UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 8, 2007

ABM Industries Incorporated

(Exact name of registrant as specified in its charter)

Delaware		1-8929		94-1369354
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

160 Pacific Avenue, Suite 222, San Francisco, California		94111
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (415) 733-4000

Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

In the March 12, 2007 press release discussed below in Item 8.01, ABM Industries Incorporated (the “Company”) announced that effective March 19, 2007, James Lusk will become its new Executive Vice President. Effective December 31, 2007, Mr. Lusk will succeed George B. Sundby as Executive Vice President & Chief Financial Officer.

Mr. Lusk, 51, was Vice President, Business Services & Chief Operating Officer for the Europe, Middle East and Africa regions for Avaya from January 2005 to January 2007. From October 2002 to January 2005 he was Executive Vice President, Chief Financial Officer and Treasurer of Bioscrip/MIM Corporation. From January 2002 until October 2002 Mr. Lusk was the Chief Executive Officer of Sevmir Enterprises, a financial services company which he founded. Prior to that, Mr. Lusk spent nineteen years in various positions at Lucent Technologies/AT&T, including President of Business Services and Interim CFO. He serves on the Board of Directors of Glowpoint, Inc.

The Compensation Committee has approved Mr. Lusk’s compensation, which for the remainder of fiscal year 2007 will be at an annual salary rate of $420,000 with a 2007 incentive bonus of $231,000. In fiscal year 2008, Mr. Lusk will begin to participate in the Company’s annual performance incentive program, under which he will be eligible for bonus payments based on the same criteria as other senior executives.

The Compensation Committee also authorized the grant to Mr. Lusk of equity awards with the aggregate value of $650,000, which value will be divided $275,000 in restricted stock units (“RSUs”), $250,000 in performance shares and the remaining $125,000 in nonqualified stock options based on the fair market value of ABM common stock on the effective date of Mr. Lusk’s employment, which the Company expects to be March 19, 2007. The vesting of the performance shares is tied to two-year profit margin and revenue targets in the period ending October 31, 2009.

The Company has entered into an employment agreement with Mr. Lusk that would extend through March 2009, and would further extend automatically for an additional one-year period if a notice of non-renewal is not given at least 90 days prior to the termination date. The employment agreement would also terminate earlier in connection with termination for cause, voluntary termination by Mr. Lusk or upon his total disability or death.

Under the employment agreement, Mr. Lusk would also eligible for other customary benefits including, but not limited to, participation in the Company’s 401(k) Plan, as well as group life, health, and accidental death and disability insurance programs. Under Company policies, the Company also provides certain other perquisites, such as automobiles or automobile allowances and expenses, club dues, and incidental personal benefits, including office parking.

The Company expects to enter into a severance agreement with Mr. Lusk, similar to those of current top senior management, should his employment with the Company be terminated under certain defined circumstances following a change in control. The agreements are considered to be “double trigger” arrangements where the payment of severance compensation is predicated upon the occurrence of two triggering events: (1) the occurrence of a change in control; and (2) either the involuntary termination of employment with the Company (other than for “cause” as defined in the agreement) or the termination of employment with the Company for “good reason” as defined in the agreement. The stated benefits consist of (1) a lump sum payment in an amount equal to two times the sum of base salary (at the rate in effect for the year in which the termination date occurs) and current target bonus; (2) the continuation of all health benefits or reasonably equivalent benefits for 18 months following the date of termination; and (3) a lump sum cash payment equal to the sum of any unpaid incentive compensation that was earned, accrued, allocated or awarded for a performance period ending prior to the termination date plus the value of any annual bonus or long-term incentive pay earned, accrued, allocated or awarded with respect to service during the performance period. Any payments under the severance agreement will be reduced to the extent that the executive receives payment under his employment agreement with the Company following a termination of employment.

Payments and benefits under the Company’s severance agreements (as well as under all other agreements or plans covering an executive) are subject to reduction in order to avoid the application of the excise tax on “excess parachute payments” under the Internal Revenue Code, but only if the reduction would increase the net after-tax amount received by the named executive officer (the “modified cap”) with one exception. The exception is that the reduction may be made to the extent the executive would be entitled to receive, on a net-after tax basis, at least 90% of the severance payment he would otherwise be entitled to under the severance agreement. In consideration for the protection afforded by the severance agreements, the executive agrees to non-competition provisions for the term of employment and for varying periods of time thereafter.

In connection with the transition, the existing employment agreement of Mr. Sundby has been amended, and extended from its current termination date of October 31, 2007 to December 31, 2007, at an annual salary rate of $360,000 and a fiscal year 2007 incentive bonus equal to 50% of his salary. He is entitled to an additional bonus of $100,000 on timely filing of the Company’s 2007 Form 10-K and effectiveness of the Company’s internal control over financial reporting. At the time the employment agreement ends, Mr. Sundby will also be entitled to receive a severance payment of $540,000 and reimbursement for the cost of certain continuing health insurance benefits. (He will not receive these payments on any earlier voluntary termination.) To the extent Mr. Sundby provides consulting services after December 31, 2007, he will receive $300 per hour.

Item 8.01

Other Events.

In a March 12, 2007 press release, the Company announced that it was establishing a Shared Services center in Houston, Texas, to consolidate certain back office operations; it also announced that it would locate its ABM Janitorial headquarters in Houston, concentrate its other business units in southern California and, in 2008, relocate its executive headquarters to New York City. A copy of the press release is attached as Exhibit 99.1 and is by this reference incorporated herein.

Item 9.01

Financial Statements and Exhibits.

(c) Exhibits

99.1 Press Released dated March 12, 2007, announcing a strategic repositioning and the appointment of James Lusk as Executive Vice President.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit Index

99.1 Press Released dated March 12, 2007, announcing a strategic repositioning and the appointment of James Lusk as Executive Vice President.

EXHIBIT 99.1

ABM ANNOUNCES STRATEGIC RE-POSITIONING AND KEY ADDITION TO COMPANY LEADERSHIP

— James Lusk to Head New Shared Services Center, Will Succeed George Sundby as CFO at Year-End —

— Relocating Business Units to Gain Operating Efficiencies —

— Executive Headquarters to Locate in New York in 2008 —

SAN FRANCISCO — March 12, 2007 — ABM Industries Incorporated (NYSE: ABM), a leading facility services contractor in the United States, today announced a series of operational and leadership initiatives reinforcing the Company’s commitment to increasing shareholder value and establishing a platform supporting significant long-term growth.

Central to the initiatives is the establishment of a Shared Services center consolidating certain of the Company’s back office functions in Houston, Texas. By integrating support functions, the new Shared Services unit will increase operating efficiencies and enhance the Company’s competitive position within the industry. It also represents an extension of ABM’s ongoing strategy to invest in its technology infrastructure.

James Lusk, an executive with experience directing implementation of a Shared Services unit at other companies, is joining ABM this month as Executive Vice President. Initially, Mr. Lusk will head the Shared Services implementation and effective December 31, 2007, he will succeed George B. Sundby as Executive Vice President and Chief Financial Officer.

In addition: the Company will locate its ABM Janitorial headquarters in Houston; its other business units will be concentrated in southern California; and, in 2008, its executive headquarters will locate in New York City.

“ABM is at an exciting juncture,” said ABM President and Chief Executive Officer Henrik Slipsager. “Building on our current momentum to position the Company to best meet both market dynamics and customer-driven demands, we are re-positioning the Company for competitiveness and expansion. By consolidating back office functions in a Shared Services center in Houston, concentrating our non-Janitorial operational units in southern California, and re-tooling our management organization — including locating our executive headquarters in New York closer to many of our major customers — we will gain operating efficiencies and be able to capitalize on growth opportunities. These actions are not expected to have a material impact on previously issued earnings guidance.

“Jim Lusk brings a wealth of experience to help us achieve these new initiatives. He is a recognized thought leader in the area of corporate Shared Services and has implemented these types of programs successfully for other companies. Given ABM’s evolution, Jim is exactly the type of executive we’ll need to succeed in the next phase of our growth — a strategic adviser to the CEO and a partner to the business unit management.

“I’d like to thank George Sundby for his many contributions to ABM. George has played a substantial role in establishing ABM as an industry leader. In particular, I’d like to recognize his efforts in enhancing our finance and control environment and leading the Company’s response to Sarbanes-Oxley. We appreciate his willingness to continue serving the Company through the end of the year and his commitment to ensure a smooth transition. Understanding that he’s not prepared to relocate at this point, we wish George much success in his future endeavors.”

Lusk Named EVP; Will Succeed Sundby as CFO at Year-End

Mr. Lusk, most recently served as Avaya’s Vice President, Business Services & Chief Operating Officer for the Europe, Middle East and Africa region. He is a member of the Board of Directors of Glowpoint, Inc., serving on the Audit and Compensation Committees.

Among his prior positions, Mr. Lusk served as President, Business Services and acting Chief Financial Officer at Lucent Technologies. During his tenure there, Mr. Lusk created and launched Lucent Financial Services, which provided high volume/low cost accounting and financial transaction processing to Lucent. In conjunction with PricewaterhouseCoopers, Mr. Lusk also coauthored the book “Shared Services — Adding Value to the Business Units.”

He has also served as Executive Vice President, Chief Financial Officer and Treasurer of Bioscrip/MIM Corporation, and has held positions at AT&T Corporation, Amerada Hess, Children’s Hospital and Peat, Marwick, Mitchell & Co. Mr. Lusk holds an MBA in Finance from Seton Hall University and a BS in Economics from the Wharton School of the University of Pennsylvania. He is a CPA and was inducted into the AICPA Business and Industry Leadership Hall of Fame in 1999.

Effective December 31, 2007, Mr. Lusk will succeed George B. Sundby as ABM’s Executive Vice President & Chief Financial Officer.

ABM Janitorial to Houston, ABM Facility Services to Southern California

As part of the new initiative, the Company will locate the headquarters of its ABM Janitorial business unit from San Francisco to Houston in 2008. The Company will retain the current regional locations of its Janitorial business, including the Northern California region based in San Francisco.

The Company’s other business units — including AMPCO Parking, ABM Security Services, ABM Facility Services, ABM Engineering and Amtech Lighting Services — will be headquartered in southern California. As with Janitorial, the Company will retain the current regional locations of those business units.

Executive Headquarters to New York

In 2008, the Company’s will begin a multi-phase relocation of its Executive Headquarters from San Francisco to existing offices in New York. The Company’s Chief Executive Officer, Chief Financial Officer and corporate management team will be located in New York. The move will provide improved access to a significant portion of the Company’s customer base, the financial markets, and to potential future international opportunities. This location will also enable the Company to more easily recruit executive talent.

About ABM Industries

ABM Industries Incorporated (NYSE:ABM) is among the largest facility services contractors listed on the New York Stock Exchange. With fiscal 2006 revenues in excess of $2.7 billion and more than 75,000 employees, ABM provides janitorial, parking, security, engineering and lighting services for thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across the United States and British Columbia, Canada. The ABM Family of Services includes ABM Janitorial; Ampco System Parking; ABM Security Services; ABM Facility Services; ABM Engineering; and Amtech Lighting Services.

Cautionary Statement Under the Private Securities Litigation Reform Act of 1995.

     This press release contains forward-looking statements that set forth management’s anticipated results based on management’s plans and assumptions. Any number of factors could cause the Company’s actual results to differ materially from those anticipated. These risks and uncertainties include, but are not limited to: (1) a change in the frequency or severity of claims against the Company, a deterioration in claims management, the cancellation or non-renewal of the Company’s primary insurance policies or a change in our customers’ insurance needs; (2) a change in actuarial analysis that causes an unanticipated change in insurance reserves; (3) inadequate technology systems that cannot support the growth of the business; (4) acquisition activity slows or is unsuccessful; (5) labor disputes that lead to a loss of sales or expense variations; (6) a decline in commercial office building occupancy and rental rates lowers sales and profitability; (7) financial difficulties or bankruptcy of a major customer; (8) the loss of long-term customers; (9) intense competition that lowers

revenue or reduces margins; (10) an increase in costs that the Company cannot pass on to customers; (11) natural disasters or acts of terrorism that disrupt the Company in providing services; and (12) significant accounting and other control costs that reduce the Company’s profitability. Additional information regarding these and other risks and uncertainties the Company faces is contained in the Company’s Annual Report on Form 10-K and in other reports it files from time to time with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

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Contact:

ABM Industries, Inc.
Henrik Slipsager (President & CEO)
(415) 733-4000