serves on the board of directors of Xenia Hotels & Resorts, Inc., a publicly traded, self-advised and self-administered REIT that invests primarily in premium full-service, lifestyle and urban upscale hotels.

 

Mr. Gartland’s qualifications to serve on our Board include his extensive experience in senior executive positions at major, multinational companies, including sales, operations, financial management, leadership, and mergers and acquisitions. He also brings public company board experience to our Board.

 

 

Winifred (Wendy) M. Webb

Director Since 2014

Age 59

Chief Executive Officer, Kestrel Corporate Advisors

Ms. Webb is chief executive officer of Kestrel Corporate Advisors, a position she has held since February 2013. From January 2010 to January 2013, she was managing director for Tennenbaum Capital Partners, LLC. Ms. Webb was a member of the corporate executive team as chief communications and investor relations officer and senior advisor for Ticketmaster Entertainment Inc. from April 2008 to January 2010. She served for 20 years with The Walt Disney Company, from 1988 to 2008, primarily as corporate senior vice president of investor relations and shareholder services responsible for overseeing Disney’s strategic financial communications worldwide and governance outreach. She was also executive director for The Walt Disney Company Foundation. Her previous roles included investment banking positions with PaineWebber Inc. and Lehman Brothers Kuhn Loeb. A member of the board of directors of publicly traded 9 Spokes International Limited from 2015, and of TiVo Inc. from 2016 until it was acquired in September 2016, of Jack in the Box Inc. from 2008 to 2014, and of nonprofit PetSmart Charities, Inc. from 2014 to 2016, Ms. Webb is an NACD Board Leadership Fellow, the highest level of credentialing for corporate directors offered by The National Association of Corporate Directors. She also serves as co-chair of Women Corporate Directors, Los Angeles/Orange County Chapter.

 

Ms. Webb’s qualifications to serve on our Board include her experience in senior management at global public companies and her experience in the global financial services industry. Ms. Webb brings valuable operations, public company board, finance, investor relations, communications, media and public relations, treasury, corporate governance, sales and marketing, global operations, corporate social responsibility, strategic planning, mergers and acquisitions, investment banking and capital markets experience to our Board.

 

10     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

Directors Whose Terms Expire in 2019

 

Sudhakar Kesavan

Director Since 2012

Age 63

Chairman and Chief Executive Officer, ICF International

Mr. Kesavan is chairman and chief executive officer of ICF International, a publicly traded company that is a leading provider of consulting services and technology solutions to government and commercial clients, a position held since 1999. He has also been a director of ICF International since June 1999. Previously, Mr. Kesavan served as the president of ICF Consulting Group, a subsidiary of ICF Kaiser, from 1997 to 1999. Mr. Kesavan serves on the board of the Northern Virginia Technology Council. He also serves as board member emeritus of the Rainforest Alliance, a New York-based nonprofit environmental organization, on the board of Inova Health Systems, a not-for-profit healthcare system based in Northern Virginia, and is a trustee of the Shakespeare Theater Company in Washington, DC.

 

Mr. Kesavan’s qualifications to serve on our Board include his leadership and operational experience gained from serving as a chief executive officer and director of another public company. Mr. Kesavan brings valuable experience leading both organic growth and acquisition activities, a thorough understanding of corporate governance, compensation expertise, operations, industry, public company board, financial, mergers and acquisitions, government and government relations, and global operations experience to our Board.

 

 

Lauralee E. Martin

Director Since 2015

Age 67

Former President and Chief Executive Officer of HCP, Inc.

Ms. Martin served as chief executive officer and president of HCP, Inc., a real estate investment trust focusing on properties serving the healthcare industry, from October 2013 to July 2016. Prior to joining HCP in October 2013, Ms. Martin was employed by Jones Lang LaSalle Incorporated, one of the world’s leading real estate services and money management firms, in various high-level capacities, including as chief executive officer, Americas beginning in January 2013. Prior to that, she was executive vice president and chief financial officer since January 2002, and was appointed to the additional position of chief operating officer in January 2005. Ms. Martin served on its board of directors from 2005 until May 2013. Ms. Martin previously held positions with Heller Financial as its chief financial officer, senior group president – Heller Financial Real Estate, Equipment Financing and Small Business Lending and served as president of its Real Estate group. Ms. Martin was also a member of the Heller Financial board of directors. Ms. Martin has served on the Board of Kaiser Aluminum Corporation since 2010, and on the Board of QuadReal Property Group since December 2016. She previously served as a director of HCP, Inc. from 2008 to July 2016, of KeyCorp from 2003 through 2010, and of Gables Residential Trust from 1994 through 2005. Ms. Martin served as a trustee of the Urban Land Institute and the International Council of Shopping Centers.

 

Ms. Martin’s qualifications to serve on our Board include her leadership and management experience gained from her positions as a chief executive officer, chief financial officer, and chief operating officer. Ms. Martin brings valuable knowledge to our Board in all aspects of corporate financial and operational matters, including the oversight of complex financial, accounting and corporate infrastructure functions, evaluation of acquisition opportunities, and investor relations. Her service on the boards of directors of other public companies has contributed to her expertise in corporate governance matters.

ABM Industries Incorporated 2018 Proxy Statement     11


 

 

 

 

Filippo Passerini

Director Since 2017

Age 60

Operating Executive, Carlyle Group

Mr. Passerini has been an operating executive in U.S. Buyouts at Carlyle Group since 2015. Prior to that, Mr. Passerini served as Procter & Gamble Company’s group president, Global Business Services (GBS) and chief information officer (CIO), positions he held since February 2008 and July 2004, respectively. Mr. Passerini joined Procter & Gamble, a leading multinational manufacturer of consumer goods, in 1981 and held executive positions in the United Kingdom, Greece, Italy, Turkey, Latin America and the United States. While with the Procter & Gamble organization, he oversaw more than 170 distinct services in 70 countries and led the integration of Procter & Gamble’s IT and services groups to form GBS, one of the largest and most progressive shared services organizations in the world. Mr. Passerini has served as a director of Integer Holdings Corporation since 2015 and of United Rentals, Inc. since 2009. He is a member of the CIO Hall of Fame and has received numerous awards, including: the inaugural Fisher-Hopper Prize for Lifetime Achievement in CIO Leadership; Shared Service Thought Leader of the Year; and InformationWeek’s Chief of the Year.

Mr. Passerini’s qualifications to serve on our board include his significant global experience in operations, technology and general management roles. He is recognized as a thought leader in digital technology and shared services, and known for creating new, progressive business models and driving innovation. Mr. Passerini brings extensive experience in operations, information technology and shared services, as well as public company board experience to our Board.

 

12     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

The Board of Directors

Our Board of Directors is divided into three classes serving staggered three-year terms. Directors whose terms expire in 2018 are Linda Chavez, J. Philip Ferguson, Art A. Garcia, and Scott Salmirs.

 

Age Director Since independent Audit Compensation Governance strategy and Enterprise Risk Business Leadership Industry Experience Public Company Board Financial/investment Risk Oversight Global

 

 

Committee

Qualifications

Name and

Current Position

Linda Chavez

  President, Becoming American Institute

70

1997

YES

 

Chair

 

 

 

J. Philip Ferguson

  Former Vice Chairman, University of Texas Investment
  Management Company

72

2009

YES

 

 

 

 

Anthony G. Fernandes

  Former Chairman, Chief Executive Officer and President of
  Philip Services Corporation

72

2007

YES

Chair

 

 

 

Art A. Garcia

  Executive Vice President and Chief Financial Officer of  
  Ryder Systems, Inc.

56

2017

YES

 

 

 

 

Thomas M. Gartland

  Former President, North America of Avis Budget Group, Inc.

60

2015

YES

 

Chair

 

 

Sudhakar Kesavan*

  Chairman and Chief Executive Officer, ICF International

63

2012

YES

 

 

 

Lauralee E. Martin

  Former President and Chief Executive Officer, HCP, Inc.

67

2015

YES

 

 

Filippo Passerini

  Operating Executive, Carlyle Group

60

2017

YES

 

 

Chair

 

Scott Salmirs

  President and Chief Executive Officer, ABM Industries

  Incorporated

55

2015

NO

 

 

 

 

 

Winifred M. Webb

  Chief Executive Officer, Kestrel Corporate Advisors

59

2014

YES

 

 

 

*As Chairman of the Board, Mr. Kesavan attends all committee meetings and is a member of the Governance Committee.

 

 

Corporate Governance

Our Board has adopted Corporate Governance Principles that reflect our commitment to good corporate governance and the role of governance in building long-term shareholder value. Our Corporate Governance Principles, which include our independence standards, can be found on our website at http://investor.abm.com/corporate-governance.cfm. Other information relating to our corporate governance is also available on our website at the same address, including our Bylaws, Code of Business Conduct, and the Charters of our Audit Committee, Compensation Committee, Governance Committee, and Strategy and Enterprise Risk Committee. These documents are also available in printed hard-copy format upon written request to the Corporate Secretary at the Company’s corporate headquarters.

Identifying and Evaluating Nominees for Directors

Our Board is responsible for selecting nominees for election as directors. The Board delegates the screening process to the Governance Committee with the expectation that other members of the Board will participate in this process, as appropriate. The Governance Committee periodically reviews the skills and types of experience that it believes should be represented on the Board in light of the Company’s current business needs and strategy. The Governance Committee then uses this information to consider whether all of the identified skills and experience are represented on the Board. Based upon its review, the Committee may recommend to the Board that the expertise of the current

ABM Industries Incorporated 2018 Proxy Statement     13


 

 

 

members should be supplemented. The Committee takes these factors into account when looking for candidates for the Board. Candidates recommended by the Governance Committee are subject to approval by the full Board. Our Governance Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are anticipated because of retirement or otherwise. In the event that any vacancy is anticipated, or otherwise arises, the Governance Committee considers various potential candidates for director.

Our Governance Committee recommends to the Board the criteria for director candidates, and the Board establishes the criteria. The Governance Committee is also responsible for reviewing with the Board the requisite skills and characteristics of new Board candidates and current Board members in the context of the current composition of the Board.

In analyzing director nominations and director vacancies, our Governance Committee seeks to recommend candidates for director positions who will create a collective membership on the Board with varied experience and perspectives. The Governance Committee believes that this will contribute to a Board that reflects diversity, including, but not limited to, gender, ethnicity, background and experience. We do not have a policy that requires specified types of diverse backgrounds. The Governance Committee strives to recommend candidates who demonstrate leadership and significant experience in a specific area or endeavor, understand the role of a public company director and can provide insights and practical wisdom based on their experience and expertise.

The Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director, such as search firms and the relationships of current directors. Candidates may also come to the attention of the Governance Committee through shareholders or other persons. These candidates are evaluated at regular or special meetings of the Governance Committee and may be considered at any point during the year.

Our directors are expected to prepare for, attend and participate in Board meetings and meetings of the Committees of the Board on which they serve. They are also expected to meet as frequently and spend as much time as necessary to properly discharge their responsibilities and duties as directors and to arrange their schedules so that other existing and planned future commitments do not materially interfere with their service as a director. Ordinarily, directors who are full-time employees of ABM or who serve as chief executive officers or in equivalent positions at other companies may not serve on the boards of more than two other publicly traded companies. Other directors may not serve on the boards of more than four other publicly traded companies. Service on other boards and other commitments are considered by the Governance Committee and the Board when reviewing Board candidates.

 

Board Leadership Structure

The Company currently has separate persons serving as its Chairman and its Chief Executive Officer, in recognition of the differences between the two roles. The Chief Executive Officer (Mr. Salmirs) has general and active management over the business and affairs of the Company, subject to the control of the Board. Our Chairman (Mr. Kesavan) is charged with presiding over all meetings of the Board and our shareholders, as well as providing advice and counsel to the Chief Executive Officer, coordinating the preparation of agendas, keeping directors informed of matters impacting the Company, and maintaining contact with the Company’s General Counsel. The Board believes that at this time, the separation of these roles is the most appropriate and effective leadership structure for the Company and its shareholders. Sudhakar Kesavan currently serves as Chairman of the Board.

 

Director Independence

Our Corporate Governance Principles provide that a majority of our directors will be independent; our Audit Committee, Compensation Committee, Governance Committee, and Strategy and Enterprise Risk Committee consist solely of independent directors. Each year, our Governance Committee reviews the independence of each of our directors under the NYSE listing standards and considers any current or previous employment relationships as well as any transactions or relationships between our Company and our directors or any members of their immediate families (or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder). The purpose of this review is to determine whether any relationships or transactions exist that preclude a director from being deemed independent under the NYSE listing standards or are otherwise inconsistent with a determination that the director is independent.

Our Governance Committee has affirmatively determined and recommended to our Board, and the Board has agreed, that all of our directors, other than our Chief Executive Officer, should be designated as independent.

14     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

The Board’s Oversight of Risk Management

 

Company management is responsible for day-to-day risk management activities. The Board, acting directly and through its committees, is responsible for the oversight of the Company’s risk management. Our management has implemented an enterprise risk management (ERM) process designed to work across the Company to identify, assess, govern and manage risks and the Company’s response to those risks. Our Audit Committee periodically reviews our accounting, reporting and financial practices, including financial controls, and our compliance with certain legal and regulatory requirements. Our Compensation Committee oversees compensation-related risk management, as discussed in “Compensation Discussion and Analysis” later in this Proxy Statement.  Our Governance Committee oversees risks associated with board structure and other corporate governance policies and practices.  In fiscal year 2017, the Board established a Strategy and Enterprise Risk Committee to assist the Board in its oversight of Company strategy and enterprise risks.  

 

Each committee reports regularly to the full Board on its activities. In addition, the Board participates in regular discussions in executive session and with the Company’s senior management on many key subjects, including strategy, industry group performance, operations, information systems, finance, and legal.

Mandatory Retirement

The Board has adopted a mandatory retirement policy for non-employee directors. Under this policy, a director who attains the age of 73 during his or her current term must resign from the Board effective upon the conclusion of the annual shareholders meeting next following his or her 73rd birthday.

Committees

The Board has four standing committees: the Audit Committee, the Compensation Committee, the Governance Committee and the Strategy and Enterprise Risk Committee. During 2017, the Board reviewed its committee structure and, after considering the roles and responsibilities of each committee and their areas of responsibility, created a new committee, the Strategy and Enterprise Risk Committee, and disbanded the Corporate Citizenship and Communications Committee, allocating its responsibilities to the other standing committees of the Board. Each committee is composed solely of independent directors, meets periodically throughout the year, reports its actions and recommendations to the Board, receives reports from senior management, annually evaluates its performance and has the authority to retain outside advisors. Annually, or more frequently, as needed, our Governance Committee reviews committee assignments and makes recommendations to the Board with respect to committee membership, taking into consideration directors’ qualifications and the desire to refresh committee membership. The primary responsibilities of each committee, as well as membership of each committee, as of the date of this Proxy Statement, are summarized below. For more detail, see the committee charters on our website at www.abm.com.

 

Audit Committee

 

 

Anthony G. Fernandes, Chair

J. Philip Ferguson

Art A. Garcia

Lauralee E. Martin

Winifred M. Webb

 

Key Oversight Responsibilities

 

 

 Independent auditor, including audit/nonaudit services provided

 Scope and results of the independent auditor’s audit

 Financial reporting activities and accounting standards/principles used

 Internal audit functions

 Disclosure controls and internal controls

 

 

The Board has determined that each member of the Audit Committee is financially literate and that each qualifies as an “audit committee financial expert” under the definition promulgated by the Securities and Exchange Commission.

 

 

 

The Audit Committee met six times in fiscal year 2017.

 

ABM Industries Incorporated 2018 Proxy Statement     15


 

 

 

Compensation Committee

 

 

Thomas M. Gartland, Chair

Linda Chavez

Lauralee E. Martin

Filippo Passerini

Key Oversight Responsibilities

 

 

 CEO compensation and evaluation

 Executive incentive compensation

 Equity plan and awards

 Review of compensation structure

 Executive employment and severance agreements

 

 

 

The Compensation Committee met eight times in fiscal year 2017.

 

Governance Committee

 

 

Linda Chavez, Chair

J. Philip Ferguson

Thomas M. Gartland

Sudhakar Kesavan

Key Oversight Responsibilities

 

 

 Director recruitment

 Corporate governance

 Board committee structure and membership

 Director compensation

 Executive and Board Succession planning

 

 

 

The Governance Committee met five times in fiscal year 2017.

 

 

Strategy and Enterprise Risk Committee

 

 

Filippo Passerini, Chair

Anthony G. Fernandes

Art A. Garcia

Winifred M. Webb

 

Key Oversight Responsibilities

 

 

 Strategy development

 Strategy implementation

 Enterprise risk assessment

 

 

 

The Strategy and Enterprise Risk Committee, formed in March 2017, met two times in fiscal year 2017.

 

 

 

Board and Committee Attendance in Fiscal Year 2017 

During fiscal year 2017, the Board held 12 meetings. Together, the directors attended 99% of the combined total meetings of the full Board and the committees on which they served in fiscal year 2017, and no director attended less than 90% of the combined total meetings of the full Board and the committees on which he or she served in fiscal year 2017. Our Board meets in executive session during each regularly scheduled Board meeting and may meet in executive session during specially called meetings.

Our directors attend our annual meetings of shareholders, absent a conflict or other extenuating circumstance. In fiscal year 2017, all of our directors attended the annual meeting of shareholders.  

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee during fiscal year 2017 or as of the date of this Proxy Statement is or has been an officer or employee of the Company, and no executive officer of the Company served on the compensation committee or board of any company that employed any member of the Company’s Compensation Committee or Board of Directors.

 

 

16     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

 

DIRECTOR COMPENSATION FOR FISCAL YEAR 2017

 

ABM compensates non-employee directors through a combination of annual cash retainers, fees relating to chairing or serving on a committee, and equity grants. The Governance Committee reviews the compensation of non-employee directors periodically and recommends changes to the Board whenever it deems appropriate. Semler Brossy Consulting Group, LLC (“Semler Brossy”), the Compensation Committee’s independent consultant, periodically provides information regarding non-employee director compensation to the Governance Committee. In fiscal year 2017, Semler Brossy reviewed the existing non-employee director compensation program. Based on this review, the Board approved an increase, effective November 1, 2017, in the annual cash retainer for all directors, other than the Chairman of the Board, from $70,000 to $80,000 and an increase, effective November 1, 2017, in the annual cash retainer for members of the Governance Committee and Strategy and Enterprise Risk Committee from $7,500 to $10,000. Additionally, the Governance Committee approved an increase, effective November 1, 2017, in the annual equity retainer for all directors, other than the Chairman of the Board, from $110,000 to $125,000 and approved a change in the vesting schedule for director equity grants from a three-year vesting schedule to a one-year vesting schedule. Directors who retire pursuant to our Director Retirement Policy will receive an additional cash payment in lieu of the annual equity grant equal to the prorated value of the equity grant to the date of retirement. The following table describes the components of the non-employee director compensation program in effect during 2017 compared to the changes made for 2018.

 

 

2017 Non-Employee Director Compensation

 

Compensation Element

2017 Compensation Program

2018 Compensation Program

Annual Board Cash Retainer

$175,000 for Chairman of the Board;

$70,000 for other non-employee directors

$175,000 for Chairman of the Board;

$80,000 for other non-employee directors

Annual Board Equity Retainer

$175,000 for Chairman of the Board;

$110,000 for other non-employee directors (vesting ratably over three years)

$175,000 for Chairman of the Board;

$125,000 for other non-employee directors (vesting after one year)

Board and Committee Attendance Fees

None

None

Annual Chair Fees

$15,000 for Audit Chair;

$10,000 for Compensation Chair;

$7,500 for Governance Chair;

$7,500 for Strategy and Enterprise Risk Chair

$15,000 for Audit Chair;

$10,000 for Compensation Chair;

$7,500 for Governance Chair;

$7,500 for Strategy and Enterprise Risk Chair

Annual Committee Member Retainer*

 

 

*The Chairman of the Board does not receive a separate retainer for Committee memberships

$20,000 for Audit members;

$12,500 for Compensation members;

$7,500 for Governance members;

$7,500 for Strategy and Enterprise Risk members

 

$20,000 for Audit members;

$12,500 for Compensation members;

$10,000 for Governance members;

$10,000 for Strategy and Enterprise Risk members

 

 

ABM Industries Incorporated 2018 Proxy Statement     17


 

 

 

The Governance Committee may recommend to the Board that directors who invest significant time above and beyond the normal requirements of service on the Board, or a committee thereof, receive $2,000 per day for such service. The Board may also determine that it is appropriate to compensate Board members (other than the Chairman of the Board) who are not serving on a particular committee of the Board for attendance at such committee’s meetings if the Board member’s attendance has been requested by the Chair of that committee. In such cases, the Board member may receive $2,000 for each such meeting attended. The Chairman of the Board is not eligible to receive such payments. ABM also reimburses its directors for out-of-pocket expenses incurred in attending Board and Committee meetings. Equity awards to non-employee directors are granted under our shareholder-approved 2006 Equity Incentive Plan.

 

2017 Non-Employee Director Compensation Table

 

 

Fees

Earned or

Paid in

Cash(1)

 

Stock

Awards(2)

 

All Other

Compensation(3)

 

Total

 

  Name of Director

($)

 

($)

 

($)

 

($)

 

  Linda Chavez

 

99,261

 

 

109,965

 

 

730

 

 

209,956

 

  J. Philip Ferguson

 

101,022

 

 

109,965

 

 

8,052

 

 

219,039

 

  Anthony G. Fernandes

 

111,640

 

 

109,965

 

 

3,626

 

 

225,231

 

  Art A. Garcia

 

71,895

 

 

100,815

 

 

-

 

 

172,710

 

  Thomas M. Gartland

 

100,927

 

 

109,965

 

 

1,183

 

 

212,075

 

  Luke S. Helms(4)

 

50,269

 

-

 

 

76,545

 

 

126,814

 

  Maryellen C. Herringer(4)

 

91,264

 

-

 

 

164,523

 

 

255,787

 

  Sudhakar Kesavan(5)

 

146,418

 

 

164,114

 

 

5,855

 

 

316,387

 

  Lauralee E. Martin

 

95,544

 

 

109,965

 

 

1,183

 

 

206,692

 

  Filippo Passerini

 

71,895

 

 

100,815

 

 

-

 

 

172,710

 

  Winifred M. Webb

 

97,520

 

 

109,965

 

 

-

 

 

207,485

 

 

(1)

Amount includes annual cash retainers and Board and Committee fees.

(2)

The value of stock awards shown in the “Stock Awards” column is based on the grant date fair value computed in accordance with FASB ASC Topic No. 718. The grant date fair value of the equity awards shown in the “Stock Awards” column is based on the closing price of the Company’s common stock on the date of grant of the equity award. A director who becomes a Board member following the date of the last held annual meeting of shareholders receives a prorated grant of restricted stock units (“RSUs”) based on the date that he or she joined the Board. As Messrs. Garcia and Passerini were named to the Board in January 2017, each received a prorated grant of 2,331 RSUs on March 10, 2017. In addition, each non-employee director who was expected to continue on the Board after the 2017 Annual Meeting received an annual grant on January 10, 2017. For each then-current director, the grant for 2017 on January 10, 2017 was 2,779 RSUs, which was calculated by dividing $110,000 by $39.57. In connection with his appointment as Chairman of the Board, Mr. Kesavan received an additional grant of 1,252 RSUs on March 10, 2017. Director RSUs granted in fiscal year 2017 vest ratably over a three-year period, except that in the case of a mandatory retirement, RSUs immediately vest upon retirement. RSUs held by each director as of October 31, 2017 were: Ms. Chavez, 13,181; Mr. Ferguson, 6,899; Mr. Fernandes, 38,449; Mr. Garcia, 2,349; Mr. Gartland, 6,035; Mr. Kesavan, 8,161; Ms. Martin, 6,035; Mr. Passerini, 2,349; and Ms. Webb, 11,560. As of October 31, 2017, the aggregate number of stock options (relating to grants prior to 2006) held by Ms. Chavez was 6,000.

(3)

Amounts shown include dividend equivalents paid with respect to prior Director RSU awards that were paid to non-employee directors in fiscal year 2017. Dividend equivalents are settled in Company stock when the underlying RSUs vest. Directors who defer RSUs under the Deferred Compensation Plan for Non-Employee Directors do not receive dividend equivalents on deferred RSUs until the deferral period ends. For Mr. Ferguson, the amount shown includes $2,197 in family/spousal travel. For Mr. Helms, the amount shown includes: $53,211 in dividend equivalent units paid upon the accelerated vesting of RSUs upon retirement; $18,334 cash payment in lieu of a prorated equity award; and a $5,000 donation to an organization designated by Mr. Helms. For Ms. Herringer, the amount shown includes: $127,480 in dividend equivalent units paid upon the accelerated vesting of RSUs upon retirement; $29,167 cash payment in lieu of a prorated equity award; a $5,000 donation to an organization designated by Ms. Herringer; and $2,876 in family/spousal travel in connection with Ms. Herringer’s retirement.

(4)

Mr. Helms and Ms. Herringer retired on March 8, 2017.

(5)

Chairman of the Board.

18     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

 

Non-Employee Director Deferred Compensation Plan

 

Non-employee directors are eligible to participate in the ABM Deferred Compensation Plan for Non-Employee Directors (“Director Deferred Compensation Plan”). Plan participants may elect to defer receipt of all or any portion of their annual cash retainers until they cease to be members of the Board, or to specified withdrawal dates (at least three years after their election), in accordance with the terms of the Director Deferred Compensation Plan. The amounts held in each director’s account are credited with interest quarterly at a rate based on the prime interest rate published in the Wall Street Journal on the last business day coinciding with or next preceding the valuation date. In addition, the plan permits directors to defer the settlement of Director RSUs to a date later than the vesting date.

 

Other Arrangements

 

ABM has entered into indemnification agreements with its directors. Among other things, these agreements require ABM to indemnify its directors to the fullest extent provided by Delaware law against certain liabilities that may arise in connection with their service as directors. ABM permits non-employee directors who were members of the Board on or before October 31, 2012 to participate in ABM’s health benefit plans. Directors who elect to participate pay the entire direct costs of participation in such plans. This benefit is not available to directors who join the Board after October 31, 2012. No directors are currently participating in ABM’s health benefit plans.

 

Director Stock Ownership Policy

 

Our Director Stock Ownership Policy requires directors to hold common stock (including unvested or deferred RSUs) having a value equivalent to five times his or her annual cash retainer within five years of becoming a director. Under this policy, directors who are not at their targeted stock ownership level within the five-year period must hold at least 50% of any net shares realized until they reach their target. “Net shares realized” means unrestricted shares acquired by a director under the 2006 Equity Incentive Plan or acquired pursuant to the exercise of an option, net of any shares sold to pay the exercise price. All directors are either at or above the targeted stock ownership levels or are still within the initial five-year period.

 

 

 

ABM Industries Incorporated 2018 Proxy Statement     19


 

 

 

20     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

PROPOSAL 2—ADVISORY VOTE TO APPROVE

EXECUTIVE COMPENSATION

 

Proposal Summary

 

We are asking our shareholders to approve, on an advisory basis, the Company’s executive compensation policies and practices as described in the Compensation Discussion and Analysis, accompanying tables and related narrative contained in this Proxy Statement.

 

Board Recommendation

 

The Board recommends that you vote “FOR” the following resolution:

 

RESOLVED—that the shareholders approve, on an advisory basis, the compensation of the Company’s executives named in the Summary Compensation Table, as disclosed in the Company’s 2018 Proxy Statement pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the compensation tables and other executive compensation disclosures.

 

Voting

 

Unless contrary instructions are received, the shares represented by a properly executed proxy will be voted “FOR” the preceding resolution. Your vote is advisory and so it will not be binding on the Board. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. The affirmative vote of the holders of a majority of the Common Stock represented in person or by proxy and entitled to vote on the proposal will be considered as an approval of the proposal.  

 

ABM Industries Incorporated 2018 Proxy Statement     21


 

 

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis describes our executive compensation program for our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the three other most highly compensated executive officers who are named in the summary compensation table (collectively, our “NEOs”). Our Compensation Committee (referred to as the “Committee” in this section of the Proxy Statement) oversees all aspects of our NEO compensation. Our NEOs for fiscal year 2017 are:

 

 

  

 Scott Salmirs, President and Chief Executive Officer

  

 D. Anthony Scaglione, Executive Vice President and Chief Financial Officer

  

 James P. McClure, Executive Vice President and Chief Operating Officer

  

 Scott J. Giacobbe, Executive Vice President

  

 Rene Jacobsen, Executive Vice President

Mr. McClure retired from the Company on November 1, 2017. Mr. Giacobbe succeeded Mr. McClure as Chief Operating Officer on November 1, 2017.

OUR COMPENSATION PHILOSOPHY AND PRACTICES

Compensation Philosophy

Our objective is to design an executive compensation program that encourages all of our leaders to produce strong financial results and create sustainable long-term value for our shareholders. To achieve this, we:

 

use evaluation criteria that include both internally measured performance (represented by our financial performance against our financial targets) and externally measured performance (represented by total shareholder return);

 

place significant weight on long-term equity compensation, thereby tying the total compensation of our executives to the achievement of sustained shareholder value creation; and

 

provide a mix of short-term annual cash incentive compensation and long-term performance-based equity compensation.

Best Practices

Following are some of the best practices we employ in our compensation program.

 

At-Will Employment.  We do not have fixed-term employment agreements with our NEOs.

 

Clawback Policy.  Our recoupment policy extends to both cash incentive and equity compensation, and permits us to recover incentive compensation paid to executives in connection with a restatement of the Company’s financial statements or in cases where the executive’s conduct would permit the Company to terminate him or her for “cause.”

 

No Single-Trigger Change-in-Control Payments.  We utilize double-trigger change-in-control provisions.

 

No Tax Gross-Ups.  We do not have tax gross-ups.

 

No Hedging or Pledging.  We prohibit hedging and pledging of Company stock.

 

Stock Ownership Guidelines. We require significant share ownership by our executive officers.

 

Limited Perquisites. Our executive officers receive limited perquisites.

22     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

2017 “Say-on-Pay” Vote Considerations

In March 2017, our say-on-pay proposal was approved by approximately 94% of votes cast by our shareholders and approximately 78% of shareholders voted to continue to hold a say-on-pay vote annually. The Committee and management are committed to strengthening our pay-for-performance correlation, as well as the overall design of our executive compensation program. The Committee and management will continue to use the annual say-on-pay vote as a guidepost for shareholder perspective.

Role of the Compensation Committee

The Committee is responsible for the design of the Company’s executive compensation program, and for reviewing the overall effectiveness of our executive compensation program to ensure the design achieves our objectives. The Committee:

 

approves CEO annual performance objectives and performance achievement;

 

approves our compensation market analysis process, as well as the companies used for compensation and design comparison purposes;

 

approves performance metrics for our annual and long-term incentive compensation programs;

 

approves non-CEO executive officer compensation, based on recommendations from the CEO; and

 

performs an annual evaluation of risk as it pertains to our Company-wide incentive compensation plans and programs.

Based on the Committee’s assessment of the CEO’s performance achievement against his performance objectives, the Committee recommends CEO compensation to the members of our Board who are both independent and “outside” directors under Section 162(m) of the Internal Revenue Code. This recommendation includes base pay levels, cash incentive compensation and equity awards. All elements of CEO pay are approved by such directors.

Role of Compensation Consultants

The Committee continued to engage Semler Brossy in fiscal year 2017 to serve as its independent compensation consultant. The Committee takes into consideration the advice of Semler Brossy to inform its decision-making process and has sole authority for retaining and terminating its consultant, as well as approving the terms of engagement, including fees. Semler Brossy works for the Committee and, with the approval of the Committee, has also provided services to the Governance Committee in connection with director compensation matters. Semler Brossy provides no services to the Company. The Committee has determined Semler Brossy to be independent from the Company. The Company’s management retains Willis Towers Watson as its primary compensation consultant to advise on program design, apprise management of evolving practices and trends, and perform other consulting services as needed. The Committee also considered the independence of Willis Towers Watson under applicable rules of the New York Stock Exchange. From time to time, the Committee may engage other consultants and advisors in connection with various compensation and benefits matters.

Use of Market Data and Our Compensation Comparator Group

The Committee uses compensation at our comparator group as one of its tools in connection with its assessment of our executive compensation programs and levels of compensation. Working with Semler Brossy, the Committee regularly reviews the various criteria by which it selects the Company’s Compensation Comparator Group (“CCG”). Companies in our CCG are generally selected with reference to the following criteria:

 

companies, like ABM, that provide business-to-business services, such as outsourcing, logistics management, food service, staffing, and cleaning;

 

companies in other industries that have a high ratio of employees to revenue or market capitalization; and

 

companies that generate annual revenue comparable to ABM.

 

The Committee’s decisions relating to NEO pay are informed by its review of the compensation practices reported in the proxy statements filed by the companies in the CCG. The Committee believes that the proxy data reviewed provides a reasonable indicator of total compensation paid by companies that recruit executives with skill sets similar

ABM Industries Incorporated 2018 Proxy Statement     23


 

 

to those which we seek in our executives. Compensation for our executives is typically managed within the ranges of compensation paid by companies in the CCG and general industry. While the Committee normally references the CCG median (50th percentile) for each compensation element, the Committee uses its judgment to determine pay levels necessary to pay for performance and attract and retain executive talent and places significant weight on individual job performance, experience, compensation history, future potential, internal comparisons, affordability, retention risk, and in the case of executives other than the CEO, the CEO’s recommendations.

 

 

2017 COMPENSATION COMPARATOR GROUP

ArcBest Corporation

Aramark Corporation

Brinker International, Inc.

The Brink’s Company

C. H. Robinson Worldwide, Inc.

Cintas Corporation

Convergys Corporation

Emcor Group, Inc.

Healthcare Services Group, Inc.

Insperity, Inc.

Iron Mountain Inc.

J.B. Hunt Transport Services, Inc.

Kelly Services, Inc.

Republic Services, Inc.

Robert Half International Inc.

Rollins Inc.

SP Plus Corporation

ServiceMaster

TrueBlue, Inc.

United Rentals, Inc.

Werner Enterprises, Inc.

 

In October 2016, the Committee reviewed the CCG and added United Rentals, Inc. and TrueBlue, Inc. to the CCG for fiscal year 2017, as they share business attributes with ABM. Correction Corporation of America and Rent-A-Center were eliminated from the Company’s 2017 CCG due to significant changes at these companies. The Committee has removed Brinker International, Inc. and Rollins Inc. from the Company’s 2018 CCG as these companies’ business and financial profiles no longer align with those of ABM. Stericycle, Inc. has been added to the Company’s 2018 CCG.

Pay-for-Performance Alignment

The following graph illustrates three-year realizable compensation of our NEOs compared to the compensation of NEOs in our CCG. Each point on the graph represents three-year realizable compensation of the NEOs in this group relative to his or her company’s three-year Total Shareholder Return (“TSR”) performance over the 2014–2016 period. ABM’s position in this graph shows that the Company’s pay for performance is aligned with that of our CCG.

 

 

TSR reflects share price appreciation, adjusted for dividends and stock splits.

 

Realizable compensation consists of: (1) actual base salary paid over the three-year period; (2) actual short-term incentive payouts over the three-year period; and (3) the 12/31/2016 market value of equity grants as listed below:

 

 

in-the-money value of stock options granted over the three-year period;

 

market value of time-vested restricted stock unit grants made over the three-year period based on the stock price at the end of the period; and

 

performance-based incentives: (i) as achieved, for performance cycles that have been completed through 2017; and (ii) as granted, for performance cycles that have not yet been completed, assuming target performance.

24     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

Elements of Compensation

The material components of our executive compensation program and their purposes and characteristics are summarized below.

 

Pay Element

Description and Purpose

Link to Business and Strategy

Base salary – payable in cash

 

Designed to recognize individual responsibilities, performance, leadership skills and time in role

Competitive base pay to help attract and retain strong executive talent

Annual review and adjustment, if appropriate

Increases are not automatic or guaranteed

Annual short-term incentives – payable in cash

 

Variable compensation measured by performance against annually established financial and individual performance targets

Design of short-term incentives is evaluated annually for alignment with Company strategy

Designed to reward annual performance related to key financial and operational measures

 

Long-term incentives – structured as equity awards, settled in Company stock

 

Variable compensation that consists of a mix of performance-based and time-vested equity awards

Designed to link incentives to long-term shareholder value creation

Performance-based equity programs are evaluated annually for alignment with Company strategy

Equity award mix and design of performance metrics reviewed annually

 

 

Using the elements of compensation described above, we structure our program in a way that places a significant portion of our executives’ compensation at risk. At-risk compensation includes: annual cash incentive compensation (“bonus”) which is tied to annual financial and individual performance measures; performance-based equity awards (“PSUs”) which are paid only if performance metrics established at the beginning of the three-year performance period are met; and time-based equity awards (“RSUs”) which vest over a four-year period. As reflected in the charts below, over 80% of our CEO’s compensation is at risk. Approximately 70% of our other named executive officers’ compensation is at risk. Mr. McClure’s compensation was excluded from the information presented relating to Other NEO Compensation because, due to his retirement on November 1, 2017, he did not receive the regular grant of equity awards in September 2017.

 

CEO Compensation

Other NEO Compensation

 

 

ABM Industries Incorporated 2018 Proxy Statement     25


 

 

HOW WE COMPENSATED OUR NEOS IN 2017

 

Summary Overview

 

The information below provides a summary overview of our NEOs’ 2017 compensation. Components of this compensation summary overview are discussed in detail beginning on page 28.

 

Scott Salmirs, President and CEO

 

 

 

 

Summary: Mr. Salmirs’ compensation of $4,686,371 for fiscal year 2017, as reported in the Summary Compensation Table, consisted of salary of $883,333, cash bonus of $805,320, equity grants of $2,949,955 and other compensation of $47,763. The cash bonus of $805,320, which reflects a payout of 89.5% of target, was based on the achievement of financial and safety objectives and the independent board members’ evaluation of his performance against his personal objectives.

 

2017 Accomplishments

 

  

Drove the continuing implementation of the Company’s 2020 Vision

  

Led the Company’s strategic acquisition of GCA Services Group

  

Enhanced the Company’s leadership team and engaged in significant stakeholder outreach

Fiscal 2017 Compensation

 

 

 

 

Base Pay at 10/31/2017

$

900,000

 

 

 

Bonus Target Opportunity

$

900,000

 

 

 

Bonus Payout

$

805,320

 

 

 

 

 

 

 

 

 

Long-Term Incentive Value (grant date fair value)

$

2,949,955

 

 

 

Performance-Based Awards

 

46,749

 

 

 

Time-Based Awards

 

26,238

 

 

 

 

 

D. Anthony Scaglione, Executive Vice President and CFO

 

 

 

 

Summary: Mr. Scaglione’s compensation of $1,905,588 for fiscal year 2017, as reported in the Summary Compensation Table, consisted of salary of $495,833, cash bonus of $339,465, equity grants of $1,049,942 and other compensation of $20,348. The cash bonus of $339,465, which reflects a payout of 97% of target, was based on the achievement of financial and safety objectives and the Compensation Committee’s evaluation of his performance against his personal objectives.

 

2017 Accomplishments

 

  

Structured the financing for, and led the due diligence of, the GCA Services Group acquisition

 

 

 

 

 

 

  

Supported implementation of 2020 Vision through establishment of

Fiscal 2017 Compensation

 

 

 

 

the Enterprise Services Center and procurement organization

Base Pay at 10/31/2017

$

500,000

 

  

Drove greater focus on safety and other risk management strategies

Bonus Target Opportunity

$

350,000

 

 

 

Bonus Payout

$

339,465

 

 

 

 

 

 

 

 

 

Long-Term Incentive Value (grant date fair value)

$

1,049,942

 

 

 

Performance-Based Awards

 

18,086

 

 

 

Time-Based Awards

 

7,932

 

 

 

 

26     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

James P. McClure, Executive Vice President and COO (retired on November 1, 2017)

 

 

 

 

Summary: Mr. McClure’s compensation of $1,640,018 for fiscal year 2017, as reported in the Summary Compensation Table, consisted of salary of $723,791, cash bonus of $487,438, equity grants of $391,545 and other compensation of $37,244. The cash bonus of $487,438, which reflects a payout of 89.5% of target, was based on the achievement of financial and safety objectives and the Compensation Committee’s evaluation of his performance against his personal objectives.

 

2017 Accomplishments

Led our industry groups during time of transformative change and contributed to successful manangement transitions

Effectively transitioned the COO role to Scott Giacobbe

 

Fiscal 2017 Compensation

 

 

 

 

Base Pay at 10/31/2017

$

726,164

 

 

 

BonusTarget Opportunity

$

544,623

 

 

 

Bonus Payout

$

487,438

 

 

 

 

 

 

 

 

 

Long-Term Incentive Value (grant date fair value)*

$

391,545

 

 

 

Performance-Based Awards

 

9,895

 

 

 

Time-Based Awards**

 

0

*

 

 

 

*

Forfeited upon retirement.

**

No awards made in light of announced retirement.

 

 

Scott J. Giacobbe, Executive Vice President and COO (effective November 1, 2017)

 

 

 

 

Summary: Mr. Giacobbe’s compensation of $1,571,322 for fiscal year 2017, as reported in the Summary Compensation Table, consisted of salary of $449,900, cash bonus of $344,575, equity grants of $734,928 and other compensation of $41,919. The cash bonus of $344,575, which reflects a payout of 89.5% of target, was based on the achievement of financial and safety objectives and the Compensation Committee’s evaluation of his performance against his personal objectives.

 

2017 Accomplishments

Successfully transitioned from president of our Technical Solutions group to COO

Effectively engaged in key customer outreach

 

 

 

 

Strengthened enterprise sales culture

Fiscal 2017 Compensation

 

 

 

 

 

Base Pay at 10/31/2017

$

451,376

 

 

 

Bonus Target Opportunity*

$

385,000

 

 

 

Bonus Payout

$

344,575

 

 

 

 

 

 

 

 

 

Long-Term Incentive Value (grant date fair value)

$

734,928

 

 

 

Performance-Based Awards

 

4,399

 

 

 

Time-Based Awards

 

13,739

 

 

 

 

*

Bonus target is based on a base pay of $550,000, which went into effect on November 1, 2017, reflecting Mr. Giacobbe’s new role as COO.

 

ABM Industries Incorporated 2018 Proxy Statement     27


 

 

Rene Jacobsen, Executive Vice President and President – Business & Industry

 

 

 

 

Summary: Mr. Jacobsen’s compensation of $1,508,773 for fiscal year 2017, as reported in the Summary Compensation Table, consisted of salary of $474,583, cash bonus of $265,380, equity grants of $734,893 and other compensation of $33,917. The cash bonus of $265,380, which reflects a payout of 88.5% of target, was based on the achievement of financial and safety objectives and the Compensation Committee’s evaluation of his performance against his personal objectives.

 

2017 Accomplishments

Led the Business & Industry group in achieving a 13.7% increase in 2017 operating profit over 2016, and an increase to 5.1% in operating profit margin over the same period

 

 

Led the succession of senior Business & Industry group management team

 

 

Created strategic alignment across Business & Industry Group regions

 

 

 

 

 

 

Fiscal 2017 Compensation

 

 

 

 

 

Base Pay at 10/31/2017

$

500,000

 

 

 

Bonus Target Opportunity

$

300,000

 

 

 

Bonus Payout

$

265,380

 

 

 

 

 

 

 

 

 

Long-Term Incentive Value (grant date fair value)

$

734,893

 

 

 

Performance-Based Awards

 

5,235

 

 

 

Time-Based Awards

 

12,943

 

 

 

 

 

2017 Base Salary

The Compensation Committee reviews total compensation, including base salaries, for executives in the first quarter of each fiscal year, and as needed, in connection with recruitment, promotions or other changes in responsibilities. Base salary amounts affect potential annual cash performance incentive payments and equity award grant amounts, since these other compensation elements are based on a percentage of base salary. The following table shows, for each NEO, such officer’s 2016 base salary and 2017 base salary. Annual changes in base salary typically become effective on January 1.

 

NEO

2016 Annual

Base Salary

2017 Annual

Base Salary

Scott Salmirs

$800,000

$900,000

D. Anthony Scaglione

$475,000

$500,000

James P. McClure

$711,926

$726,164

Scott J. Giacobbe

$442,525

$451,376

Rene Jacobsen

$450,000

$500,000

 

Mr. Salmirs’ salary increase of approximately 12.5% and Mr. Jacobsen’s salary increase of approximately 11% reflected performance and market-based considerations. On November 1, 2017, Mr. Giacobbe received an increase in base salary to $550,000 in connection with his promotion to Chief Operating Officer. He will next be eligible for an annual increase in base salary in January 2019.

 

2017 Annual Cash Incentive Compensation

 

Each year, the Committee reviews Company strategy and develops an annual cash incentive program (“CIP”) that is designed to incentivize behavior that will drive financial and individual performance objectives and achievement aligned with the Company’s strategic objectives. This process generally begins in the fourth quarter of the preceding fiscal year and culminates in the first quarter of the fiscal year, when relevant financial objectives and targets are

28     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

established by the Committee. As part of this process, the Committee reviews the Company’s strategic priorities and operating budget and market data in December of each year, and these factors inform the Committee’s decisions with respect to annual incentive opportunities.

 

The Committee approves financial objectives which are included in the CIP. It also approves the individual performance objectives for our CEO in consultation with our Board. The CEO approves the individual performance objectives of the other NEOs although the Committee has the discretion to change these individual performance objectives. Although the Committee bases annual cash incentive payments on the achievement of the specified performance objectives, it retains discretion in determining the actual payouts to the NEOs.  

 

CIP Performance Objective Weighting and Bonus Target

 

Each of our NEOs was eligible to earn an annual cash incentive award under the CIP in fiscal year 2017. Each NEO’s potential award was expressed as a percentage of his base salary, including threshold, target and maximum percentages. After the end of the fiscal year, the Committee determined the amount of each NEO’s actual annual incentive award (other than the CEO) based upon the achievement of a combination of corporate and individual goals as set out in the table below. The independent members of the Board determine CEO compensation, after taking into consideration the recommendations of the Committee.

 

The relative weights for each performance component of the CIP and the target bonus potential for each NEO, are set forth in the following table. Payout can range from zero to 167.5% of target.

 

2017 Annual Cash Incentive Program Weighting and Bonus Targets

 

Performance Objectives Weighting

 

Corporate

Commercial

Operations

Business

& Industry

Safety

Individual

Performance

Target

Bonus as

Percentage

of Salary

Scott Salmirs

60%

n/a

n/a

10%

30%

100%

D. Anthony Scaglione

60%

n/a

n/a

10%

30%

70%

James P. McClure

60%

n/a

n/a

10%

30%

75%

Scott J. Giacobbe

60%

n/a

n/a

10%

30%

70%

Rene Jacobsen

10%

20%

30%

10%

30%

60%

 

 

2017 Financial and Safety Objectives under Our CIP

 

In fiscal year 2017, financial metrics under our CIP included a combination of adjusted EBITDA margin compared to budget and income from continuing operations compared to budget, to provide balanced measurement across both factors (collectively, “Financial Objectives”). In addition, Mr. Jacobsen’s Financial Objectives also included objectives relating to Commercial Operations and Business & Industry Group. All NEOs had safety objectives relating to promoting a safe working environment (“Safety Objectives”).

 

The Financial Objectives were established by the Committee in the first quarter of 2017, prior to the time that the Company had entered into discussions to acquire GCA Services Group. Accordingly, the Committee adjusted financial results so as to exclude the effects of this acquisition, which closed on September 1, 2017, which was near the end of our performance period. Financial and Safety targets, were not adjusted. The following table shows the Financial Objectives and Safety Objectives, achievement levels and payout for Messrs. Salmirs, Scaglione, McClure and Giacobbe.

 

ABM Industries Incorporated 2018 Proxy Statement     29


 

 

2017 Financial and Safety Objectives Achievement for Messrs. Salmirs, Scaglione, McClure and Giacobbe

 

Financial and Safety Objectives (70%)

Target

Actual

Actual vs.

Target

Payout

Adjusted EBITDA Margin  
(30% weighting)

4.56%

4.21%(1)

92.4%

81.0%

Income from Continuing Operations (adjusted)
(30% weighting)

$82.4

$95.1(2)

115.4%

138.5%

Safety(3)

(10% weighting)

n/a

n/a

n/a

86.4%

Unweighted Payout of Financial Objectives and Safety Objectives (target is 100%)

 

 

 

106.4%

Weighted Payout of Financial Objectives and Safety Objectives (target is 70%)

 

 

 

74.5%

(1)

As used herein, “Adjusted EBITDA” means Income from Continuing Operations before interest, taxes, depreciation and amortization and excludes items impacting comparability and is further adjusted to exclude the impact of the GCA Services Group acquisition. Adjusted EBITDA Margin means Adjusted EBITDA divided by Adjusted Revenue, which is Revenue adjusted for the impact of the GCA Services Group acquisition. Reconciliations of Net Income to Adjusted EBITDA and Revenue to Adjusted Revenue are set forth in Appendix A.

(2)

Adjusted Income from Continuing Operations for fiscal year 2017, means Income from Continuing Operations adjusted to exclude the impact of the acquisition of GCA Services Group. A reconciliation of Income from Continuing Operations to Adjusted Income from Continuing Operations is set forth in Appendix A.

(3)

Composed of numerous metrics that resulted in a funding of 86.4%.

 

 

Because Mr. Jacobsen led our Business & Industry Group, his Financial Objectives included a mix of Corporate, Combined Commercial Operations and Business & Industry Group objectives. These objectives and results are reflected in the table below. Results exclude the impact of the acquisition of GCA Services Group.

 

2017 Financial and Safety Objectives Achievement for Mr. Jacobsen

 

Financial and Safety Objectives (70%)

Target

Actual

Actual vs.

Target

Payout

Income from Continuing Operations (adjusted)
(10% weighting)

$82.4

$95.1(1)

115.4%

138.5%

Combined Commercial Operations Performance – Operating Profit Margin % vs. Budget (20% weighting)

5.58%

5.52%(2)

99.0%

97.5%

Business & Industry Group Performance – Variable Gross Profit vs. Budget (15% weighting)

$365.9

$358.9

98.1%

95.3%

Business & Industry Group Performance – Revenue vs. Budget (15% weighting)

$2,950.9

$2,887.4

97.8%

94.5%

Safety

(10% weighting)(3)

n/a

n/a

n/a

86.4%

Unweighted Payout of Financial Objectives and Safety Objectives (target is 100%)

 

 

 

100.7%

Weighted Payout of Financial Objectives and Safety Objectives (target is 70%)

 

 

 

70.5%

(1)

Adjusted Income from Continuing Operations for fiscal year 2017, which is Income from Continuing Operations adjusted to exclude the impact of the acquisition of GCA Services Group. A reconciliation of Income from Continuing Operations to Adjusted Income from Continuing Operations is set forth in Appendix A.

(2)

Operating Profit Margin % adjusted to exclude the impact of the acquisition of GCA Services Group.

(3)

Composed of numerous metrics that resulted in a funding of 86.4%.

30     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

Personal Objectives under Our CIP

 

In the beginning of each year, the Committee establishes the personal objectives (“Personal Objectives”) of the CEO. The CEO reviews and approves the Personal Objectives of the other NEOs. The Committee also establishes the relative weighting of the Financial Objectives, Safety Objectives and Personal Objectives for all NEOs at the beginning of the year. At the end of each year, the Committee conducts an extensive review of our CEO’s performance in executive session, with the assistance of Semler Brossy. Our CEO provides the Committee with an assessment of performance for each of the other NEOs. Each assessment takes into account a number of quantitative and qualitative factors, such as the attainment of key strategic goals and performance objectives that were set in the beginning of the fiscal year. After assessing the CEO’s performance, the Committee recommends the CEO’s compensation to the independent members of the Board, who then determine the CEO’s compensation. The Committee also reviews the CEO’s assessment of the other NEOs and establishes the compensation of the other NEOs.

 

As described above, at the beginning of the fiscal year, the Committee determined that 30% of the CIP bonus opportunity for our NEOs would be based on the achievement of Personal Objectives. Other senior-level employees also participate in the CIP, and for these individuals, bonus amounts related to the achievement of Personal Objectives are determined by the individual’s manager taking into account guidelines established by the CEO and the CFO. In fiscal year 2017, all participants in the CIP had Personal Objectives related to the Company’s 2020 Vision. While progress had been achieved in the implementation of the Company’s 2020 Vision, certain aspects of this strategic transformation relating to the ABM Way had not gained the traction or produced the results expected at the outset of 2017. Accordingly, for individuals whose compensation is not determined by the Committee, management reduced the weighting associated with Personal Objectives from 30% to 15%. The CEO and CFO discussed the reasons for this reduction in weighting value with the Committee and recommended that the weighting for the NEOs’ Personal Objectives be similarly reduced.

 

In determining the weighting for the portion of the CIP bonus based on Personal Objectives for the NEOs, the Committee considered the recommendations of the CEO and CFO. The Committee determined that such a reduction was also appropriate for the NEOs, in light of the fact that the NEOs play a critical role in the timing and achievement of goals relating to the Company’s 2020 Vision transformation. Accordingly, the Committee reduced the weighting relating to the achievement of Personal Objectives for the NEOs from 30% to 15%.

 

The Committee’s assessments relating to the achievement of the Personal Objectives of the NEOs and bonus determinations are described on the following page.

 

ABM Industries Incorporated 2018 Proxy Statement     31


 

 

2017 CIP Payments for Our NEOs

 

The table below presents the fiscal year 2017 performance under our CIP for our NEOs’ Financial Objectives, Safety Objectives and Personal Objectives, and their resulting payout (both the total award dollar amount and as a percentage of target opportunity).

 

NEO

2017 Performance

(Weighting)

2017 Bonus

Payout

Financial

Objectives

(60%)(1)

Safety

Objectives

(10%)

Personal Objectives (15%)(2)

 

 

Key 2017 Goals

Achievement & Highlights

Scott Salmirs
President and Chief Executive Officer

109.75%

86.4%

   Support the Company’s 2020 Vision

 

 

100%

$805,320

(89.5% of
Target)

   Successful execution of management transitions

 

   Skillful leadership related to 2020 Vision

 

 

 

   Relationship building, both internally and with external stakeholders

   Successful leadership transitions during the year

 

 

 

 

 

 

   Strong communication with Company stakeholders

D. Anthony Scaglione
Executive Vice President and Chief Financial Officer

109.75%

86.4%

   Support the Company’s 2020 Vision

 

150%

$339,465

(97% of
Target)

   Centralize various finance functions

   Exceptional leadership in financial structuring of GCA Services Group acquisition

 

 

 

   Improve safety performance

   Migrated finance functions to Enterprise Services Center and established the procurement organization

 

 

 

 

 

   Enhanced safety culture

James McClure Executive Vice President and Chief Operating Officer

109.75%

86.4%

   Assure successful transition of leadership within new industry group structure and to the incoming COO

 

100%

 

$487,438

(89.5% of
Target)

 

   Successful transition of three industry group leaders

   Mentored Mr. Giacobbe with respect to his new COO position

Scott Giacobbe Executive Vice President

109.75%

86.4%

   Support the Company’s 2020 Vision

 

100%

$344,575

(89.5% of
Target)

   Transition to the COO role

   Effectively transitioned leadership of the Technical Solutions group

   Established himself as enterprise-wide leader

   Strong, targeted customer outreach

Rene Jacobsen Executive Vice President and President – Business & Industry Groups

103.1%

86.4%

   Develop common strategic goals and standardized reporting and operational review processes for the Business & Industry Group

 

120%

$265,380

(88.5% of
Target)

   Strong financial performance

   Effective goal and strategic alignment

   Build senior management team within the Business & Industry Group

   Built strong Business & Industry management team

 

(1)

See tables on page 30 for more detail relating to financial objectives.

(2)

As discussed above, for 2017 the Committee reduced the weighting relating to the achievement of Personal Objectives from 30% to 15%, thereby reducing the portion of their bonus opportunity that is based on the achievement of Personal Objectives.

32     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

Equity Incentive Compensation

 

The Committee believes that a long-term incentive program motivates and rewards our executive officers for their contributions to our Company’s performance and serves to align long-term compensation with the performance of Company stock. Our practice is to grant long-term incentives annually in the form of equity awards that are allocated among time-based RSUs, which typically vest over a four-year period, and PSUs, which we sometimes refer to as “performance shares” and which typically vest after a three-year performance period. Performance share grants are currently awarded under two performance share programs: one based on Company financial mertrics and one based on comparative total shareholder return metrics. We refer to equity grants under the former as “PSP” awards and the latter as “TSR” awards.

 

The Committee considers market data and the mix of compensation at risk when establishing the long-term incentive opportunity for each NEO. Generally, the Committee approves an equity award of a specific dollar value for each recipient based on a multiple of the recipient’s base salary. The dollar value of the award is determined after taking into consideration various factors, including a market analysis prepared by Semler Brossy and the overall mix of performance-based compensation. The Committee believes that a meaningful portion of equity compensation should be performance-based. The Committee may also grant one-time equity awards when circumstances indicate that such an award is appropriate.

 

In fiscal year 2017, our NEOs received grants of equity awards in the form of PSUs and RSUs, as shown in the table below. Messrs. Giacobbe and Jacobsen also received off-cycle RSU awards to reflect changes in their areas of responsibility during the year. In addition, each NEO also holds unvested equity awards granted in prior years, which vest over a period of three or four years from the date of grant (in some circumstances, subject to performance vesting conditions).

 

Fiscal Year 2017 Equity Awards*

 

2017 PSP

2017 TSR

2017 RSU

Off-cycle

 

NEO

Number
Granted


Grant Date Value
($)

Number Granted

Grant Date Value
($)

Number
Granted

Grant
Date
Value
($)

Number
Granted

Grant
Date
Value
($)

Aggregate

Value of Equity Awards

($)

Scott Salmirs

30,326

1,199,999

16,423

674,985

26,238

1,074,971

n/a

n/a

2,949,955

D. Anthony Scaglione

12,004

474,998

6,082

249,970

7,932

324,974

n/a

n/a

1,049,942

James P. McClure**

9,895

391,545

0

0

0

0

n/a

n/a

391,545

Scott J. Giacobbe

3,411

134,973

988

40,607

11,212

459,356

2,527

99,993

734,928

Rene Jacobsen

3,411

134,973

1,824

74,966

4,271

174,983

8,672

349,971

734,893

 

*

For additional information, please see “Grants of Plan-Based Awards During Fiscal Year 2017.”

**

Mr. McClure retired on November 1, 2017.

 

In connection with the initiation of the Company’s 2020 Vision, the Committee reviewed the Company’s performance share programs. At that time, there were two types of performance share programs: one based on “value creation” (“Value Creation PSP”) and one based on total shareholder return (“TSR PSP”). Achievement under the Value Creation PSP was measured by three one-year periods using a formula comprised of operating cash flow and adjusted EBITDA, as described below, and one three-year period in which performance was measured by compounded three-year adjusted EBITDA growth, calculated at the end of the three-year performance period. The TSR PSP measured Company TSR against the TSR of the S&P SmallCap 600 Index over a three-year period.

 

In 2016, the Committee decided to move away from the design of the Value Creation PSP and, commencing with the 2016 fiscal year, adopted a new performance share program with a simpler design covering one three-year performance period. The performance metrics applicable to executive officers under this new PSP are comprised of organic revenue growth, EBITDA and return on invested capital (“ROIC”). The Committee believes the simpler design affords greater visibility into, and alignment with, key drivers of success under our 2020 Vision. The Committee determined to retain the TSR PSP as it aligns our executives’ interests directly with interests of our shareholders.  

 

ABM Industries Incorporated 2018 Proxy Statement     33


 

 

Results of 20152017 Value Creation Performance Share Program

 

The following table summarizes the results under our 2015–2017 Value Creation PSP, which covered a performance period from November 1, 2014 to October 31, 2017. As discussed above, the Company no longer uses this design for its performance share program. Adjusted EBITDA is income from continuing operations before interest, taxes, depreciation and amortization and reflects adjustments related to acquisitions and discontinued operations, as well as items impacting comparability. Operating cash flow is also adjusted to reflect the impact of acquisitions and discontinued operations and other items. Categories of adjustments are approved by the Committee when the PSP is established. Final performance was 73.0% of target.

 

Results of 2015–2017 Value Creation PSP

60%

40%

Year

Operating
Cash
Flow

($ millions)

Adjusted
EBITDA

($ millions)

Value Creation(1)

($ millions)

Value
Creation
Achievement
(%)

Award Funding(2)
(%)

Weight

Adjusted
EBITDA Growth
(%)

Award

Funding(2)

(%)

Weight

 

Plan

Results

Plan

Results

Plan

Results

 

 

 

 

 

 

2015

118.4

145.3

236.0

221.6

214.9

169.8

79.0

59.3

20%

n/a

n/a

n/a

2016

117.4

127.5

247.8

219.4

176.4

116.5

66.0

0.0

20%

n/a

n/a

n/a

2017

121.1

164.7

260.2

230.9

183.1

222.2

121.4

141.0

20%

88.8

82.2

40%

Final

 

 

 

 

 

 

 

 

 

 

 

73.0%

 

(1)

Value Creation equals Operating Cash Flow plus change in current-year adjusted EBITDA over prior-year adjusted EBITDA multiplied by 5.

(2)

The award funding percentage is determined by applying the percentage under the Value Creation Achievement to the award funding table (shown below). Percentages in between the table values are calculated using straight-line interpolation.

 

 

%

Achievement

Award

Funding %

≥ 135

200

≥ 125

150

≥ 115

125

≥ 100

100

≥ 90

85

≥ 75

50

< 75

0

 

Results of 20152017 TSR PSP

 

Under the 2015–2017 TSR PSP, the measurement period was a three-year period commencing on November 1, 2014 and ending on October 31, 2017, with TSR being measured by reference to the S&P SmallCap 600 Index. Achievement under the 2015–2017 TSR PSP is measured by the Company’s TSR percentile ranking, compared to the S&P SmallCap 600 Index, for the three-year period ending October 31, 2017. The following table shows ABM’s TSR compared to the S&P SmallCap 600 Index for this period.

 

COMPARISON OF CUMULATIVE THREE-YEAR SHAREHOLDER RETURN

 

34     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

Award funding for the TSR PSP is set forth below.

 

TSR AWARD FUNDING TABLE

 

ABM Three-Year
Percentile Ranking

Award
Funding

Threshold

25th Percentile

50%

Target

50th Percentile

100%

Maximum

75th Percentile

150%

 

The Company ranked in the second quartile for TSR of S&P SmallCap 600 Index companies, resulting in a payout under the 2015–2017 TSR PSP of 143.2% of target.

 

 

Other Compensation and Governance-Related Matters

 

Employment and Change-in-Control Agreements

 

During 2017, the Compensation Committee reviewed the form of employment agreements for the CEO and other executive officers in light of the expiration of employment agreements with Messrs. Salmirs, Scaglione and McClure on October 31, 2017. As had historically been the case, these employment agreements were generally for two-year terms. After considering the current needs of the Company and benchmarking compensation practices, the Committee determined that it was appropriate to move away from executive employment agreements having a fixed term and instead adopted a form of agreement reflecting an “at-will” employment relationship, while at the same time affording some income security by specifying certain severance payments upon involuntary or constructive termination. All of our NEOs (other than Mr. McClure who retired) have entered into the new form of employment agreement.

 

Under the terms of these new employment agreements, an executive who is terminated without cause by the Company, or who resigns for “good reason” (such as a material reduction in the executive’s compensation or material change in the executive’s position), will be entitled to receive a multiple (2.5 for Mr. Salmirs and 2.0 for the other NEOs) of the sum of his base salary and target bonus, as well as a prorated portion of his annual bonus for the year of termination and 18 months of health insurance reimbursements. In addition, in revising the executive employment agreements, the Committee also considered the demographic profile of our NEOs, the desire to retain our executive team through and beyond the execution of our 2020 Vision, and current market practices. Under the new agreements, an NEO who voluntarily leaves the Company before age 60 will forfeit all unvested equity awards made after January 1, 2018. An NEO who voluntarily leaves the Company at age 60 or older with 10 years of service will continue to vest in equity awards granted after January 1, 2018, in accordance with the terms of those awards. These employment agreements also provide that following termination of employment for any reason, the officer will refrain from competing with, or soliciting the employees or customers of, the Company for one year following the termination of employment.

 

In order to assure continuity of ABM’s senior management in the event of a potential change-in-control of the Company, ABM provides our NEOs with “double-trigger” severance benefits should their employment with ABM be terminated following a change in control. During 2017, the Committee reviewed the Company’s change-in-control agreements. As a result of this review, new change-in-control agreements were entered into with the NEOs. The current agreements, which went into effect after the end of the 2017 fiscal year, provide double-trigger severance benefits if the officer is terminated without cause, or resigns for “good reason,” within two years following a change-in-control. These benefits consist of a lump-sum payment equal to a multiple (3.0 for Mr. Salmirs and 2.5 for each of the other NEOs) of the sum of his base salary and target bonus; a lump-sum payment equal to the present value of health and welfare benefits for 18 months; and accelerated vesting of equity awards. There are no excise tax gross-ups under the change-in-control agreements. Instead, any such payments and benefits are subject to reduction in order to avoid the application of the excise tax on “excess parachute payments” under the Internal Revenue Code, but generally only if the reduction would increase the net after-tax amount received by the officer.

 

For a summary of the executives’ employment and change-in-control agreements in effect during fiscal year 2017, see “Potential Benefits on Termination.”

 

ABM Industries Incorporated 2018 Proxy Statement     35


 

 

Stock Ownership Guidelines and Anti-Hedging and Pledging Policy

 

The Company has stock ownership guidelines for certain officers, including our NEOs. Executives are expected to achieve their targets within five years of becoming subject to the stock ownership policy. Stock ownership guidelines are based on a multiple of base salary. Individuals who have not met their stock ownership level at the end of the applicable five-year period are expected to retain 50% of their after-tax net shares paid under any Company long-term incentive plan or program, such as shares paid out under the performance share program and vested restricted stock units, until their ownership guidelines are satisfied. The Committee periodically reviews the stock ownership guidelines and may make adjustments to these guidelines to the extent it believes such adjustments are appropriate. Progress toward targeted ownership levels may be taken into consideration in future grants to executives. Unvested RSUs are taken into consideration when determining if ownership guidelines have been achieved; unearned performance shares are not included nor are stock options, whether vested or unvested. Current stock ownership guidelines are as follows:

 

 

Position

Requirements

CEO

Shares with a fair market value equal to six times base salary

Executive Vice Presidents

Shares with a fair market value equal to three times base salary

Senior Vice Presidents and certain subsidiary senior officers

Shares with a fair market value equal to base salary

 

All of our NEOs are either at or above our stock ownership guidelines or are well positioned to achieve compliance within the required time period.

 

Additionally, the Company has a policy prohibiting all employees, including the NEOs and members of our Board, from engaging in any hedging transactions involving our stock. We also prohibit pledging, or using as collateral, Company stock to secure personal loans or other obligations.  

 

Window Trading and Rule 10b5-1 Trading Plans

 

Under the Company’s insider trading policy, officers may only purchase or sell ABM securities during “open window” periods, which begin on the third business day following the date of each quarterly earnings announcement and end at the close of trading on the 15th day of the third month of the fiscal quarter. The only exception to this is for officers who have entered into a trading plan pursuant to SEC Rule 10b5-1.

 

NEOs are permitted to establish trading plans under SEC Rule 10b5-1 during open trading windows. These plans enable an executive to diversify his or her holdings of Company stock during periods in which the executive would otherwise be unable to buy or sell such stock because he or she possessed material, nonpublic information about the Company. Any trading plan must be submitted in writing to the Company’s designated officer for review and approval prior to its effective date.

 

Annual Compensation-Related Risk Evaluation

 

We annually review risks associated with our executive compensation program, as well as our other broad-based employee incentive programs, with respect to enterprise risk factors, with the assistance of management’s compensation consultant, Willis Towers Watson, which prepares a risk analysis. The Committee and its independent compensation consultant, Semler Brossy, review this analysis. In connection with its 2017 review, the Committee noted the various ways in which risk is managed or mitigated. Practices and policies mitigating risks included the balance of corporate, business unit and individual weightings in incentive compensation programs, the mix between long-term and short-term incentives, use of stock ownership requirements, the Company’s policy prohibiting hedging, and the Company’s recoupment or “clawback” policy. Based on this review, the Committee agreed with the findings in the analysis that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

Compensation Recoupment (Clawback) Policy

 

The Board has adopted a policy relating to the recoupment of cash and equity compensation. The policy provides that, if the Company’s financial statements are the subject of a restatement due to misconduct, fraud or malfeasance, then, to the extent permitted by applicable law, the independent members of the Board, or a committee consisting of

36     ABM Industries Incorporated 2018 Proxy Statement


 

 

 

independent members of the Board may, in their discretion, recover cash compensation paid to an executive officer of the Company or rescind or make other adjustments to an equity award made to an executive officer of the Company, including recovering cash proceeds relating to the sale or other disposition of an equity award, to the extent that the payment or award was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, the Company may seek to recover any amount determined to have been inappropriately received by the individual executive officer. In addition, it is the Board’s policy that if the independent members of the Board, or a committee consisting of independent members of the Board, determine that an employee who received a cash incentive payment or an equity award engaged in conduct constituting “cause” (such as serious misconduct, dishonesty, disloyalty, conviction of a felony or misdemeanor involving moral turpitude, or failure to substantially perform employment-related duties or responsibilities), the Board or such Committee may take such action it deems necessary to address such conduct, including recovery of cash incentive payments, rescission of equity grants made to the employee in the 36-month period prior to the date on which the Board or such Committee makes such determination and recovery of proceeds relating to the sale or other disposition of an equity award during such 36-month period.

Benefits and Perquisites

 

The NEOs are eligible for customary employee benefits, which include participation in ABM’s 401(k) Plan, as well as group life, health and accidental death and disability insurance programs and executive health examinations. These and certain other perquisites are set forth in the Summary Compensation Table.

 

Mr. McClure qualified for benefits under the Supplemental Executive Retirement Plan (SERP), an unfunded retirement plan that was previously closed to new participants. Mr. McClure also participated in the Service Award Benefit Plan (SAB), which provides participants, upon termination of employment, with a minimum of seven days of pay for each year of employment between November 1989 and January 2002. Both the SERP and the SAB were closed to new participants prior to the employment of our other NEOs.

 

The NEOs are eligible to participate in ABM’s Employee Deferred Compensation Plan, which is an unfunded deferred compensation plan available to highly compensated employees. The Employee Deferred Compensation Plan benefits are shown in the “Nonqualified Deferred Compensation in Fiscal Year 2017” table, followed by a description of the plan. The Committee regularly reviews the benefits provided under this and other plans, and as a result of such a review, in January 2011, the Company entered into a trust agreement that will fund amounts due under the Employee Deferred Compensation Plan in the event of a change in control of ABM.

 

Accounting and Tax Considerations

 

The Committee takes into consideration the accounting, tax and related financial implications to the Company and executives when designing compensation and benefit programs. From an accounting perspective, in general, base salary, annual cash incentive payments, and the costs related to benefits and perquisites are recognized as compensation expense at the time they are earned or provided, and equity-based compensation expense is recognized over the vesting period of the grant. Subject to the exceptions and limits described below, the Company deducts for federal income tax purposes, payments of compensation and other benefits to executives. The Company does not deduct nonqualified deferred compensation until the year that the deferred compensation is paid to the executive.

 

Section 162(m) of the Internal Revenue Code generally does not allow a tax deduction to public companies for compensation paid to certain executive officers in one year over $1 million per executive. Prior to the 2017 tax reform, compensation based solely on the attainment of one or more preestablished objective performance goals (subject to meeting certain other requirements) was exempt from this limit. Our shareholder-approved equity incentive and executive officer incentive plans were designed to permit the Committee to grant certain types of performance-based compensation intended to qualify for this exception from the Section 162(m) limit. However, the exemption for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, subject to transition relief for certain arrangements in place as of November 2, 2017. For ABM, this means that the new Section 162(m) rules will apply starting with the tax year beginning November 1, 2018.

 

Given the uncertain scope of the transition relief and the absence of any rulemaking at this time, the full impact of the new Section 162(m) on the Company and its executive compensation practices is not yet known. The Committee will continue to monitor developments in this regard. The Committee continues to have the flexibility to pay nondeductible compensation if it believes that it is in the best interests of the Company.

 

ABM Industries Incorporated 2018 Proxy Statement     37


 

 

 

COMPENSATION COMMITTEE REPORT

 

The Committee has reviewed the Compensation Discussion and Analysis and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in ABM’s Annual Report on Form 10-K for the fiscal year ended October 31, 2017 and 2018 Proxy Statement.

 

Compensation Committee:

 

Thomas M. Gartland, Chair

Linda Chavez

Lauralee E. Martin

Filippo Passerini

 

 

38     ABM Industries Incorporated 2018 Proxy Statement


 

 

Additional Information About Executive Compensation

The following tables and accompanying narrative provide detailed information regarding the compensation of the NEOs.

 

2017 Summary Compensation Table

 

 

 

 

 

 

 

 

 

Fiscal

Salary

Stock

Awards(1)

Nonequity

Incentive

Plan

Compensation(2)

Change in Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

All

Other

Compensation(3)

Total

    Name

Year

($)

($)

($)

($)

($)

($)

  Scott Salmirs

2017

883,333

2,949,955

805,320

-

47,763

4,686,371

President and

2016

793,333

2,039,917

969,600

-

35,135

3,837,985

Chief Executive Officer

2015

654,124

1,094,960

318,325

-

64,277

2,131,686

  D. Anthony Scaglione

2017

495,833

1,049,942

339,465

-

20,348

1,905,588

Executive Vice President

2016

466,666

615,542

405,883

-

22,770

1,510,861

and Chief Financial Officer

2015

379,673

394,493

118,151

-

29,967

922,284

  James P. McClure(4)

2017

723,791

391,545

487,438

-

37,244

1,640,018

Executive Vice President

2016

708,470

3,080,066

651,837

15,241

20,341

4,475,955

and Chief Operating Officer

2015

688,931

2,647,633

312,979

-

15,566

3,665,109

  Scott J. Giacobbe(4)

2017

449,900

734,928

344,575

-

41,919

1,571,322

Executive Vice President

 

 

 

 

 

 

 

  Rene Jacobsen(4)

2017

474,583

734,893

265,380

-