abm-def14a_20210324.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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February 12, 2021

 

Dear stockholders:

 

On behalf of the Board of Directors, I want to thank you for your continued interest in and support of ABM Industries Incorporated (“ABM,” “we,” “us,” “our,” or the “Company”). The Board’s commitment to our stakeholders is paramount, and in 2020 we stewarded the business and its leaders through COVID-19, as the organization worked tirelessly to navigate the pandemic.

Thanks to the resilience of ABM’s employees and outstanding execution, ABM strengthened its operational and financial positioning in 2020, in the face of significant adversity. The Company continues to provide critical value and essential services to our clients and the industries we serve.

As our 2021 Annual Meeting approaches, we are pleased to share our reflections on how the Board and management worked together to deliver strong results for ABM’s stockholders during such an unprecedented year.

COVID-19: Prevailing Over Adversity

Throughout its history, ABM has built our reputation on being there for our clients and communities during the most critical times. While the COVID-19 pandemic tested ABM’s financial strength, purpose and values, swift and decisive actions by management and the Board helped guide our Company through the year.

At the onset of the pandemic, the ABM management team prioritized maintaining liquidity, managing and redeploying labor, and aggressive management of cash collections. To ensure business continuity for our customers and the safety of our employees, ABM quickly established protocols to deliver the essential services ABM provides. To meet our clients’ COVID-19 sanitization needs, ABM developed a proprietary, comprehensive cleaning and disinfectant service, EnhancedClean, providing peace of mind through studied protocols and practices.  

These actions strengthened the Company’s reputation in the marketplace for operational excellence and exemplary client services. The ABM team continues to provide the essential services needed for customers to confidently return to offices, schools, airports and other public spaces, and deliver assurances to their employees, customers and the public by demonstrating trustworthy disinfection and hygiene.

Board Oversight of Strategy

Especially during these times, the Board is dedicated to its role as your fiduciary. Our Directors’ diverse skills and backgrounds continue to reflect the expertise necessary for effective oversight of the business. The Board has deep collective knowledge in areas such as operational leadership, sales, financial management, public relations, corporate responsibility, human resources management, digital technology, and supply chain management, to effectively oversee management’s execution of ABM’s corporate strategy.

 

 

 


 

 

 

Much of the Board’s and management’s focus during 2020 related to business continuity and strategic planning, in order to protect stockholder value during this volatile year. In March 2020, the Company elected to fully draw on its remaining revolving line of credit, adding approximately $300 million of capacity to its balance sheet. In May 2020, the Company completed an amendment to its senior, secured credit agreement to provide additional flexibility.  In June 2020, the Company’s Chief Financial Officer notified the Company that he would be leaving the Company effective July 1, 2020.

In July 2020, in order to stabilize and motivate ABM’s key leaders to navigate the Company through the pandemic uncertainties, the Board’s Compensation Committee implemented a stock award to approximately 175 key leaders, described on pages 31 and 39 – 40 of the Proxy Statement. The Compensation Committee has a demonstrated history of pay-for-performance and appropriate executive pay practices, as described on pages 29 – 33 of the Proxy Statement, which ensures that our executives’ compensation is aligned with ABM’s strategy and actual performance, furthering the interests of our stockholders.

Ultimately, in fiscal 2020 ABM achieved exceptional financial performance across key areas such as EBITDA margin, bringing into culmination our 2020 Vision, which we announced in 2015, to transition into the next phase of evolution for ABM.

Looking Forward

We are committed to serving your interests in 2021 and beyond, and have great confidence that ABM Industries will continue to deliver value to all of our stakeholders.

Thank you for your continued support.

 

 

Sincerely,

 

 

Sudhakar Kesavan

Chairman of the Board

 

 

 

 


 

 

 

 

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

WHEN

Wednesday, March 24, 2021,
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

Virtual

www.virtualshareholdermeeting.com/ABM2021

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 if you received physical proxy materials with an enclosed postage paid envelope.

ITEMS OF BUSINESS

1.

Election of the four directors named in the Proxy Statement to serve one-year terms until the 2022 Annual Meeting and until their successors are duly elected and qualified.

2.

Approval of the ABM 2021 Equity and Incentive Compensation Plan.

3.

Advisory vote to approve executive compensation.

4.

Ratification of the appointment of KPMG LLP as ABM’s independent registered public accounting firm for the fiscal year ending October 31, 2021.

5.

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

RECORD DATE

Stockholders of record at the close of business on January 27, 2021 are entitled to notice of, and to vote at the Annual Meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 24, 2021:

 

The Notice of Annual Meeting, Proxy Statement and the Annual Report to Stockholders

are available on the Internet at www.proxyvote.com.

Whether or not you plan to attend the Annual Meeting, please vote at your earliest convenience by following the instructions in the Notice of Internet Availability of Proxy Materials or the proxy card you received in the mail.

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

 

i

GOVERNANCE

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

1

PROPOSAL 1–ELECTION OF DIRECTORS

 

2

Nominees for Election to Serve as Directors for a Term Expiring in 2022

 

3

The Board of Directors

 

8

Corporate Governance

 

8

Identifying and Evaluating Nominees for Directors

 

8

Board Leadership Structure

 

9

Director Independence

 

10

The Board’s Oversight of Risk Management

 

10

The Board’s Role in Cybersecurity Risk Oversight

 

10

Corporate Social Responsibility and Sustainability

 

10

Mandatory Retirement

 

12

Outside Board Limits

 

12

Board Committees

 

12

Board and Committee Attendance in Fiscal Year 2020

 

14

DIRECTOR COMPENSATION FOR FISCAL YEAR 2020

 

14

2020 Non-Employee Director Compensation Elements

 

14

2020 Non-Employee Director Compensation Table

 

15

Non-Employee Director Deferred Compensation Plan

 

15

Director Stock Ownership Policy

 

15

PROPOSAL 2–APPROVAL OF THE ABM 2021 EQUITY AND INCENTIVE COMPENSATION PLAN

 

18

Proposed Equity and Incentive Compensation Plan

 

18

EQUITY COMPENSATION PLAN INFORMATION

 

26

EXECUTIVE COMPENSATION

 

 

PROPOSAL 3–ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

28

COMPENSATION DISCUSSION AND ANALYSIS

 

29

Our Compensation Philosophy and Practices

 

29

How We Compensated Our NEOs in 2020

 

36

Other Compensation and Governance-Related Matters

 

42

Compensation Committee Report

 

44

Additional Information About Executive Compensation

 

45

2020 Summary Compensation Table

 

45

Grants of Plan-Based Awards During Fiscal Year 2020

 

46

Outstanding Equity Awards at 2020 Fiscal Year-End

 

47

Option Exercises and Stock Vested in Fiscal Year 2020

 

48

Nonqualified Deferred Compensation in Fiscal Year 2020

 

49

Potential Benefits on Termination

 

50

2020 CEO Pay Ratio

 

53

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


 

 

GENERAL INFORMATION

 

 

Certain Relationships and Transactions with Related Persons

 

60

Security Ownership of Certain Beneficial Owners

 

61

Security Ownership of Directors and Executive Officers

 

62

Questions and Answers About the Proxy Materials and the 2021 Annual Meeting

 

64

Other Business

 

68

Submission of Stockholder Proposals for 2021 Annual Meeting

 

69

Appendix A–2021 Equity and Incentive Compensation Plan

 

A-1

Appendix B–Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

 

B-1

 

 

Note About Forward-Looking Statements

This Proxy Statement contains both historical and forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. We make forward-looking statements related to future expectations, estimates, and projections that are uncertain and often contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “should,” “target,” or other similar words or phrases. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict. Factors that might cause such differences include, but are not limited to, those discussed in Part 1 of ABM’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020, under Item 1A., “Risk Factors,” and we urge readers to consider these risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.


 

 

 

 

 

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 Stockholders

 

 

Time and Date:

 

Wednesday, March 24, 2021

10:00 a.m. Eastern Time

 

Place:

 

www.virtualshareholdermeeting.com/ABM2021

 

 

Record Date:

 

January 27, 2021

 

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.

 

Virtual Annual Meeting

We believe the virtual annual meeting format facilitates stockholder access by enabling stockholders to participate fully and equally from any location around the world at no cost. This year, in light of the ongoing public health impacts of the COVID-19 pandemic, a virtual annual meeting also enables us to communicate with our stockholders while supporting the health and safety of our employees, stockholders and communities.

 

You may submit questions in advance on the day of the Annual Meeting of Stockholders by logging into www.proxyvote.com and entering your 16-digit control number. Once past the log-in screen, click on “Question for Management,” type in the question, and click “Submit.” Alternatively, stockholders will be able to submit questions live during the virtual meeting by typing the question into the “Ask a Question” field, and clicking submit. We will answer questions that comply with the meeting rules of conduct during the Annual Meeting of Stockholders, subject to time constraints. Questions relevant to meeting matters that we do not have time to answer during the meeting will be posted to our website following the meeting along with those questions that were addressed during the meeting. Questions regarding personal matters or matters not relevant to meeting matters will not be answered.

 

Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting will be made publicly available for one year at www.virtualshareholdermeeting.com/ABM2021.

 

We encourage you to access the Annual Meeting before it begins. Online check-in will start 15 minutes before the meeting on March 24, 2021. If you have difficulty accessing the meeting, please call 1-844-986-0822 (toll free) or 303-562-9302 (international). We will have technicians available to assist you.

 

Voting Matters and Board Recommendations

 

Proposals

Board Vote

Recommendation

Page Reference

(for more detail)

 

01

 

Election of Directors

 

FOR EACH DIRECTOR NOMINEE

 

X

 

02

 

Approval of the ABM 2021 Equity and Incentive Compensation Plan

 

FOR

 

 

X

 

03

 

Advisory vote to approve executive compensation

 

FOR

 

 

X

 

04

 

Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2021

 

FOR

 

 

X

ABM Industries Incorporated 2021 Proxy Statement     i


 

 

 

 

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

73

1997

Senior Fellow, Niskanen Center

Yes

Governance, Chair; Compensation

Art A. Garcia

59

2017

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

Yes

Audit, Chair; Stakeholder and Enterprise Risk

Jill M. Golder

58

2019

Former Chief Financial Officer, Cracker Barrel Old Country Store, Inc.

Yes

Audit

Scott Salmirs

58

2015

President and Chief Executive Officer, ABM Industries Incorporated

No

 

ii     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

 

ABM AT A GLANCE

ABM’s Business Highlights and Accomplishments in Fiscal Year 2020

Despite a year of significant macroeconomic instability, ABM achieved many successes during 2020. We honored our purpose of taking care of the people, spaces and places that are important to our clients, employees and communities during a time when the global community was impacted by the COVID-19 pandemic. The pandemic coincided with the culminating year of our long-term 2020 Vision. The Board and management team acted nimbly to adapt ABM’s strategy both proactively and reactively, in areas such as management, service delivery and employee redeployment. Such actions resulted in achievements materially beyond many of our key pre-pandemic objectives, despite lower revenue. The pandemic pressure-tested every aspect of the Company’s resiliency, and we are proud that ABM emerged as an even stronger company with a foundation that further enhances the long-term interests of our stockholders and stakeholders.

ABM Industries Incorporated 2021 Proxy Statement     iii


 

 

 

 

ABM’s 2020 Achievements

We accelerated into our long-term adjusted EBITDA margin range of 5.5% - 6.0% with 2020 adjusted EBITDA margin of 6.0%(1) and grew adjusted income from continuing operations by approximately 20% to $163.5 million(2) through higher margin services and by dynamically managing our workforce.

Our diversified client base across business & industry and technology & manufacturing and nimble operating model in education, aviation and technical solutions, provided resilience to our business during the COVID-19 pandemic.

We maintained our commitment to stockholders through the continuation of our cash dividend for the 55th consecutive year.  

We developed a proprietary, comprehensive cleaning and disinfection services, EnhancedClean™, to meet our clients’ COVID-19 sanitization needs, providing virus protection through studied protocols and practices.

We instituted safety protocols and managed supply chain demands, such as the mandatory use of face masks and other personal protective equipment, to help protect the health of our employees and clients. Additionally, we transitioned many office-based employees to a remote work environment, suspended non-essential travel, and adopted technologies to allow employees to effectively perform their functions remotely.

Our teams provided best-in-class cleaning and disinfecting services that were critical in keeping essential services running during the pandemic, including airports, distribution centers, healthcare systems, manufacturing plants, public transit systems, and research labs.

Our commitment to a diverse, equitable and inclusive workplace strengthened with the formation of our Culture and Inclusion Council and our continuing connection to the Partnership for New York City.

We mobilized cross-functional task forces across our critical business areas to strengthen our operating procedures for labor management, sales and financial activities given the constantly changing environment. For liquidity, this approach led to the generation of more than $450 million in cash flow from operations.

(1)

“Adjusted EBITDA margin” is defined as adjusted EBITDA divided by revenue. A reconciliation of net income to adjusted EBITDA is set forth in Appendix B.

(2)

A reconciliation of income from continuing operations to adjusted income from continuing operations is set forth in Appendix B.

Our COVID-19 Response

Unprecedented Challenges

The impacts of COVID-19 spread across our national and European footprint and across all of our various end markets. In March, immediately following the onset of the pandemic, our management team pivoted their focus to aggressive execution of service delivery, managing and redeploying labor, and maintaining liquidity. At the end of March 2020, the Company elected to fully draw on the remaining $300 million in its revolver, to add capacity to the balance sheet, and in May 2020 the Company completed an amendment to its senior credit agreement to provide more financial flexibility. In June 2020, D. Anthony Scaglione, ABM’s Chief Financial Officer and one of the key members of the executive leadership team, notified the Company that he would be leaving the Company effective July 1, 2020, creating an urgency for our Board of Directors to focus on keeping our leadership motivated and intact while the Company continues to navigate through the pandemic-driven challenges imposed on our business.

Taking Care of Our People, Guided by ABM’s Values

Despite these challenges and difficult developments, we took rapid action to coordinate across our people, our clients and their operations while leveraging financial resilience and risk mitigation. We remain guided by our core set of fundamental values: respect, integrity, collaboration, innovation, excellence and trust.

We cannot express the tremendous pride we have in our skilled and knowledgeable workforce. Our employees are the driving force behind everything we do. Earlier in 2020, as details continued to emerge on the pathology of COVID-19, we responded immediately to secure personal protective equipment for our front-line employees and developed safety protocols necessary to responsibly service our clients’ workspaces. We quickly adapted our standard operating practices throughout the entire organization to comply with local, national and global guidelines along with those

iv     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

developed by our expert-led advisory council. In mid-March 2020, we transitioned most of our non-frontline workforce to virtual and remote work environments.

Reinventing ABM - Past the Challenges Today, Preparing for Tomorrow

Amidst the changing global conditions caused by the pandemic, we never lost sight of our commitment to keep environments safe, clean, comfortable and energy efficient through individual or integrated solutions. This commitment led to the development of our industry leading EnhancedClean program. The 3-step approach delivers healthy spaces with a certified virus protection process, building on our trustworthiness in cleaning and disinfection. In conjunction, we launched our Safety Seen campaign to provide a visual assurance of our cleaning and disinfection efforts in these extraordinary times.

During the pandemic, we have continued to deliver value and navigate the volatility that we face. As we look to the future, we are inspired by the new opportunities presented to ABM stemming from the post-pandemic “new normal” through increased expectations for safer workspaces, building cleanliness and sanitization, the rising demand for service volume and frequency, the focus on higher value-added services and the greater importance of scale, reach, and reliability.

CORPORATE GOVERNANCE AND BOARD HIGHLIGHTS

Board Composition

The following chart reflects the principal occupation, age, tenure and committee memberships of each member of our Board of Directors (the “Board”).

Name and Principal Occupation

Age

Director

since

Independent

Committee memberships

AC

CC

GC

SER

 

 

 

 

Quincy L Allen(1)

Former Chief Marketing Officer of IBM Cloud, IBM Corporation

60

2021

Yes

 

 

 

 

 

 

 

 

 

 

 

 

LeighAnne G. Baker

Former Senior Vice President and Chief Human Resources Officer, Cargill, Inc.

62

2018

Yes

 

 

 

 

 

 

 

 

 

 

Linda Chavez

Senior Fellow, Niskanen Center

73

1997

Yes

 

 

 

 

 

 

 

 

 

 

Donald F. Colleran

President and Chief Executive Officer of FedEx Express, a subsidiary of FedEx Corporation

65

2018

Yes

 

 

 

 

 

 

Art A. Garcia

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

59

2017

Yes

‡*

 

 

 

 

 

 

Thomas M. Gartland

Executive Chairman of SGL TransGroup; Former President, North America of Avis Budget Group, Inc.

63

2015

Yes

 

 

 

 

 

 

Jill M. Golder

Former Chief Financial Officer, Cracker Barrel Old Country Store, Inc.

58

2019

Yes

*

 

 

 

 

 

 

 

Sudhakar Kesavan†

Former Executive Chairman, ICF International, Inc.

66

2012

Yes

 

 

 

 

 

 

Scott Salmirs

President and Chief Executive Officer, ABM Industries Incorporated

58

2015

No

 

 

 

 

 

 

 

 

Winifred (Wendy) M. Webb

Chief Executive Officer, Kestrel Corporate Advisors; Former Senior Executive at Ticketmaster and The Walt Disney Company

62

2014

Yes

*

 

 

 

Legend:

AC – Audit Committee: CC – Compensation Committee; GC – Governance Committee; SER – Stakeholder and Enterprise Risk Committee

Indicates Board Chair

Indicates Committee Chair

*

Indicates Audit Committee Financial Expert

(1)

Mr. Allen was elected to the Board on February 10, 2021, and does not yet serve on any Committee of the Board.

ABM Industries Incorporated 2021 Proxy Statement     v


 

 

 

 

 

Corporate Governance

Our Board is committed to thoughtful and independent representation of stockholder interests and corporate governance policies and practices that drive long-term stockholder value. The following points summarize certain aspects of our corporate governance:

 

All directors and nominees other than Chief Executive Officer are independent

Robust director and executive officer stock ownership guidelines

Separate Chairman of Board and Chief Executive Officer 

Regular executive sessions of independent directors

Director overboarding policy

Risk oversight by Board and Committees

100% Director attendance at Board and Committee meetings, during fiscal year 2020

Declassified Board (subject to phase-out as described below)

Majority voting with resignation policy for directors in uncontested elections

Thorough annual Board and Committee self-evaluation process

Board focused on refreshment and director succession planning 

Mandatory director retirement age of 73 (subject to Board waiver)

Diverse Board that provides a range of viewpoints

Annual Board strategy meeting and review of Company’s strategic plan

Profile of our Board Members

Summary information about our Board is provided below:

 

 

Business Leadership

 

Financial/Investment

10 

 

 

 

 

 

 

 

 

 

 

 

 

10 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Industry Experience

 

Risk Oversight

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Public Company Board Experience

 

International Business Experience

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenure

 

Our Board maintains an ongoing commitment to refreshment and proactive assessment of its collective skills, experience and perspectives. 50% of our current Board members have served on the Board for five or fewer years. The Board and the Governance Committee believe that this balance of experience, continuity and refreshment helps the Board most effectively serve the Company and its stockholders.

 

vi     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

Diversity

Our Board and Governance Committee are committed to Board diversity: 40% of our Board members are female and 40% of our Board is racially or ethnically diverse.

 

 

Independence

Our Board is comprised of independent directors, with the exception of Mr. Salmirs.

 

ABM Industries Incorporated 2021 Proxy Statement     vii


 

 

 

EXECUTIVE COMPENSATION HIGHLIGHTS

Our Compensation Practices

 

What We Do

   Design Compensation Programs to Pay for Performance

   Use Equity Awards for Long-Term Incentive and Retention

   Maintain a Clawback Policy

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

   Use an Independent Compensation Consultant

   Require Significant Share Ownership and Retention by Executive Officers

   Limit Perquisites

   Use Double-Trigger Change-in-Control Arrangements

   Hold annual Say-on-Pay Vote

 

What We Don’t Do

   No Fixed-Term Employment Agreements

   No Gross-Ups for Taxes

   No Repricing of Stock Options

   No Hedging and Pledging of ABM Stock

 

Our Executive Compensation Programs 

In fiscal year 2020, 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:

 

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

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

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. 

 

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 stockholder interests; and

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

 

viii     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

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. Approximately 91% of our CEO’s compensation is at risk. Approximately 81% of our other named executive officers’ (“NEOs”) compensation is at risk.

 

Unique Fiscal Year 2020 Executive Compensation Impacts

•    ABM faced unprecedented business challenges in fiscal year 2020 as a result of the pandemic and related disruptions, including the departure of the Company’s Chief Financial Officer.

•    The Company pivoted to focus on keeping our employees, our clients, their customers and our communities safe, maintaining our liquidity and managing through the evolving challenges of the pandemic.

•    Our executive officers and independent board members took temporary 20% salary and retainer reductions from May 1, 2020, through July 1, 2020, while key management employees took temporary 10% salary reductions for the same period.

•    The Company suspended its 401(k) match from June 1, 2020, through the end of calendar year 2020, cut non-essential travel and entertainment, and employed temporary furloughs and hours reductions to control expenses.

•    In July 2020, ABM granted one-time stock awards to stabilize and motivate approximately 175 key leaders.  These awards will time-vest over a two-year period. The vesting schedule is tied to the critical 24-month period as the Company continues to navigate through the pandemic, and reflects the inability to set meaningful performance metrics at the time, given that the historic lack of visibility to both revenue and profit led to the Company’s withdrawal of financial guidance for the duration of fiscal year 2020.

•    While our executives performed exceedingly well in leading the Company during the pandemic, our executive officers forfeited the personal objective component of their cash bonuses. Our CEO's cash bonus was further reduced to no more than target by the independent directors on the Board at the request of the CEO, in recognition of the wide-ranging impacts of the COVID-19 pandemic, including difficult cost-saving measures throughout the Company.

•    Our Compensation Committee did not adjust any target metrics for in-flight short or long-term incentives, and continued its commitment to a strong pay-for-performance philosophy.

•    ABM mobilized to successfully deliver results in excess of our pre-COVID-19 targets in many areas including new sales, EBTIDA margin and adjusted operating income from continuing operations.

•    Our executive officers’ compensation is aligned with ABM’s strategy and reflects actual performance, furthering the interests of our stockholders.

 


ABM Industries Incorporated 2021 Proxy Statement     ix


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

PROPOSAL 1ELECTION OF DIRECTORS

 

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

Nominees for Election to Serve as Directors for a Term Expiring in 2022

The Board of Directors

Corporate Governance

Identifying and Evaluating Nominees for Directors

Board Leadership Structure

Director Independence

The Board’s Oversight of Risk Management

The Board’s Role in Cybersecurity Risk Oversight

Corporate Social Responsibility and Sustainability

Mandatory Retirement

Outside Board Limits

Board Committees

Board and Committee Attendance in Fiscal Year 2020

DIRECTOR COMPENSATION FOR FISCAL YEAR 2020

2020 Non-Employee Director Compensation Elements

2020 Non-Employee Director Compensation Table

Non-Employee Director Deferred Compensation Plan

Director Stock Ownership Policy

 

ABM Industries Incorporated 2021 Proxy Statement     1


 

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

 

Proposal Summary

We are asking our stockholders to elect four nominees to serve on the Board for a one-year term and until their successors are duly elected and qualified. Information about the Board and each director nominee is included in this section. The number of directors is currently fixed at ten.

Board Recommendation

The Board unanimously 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 stockholders 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 in connection with that director’s election at a stockholder meeting as more fully described under “Questions and Answers About The Proxy Materials And The 2021 Annual Meeting” of this Proxy Statement. 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.

Board Declassification

Our Board, which currently consists of ten directors, historically was divided into three classes. As approved by the Company’s stockholders at the 2020 Annual Meeting of Stockholders, the Board has begun to be declassified over a three-year phase-out period. All director nominees whose terms expire at the 2021 Annual Meeting will be, if elected by our stockholders, elected to hold office for a term of one year, or until their successors are duly elected and qualified in accordance with our Bylaws. At the 2023 Annual Meeting of Stockholders, all director nominees elected by our stockholders will be elected to hold office for a term of one year, or until their successors are duly elected and qualified in accordance with our Bylaws, and the classification of the Board of Directors will terminate in its entirety.

 

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Nominees for Election to Serve as Directors for a Term Expiring in 2022

 

Linda Chavez

Director Since 1997

Age 73

Senior Fellow, Niskanen Center

Ms. Chavez is senior fellow at the Niskanen Center, a public policy organization, where she focuses on politics and public policy, and at the National Immigration Forum, where she focuses on immigration reform. 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, served on the advisory board of the Outstanding Directors Exchange in 2008 and 2009, and served on the board of Research Electro-Optics, a privately held company, from 2012 to 2018. Ms. Chavez also serves or has served on numerous nonprofit boards. She is an author, television commentator and frequently writes 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.

 

 

Art A. Garcia

Director Since 2017

Age 59

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

Mr. Garcia retired in 2019 as the executive vice president and chief financial officer of Ryder System, Inc., a $8.4 billion commercial fleet and supply chain management solutions company, a position held since 2010 and was a member of Ryder’s executive leadership team. Previously, 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 has served on the board of Elanco Animal Health (NYSE: ELAN), a $3.1 billion provider of products and services to improve animal health production in more than 90 countries around the world since 2019, and serves as a member of the Audit and Finance Committees, and on the board of American Electric Power (NASDAQ: AEP), a $15.6 billion electric public utility company, delivering electricity and custom energy solutions since 2019, where he serves as chair of the Finance Committee and a member of the Audit & Director Governance Committees.

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.

 

ABM Industries Incorporated 2021 Proxy Statement     3


 

 

 

 

Jill M. Golder

Director Since 2019

Age 58

Former Senior Vice President and Chief Financial Officer, Cracker Barrel Old Country Store

Ms. Golder is former senior vice president and chief financial officer of the restaurant and gift store chain Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL), a position held from Jue 2016 to December 2020. She previously served in finance leadership roles at Ruby Tuesday, Inc. from 2013 to 2016, including as executive vice president and chief financial officer from 2014 to 2016. Ms. Golder served in progressively more responsible finance positions during her 23 years at Darden Restaurants, Inc., including senior vice president finance for Olive Garden, senior vice president finance of Smokey Bones, senior vice president finance of Specialty Restaurant Group and senior vice president of Red Lobster. Ms. has served on the board of IZEA Worldwide, Inc. (NASDAQ: IZEA), an influencer marketing technology company, since 2021, and previously served on its board from 2015 to 2019.

Ms. Golder’s qualifications to serve on our Board include her extensive financial experience in a variety of leadership roles at various major, multinational companies. Ms. Golder also brings public company experience to our Board.

 

 

Scott Salmirs

Director Since 2015

Age 58

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 teens with substance abuse issues, 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.

 

 

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Continuing Directors Whose Terms Expire in 2022

 

Quincy L. Allen

Director Since 2021

Age 60

Former Chief Marketing Officer of IBM Cloud, IBM Corporation

Mr. Allen is former chief marketing officer of IBM Cloud at IBM Corporation (NYSE: IBM), an international technology solutions company, a position held from 2015 to 2018. Prior to joining IBM, Mr. Allen served as chief marketing and strategy officer at Unisys Corporation (NYSE: UIS) from 2012 to 2015. He previously served as chief executive officer of Vertis Communications, a direct marketing and advertising company, a position held from 2009 to 2010. Vertis Communications filed for voluntary bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in November 2010 and emerged from bankruptcy in March 2012. In October 2012, Vertis Communications filed for bankruptcy protection again. Prior to Vertis Communications, Mr. Allen held several leadership positions with Xerox Corporation, including serving as president of the Global Services and Strategic Marketing Group and president of Production Systems Group, as well as vice president of Xerox Corporation. Mr. Allen has served on the board of The ODP Corporation (Office Depot) (NASDAQ: ODP) since February 2020, and previously served on the boards of NCR Corporation (NYSE: NCR) from 2009 to 2012 and Gateway, Inc. from 2006 to 2007.

Mr. Allen’s qualifications to serve on the Board include his extensive operational and technology experience at major multinational corporations, and background in business development. Mr. Allen also brings public company experience to our Board.

 

 

LeighAnne G. Baker

Director Since 2018

Age 62

Former Senior Vice President and Chief Human Resources Officer, Cargill, Inc.

Ms. Baker is former senior corporate vice president and chief human resources officer of Cargill, Inc., a global food and agricultural company, a position held from May 2014 to June 2020. She served as a member of the executive team and responsible for Cargill’s global human resources strategy and practices. Prior to joining Cargill in May 2014, she served as executive vice president and chief human resources officer of Hertz Global Holdings, Inc. from 2007 to 2014. Before joining Hertz, Ms. Baker was senior vice president, global human resources of The Reynolds & Reynolds Company, a leading provider of automotive dealer management systems, from 2005 to 2007. She also served in various management and leadership roles at The Timken Company from 1981 to 2005. Ms. Baker has served on the board of Pactive Evergreen (NASDAQ: PTVE), a manufacturer and distributor of foodservice, food merchandising products and fresh beverage cartons, since 2020, where she serves as chair of the Compensation Committee and as a member of the Audit Committee.

Ms. Baker’s qualifications to serve on our Board include many years of executive experience for large enterprises, providing extensive expertise in global human resources management, leadership development and large-scale organizational change.

 

ABM Industries Incorporated 2021 Proxy Statement     5


 

 

 

 

Sudhakar Kesavan

Director Since 2012

Age 66

Former Executive Chairman, ICF International, Inc.

Mr. Kesavan is former executive chairman of ICF International, Inc. (NASDAQ: ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, a position he held from 1999 to December 2020. He served as chief executive officer of ICF International from 1999 to 2019 and has served as 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 Inova Health Systems, a not-for-profit healthcare system based in Northern Virginia, serves as board member emeritus for Northern Virginia Technology Council and serves 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, and operations, industry, public company board, financial, mergers and acquisitions, government and government relations, and global operations experience to our Board.

 

Continuing Directors Whose Terms Expire in 2023

 

Donald F. Colleran

Director Since 2018

Age 65

President and Chief Executive Officer, FedEx Express, a subsidiary of FedEx Corporation

Mr. Colleran is president and chief executive officer of FedEx Express, a subsidiary of FedEx Corporation, a global provider of supply chain, transportation, business and related information services, a position held since March 2019. From 2017 to March 2019, Mr. Colleran was executive vice president and chief sales officer of FedEx Corporation. He also serves on the FedEx Corporation Strategic Management Committee, which sets the strategic direction for FedEx. Mr. Colleran joined FedEx in 1989, where he has served in a variety of leadership roles including executive vice president, global sales of FedEx Services from July 2006 through December 2016. He serves as a director of EastGroup Properties, Inc. (NYSE: EGP), an equity real estate investment trust, since 2017, and serves as a member of the Compensation Committee and Nominating and Corporate Governance Committee.

Mr. Colleran’s qualifications to serve on our Board include his extensive experience in a variety of leadership roles at a major, multinational company, including business, sales, leadership, and global operations. Mr. Colleran also brings public company experience to our Board.

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Thomas M. Gartland

Director Since 2015

Age 63

Executive Chairman, SGL TransGroup; Former President, North America of Avis Budget Group, Inc.

Mr. Gartland has been the executive chairman of SGL TransGroup, a privately-held global freight forwarder, since 2017, where he serves as a member of the Audit Committee and Compensation Committee. Mr. Gartland retired in December 2014 from his role as president, North America for Avis Budget Group, Inc., a 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 has served on the board of directors of Xenia Hotels & Resorts, Inc. (NYSE: XHR), a self-advised and self-administered REIT that invests primarily in premium full-service, lifestyle and urban upscale hotels, since 2015 and serves as chair of the Compensation Committee.

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 62

Chief Executive Officer, Kestrel Corporate Advisors; Former Senior Executive at Ticketmaster and The Walt Disney Company

Ms. Webb is chief executive officer of Kestrel Corporate Advisors, an advisory services firm, counseling organizations on strategic business issues, including growth initiatives, digital marketing, board governance and investor relations, since 2013. From 2010 to 2013, she was managing director for Tennenbaum Capital Partners. Ms. Webb was a member of the corporate executive team for Ticketmaster from 2008 to 2010. She served for 20 years with The Walt Disney Company, from 1988 to 2008, in various senior positions including corporate senior vice president of investor relations and shareholder services, and governance outreach. She was also executive director for The Walt Disney Company Foundation. Before Disney, she held roles in investment banking. She has served on the boards of directors of Wynn Resorts, Limited (NASDAQ: WYNN) since April 2018, serving as chair of the Audit Committee, and of AppFolio, Inc. (NASDAQ: APPF) since December 2019, where she is chair of the Audit Committee and a member of the Nominating and Corporate Governance, and Risk and Compliance Oversight Committees. Ms. Webb also has served on the board of trustees of a REIT, American Homes 4 Rent (NYSE: AMH), since January 2019, and is a member of the Compensation, and Nominating and Corporate Governance Committees. She previously served on the boards of 9 Spokes International Ltd. (2015 to 2018), of TiVo Inc. (2016), of Jack in the Box Inc. (2008 to 2014), and of nonprofit PetSmart Charities, Inc. (2014 to 2016). She served as co-chair of nonprofit WomenCorporateDirectors, LA/OC Chapter (2017 to 2020). Ms. Webb has been recognized as an NACD Directorship 100 honoree, a WomenInc. Most Influential Corporate Board Director, and a Directors & Boards Director to Watch.

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 public company board, 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.

 

ABM Industries Incorporated 2021 Proxy Statement     7


 

 

 

The Board of Directors

 

Name and Principal Occupation

Age

Director

since

Independent

Committee memberships

AC

CC

GC

SER

 

 

 

 

Quincy L Allen(1)

Former Chief Marketing Officer of IBM Cloud, IBM Corporation

60

2021

Yes

 

 

 

 

 

 

 

 

 

 

 

 

LeighAnne G. Baker

Former Senior Vice President and Chief Human Resources Officer, Cargill, Inc.

62

2018

Yes

 

 

 

 

 

 

 

 

 

 

Linda Chavez

Senior Fellow, Niskanen Center

73

1997

Yes

 

 

 

 

 

 

 

 

 

 

Donald F. Colleran

President and Chief Executive Officer of FedEx Express, a subsidiary of FedEx Corporation

65

2018

Yes

 

 

 

 

 

 

Art A. Garcia

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

59

2017

Yes

‡*

 

 

 

 

 

 

Thomas M. Gartland

Executive Chairman of SGL TransGroup; Former President, North America of Avis Budget Group, Inc.

63

2015

Yes

 

 

 

 

 

 

Jill M. Golder

Former Chief Financial Officer, Cracker Barrel Old Country Store, Inc.

58

2019

Yes

*

 

 

 

 

 

 

 

Sudhakar Kesavan†

Former Executive Chairman, ICF International, Inc.

66

2012

Yes

 

 

 

 

 

 

Scott Salmirs

President and Chief Executive Officer, ABM Industries Incorporated

58

2015

No

 

 

 

 

 

 

 

 

Winifred (Wendy) M. Webb

Chief Executive Officer, Kestrel Corporate Advisors; Former Senior Executive at Ticketmaster and The Walt Disney Company

62

2014

Yes

*

 

 

 

Legend:

AC – Audit Committee: CC – Compensation Committee; GC – Governance Committee; SER – Stakeholder and Enterprise Risk Committee

 

Indicates Board Chair

Indicates Committee Chair

*

Indicates Audit Committee Financial Expert

(1)

Mr. Allen was elected to the Board on February 10, 2021, and does not yet serve on any Committee of the Board.

Corporate Governance

Our Board has adopted Corporate Governance Principles that reflect our commitment to sound corporate governance and the role of governance in building long-term stockholder 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, our Code of Business Conduct, and the Charters of our Audit Committee, Compensation Committee, Governance Committee, and Stakeholder 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 Governance Committee may recommend to the Board that the expertise of the

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current members should be supplemented. The Governance 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, backgrounds and perspectives, including the specific qualifications of industry knowledge; accounting and finance; management; leadership; business strategy and operations; corporate governance; other public board experience; and risk management, and also seeks diversity in its directors, including but not limited to diversity in the areas of race, ethnicity, national origin, gender, and age.

With individual members of the Board, the Governance Committee seeks individuals that have leadership in other organizations and have significant experience in a specific area or endeavor, and who 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 professional search firms and the relationships of current directors. In the case of a search firm, the Governance Committee will pay a fee for such a firm to assist it in the recruitment and identification of potential candidates for the Board. When identifying new candidates for Board membership, the Governance Committee includes, and requests that any such search firm it engages include, highly qualified women and racially and ethnically diverse persons in the initial pool from which potential director candidates are chosen in accordance with the Corporate Governance Principles. Ms. Golder, a nominee for election at this Annual Meeting, was elected to the Board in 2019 and recommended to the Governance Committee by a search firm that also presented several other candidates for consideration. After the Governance Committee evaluated Ms. Golder’s candidacy for the Board (including, without limitation, through her interviews with directors, completion of a questionnaire and related procedures), it then determined to recommend her to the Board for election.

Candidates may also come to the attention of the Governance Committee through stockholders or other persons. Such stockholder director candidates would be evaluated under the Governance Committee’s established evaluation practices for director candidates. Stockholders wishing to submit candidates for election as directors should provide the names of such candidates to the Corporate Secretary, ABM Industries Incorporated, One Liberty Plaza, New York, New York 10006. See “Questions And Answers About The Proxy Materials And the 2021 Annual Meeting” for more information on submitting stockholder director nominations to the Company.  

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. Directors who are full-time employees of ABM or who serve as chief executive officers or in equivalent positions at other public companies may not serve on the boards of more than one other publicly traded company. Other directors may not serve on the boards of more than three 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. The Chairman of our Board (Mr. Kesavan) is charged with presiding over all meetings of the Board and our stockholders, 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 stockholders.

ABM Industries Incorporated 2021 Proxy Statement     9


 

 

 

Director Independence

Our Corporate Governance Principles provide that a majority of our directors must be independent; Further, the Committee Charters for our Audit Committee, Compensation Committee, Governance Committee, and Stakeholder and Enterprise Risk Committee require all members be independent. Each year, our Governance Committee reviews the independence of each of our directors under applicable New York Stock Exchange (“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 applicable 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 affirmatively determined, that each of our directors, other than our Chief Executive Officer, is independent under applicable NYSE and Securities and Exchange Commission (“SEC”) rules and regulations. Mr. Filippo Passerini departed the Board in May 2020, and had been affirmatively determined by the Board and Governance Committee to be independent under applicable NYSE and SEC rules and regulations prior to his departure.

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 Stakeholder and Enterprise Risk Committee assists the Board in its oversight of the Company’s activities and practices identifying, evaluating and mitigating strategic and operational risks, as well reviewing the Company’s practices and activities regarding social, environmental and related public policy matters that may pose risks to the Company’s business. The responsibilities of this committee with respect to ERM oversight were included among those of our former Strategy and Enterprise Risk Committee.

Our Audit Committee oversees risks relating to 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 fulfilling their oversight responsibilities, all committees receive regular reports on their respective areas of responsibility from members of management. Each committee reports regularly to the full Board on its activities, including on matters relating to risk oversight. In addition, the Board participates in regular discussions in executive sessions led by the Chairman of the Board and with the Company’s senior management on many key subjects, including strategy, industry group performance, operations, information systems, finance, and legal.

The Board’s Role in Cybersecurity Risk Oversight

Enterprise cybersecurity risk management is an important focus of our Board and its Stakeholder and Enterprise Risk Committee. The Company’s Chief Information Officer provides regular reports and updates. Such reports cover the Company’s information technology security program, including its current status, capabilities, objectives and plans, as well as the evolving cybersecurity threat landscape.

Corporate Social Responsibility and Sustainability

Our Company’s mission is to make a difference, every person, every day. We aim to do business in a responsible way and introduce sustainable solutions to the market that help preserve our planet and provide places and spaces that are socially and environmentally responsible. Our sustainability strategy is guided by the following three strategic axes:

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To ensure the comprehensive development and execution of our sustainability strategy, we maintain rigorous dialogue with our diverse stakeholders - our clients, vendors, employees, investors, and the communities in which we live and work. Through these engagements, we identify and prioritize the material environmental, social and governance (“ESG”) issues that impact our business.

Sustainability Oversight

We execute on many of our ESG issues through our sustainability oversight. We have a dedicated Corporate Sustainability Manager who reports to our Chief Communications Officer, coordinates with our UK Environmental Manager, and oversees ABM’s sustainability committee, which is comprised of various sustainability project managers from across the Company with expertise on waste, energy and green cleaning services.

Our Board enhanced its commitment to review and oversight of ESG issues through the creation of the Board’s Stakeholder and Enterprise Risk Committee in June 2020. The Stakeholder and Enterprise Risk Committee is responsible for oversight of social, environmental and public policy matters, stakeholder impacts, and enterprise and strategic risks.

Doing Business in a Responsible Way

For more than 100 years, ABM has been committed to ethical business practices, and we have developed our Code of Business Conduct to ensure ABM’s principles of respect, integrity, collaboration, innovation, trust and excellence are applied throughout our operations. Our Code of Business Conduct covers topics including conflicts of interest, duty of loyalty, gifts and gratuities, bribery and corruption and harassment and discrimination, among others. We reinforce these practices through an annual comprehensive training and certification program on our Code of Business Conduct for our Board and all of our staff and management employees.

We also maintain a Supplier Code of Conduct, to ensure our suppliers uphold the policies of ABM concerning compliance with all applicable laws, respect for human rights, environmental conservation and the safety of products and services.

Ensuring our Employees’ Well-Being

Our human capital strategy is centered on our values and our employees; we prioritize our human capital development in order to do business in a responsible way and ensure our employees’ success. The execution of this strategy is overseen at the highest levels of our organization, from our Board, our Board’s Stakeholder and Enterprise Risk Committee, and across our senior management.

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Delivering a safe workspace where our people feel valued and able to develop their potential is one of our main drivers to make a difference, and the cornerstone of our comprehensive risk management and safety program is safety awareness. We have established a “safety-first” culture through various programs and initiatives including, but not limited to, incorporation into our daily shift protocols, training, and alignment with our corporate incentive plans.

Our online training platform, ABM University, provides our staff and management employees with access to a multitude of training courses, videos, reference material, and other tools. Outside of ABM University, our frontline employees receive on-the-job training to ensure we are executing for our clients.

We are an Equal Opportunity and Affirmative Action employer in compliance with the requirements of the Executive Order 11246 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act. We pride ourselves on our commitment to fostering a diverse, inclusive, and empowered workforce. In 2020, the Company established a Culture and Inclusion Leadership Council, which seeks to obtain feedback from our employees and focuses on matters related to corporate culture at ABM, specifically related to diversity, inclusion, and social justice.

Managing our Environmental Footprint

The past two years marked significant progress for our sustainability journey and prepared us to better support our clients and the communities where we live and operate.  We take steps every day to minimize the impact of our operations on the world around us and are committed to reducing our carbon footprint.  Last year, we strengthened our portfolio of sustainable solutions to effectively mitigate climate change risks, lower CO2 emissions, and improve waste diversion rates from landfills.  

Since 2011, we have voluntarily published a Sustainability Report on an annual basis in alignment with the Global Reporting Initiative framework, and since 2020 in alignment with the Sustainability Accounting Standards Board guidelines, to address our business, our employees, and the environment. More information can be found in the corporate sustainability section of our corporate website.

Mandatory Retirement

The Board has adopted a retirement policy for directors, subject to waiver by the Board if the Governance Committee and Board each deem a director’s continued service is in the best interests of the Company. 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 stockholders meeting next following his or her 73rd birthday.

Outside Board Limits

We limit the number of other public company boards our directors may join to ensure that our directors are able to rigorously prepare for and participate in Board and Committee meetings, to ask direct questions and require straight answers, and to spend the time needed, including by meeting as frequently as necessary, to properly discharge their responsibilities and duties as directors. Directors who are fulltime employees of the Company or who serve as chief executive officers or equivalent positions at other public companies may not serve on more than one other board of a publicly-traded company. Other directors may not serve on more than three other boards of public companies. Any director seeking to join the board of directors of another public company or for-profit organization must first notify the Governance Committee before accepting an invitation to serve on another board.  

Board Committees

The Board has four standing committees: the Audit Committee, the Compensation Committee, the Governance Committee and the Stakeholder and Enterprise Risk Committee. During 2020, the Board and its Governance Committee reviewed the Board’s committee structure and, after considering the roles and responsibilities of each committee and their areas of responsibility, created a new committee, the Stakeholder and Enterprise Risk Committee, and disbanded the Strategy and Enterprise Risk Committee.  The responsibilities of the Strategy and Enterprise Risk Committee with respect to oversight of the Company’s strategy development and implementation were allocated to the full 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, meets regularly in executive session, 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 each director’s qualifications and the desire to refresh committee membership. The primary responsibilities of each committee, as well as membership of each committee, as

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of the date of this Proxy Statement, are summarized below. Each committee is governed by a charter, which sets forth the applicable responsibilities for each committee. For more information, see the committee charters on the corporate governance section of our website at http://investor.abm.com/corporate-governance.cfm.

 

Audit Committee

 

 

Art A. Garcia, Chair

Jill M. Golder

Winifred M. Webb

 

Key Oversight Responsibilities

 

 

 Selection of independent auditor, including review of 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 Mr. Garcia, Ms. Golder and Ms. Webb each qualifies as an “audit committee financial expert” under applicable SEC rules.

 

 

 

The Audit Committee met eight times in fiscal year 2020.

 

Compensation Committee

 

 

Thomas M. Gartland, Chair

LeighAnne G. Baker

Linda Chavez

Donald F. Colleran

 

Key Oversight Responsibilities

 

 

 CEO compensation and evaluation

 Other non-CEO executives’ compensation

 Equity plan and awards

 Review of compensation structure

 Executive employment and severance agreements

 

 

 

The Compensation Committee met eight times in fiscal year 2020.

 

Governance Committee

 

 

Linda Chavez, Chair

Thomas M. Gartland

Sudhakar Kesavan

Key Oversight Responsibilities

 

 

 Director recruitment

 Corporate governance

 Board committee structure, membership and evaluations of Board and
 committees

 Director compensation

 Executive and Board Succession planning

 

 

 

The Governance Committee met nine times in fiscal year 2020.

Stakeholder and Enterprise Risk Committee

 

 

Winifred M. Webb, Chair

LeighAnne G. Baker

Donald F. Colleran

Art A. Garcia

 

 

Key Oversight Responsibilities

 

 

 Social, environmental and public policy matters

 Review impact of business on key stakeholders

 Enterprise risk assessment

 Operational risks

 

 

 

The Stakeholder and Enterprise Risk Committee, formed in June 2020, met two times in fiscal year 2020.

ABM Industries Incorporated 2021 Proxy Statement     13


 

 

 

 

Board and Committee Attendance in Fiscal Year 2020 

During fiscal year 2020, the Board held twelve meetings. Each then serving director attended 100% of the meetings of the Board and 100% of the committees on which he or she served during fiscal year 2020.

Our Board meets in executive session during each regularly scheduled Board meeting, with the Chairman of the Board presiding at such executive sessions, and may meet in executive session during specially called meetings.

Our directors attend our annual meetings of stockholders, absent a conflict or other extenuating circumstances. All of our then serving directors attended the 2020 Annual Meeting of Stockholders.

 

DIRECTOR COMPENSATION FOR FISCAL YEAR 2020

ABM compensates non-employee directors through a combination of annual cash retainers, fees relating to chairing or serving on a committee, and equity grants. 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 stockholder-approved 2006 Equity Incentive Plan. 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. No changes were made to non-employee director compensation in fiscal year 2020.

2020 Non-Employee Director Compensation Elements

 

Compensation Element

2020 Compensation Program

Annual Board Cash Retainer

    $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 (vesting after one year from grant date)

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

Board and Committee Meeting Attendance Fees

None

Annual Chair Cash Fees

    $15,000 for Audit Chair

    $10,000 for Compensation Chair

    $7,500 for Governance Chair

    $7,500 for Stakeholder 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

    $10,000 for Governance members

    $10,000 for Stakeholder and Enterprise Risk members

Ad Hoc Committee Service or Investment of Significant Time Above and Beyond the Requirements of Board or Committee Service*

    $2,000 per day*

*The Chairman of the Board is not eligible to receive such payments

*No directors received any such payments in 2020

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2020 Non-Employee Director Compensation Table

 

 

Fees

Earned or

Paid in

Cash(1)

Stock

Awards(2)

All Other

Compensation(3)

Total

  Name*

($)

($)

($)

($)

LeighAnne G. Baker

 

92,708

 

 

125,005

 

 

1,834

 

 

219,547

 

Linda Chavez

 

104,500

 

 

125,005

 

 

7,637

 

 

237,142

 

Donald F. Colleran

 

97,375

 

 

125,005

 

 

1,834

 

 

224,214

 

Art A. Garcia

 

118,750

 

 

125,005

 

 

7,211

 

 

250,966

 

Thomas M. Gartland

 

106,875

 

 

125,005

 

 

4,317

 

 

236,197

 

Jill M. Golder

 

95,000

 

 

125,005

 

 

2,469

 

 

222,474

 

Sudhakar Kesavan(4)

 

166,250

 

 

175,000

 

 

2,568

 

 

343,818

 

Filippo Passerini(5)

 

47,000

 

 

125,005

 

 

648

 

 

172,653

 

Winifred M. Webb

 

108,125

 

 

125,005

 

 

8,531

 

 

241,661

 

*Mr. Salmirs is a member of the Board and President and Chief Executive Officer of ABM. His compensation for fiscal year 2020 is reported in the Summary Compensation Table and other sections of this Proxy Statement. In fiscal year 2020, Mr. Salmirs did not receive any compensation for his service on the Board. Additionally, Mr. Allen did not join the Board until after the end of fiscal year 2020 and thus received no compensation for his service to the Board during that period.

 

(1)

Amount includes annual Board cash retainers and Committee cash 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 per share 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 stockholders receives a prorated grant of restricted stock units (“RSUs”) based on the date that he or she joined the Board. In addition, each non-employee director who was expected to continue on the Board after the 2020 annual meeting of stockholders received an annual grant on January 6, 2020. For each then-current director, with the exception of Mr. Kesavan, the grant for 2020 on January 6, 2020 was 3,263 RSUs, which was calculated by dividing $125,000 by $38.31. For Mr. Kesavan, the grant for 2020 on January 6, 2020 was 4,568 RSUs, which was calculated by dividing $175,000 by $38.31. RSUs held by each director as of October 31, 2020, including RSUs that have been deferred under the Deferred Compensation Plan for Non-Employee Directors, were: Ms. Baker, 3,298; Ms. Chavez, 11,365; Mr. Colleran, 3,298; Mr. Garcia, 10,771; Mr. Gartland, 6,750; Ms. Golder, 3,298; Mr. Kesavan, 4,617; and Ms. Webb, 12,608.

(3)

Amounts shown include value of dividend equivalents (DEUs) credited in fiscal year 2020 with respect to RSUs held by non-employee directors. DEUs are settled in Company stock when the underlying RSUs vest. Directors who defer RSUs under the ABM Deferred Compensation Plan for Non-Employee Directors do not receive DEUs on deferred RSUs until the underlying RSUs are paid out.  

(4)

Chairman of the Board.

(5)

Mr. Passerini resigned from the Board on May 19, 2020.

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 and fees 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 Director Deferred Compensation Plan permits directors to defer the settlement of Director RSUs to a date later than the vesting date.

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

ABM Industries Incorporated 2021 Proxy Statement     15


 

 

 

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.

Pursuant to our anti-hedging and pledging policy, none of our directors is permitted to hedge or pledge shares of ABM’s common stock.

 

 

 

 

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EQUITY INCENTIVE PLAN

 

PROPOSAL 2—APPROVAL OF ABM INDUSTRIES INCORPORATED 2021 EQUITY AND INCENTIVE COMPENSATION PLAN

 

 

Proposed Equity and Incentive Compensation Plan

ABM 2021 Equity and Incentive Compensation Plan

 

ABM Industries Incorporated 2021 Proxy Statement     17


 

 

 

 

PROPOSAL 2—APPROVAL OF ABM INDUSTRIES INCORPORATED 2021 EQUITY AND INCENTIVE COMPENSATION PLAN

 

Overview

We are asking our stockholders to adopt and approve the ABM Industries Incorporated 2021 Equity and Incentive Compensation Plan (the “2021 Plan”) to continue our ability to provide to our non-employee directors, officers and other employees and certain consultants equity and cash incentive awards that reward their service and performance.

The number of shares authorized for issuance under the 2021 Plan, as proposed, is 3,975,000. The following is a summary of the Plan, which is qualified in its entirety by the complete text of the 2021 Plan attached as Appendix A to this Proxy Statement. To the extent the description below differs from the 2021 Plan text in Appendix A, the text of the 2021 Plan governs the terms and provisions of the 2021 Plan. Because Company directors and executive officers are eligible to receive awards under the 2021 Plan, they may be deemed to have a personal interest in the adoption of this proposal.

Purposes of the Proposal

Our Board and Compensation Committee determined that the adoption of the 2021 Plan is necessary to reward the service and performance of our non-employee directors, officers and other employees and certain consultants. The Board believes that a long-term equity incentive program motivates and rewards our directors, executive officers and other key individuals for their contributions to our Company’s performance and serves to align long-term compensation with the performance of Company stock. Our Board recommends a vote for approval of the 2021 Plan because it will allow the Company to continue to use equity-based incentives and promote the goals of our compensation strategy. The 2021 Plan will only become effective subject to approval by our stockholders and, if it is not approved, the current ABM Industries Incorporated 2006 Equity Incentive Plan, as Amended and Restated on March 7, 2018 (the “predecessor plan”), will continue to remain in effect. If the 2021 Plan is approved by the Company’s stockholders at the Annual Meeting, no grants will be made under the predecessor plan thereafter, provided that outstanding awards granted under the predecessor plan will continue unaffected by such stockholder approval. If approved by the Company’s stockholders at this Annual Meeting, the 2021 Plan will be a new plan for the Company, the administration of which will be subject to the discretion of the Compensation Committee. As such, it is not possible at present to determine the amount or form of any award that will be granted or available for grant to any person in the future under such plan.

Key Data

The following table includes information regarding equity awards as of January 27, 2021 (including the equity awards under the predecessor plan). No further grants will be made under the predecessor plan as of January 27, 2021, unless stockholders do not approve the 2021 Plan.

 

As of January 27, 2021

 

Category

Shares

Predecessor plan shares currently available for issuance (no further grants under this plan unless stockholders do not approve the 2021 Plan)

1,349,989

Total shares underlying outstanding options and stock appreciation rights

59,722

Weighted average exercise price of outstanding options and stock appreciation rights

$13.43

Weighted average remaining term of outstanding options and stock appreciation rights

20.47 years

Total shares underlying outstanding full-value awards (e.g., RSUs, Performance Shares)

2,218,542

Record date common shares outstanding

67,078,471

 

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Important Features of the 2021 Plan

Plan Feature

Description

Reasonable Share Limits

If the 2021 Plan is approved, no more than 3,975,000 shares of common stock will be authorized for issuance.

Plan Term

If approved, no grant will be made under the 2021 Plan on or after the tenth anniversary of the date the plan goes into effect.

Minimum Vesting Provisions

Except as otherwise provided in the 2021 Plan, equity-based awards granted under the 2021 Plan will generally be subject to either a minimum vesting or minimum performance period of at least one year.

Limits on Non-Employee Director Compensation  

The 2021 Plan provides an overall annual cap on the amount of compensation that may be granted to each non-employee director.

No Dividends on Unvested Awards

No dividends or dividend equivalents will be paid on awards until they are earned and/or vested.

No Repricing Without Stockholder Approval

Option rights and appreciation rights may not be amended to reduce their exercise or base price, as applicable, and may not be cancelled in exchange for cash, other awards, or option rights and appreciation rights with an exercise or base price, as applicable, that is less than the exercise or base price of the original option rights or appreciation rights without obtaining stockholder approval.

No Discounted Option Rights or Appreciation Rights

Option rights and appreciation rights may not be granted with an exercise or base price less than the fair market value of ABM common stock on the date of grant.  

No “Evergreen” Provisions

The 2021 Plan authorizes the issuance of a fixed number of shares of common stock (subject to adjustment as provided therein). Stockholder approval will be required before any additional shares can be authorized for issuance under the 2021 Plan.

Clawback Protections

Pursuant to the terms of the 2021 Plan, awards will be subject to recovery or recoupment under circumstances set forth in any policy adopted by ABM and all applicable laws, government regulations and stock exchange listing requirements.

Plan Summary

The following summary is of the 2021 Plan and this summary describes the material features of the 2021 Plan. The purposes of the 2021 Plan are to promote the interests of the Company. ABM believes the 2021 Plan will further the interests of our stockholders by:

 

motivating and rewarding long-term strategic management that results in profitable growth and sustained stockholder value creation;

 

aligning employee and director interests with those of stockholders through encouraging stock ownership;

 

reinforcing a strong management team commitment to ABM’s long-term success;

 

providing meaningful long-term incentive award opportunity as part of a competitive total compensation program that enables ABM to attract and retain its key employees;

 

managing costs effectively through program design and administration guidelines in terms of accounting, tax, cash flow and stockholder dilution; and

ABM Industries Incorporated 2021 Proxy Statement     19


 

 

 

 

structuring grants to be responsive to changes in the Company’s business environment and compensation objectives.

The 2021 Plan will generally be administered by our Compensation Committee. Employees (including officers), directors and certain consultants of the Company and our affiliates are eligible to receive awards under the 2021 Plan. As of January 27, 2021, approximately 600 of the Company’s employees (including our officers), nine of our currently-serving non-employee directors, and approximately 25 of our consultants are eligible to participate in the 2021 Plan in connection with their provision of services to ABM.

The 2021 Plan consists of the following components: stock option rights, appreciation rights, restricted stock, restricted stock units (“RSUs”), cash incentives, performance shares, performance units and other awards. The Board recommends that our stockholders approve authorizing for issuance 3,975,000 shares of our common stock under the 2021 Plan.

Certain Limitations on Awards

Under the 2021 Plan, the aggregate number of shares relating to incentive stock options (as defined in the 2021 Plan) may not exceed 3,975,000 shares. Notwithstanding anything in the 2021 Plan to the contrary, no non-employee director may be granted, in any one calendar year, compensation for such service having an aggregate maximum value (measured at the grant date, as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes), of more than $750,000. The 2021 Plan provides that the aggregate number of shares available for issuance under the 2021 Plan will be reduced by one share for each share issued in settlement of any award. Subject to the terms of the 2021 Plan, if any award granted under the 2021 Plan is cancelled or forfeited, expires, is settled for cash, or is unearned, the common stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available for issuance under the 2021 Plan. If, after the effective date of the 2021 Plan, any common stock subject to an award granted under the predecessor plan is forfeited, or an award granted under the predecessor plan is cancelled or forfeited, expires, is settled for cash, or is unearned, the common stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under the 2021 Plan.

 

Notwithstanding the foregoing, (i) shares of common stock withheld by the Company, tendered or otherwise used in payment of the exercise price of an option right will not be added back to the aggregate number of shares of common stock available under the 2021 Plan; (ii) shares of common stock withheld by the Company, tendered or otherwise used to satisfy tax withholding will not be added back to the aggregate number of shares of common stock available under the 2021 Plan; (iii) shares of common stock subject to a share-settled appreciation right that are not actually issued in connection with the settlement of such appreciation right on the exercise thereof will not be added back to the aggregate number of shares of common stock available under the 2021 Plan; and (iv) shares of common stock reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of option rights will not be added back to the aggregate number of shares of common stock available under the 2021 Plan.  If a participant has elected to give up the right to receive cash compensation in exchange for shares based on fair market value, such shares will not count against the aggregate share limit of the 2021 Plan.

 

Awards may be granted under the 2021 Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, RSUs or other share or share-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any subsidiary. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of the 2021 Plan, and may account for common stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted for differences in stock prices in connection with the transaction. Any common stock that is issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company will not reduce the shares of common stock available for issuance or transfer under the 2021 Plan or otherwise count against the share limits contained in the 2021 Plan. In addition, no shares of common stock subject to an award that is granted by, or becomes an obligation of, the Company under the 2021 Plan, will be added to the aggregate share limit contained in the 2021 Plan pursuant to the share recycling provisions set forth in Section 3(b) of the Plan.

Awards granted under the 2021 Plan may provide for the payment of dividends or dividend equivalents (other than in connection with option rights and appreciation rights), payable in cash, shares, other securities or other property; provided, however, that such dividends or dividend equivalents will only be paid to the participant if the underlying award vests and/or is earned. Except to the extent provided in the 2021 Plan, no award will be transferable by the participant, except by will or the laws of descent and distribution.

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Minimum Vesting/Performance Period

Except in the case of substitute awards (as defined in the 2021 Plan) and cash incentive awards, awards granted under the 2021 Plan to participants will either be subject to a minimum vesting or minimum performance period, in the case of performance awards, of one year. Notwithstanding the foregoing, (i) the Compensation Committee may authorize acceleration of vesting of such awards in the event of the participant’s death, disability, termination of employment or service or the occurrence of a change in control (as defined in the 2021 Plan), (ii) the Compensation Committee may grant awards without the above-described minimum requirements with respect to awards covering up to 5% of the aggregate number of shares authorized for issuance under the 2021 Plan, and (iii) with respect to awards granted to non-employee directors, the vesting of such awards will be deemed to satisfy the minimum vesting requirement to the extent that the awards vest based on the approximate one-year period beginning on each regular annual meeting of the Company’s stockholders and ending on the date of the next regular annual meeting of the Company’s stockholders (provided that, in no case, will the minimum vesting requirement be less than 50 weeks).

Eligible Participants

Under the 2021 Plan, the Compensation Committee may grant awards to the following persons providing services to the Company: (i) non-employee directors, (ii) officers or other employees of the Company or any subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the date of grant, or (iii) certain consultants as provided in the 2021 Plan.

Stock Option Rights

Stock option rights granted under the 2021 Plan may be either incentive stock options or non-qualified stock options. Incentive stock options may only be granted to employees. Except with respect to substitute awards, incentive stock options and non-qualified stock options must have an exercise price per share that is not less than the fair market value of a share of our common stock on the date of grant. Each stock option will specify the vesting schedule, including any applicable management objectives (i.e., performance goals), and the option term may not extend for more than ten years after the date of grant. Each grant will specify the form of consideration to be paid in satisfaction of the exercise price, including (i) in cash, by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of common stock owned by the optionee having a value at the time of exercise equal to the total exercise price, (iii) subject to any conditions or limitations established by the Compensation Committee, by the withholding of common stock otherwise issuable upon exercise of an option pursuant to a “net exercise” arrangement, (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Compensation Committee. Option rights may not provide for any dividends or dividend equivalents to be paid thereon.

Appreciation Rights

The 2021 Plan provides for the grant of appreciation rights. Except with respect to substitute awards, the base price of an appreciation right may not be less than the fair market value of a share of common stock on the date of grant. Each appreciation right will specify the vesting schedule, including any applicable management objectives, and the term of an appreciation right may not extend more than ten years from the date of grant. An appreciation right may be paid in cash, shares of our common stock or any combination thereof. Appreciation rights may not provide for any dividends or dividend equivalents to be paid thereon.

Restricted Stock

Restricted stock may also be granted under the 2021 Plan. Restricted stock constitutes the transfer of ownership of shares of our common stock to the participant in consideration of the performance of services, entitling such participant to dividend, voting and other ownership rights, subject to a substantial risk of forfeiture and restrictions on transfer for a period of time, each as determined by the Compensation Committee, or until certain management objectives specified by the Compensation Committee are achieved. Each grant or sale of restricted stock may be made without additional consideration or in consideration of a payment by the participant that is less than the fair market value of shares of our common stock on the date of grant.

Dividends and other distributions paid on or in respect of any shares of restricted stock may be paid directly to the participant, or may be reinvested in additional shares of restricted stock, as determined by the Compensation Committee in its sole discretion, provided, however, that in all cases, such dividends and other distributions will be subject to the same restrictions on vesting, payment or otherwise as the underlying award.

ABM Industries Incorporated 2021 Proxy Statement     21


 

 

 

Restricted Stock Units

The 2021 Plan provides for the grant of RSUs. RSUs awarded under the 2021 Plan constitute an agreement by the Company to deliver shares of our common stock, cash, or a combination thereof, to the participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of management objectives) during the restriction period as the Compensation Committee may specify. Each grant or sale of RSUs may be made without additional consideration or in consideration of a payment by the participant that is less than the fair market value of shares of our common stock on the date of grant.

During the applicable restriction period, the participant will have no ownership, transfer or voting rights in the shares of our common stock underlying the RSUs. Rights to dividend equivalents may be extended to and made part of any RSU award at the discretion of and on the terms determined by the Compensation Committee; provided, however, that any dividend equivalents or other distributions on the shares of our common stock underlying the RSUs units will be deferred until and paid contingent upon the vesting of such RSUs.

Cash Incentive Awards, Performance Shares and Performance Units

Performance shares, performance units and cash incentive awards may also be granted to participants under the 2021 Plan. A performance share is a bookkeeping entry that records the equivalent of one share of our common stock, and a performance unit is a bookkeeping entry that records a unit equivalent to $1.00 or such other value as determined by the Compensation Committee. Each grant will specify the number or amount of performance shares or performance units, or the amount payable with respect to cash incentive awards, being awarded, which number or amount may be subject to adjustment to reflect changes in compensation or other factors.

These awards become payable to participants upon of the achievement of specified management objectives, and upon such terms and conditions as the Compensation Committee determines at the time of grant. Each grant will specify the management objectives regarding the earning of the award. Each grant will specify the time and manner of payment of cash incentive awards, performance shares or performance units that have been earned, and any grant may further specify that any such amount may be paid or settled in cash, shares of our common stock, or any combination thereof. Any grant of performance shares or performance units may provide for the payment of dividend equivalents in cash or in additional shares of our common stock, provided that such dividend equivalents will be subject to deferral and payment on a contingent basis based on the earning and vesting of the performance shares or performance units, as applicable, with respect to which such dividend equivalents are paid.

The management objectives that may apply with respect to awards of performance shares, performance units, or cash incentive awards (or, when so determined by the Compensation Committee, option rights, appreciation rights, restricted stock, RSUs, dividend equivalents or other awards pursuant to the 2021 Plan) may include (but are not limited to): absolute or relative stockholder return; earnings per share; stock price; return on equity; return on invested capital; net earnings; income from continuing operations; related return ratios; cash flow; net earnings growth; earnings before interest, taxes, depreciation and amortization; gross or operating margins; operating profit; productivity ratios; expense targets; operating efficiency; market share; customer retention and/or satisfaction; safety; diversity; employee recruitment, engagement, retention and/or training; employee satisfaction; environmental performance or goals, working capital targets (including, but not limited to days sales outstanding); sales; return on assets; revenues; decrease in expenses; increase in funds from operations (“FFO”); and increase in FFO per share, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group.  If the Compensation Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the aforementioned management objectives unsuitable, the Compensation Committee may in its discretion modify such management objectives or the goals or actual levels of achievement regarding the management objectives, in whole or in part, as the Compensation Committee deems appropriate and equitable.

Other Awards

Other awards may also be granted under the 2021 Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares (including, without limitation, securities convertible into shares), as deemed by the Compensation Committee to be consistent with the purposes of the 2021 Plan. Cash awards, as an element of or supplement to any other award granted under the 2021 Plan, may also be granted. Subject to the terms of the 2021 Plan, the Compensation Committee may authorize the grant of shares of common stock as a bonus, or may authorize the grant of other awards in lieu of obligations of the Company or a subsidiary to pay cash or deliver other property under the 2021 Plan or under other plans or compensatory arrangements, subject to such terms as will be determined by the Compensation Committee in a manner that complies with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee may, at or after the date of grant, authorize the payment of dividends or dividend equivalents on other awards on a deferred and contingent basis, either

22     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

in cash or in additional shares of common stock; provided, however, that dividend equivalents or other distributions on common stock underlying awards granted will be deferred until and paid contingent upon the earning and vesting of such awards. These awards will provide for vesting and other terms as deemed appropriate by the Compensation Committee and consistent with the terms of the 2021 Plan.

Adjustments; Change in Control

The Compensation Committee will make or provide for such adjustments in the number of and kind of common stock covered by outstanding awards granted under the 2021 Plan, in the exercise price and base price provided in outstanding option rights and appreciation rights, respectively, in cash incentive awards, and in other award terms, as the Compensation Committee, in its sole discretion, determines, in good faith, is equitably required to prevent dilution or enlargement of the rights of participants that otherwise would result from (1) any extraordinary cash dividend, stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (ii) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (iii) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event or in the event of a change in control, the Compensation Committee may provide in substitution for any or all outstanding awards under the 2021 Plan such alternative consideration (including cash), if any, as it, in good faith, may determine to be equitable in the circumstances and will require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code.  In addition, for each option right or appreciation right with an exercise price or base price, respectively, greater than the consideration offered in connection with any such transaction or event or change in control, the Compensation Committee may in its discretion elect to cancel such option right or appreciation right without any payment to the person holding such option right or appreciation right. The Compensation Committee will also make or provide for such adjustments in the number of shares of common stock specified in the 2021 Plan as the Compensation Committee, in its sole discretion, determines, in good faith, is appropriate to reflect any transaction or event described therein.

Amendment and Termination

Our Board of Directors generally may amend the 2021 Plan from time to time in whole or in part. However, if any amendment (i) would materially increase the benefits accruing to participants under the 2021 Plan, (ii) would materially increase the number of shares of our common stock which may be issued under the 2021 Plan, (iii) would materially modify the requirements for participation in the 2021 Plan, or (iv) must otherwise be approved by our stockholders in order to comply with applicable law or the rules, then such amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained.

Subject to the terms of the 2021 Plan, the Compensation Committee may amend the terms of any award, prospectively or retroactively. Except as otherwise provided in the 2021 Plan, no such amendment will materially impair the rights of any participant without his or her consent.  Further, if permitted by Section 409A of the Code, but subject to the terms of the 2021 Plan, to the extent a participant holds an option right or appreciation right not immediately exercisable in full, or any restricted stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any RSUs as to which the restriction period has not been completed, or any cash incentive awards, performance shares or performance units which have not been fully earned, or any dividend equivalents or other awards made pursuant to the 2021 Plan subject to any vesting schedule or transfer restriction, or who holds common stock subject to any transfer restriction imposed under the 2021 Plan, the Compensation Committee may, in its sole discretion, provide for continued vesting or accelerate the time at which such option right, appreciation right or other award may vest or be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such restriction period will end or the time at which such cash incentive awards, performance shares or performance units will be deemed to have been earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award.

The Board may, in its discretion, terminate the 2021 Plan at any time.  Termination of the 2021 Plan will not affect the rights of participants or their successors under any awards outstanding and not exercised in full on the date of termination.

Notwithstanding the foregoing or any provision of the 2021 Plan or an award agreement to the contrary, the Compensation Committee, may at any time (without the consent of participants), modify, amend, or terminate any or all of the provisions of the 2021 Plan or an award agreement to the extent necessary to conform the provisions of the 2021 Plan and/or the award agreement with Section 409A of the Code or any other provision of the federal income tax laws, regardless of whether such modification, amendment or termination of the 2021 Plan and/or award agreement shall adversely affect the rights of a participant, and to enable the 2021 Plan to achieve its stated purposes in any jurisdiction outside the United States in a tax-efficient manner and in compliance with local rules and regulations.

ABM Industries Incorporated 2021 Proxy Statement     23


 

 

 

No Repricing

Except in connection with a corporate transaction or event described in the 2021 Plan or in connection with a change in control, the terms of outstanding awards may not be amended to reduce the exercise price of outstanding option rights or the base price of outstanding appreciation rights, or cancel outstanding “underwater” option rights or appreciation rights (including following a participant’s voluntary surrender of “underwater” option rights or appreciation rights) in exchange for cash, other awards or option rights or appreciation rights with an exercise price or base price, as applicable, that is less than the exercise price of the original option rights or exercise price of the original appreciation rights, as applicable, without approval by the stockholders.

Withholding

To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by a participant or other person under the 2021 Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Compensation Committee) may include relinquishment of a portion of such benefit.  If a participant’s benefit is to be received in the form of common stock, and such participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Compensation Committee, the Company will withhold shares of common stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when the participant is required to pay the Company an amount required to be withheld under applicable income, employment, tax or other laws, the participant may elect, unless otherwise determined by the Compensation Committee, to satisfy the obligation, in whole or in part, by having withheld, from the shares of common stock required to be delivered to the participant, shares of common stock having a value equal to the amount required to be withheld or by delivering to the Company other shares of common stock held by such participant. The Compensation Committee may also provide for automatic and mandatory withholding of shares of common stock from an award by the Company in connection with the participant’s satisfaction of such obligations. The common stock used for tax or other withholding will be valued at an amount equal to the fair market value of such common stock on the date the benefit is to be included in participant’s income.  In no event will the fair market value of the common stock to be withheld and delivered exceed the minimum amount required to be withheld, unless (i) an additional amount can be withheld and not result in adverse accounting consequences and (ii) such additional withholding amount is authorized by the Compensation Committee.

Clawback

Any award agreement may reference a clawback policy of the Company or provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Compensation Committee from time to time, if a participant, either (i) during employment or other service with the Company or a subsidiary, or (ii) within a specified period after termination of such employment or service, engages in any detrimental activity, as described in the applicable award agreement or such clawback policy. In addition, notwithstanding anything in the 2021 Plan to the contrary, any award agreement or such clawback policy may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any common stock issued under and/or any other benefit related to an award, or other provisions intended to have a similar effect, including upon such terms and conditions as may be required by the Compensation Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the common stock may be traded.

U.S. Federal Income Tax Consequences

The following is a brief summary of certain of the United States federal income tax consequences applicable to our 2021 Plan participants and the Company, and is based upon an interpretation of present federal tax laws and regulations and may be inapplicable if such laws and regulations are changed. This summary, which is presented for the information of stockholders concerning how to vote on this proposal and not for 2021 Plan participants, is not intended to be complete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes), or state, local or foreign tax consequences.

Incentive Stock Option Rights.  Options issued under the 2021 Plan and designated as incentive stock options are intended to qualify under Section 422 of the Code. Under the provisions of Section 422 and the related regulations, an optionee who has been granted an incentive stock option will not recognize income and the Company will not be entitled

24     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

to a deduction at the time of the grant or exercise of the option; provided, however, that the difference between the value of the common stock received on the exercise date and the exercise price paid is an item of tax preference for purposes of determining the optionee’s alternative minimum tax. The taxation of gain or loss upon the sale of the common stock acquired upon exercise of an incentive stock option depends, in part, on whether the holding period of the common stock is at least (i) two years from the date the option was granted and (ii) one year from the date the common stock was transferred to the optionee. If this holding period is satisfied, any gain or loss recognized on a subsequent disposition of the common stock will be treated as a long-term capital gain or loss. If this holding period is not met, then, upon such “disqualifying disposition” of the common stock, the optionee generally will recognize compensation, taxable as ordinary income, in an amount equal to the excess of the fair market value of the common stock at the time of exercise over the option price limited, however, to the gain on sale. Any further gain (or loss) recognized by the optionee generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period. If the optionee recognizes ordinary income upon a disqualifying disposition, the Company generally will be entitled to a tax deduction in the same amount. If, however, the optionee meets the applicable holding period, the Company will generally not be entitled to a tax deduction with respect to capital gains recognized by the optionee. If an incentive stock option is exercised at a time when it no longer qualifies as an incentive stock option, the option will be treated as a nonqualified stock option.

Nonqualified Stock Option Rights and Appreciation Rights. An optionee will generally not recognize income at the time a nonqualified stock option is granted. Rather, the optionee recognizes compensation, taxable as income, only when the nonqualified stock option is exercised. The amount of income recognized is equal to the excess of the fair market value of the common stock received over the exercise price. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a tax deduction in an amount equal to the ordinary income recognized by the optionee. Upon a subsequent disposition of the common stock acquired under a nonqualified stock option, the optionee will recognize short-term or long-term capital gain (or loss) depending on the holding period.

Stock appreciation rights are treated very similar to nonqualified stock options for tax purposes. A participant receiving a stock appreciation right will not normally recognize any taxable income upon the grant of the stock appreciation right. Upon the exercise of the stock appreciation right, the participant will recognize compensation taxable as ordinary income equal to either: (i) the cash received upon the exercise or (ii) if common stock is received, upon the exercise of the stock appreciation right, the fair market value of the common stock received. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant.

Unrestricted Stock and Other Stock-Based Awards. The tax consequences of receiving common stock pursuant to a stock award under our 2021 Plan are similar to receiving cash compensation from the Company, unless the common stock awarded is restricted stock (i.e., subject to a substantial risk of forfeiture). If the shares of common stock are unrestricted (i.e., not subject to a substantial risk of forfeiture), the participant must recognize compensation, taxable as ordinary income equal to the fair market value of the common stock received less any amount paid for common stock. The federal income tax consequences of other stock-based incentive awards will depend on how the awards are structured. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a deduction with respect to other incentive awards only to the extent that the recipient recognizes ordinary income in connection with such awards.

Restricted Stock. A participant that receives a restricted stock award under the 2021 Plan will normally not be required to recognize income for federal income tax purposes at the time of grant, nor is the Company entitled to any deduction, to the extent that the common stock awarded has not vested (i.e., no longer subject to a substantial risk of forfeiture). When any part of a restricted stock award vests, the participant will recognize compensation taxable as ordinary income in an amount equal to the fair market value of the vested common stock on the vesting date. The participant may, however, make an election, referred to as a Section 83(b) election, within thirty days following the grant of the restricted stock award, to be taxed at the time of the grant of the award based on the fair market value of the common stock on the grant date (determined without regard to the restrictions). If a Section 83(b) election has not been made, any dividends received with respect to the restricted stock award prior to the lapse of the restrictions will be treated as additional compensation that is taxable as ordinary income to the participant. Generally, the Company, subject to any Section 162(m) limitation, will be entitled to a deduction in the same amount and at the same time that the participant recognizes ordinary income. Upon the sale of the vested common stock, the participant will recognize short-term or long-term capital gain or loss depending on the holding period.

Restricted Stock Units.  A participant who receives restricted stock units will not recognize taxable income for federal income tax purposes, and the Company is not entitled to a deduction, at the time of grant. Rather, upon the settlement of units, the recipient of such units generally will be subject to tax at ordinary income rates on the fair market value of any common stock issued or cash paid in settlement of the award of such units, and the Company generally, subject

ABM Industries Incorporated 2021 Proxy Statement     25


 

 

 

to any Section 162(m) limitation, will be entitled to a deduction equal to the amount of the ordinary income recognized by the recipient. If the recipient receives shares of common stock upon settlement then, upon disposition of such shares, appreciation or depreciation after the settlement date is treated as either short-term or long-term capital gain or loss, depending on how long the shares have been held.

Performance Awards. A participant generally will not recognize income upon the grant of a performance award. Upon payment of the performance award, the participant will recognize compensation, taxable as ordinary income, in an amount equal to the cash received or, if the performance award is payable in common stock, the fair market value of the common stock received. When the participant recognizes ordinary income upon payment of a performance award, the Company generally, subject to any Section 162(m) limitation, will be entitled to a tax deduction in the same amount.

Board Recommendation

The Board of Directors unanimously recommends that you vote FOR approval of the ABM Industries Incorporated 2021 Equity and Incentive Compensation Plan.

 

Equity Compensation Plan Information

 

 

 

 

 

 

 

 

Plan Category

Number of Securities

to be Issued Upon

Exercise of

Outstanding Options,

Warrants and Rights (a)

 

Weighted-

Average Exercise

Price of

Outstanding

Options,

Warrants

and Rights (b)

 

Number of Securities

Remaining Available

for Future Issuance

Under Equity

Compensation Plans

(Excluding Securities

Reflected in Column

(a)) (c)

 

 

 

 

 

 

 

  Equity compensation plans

     approved by security holders

2,180,257

(1)

$13.25

(2)

2,685,237

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Equity compensation plans not

     approved by stockholders

0

 

n/a

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  TOTAL

2,180,257

 

$13.25

 

2,685,237

 

 

 

 

 

 

 

 

 

(1)

Includes 1,145,832, 944,703 and 89,722 shares that may be issued to settle outstanding RSUs, performance shares (at target) and options, respectively.

 

 

(2)

Weighted average exercise price of outstanding options only. RSUs and performance shares do not have an exercise price and, accordingly, are not included in this calculation.

 

 

(3)

Includes 2,086,078 shares available for grant under 2006 Plan and 599,159 shares available for issuance under the Employee Stock Purchase Plan.

 

 

 

 

26     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

 

 

EXECUTIVE COMPENSATION

 

PROPOSAL 3ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

 

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Philosophy and Practices

How We Compensated Our NEOs in 2020

Other Compensation and Governance-Related Matters

Compensation Committee Report

Additional Information About Executive Compensation

2020 Summary Compensation Table

Grants of Plan-Based Awards During Fiscal Year 2020

Outstanding Equity Awards at 2020 Fiscal Year-End

Option Exercises and Stock Vested in Fiscal Year 2020

Nonqualified Deferred Compensation in Fiscal Year 2020

Potential Benefits on Termination

Potential Payments upon Qualifying Terminations of Employment Following a Change-in-Control

Potential Payments upon Retirement

Potential Payments upon Termination without Cause

Potential Payments upon Death or Disability

CEO Pay Ratio

ABM Industries Incorporated 2021 Proxy Statement     27


 

 

 

PROPOSAL 3—ADVISORY VOTE TO APPROVE

EXECUTIVE COMPENSATION

 

Proposal Summary

Pursuant to Item 402 of Regulation S-K, we are asking our stockholders 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. At our 2011 and 2017 annual meetings of stockholders, our stockholders voted to conduct this advisory vote on an annual basis, which we will continue to do until the next vote on the frequency of holding our advisory say-on-pay votes in 2023.

Board Recommendation

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

RESOLVED—that the stockholders approve, on an advisory basis, the compensation of the Company’s executives named in the Summary Compensation Table, as disclosed in the Company’s 2021 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 adoption of this proposal requires the affirmative vote of the holders of a majority of shares of common stock present in person or by proxy at the Annual Meeting and entitled to vote on the proposal, as more fully described under “Questions and Answers About the Proxy Materials and the 2021 Annual Meeting.”

 

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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. In fiscal year 2020, ABM had significant organizational changes, including the recruitment and on-boarding of our Chief Strategy & Transformation Officer, the resignation and departure of our Chief Financial Officer, and the appointment of an interim Chief Financial Officer. Our NEOs for fiscal year 2020 are:

 

 

  

 Scott Salmirs, President and Chief Executive Officer

  

 D. Anthony Scaglione, Former Executive Vice President and Chief Financial Officer (through July 1, 2020)

  

 Dean A. Chin, Interim Chief Financial Officer, Senior Vice President, Chief Accounting Officer and Corporate
 Controller (beginning July 1, 2020)

  

 Joshua H. Feinberg, Executive Vice President and Chief Strategy and Transformation Officer

  

 Scott J. Giacobbe, Executive Vice President and Chief Revenue Officer(1)

  

 Rene Jacobsen, Executive Vice President and Chief Facilities Services Officer

(1)

Mr. Giacobbe was an Executive Officer for the entire 2020 fiscal year period and ceased to be an officer on November 1, 2020.

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 stockholders. To achieve this, we:

 

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

 

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

 

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

Best Practices

The 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 and Retention Requirements. We require significant stock ownership and retention by our executive officers.

ABM Industries Incorporated 2021 Proxy Statement     29


 

 

 

Limited Perquisites. Our executive officers receive limited perquisites.

 

No Unearned Dividends or Dividend Equivalents. Our executive officers receive dividend equivalents on equity awards only to the extent that the awards are earned.

Fiscal 2020 Overview Impact on Executive Compensation

While fiscal year 2020 has been uniquely challenging, the Board and management team focused on responding appropriately to the business impacts of the pandemic while maintaining our philosophy of pay-for-performance in the midst of significant and unprecedented challenges.

 

COVID-19 Impacts

•       Revolver fully drawn down in March 2020, adding $300 million to balance sheet.

•       Financial guidance withdrawn in March 2020, for duration of fiscal year.

•       Credit Facility amended in May 2020, to provide maximum flexibility.

•       Resignation of our Chief Financial Officer in June 2020, and appointment of an interim Chief Financial Officer in July 2020.

•       Vast majority of the Company’s clients in all highly diversified end-markets (such as aviation, commercial real estate, and education) were, and remain, in various states of disruption.

•       Management focus pivoted to maintaining liquidity, managing and redeploying labor, and aggressive management of cash collections.

•       Launch of EnhancedClean services, providing peace of mind to clients through studied protocols and practices.

•       Executive leadership team, including our NEOs, reduced their base salaries by 20%, from May 1, 2020, through July 31, 2020, while our non-executive directors reduced their cash retainers by 20% and key management employees reduced their base salaries by 10% for the same period.

•       Company's 401(k) matching program suspended effective June 1, 2020, through the end of calendar year 2020.

2020 Company Performance

•       Proactively tackled the needs of our employees and clients throughout the pandemic by aggressively procuring personal protective equipment and supply chain necessities, developing EnhancedClean products guided by an external expert-led advisory council, transitioning to virtual and remote work-from-home operations for administrative staff where possible, and enhancing safety training and protocols.

•       In spite of the pandemic, ABM achieved record new sales in 2020 of $1.2 billion.

•       COVID-related activities, including our proprietary, EnhancedClean Program bookings totaled $300 million.

•       ABM met and exceeded our 5-year long-term strategy goals, with significant growth from 2015, achieving 6% adjusted EBITDA margin(1).

(1)

“Adjusted EBITDA margin” is defined as adjusted EBITDA divided by revenue. A reconciliation of net income to adjusted EBITDA is set forth in Appendix B.

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Pay Governance and Philosophy

•       Provide compensation plans with a significant portion of the total pay at-risk in short- and long-term incentives and a greater emphasis on the long-term plans, and payouts based on achievements of financial and non-financial objectives.

•       Maintain policies that promote good governance and serve the interests of our stockholders, including policies on anti-pledging, anti-hedging, insider trading, stock ownership guidelines for executives and clawbacks.

•       Follow best practices such as maximum caps on our short- and long-term incentive plans, a combination of relative and absolute performance metrics in our performance share program, multi-year vesting of our time-based stock awards, and no guaranteed base salary increases.

•       Stockholders vote on say-on-pay on an annual basis, with a proven track record of investor support of executive compensation plans.

•       Pay programs align our executives' compensation with strategic goals while motivating and retaining executives critical to our future success and long-term performance.  

•       Significant portion of our executives' compensation is at-risk, with approximately 91% of our CEO's compensation and approximately 81% of our other NEO's compensation tied to short- and long-term incentive plans.

•       Pay levels are set commensurate with performance and intended to attract and retain high quality executive talent, with our total target pay aligning with our peer median.

•       Committee engages an independent compensation consultant to advise on internal pay equity among executives, pay-for-performance alignment and external market competitiveness, including peer analyses.

NEO 2020 & 2021 Pay

•       Base salaries reflect each NEO's role, responsibility, experience, individual performance and market conditions, without automatic or guaranteed increases. There were no base salary increases in 2020 or 2021 for our NEOs.

•       Annual long-term equity incentives awarded in January 2020, with majority (75%) in three-year performance-based shares tied to adjusted EBITDA, organic revenue, and return on invested capital, along with a relative-TSR modifier on a scale of 80% to 120% of target. The remainder (25%) are in time-based RSUs, with both awards earned over a three-year period.

•       In July 2020, the Committee awarded one-time time-based RSUs to approximately 175 of our key management leaders to stabilize leadership and provide motivation during a time of significant uncertainty. Given the Company’s withdrawal of financial guidance for the duration of fiscal year 2020, the Committee determined that selecting and setting performance metrics was not possible or appropriate. These one-time awards have a two-year time-based vesting schedule. The Committee views these awards as a singular one-time action reflecting the truly unique circumstances of 2020.

•       Corporate goals under the Company’s annual cash incentive program were achieved at maximum payout for adjusted net income, below threshold payout for revenue, and at maximum payout for safety, each based on performance targets set prior to the onset of the COVID-19 pandemic. With personal objectives under the cash incentive program measured at target performance, the corporate goal achievements indicated a cash bonus payout of 125% of target for the NEOs. However, the NEOs voluntarily forfeited their personal objectives payouts, which represented 15% of the award, for reduced cash bonus payouts of 109.7% of target.

•       CEO's cash bonus was further reduced to 100% by the independent directors on the Board at the request of the CEO, in recognition of the wide-ranging impacts of the COVID-19 pandemic, including difficult cost-saving measures implemented throughout the Company.

•       Cash bonuses for cash incentive program-eligible employees below the executive officers were paid as earned without any reductions.

ABM Industries Incorporated 2021 Proxy Statement     31


 

 

 

•       Our 2018-2020 Performance Share Program for NEOs, which commenced with the 2018 fiscal year, used performance metrics comprised of Adjusted EBITDA, organic revenue and ROIC, and covered a performance period from November 1, 2017 through October 31, 2020. Achievement under the 2018-2020 Performance Share Program metrics resulted in a payout at 90% of target. Additionally, the Company ranked in the 54th percentile of S&P SmallCap 600 Index companies, resulting in a payout under the 2018–2020 TSR-based Performance Share Program of 108% of target.

•       No adjustments were made to the metrics that would increase payouts of the Cash Incentive or Performance Share Plans, despite challenges encountered by the COVID-19 pandemic.

Why you should support Say-on-Pay Proposal

•       ABM was resilient and adapted to the changing business environment as a result of the COVID-19 pandemic and continued to achieve strong performance in fiscal year 2020 and build long-term stockholder value.

•       Our 2020 incentive payouts were aligned with Company performance, emphasized incentives to achieve our strategic goals over the long-term, and, in the case of the 2020 annual cash incentive, was reduced to avoid any potential windfall for executives in a challenging economic environment.

•       We are committed to pay programs that motivate and retain a high-quality management team focused on ABM's strategy execution and navigation through the challenging COVID-19 environment to continue to deliver stockholder value.

Pay-for-Performance Alignment

The following graph provides a historical realizable pay-for-performance review for our NEOs for three-year pay and performance cycles, beginning with 2008-2010 and ending with 2017-2019. As illustrated below, while both realizable pay and relative performance have varied, the Company has maintained pay generally at or below the median of the competitive market.

In light of the unusual impact of the pandemic, the Committee evaluated all actions in the context of the Committee’s on-going commitment to pay-for-performance. The goal was to maintain the integrity of all performance-based programs in progress, while recognizing the significant impact of COVID-19-related market conditions on management team stability and continuity.  

 

32     ABM Industries Incorporated 2021 Proxy Statement


 

 

 

Fiscal Year 2019 “Say-on-Pay” Vote Results

In March 2020, our say-on-pay proposal was approved by over 98% of the votes cast by our stockholders. The Committee and management are committed to continually strengthening our pay-for-performance correlation, as well as the overall design of our executive compensation program to support driving the right behaviors for sustainable success, aligning with best practices in corporate governance and reflecting the interests of our stockholders and stakeholders. The Committee and management use the annual say-on-pay vote as a guidepost for stockholder 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 independent members of our Board. This recommendation includes base pay levels, cash incentive compensation and equity awards. All elements of CEO pay are approved by the independent members of our Board.

ABM Industries Incorporated 2021 Proxy Statement     33


 

 

The Committee generally has the authority to delegate its authority to subcommittees or the Chair of the Committee when it deems appropriate and in the best interests of the Company. The Committee also generally has the authority to delegate such powers and authority as it may determine to be appropriate.

Role of Compensation Consultants

The Committee continued to engage Semler Brossy in fiscal year 2020 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. Services provided by Semler Brossy to the Committee relating to executive compensation in fiscal year 2020 included: attended Committee meetings to present and offer independent recommendations, insights and perspectives on executive compensation matters; assessed our Compensation Comparator Group (“CCG”) used for compensation decisions; assessed how our executive compensation program aligns with pay for performance; reviewed targeted pay levels and the mix of principal compensation components for the CEO and other NEOs; advised on annual and long-term incentive design and plan structure, performance goals, award opportunities and vesting conditions; and updated the Committee on emerging trends and best practices in the area of executive compensation.  The Committee meets multiple times throughout the year with the compensation consultant in executive session without management present. 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 does not provide any other services to the Company. The Committee has determined Semler Brossy to be independent from management and that its engagement did not present any conflicts of interest.

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 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 this proxy data provides a reasonable indicator of total compensation paid by companies that recruit executives with skill sets similar 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. 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. The Committee 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.

 

 

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2020 COMPENSATION COMPARATOR GROUP

Aramark Corporation

ArcBest Corporation

The Brink’s Company

C. H. Robinson Worldwide, Inc.

Cintas Corporation

Comfort Systems USA, Inc.

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.

ServiceMaster Global Holdings, Inc.

SP Plus Corporation

Stericycle, Inc.

TrueBlue, Inc.

United Rentals, Inc.

Werner Enterprises, Inc.

In October 2019, the Committee reviewed the CCG and added Comfort Systems USA, Inc. for fiscal year 2020. Convergys Corporation was removed from the Company’s 2020 CCG, as it had been acquired and its business and financial profile no longer align with those of ABM.

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, at-risk compensation that consists of a mix of performance-based and time-based vested equity awards

 

    Designed to link incentives to long-term stockholder value creation and retention

    Equity award mix and design of performance metrics reviewed annually

    Programs are evaluated annually for alignment with Company strategy and actual performance

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, safety 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 (“PSs”); and time-based equity awards (together with PSs, “LTIs”). As reflected in the charts below, approximately 91% of our CEO’s compensation is at risk. Approximately 81% of our other NEOs’ compensation is at risk.

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CEO Compensation

 

Other NEO Compensation

 

HOW WE COMPENSATED OUR NEOS IN 2020

2020 Base Salary

The 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 each NEO’s 2019 and 2020 base salaries as of January 1 of each fiscal year. The base salaries for our NEOs are reviewed annually when the Committee reviews its compensation benchmark information. Annual changes in base salary typically become effective on January 1. In light of the pandemic, the NEOs took voluntary pay reductions of 20% from May 1, 2020 through July 31, 2020, as part of the Company’s overall cost-saving measures.

 

Named Executive Officer

2019 Annual

Base Salary

2020 Annual

Base Salary(1)

Scott Salmirs

$990,000

 

$990,000

 

D. Anthony Scaglione

$550,000

 

$550,000

 

Dean A. Chin

$381,608

 

$391,100

(2)

Joshua H. Feinberg

--

 

$550,000

 

Scott J. Giacobbe

$550,000

 

$550,000

 

Rene Jacobsen

$550,000

 

$550,000

 

 

(1)

Voluntary 20% salary reduction not reflected in annualized base salary rates above.

 

 

(2)

Mr. Chin received an increase prior to his assumption of the Interim Chief Financial Officer role.

 

2020 Annual Cash Incentive Compensation

Each year, the Committee reviews the Company’s strategic and financial plan and key business objectives to align the annual cash incentive program (“CIP”) with the achievement of the Company’s goals. The metrics in the CIP have been selected to focus on driving sustainable, long-term value for our stockholders, as demonstrated by financial, safety and strategic goal achievement.  

The Committee reviews the design, metrics and performance level requirements for the CIP annually, establishes the relative weightings of Financial Objectives, Safety Objectives and Personal Objectives for the CEO and all NEOs at the beginning of the year, and evaluates performance achieved against the objectives to determine cash payouts earned under the CIP.

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Each of our NEOs was eligible to earn an annual cash incentive award under the CIP in fiscal year 2020, and the Committee evaluated both performance against metrics set at the beginning of the fiscal year as well as the impact of COVID-19 in determining payouts on such metrics. As stated above, the Committee determined not to make any COVID-19 pandemic related adjustments to Company performance metrics under the 2020 CIP.

2020 Financial and Safety Objectives for the CIP

For 2020, the Committee set Financial Objectives to recognize top-line growth and bottom-line profitability, with potential for negative adjustment to ensure acceptable margin. The Committee also set 2020 Safety Objectives to foster continued improvement on key measures of workplace safety.

2020 Personal Objectives for the CIP

In December 2019, the Committee determined that 15% of the cash incentive award opportunity under the CIP for our NEOs would be based on the achievement of Personal Objectives. The Committee established Personal Objectives for the CEO in consultation with our full Board that aligned with the Company’s most critical strategic priorities for the year. The CEO also worked with each other NEO to establish Personal Objectives for each such NEO aligned to his or her most critical priorities for the year and that reflect the unique role of each NEO.

In June 2020, the individual Personal Objectives for the CEO and each of the NEOs were replaced with four shared critical priorities, reflecting rapidly changing business priorities and the extraordinary and fluid circumstances emerging as a result of the pandemic. These changes where adopted to ensure that our executive officers remained focused on the well-being of our employees, clients, and the communities in which we operate; maintaining liquidity; and continuing to pursue ABM’s long-term strategy.

Collective NEOs Objectives adjusted for COVID-19 for Fiscal Year 2020

 

Weight

Goals

25%

ABM Way: Lead the organization through COVID-19 crisis

25%

Grow ABM: Take appropriate actions to ensure financial viability through the COVID-19 crisis

25%

Crisis Focused: Focus on client experience by anticipating their needs, delivering on our promises, and enhancing our offerings

25%

Win With Talent: Effectively manage team member programs, experience and impacts related to the COVID-19 crisis

Bonus Targets and CIP Performance Objectives Weighting

Each NEO’s potential CIP award was expressed as a percentage of his or her base salary, including threshold, target and maximum percentages.

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The target bonus potential for each NEO and relative weights for each Performance Objective of the CIP are set forth in the following table. Payout can range from zero to 192.5% of target.

 

2020 Annual Cash Incentive Program Bonus Targets and Weighting

 

 

Performance Objectives Weighting

 

Target Bonus
as Percentage
of Salary(1)

Financial
Objectives

Corporate

Safety
Objectives

Personal
Objectives

Named Executive Officer

Scott Salmirs

125%

75%

10%

15%

D. Anthony Scaglione(2)

100%

75%

10%

15%

Dean A. Chin

50%

75%

10%

15%

Joshua H. Feinberg

100%

75%

10%

15%

Scott J. Giacobbe

100%

75%

10%

15%

Rene Jacobsen

100%

75%

10%

15%

 

(1)

Represents each NEO’s target cash incentive compensation opportunity, expressed as a percentage of his or her base salary on October 31, 2020.

 

 

(2)

Mr. Scaglione resigned his position and departed from the Company effective July 1, 2020, and, as a result, ceased his participation in the 2020 CIP on such date.

 

Funding Levels and Payouts Under CIP for NEOs in 2020

The Company’s financial and safety performance in 2020 resulted in a combined funding level for Financial Objectives and Safety Objectives above target, with Adjusted Income from Continuing Operations and Safety achieved at maximum payout and Revenue achieved at below threshold for payout. In combination, Financial Objectives and Safety Objectives are used to determine 85% of the annual CIP opportunity for the NEOs, and Personal Objectives are used to determine 15% of the annual CIP opportunity for the NEOs.  

If the NEOs’ Personal Objectives were determined to have been achieved at target, the overall CIP payouts for the NEOs would have been at 125% of target. However, despite the NEOs’ strong leadership, guidance and delivery against their updated collective Personal Objectives, in light of the wide-ranging impacts of the COVID-19 pandemic, the Committee accepted the NEO’s voluntary forfeiture of the 15% Personal Objectives portion of each of their CIP payouts and applied negative discretion, resulting in reduced payouts of 109.7% of target.  

2020 Funding Levels and Payouts Achieved For NEOs

 

Financial & Safety Objectives (85%)

Target

Actual

Actual vs.

Target

Payout

Adjusted Income from Continuing Operations(1)  
(45% weighting)

$134.9m

$163.5m

121%

200%

Revenue
(30% weighting)

$6.490b

$5.988b

92%

0%

Safety Objectives(2)

(10% weighting)

--

--

--

200%

Personal Objectives

 

 

 

Total CIP
Payout

Potential Overall CIP Payout with Personal Objectives (15%) Achieved at Target

--

--

--

125%

Actual Overall CIP Payout with Personal Objectives (15%) Forfeited

--

--

--

109.7%

 

(1)

A reconciliation of Income from Continuing Operations to Adjusted Income from Continuing Operations is set forth in Appendix B.

 

 

(2)

Comprised of numerous metrics achievement, including but not limited to pre-determined improvement metrics with respect to workers’ compensation, general, aviation and auto liability claims frequency, and leadership visitation and

 

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action with regard to safety that resulted in a funding level of 200%.  Leadership visitation targets were measured based on actual achievement on a pro-rated basis thru the suspension of all non-essential travel beginning February 2020.

 

Final Payouts Under CIP for CEO in 2020

Mr. Salmirs was subject to the same Financial, Safety and Personal Objectives targets and weightings as all NEOs for fiscal year 2020.  In assessing Mr. Salmirs annual performance and determining appropriate CIP payout, the Committee annually considers Mr. Salmirs’ performance against his Personal Objectives, in a process that involves discussions with all of the independent Board members.

For fiscal year 2020, the Committee and the independent board members determined that Mr. Salmirs delivered critical leadership and perseverance during the challenges posed by COVID-19, guiding the Company to extraordinary results that enhanced the long-term interests of our stockholders and stakeholders.

Notwithstanding that determination, in light of the wide-ranging impacts of the COVID-19 pandemic, including difficult cost-saving measures throughout the Company, the independent members of the Board accepted Mr. Salmirs' request to reduce his overall CIP payout for 2020 to no more than target, or 100%, a deeper reduction than applied to the other NEOs.

For the amounts paid to the NEOs under the 2020 CIP, see the “Non-equity Incentive Plan Compensation” column of the Summary Compensation Table.

Equity Incentive Compensation

Annual Equity Awards

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. In fiscal year 2020, the Committee approved a long-term compensation program for NEOs which included equity awards allocated among (i) time-based RSUs (25% of total equity grant at target), which typically vest over a three-year period, and (ii) PSs with a TSR-modifier (“TSR-Modified Performance Shares”) (75% of total equity grant at target), which are based on Company financial metrics, including Adjusted EBITDA, organic revenue and return on invested capital (“ROIC”) (the definitions for such metrics are set forth in Appendix B). Such TSR-Modified Performance Shares vest after a three-year period and will be modified on a scale of 80% to 120% of target award upon vesting by comparing the Company’s TSR performance relative to the S&P Composite 1500 Commercial Services & Supplies Index over a three-year performance period from November 1, 2019, to October 31, 2022.

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 at 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.

One-Time Restricted Stock Unit Awards

When it became clear that the COVID-19 pandemic would have global macroeconomic effects, on March 24, 2020, the Company elected to fully draw on its remaining revolving line of credit, adding approximately $300 million of capacity to its balance sheet. Additionally, in March 2020, the ABM management team pivoted its key focuses to maintaining liquidity, managing and redeploying labor, and aggressive management of cash collections. On March 26, 2020, the Company withdrew its previously issued fiscal year 2020 guidance outlook for the remaining duration of the fiscal year.  On May 28, 2020, the Company completed an amendment to its senior, secured credit agreement to, among other things, increase the maximum permitted total net leverage.  

As noted above, base salaries for the NEOs were reduced by 20% effective May 1, 2020,until July 31, 2020, and effective June 1, 2020, the Company’s 401(k) Plan matching contributions were suspended through the remainder of calendar year 2020.  On June 15, 2020, D. Anthony Scaglione, the Chief Financial Officer of the Company, notified the Company that he would be departing the Company, effective on July 1, 2020.  

Following a series of meetings of both the Board and the Committee in April, May, June and July, on July 14, 2020, the Committee approved special one-time RSU awards to approximately 175 key leaders, in order to stabilize and motivate

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the true drivers of ABM’s success. The recipients of these awards are critical to continued business stewardship and stockholder value creation during this unprecedented time. In addition to the other recipients, Mr. Salmirs, Mr. Jacobsen, Mr. Chin and Mr. Giacobbe received such one-time awards.

These RSUs vest over a two-year period and require continued employment to be earned. At the time of the grants, the Board and Committee were focused on stabilizing key employees for the critical upcoming 24-month period as the Company continues to navigate through the pandemic. The Board and the Committee also determined that selecting and setting performance metrics was not possible or appropriate in the volatile environment, particularly given that the vast majority of the Company’s clients in all highly diversified end-markets (such as aviation, commercial real estate, and education) were, and remain, in various states of disruption.  This resulted in an historic lack of visibility to both revenue and profit, which led to the Company’s withdrawal of financial guidance for the duration of fiscal year 2020. The Committee views these awards as a singular one-time action reflecting the truly unique circumstances of 2020 and granted in a period of significant uncertainty. The Committee also affirmed at the time of the one-time grants that they would make no adjustments to performance metrics for outstanding long-term incentive awards.

 

Fiscal Year 2020 Equity Awards*

 

2020-2022
TSR-Modified
Performance Shares

2020 Annual RSU

One-Time Special
RSU

 

Named Executive Officer

Number
Granted
(at target)

Grant
Date
Value per
Share
($)

Number
Granted

Grant
Date
Value per
Share
($)

Number
Granted

Grant
Date
Value per
Share
($)

Aggregate

Value of Equity
Awards
(at target)

($)

Scott Salmirs

80,708

41.40

28,764

38.72

97,846

 

33.90

7,772,033

D. Anthony Scaglione(1)

24,910

41.40

8,878

38.72

--

 

--

1,375,030

Dean A. Chin

4,149

41.40

1,479

38.72

7,227

 

33.90

474,031

Joshua H. Feinberg

19,928

41.40

7,102

38.72

39,746

(2)

37.74

2,600,023

Scott J. Giacobbe(3)

19,928

41.40

7,102

38.72

27,168

 

33.90

2,021,004

Rene Jacobsen

14,946

41.40

5,327

38.72

17,492

 

33.90

1,418,005

 

*

The Company does not publicly disclose its specific targets applicable to equity compensation programs until after the performance period is over, including specific target goals for financial metrics comprised of Adjusted EBITDA, organic revenue and ROIC due to potential competitive harm. The Committee has set performance goals that it believes are challenging, but attainable, with significant effort on the part of the Company.  For additional information on our NEOs’ fiscal year 2020 equity awards, please see “Grants of Plan-Based Awards During Fiscal Year 2020.”

(1)

Mr. Scaglione forfeited all such awards upon his voluntary departure from the Company effective July 1, 2020. He did not receive the one-time RSU awards granted in July 2020.

(2)

In the case of Mr. Feinberg, the RSUs granted in the One-Time Special RSU column reflect his sign-on grant made as of December 23, 2019.

(3)

Upon Mr. Giacobbe’s termination from the Company on January 15, 2021, he forfeited the unvested portions of such equity awards under the terms of such awards.

2018-2020 Performance Share Programs Overview

In the 2018 fiscal year, we granted two types of PS awards to our executive officers: (i) PS awards that were earned, if at all, based on the achievement of relative TSR goals and (ii) PS awards that were earned, if at all, based on the achievement of financial metrics, in each case, over a three-year performance period as described in our proxy statement filed on February 7, 2018, and that were earned as detailed below following the end of the performance period.

Results of 20182020 Performance Share Program

Our 2018-2020 Performance Share Program for NEOs, which commenced with the 2018 fiscal year, used performance metrics comprised of Adjusted EBITDA, organic revenue and ROIC, and covered a performance period from November 1, 2017 through October 31, 2020. As described above, the Committee determined not to make any adjustments to the performance metrics applicable to the 2018-2020 PS awards related to COVID-19 pandemic effects on the Company’s performance. Award funding for this 2018-2020 Performance Share Program is set forth in the following table.

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%

Achievement

Award

Funding %

≥ 135

200

≥ 125

150

≥ 115

125

≥ 95 - 105

100

≥ 90

85

≥ 75

50

< 75

0

The following table summarizes the results under the 2018-2020 Performance Share Program.

Results of 2018-2020 Performance Share Program

 

Weighting

Goal

Actual

%
Achievement

%
Payout

Weighted
Payout

Adjusted EBITDA(1)

60%

$409.0m

$361.9m

89%

82%

49%

Organic Revenue(2)

20%

$6.960b

$5.988b

86%

76%

15%

ROIC(3)

20%

6.2%

7.2%

116%

128%

26%

Award Payout

 

 

 

 

 

90%

 

(1)

A reconciliation of Net Income to Adjusted EBITDA is set forth in Appendix B.

 

 

(2)

For the performance period for the 2018-2020 Performance Shares, Organic Revenue was equal to the Company’s revenue for fiscal year 2020.

 

 

(3)

A definition of ROIC is set forth in Appendix B.

 

Named Executive Officer

2018-2020
Performance
Shares
(Target)

2018-2020
Performance
Shares
(Earned)(1)

Scott Salmirs

57,047

48,646

D. Anthony Scaglione(2)