- Proxy Statement (definitive) (DEF 14A)
September 16 2010 - 3:06PM
Edgar (US Regulatory)
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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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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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CINTAS CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total Fee Paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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6800 Cintas Boulevard
Cincinnati, Ohio 45262
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
Dear Shareholder:
We
invite you to attend our Annual Meeting of Shareholders on October 26, 2010, at 10:00 a.m. Eastern Daylight Time at Cintas' Headquarters, 6800 Cintas Boulevard, Cincinnati, Ohio.
This
booklet includes notice of the meeting and the proxy statement. The proxy statement tells you more about the agenda and procedures for the meeting. It also describes how the Board operates and
gives personal information about our director candidates.
Shareholders
entitled to vote at this Annual Meeting are those of record as of the close of business on August 27, 2010. Please note that only shareholders of record or holders of valid proxies
from such shareholders may attend or vote at the meeting.
Since seating will be limited, we ask shareholders to call 1-866-246-8277 to make
a reservation for the meeting. When making your reservation, please give your full name, company name and address. If you do not make a reservation, you may not be provided entry into the meeting due
to limited space.
Upon
arrival at the Annual Meeting, shareholders may be asked for a form of personal identification and proof of stock ownership. This can be in the form of a brokerage statement or proxy card. Based
on this proof of ownership and the reservation system noted above, an admission ticket will be given to the shareholder at the meeting. No cameras, recording equipment, electronic devices, cellular
telephones, large bags, briefcases or packages will be permitted in the meeting.
We
are once again pleased to take advantage of U.S. Securities and Exchange Commission rules that allow companies to furnish their proxy materials over the Internet. As a result, we are mailing to
most of our shareholders a Notice of Internet Availability of Proxy Materials (the "Notice") instead of a paper copy of this proxy statement and our 2010 Annual Report on Form 10-K.
The Notice contains instructions on how to access and review those documents over the Internet. We believe that this process will allow us to provide our shareholders with the information they need in
a timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. If you received a Notice by mail and would like to receive a printed
copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.
Whether
or not you plan to attend the meeting, please complete and return your proxy card or vote by telephone or via the Internet by following the instructions on your proxy card.
Sincerely,
Robert
J. Kohlhepp
Chairman of the Board
September 16,
2010
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF CINTAS CORPORATION
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Time:
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10:00 a.m., Eastern Daylight Time
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Date:
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October 26, 2010
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Place:
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Cintas Corporate Headquarters
6800 Cintas Boulevard
Cincinnati, Ohio
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Purpose:
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To elect as directors the eight nominees named in the attached proxy materials;
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2.
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To ratify Ernst & Young LLP as our independent registered public accounting firm for fiscal 2011; and
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3.
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To conduct other business if properly raised.
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Only
shareholders of record on August 27, 2010, may attend or vote at the meeting. The approximate mailing date of the Notice is September 16, 2010.
The vote of each shareholder is important. You can vote your shares by completing and returning the proxy card sent to you. Shareholders can also vote their shares over the
Internet or by telephone by following the voting instructions on the proxy card.
Thomas
E. Frooman
Vice President and Secretary General Counsel
September 16,
2010
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Cintas
makes available, free of charge on its website, all of its filings that are made electronically with the Securities and Exchange Commission ("SEC"), including Forms 10-K,
10-Q and 8-K. These filings are also available on the SEC's website (www.sec.gov). To access these filings, go to our website (www.cintas.com) and click on the "Financial
Reports" tab at the right under the "Investors" page. Copies of Cintas' Annual Report on Form 10-K for the fiscal year ended May 31, 2010, including financial statements and
schedules thereto, filed with the SEC, are also available without charge to shareholders upon written request addressed to:
Thomas
E. Frooman
Vice President and Secretary General Counsel
6800 Cintas Boulevard
P.O. Box 625737
Cincinnati, Ohio 45262-5737
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GENERAL INFORMATION
Who may vote
Shareholders of Cintas, recorded in our stock register on August 27, 2010, may vote at the meeting. As of that date, Cintas had 149,916,886
shares of common stock outstanding. Each share is entitled to one vote on each matter submitted to the shareholders at the annual meeting.
How to vote
You may vote in person at the meeting or by proxy. You may also vote by Internet or telephone using one of the methods described in the proxy card.
We recommend you vote by proxy, Internet or telephone even if you plan to attend the meeting. If you vote by Internet or telephone, please do not return the proxy card. If voting by mail, please
complete, sign and date your proxy card enclosed with these proxy materials. If desired, you can change your vote at the meeting.
How proxies work
Cintas' Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner you
direct. You may vote for all, some or none of our director nominees. You may also vote for or against the other proposals or abstain from voting.
All
proxies properly signed will, unless a different choice is indicated, be voted "FOR" the election of all nominees proposed by the Nominating and Corporate Governance Committee and "FOR" the
ratification of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2011.
You
may receive more than one proxy or voting card depending on how you hold your shares. Shares registered in your name are covered by one card. If you hold shares through someone else, such as a
stockbroker or bank, you may get material from them asking how you want to vote. Specifically, if your shares are held in the name of your stockbroker or bank and you wish to vote in person at the
meeting, you should request your stockbroker or bank to issue you a proxy covering your shares.
If
any other matters come before the meeting or any postponement or adjournment, each proxy will be voted in the discretion of the individuals named as proxies on the card.
Revoking a proxy
You may revoke your proxy at any time before the vote is taken by submitting a new proxy with a later date, by voting via the Internet or by
telephone at a later time, by voting in person at the meeting or by notifying Cintas' Secretary in writing at the address under "Questions?" on page 34.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This means at least a majority of the outstanding shares eligible to vote
must be represented at the meeting, either by proxy or in person.
Votes needed
The eight nominees receiving the most votes will be elected as members of the Board of Directors subject to a resignation policy in our Bylaws that
applies to any nominee who does not receive a majority of the votes cast. See "Election of Directors" on page 3. Approval of all other matters considered at the meeting, including postponement
or adjournment, will require the affirmative vote of a majority of shares voting.
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Only
votes for or against a proposal count. Abstentions (including abstentions with respect to one or more nominees) and broker nonvotes count for quorum purposes, but not for voting purposes. Broker
nonvotes occur when a broker returns a proxy, but does not have authority to vote on a particular proposal.
Banks
or brokers holding shares for beneficial owners must vote those shares as instructed. If the bank or broker has not received instructions from you, the beneficial owner, the bank or broker
generally has discretionary voting power only with respect to the ratification of appointment of the independent registered public accounting firm. However, unlike previous years, a bank or broker no
longer has discretion to cast votes with respect to the election of directors unless they have received voting instructions from the beneficial owner of the shares.
It is
therefore important that you provide instructions to your bank or broker if your shares are held by such a bank or broker so that your vote with respect to directors is
counted.
Attending in person
Only shareholders, their proxy holders and Cintas' guests, each of which must be properly registered as described in the Notice, may attend the
meeting.
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ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The Nominating and Corporate Governance Committee of the Board of Directors has nominated for election the following current directors, namely:
Gerald S. Adolph, Richard T. Farmer, Scott D. Farmer, James J. Johnson, Robert J. Kohlhepp, David C. Phillips, Joseph Scaminace and Ronald W. Tysoe.
Proxies solicited by the Board will be voted for the election of these nominees. All directors elected at the Annual Meeting will be elected to hold office until the next annual meeting. In voting to
elect directors, shareholders are not entitled to cumulate their votes.
In
accordance with NASDAQ Stock Market, LLC ("NASDAQ") rules, our Board of Directors affirmatively determines the independence of each director and nominee for election as a director in
accordance with the elements of independence set forth in the NASDAQ listing standards and rules promulgated under the Securities Exchange Act of 1934. Cintas' director independence standards,
incorporated in the Corporate Governance Guildelines, are available on our website at www.cintas.com, under Investors Corporate Governance. Based on these standards, the Board
determined that each of the following nonemployee directors is independent: Gerald S. Adolph, James J. Johnson, David C. Phillips, Joseph Scaminace and Ronald W. Tysoe. Our
Audit, Compensation and Nominating
and Corporate Governance Committees are composed solely of independent directors. All directors are elected for one-year terms. Information on each of our nominees is given below.
An
uncontested election is one in which the number of nominees does not exceed the number of directors to be elected. In an uncontested election, like this election, our Bylaws require that any
nominee who does not receive a majority of the shares cast must promptly offer his or her resignation to the Board. The Nominating and Corporate Governance Committee will take the matter under
advisement and make a recommendation to the Board on whether to accept or reject the resignation or whether other action should be taken. The Board has 90 days following certification of the
shareholder vote to consider the offer of resignation. Within such 90 day period, the Board will promptly disclose publicly its decision whether to accept the director's resignation offer.
If
a director nominee becomes unavailable before the election, your proxy card authorizes us to vote for a replacement nominee if the Board names one.
The Board recommends you vote FOR each of the following candidates:
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Gerald S. Adolph
3 & 4
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Gerald S. Adolph was elected a Director of Cintas in 2006. Mr. Adolph is currently a Senior Vice President with Booz & Company. Mr. Adolph has held numerous leadership positions at Booz &
Company, including Worldwide Chemicals Practice Leader, Worldwide Consumer and Health Practice Leader and Global Mergers and Restructuring Practice Leader. He has also served on the Booz & Company Board of Directors. The Board believes that
Mr. Adolph's consulting experience, giving him insight into various corporate governance and business management issues, as well as his status as an independent director, make his service on the Board integral to Cintas.
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Richard T. Farmer
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Richard T. Farmer is the founder of Cintas Corporation. He served as Chairman of the Board of Cintas Corporation and its predecessor companies from 1968 to 2009. Prior to the founding of Cintas, Mr. Farmer
worked with his family owned company, which Cintas acquired in the early 1970s. Prior to August 1, 1995, Mr. Farmer also served as Chief Executive Officer. The Board believes that Mr. Farmer, as the founder of Cintas, possesses
unparalleled experience in, and insight into, all aspects of Cintas' business, which he is able to contribute to the Board through his position as Chairman Emeritus of the Board of Directors.
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Scott D. Farmer
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Scott D. Farmer joined Cintas in 1981. He has held the positions of Vice President National Account Division, Vice President Marketing and Merchandising, Rental Division Group Vice President and
Chief Operating Officer. In 1994, he was elected to the Board of Directors. He was elected Chief Executive Officer in July 2003. The Board believes that Mr. Farmer's breadth of knowledge and experience in the areas of marketing, business
development and corporate strategy, as well as his familiarity with all aspects of Cintas' business, render his service on the Board extremely beneficial to Cintas.
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James J. Johnson
2 & 4
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James J. Johnson was elected a Director of Cintas in 2009. Mr. Johnson was with the Proctor & Gamble Company for 35 years, retiring in June 2008 as Chief Legal Officer. He is also a Director of the
Medical Center Fund of Cincinnati. The Board believes that Mr. Johnson's experience with the myriad legal issues surrounding a publicly-traded company and his status as an independent director render his service on the Board invaluable to
Cintas.
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Robert J. Kohlhepp
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Robert J. Kohlhepp has been a Director of Cintas since 1979. He has been employed by Cintas since 1967 serving in various executive capacities including Vice President Finance, Executive Vice President,
President, Chief Executive Officer and Vice Chairman of the Board. He was elected Chairman of the Board in 2009. He is also a Director of Parker Hannifin Corporation, Cleveland, Ohio. He served as a director of Eagle Hospitality Properties Trust,
Inc. from 2004 until 2008. The Board believes that Mr. Kohlhepp's long-time service to Cintas, much of which has been an executive capacity, has given him significant experience with capital management and allocation and public company
financial statement preparation, uniquely qualifying him to serve as the Chairman of the Board of Directors.
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David C. Phillips
1, 2, & 4
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David C. Phillips was elected a Director of Cintas in 2003. He is designated as Lead Director of the Cintas Board of Directors and is Chairman of the Executive Committee and the Nominating and Corporate Governance
Committee. He was with Arthur Andersen LLP for 32 years in which he served in several managing partner leadership positions. After retiring from Arthur Andersen in 1994, he became Chief Executive Officer of Downtown Cincinnati, Inc.,
from which he retired in 1999 to expand his financial consulting services business and to work with Cincinnati Works, Inc. Cincinnati Works, Inc. is an organization dedicated to reducing the number of people living below the poverty level
by assisting them to strive towards self-sufficiency through work. He is also a Director of Meridian Bioscience, Inc. He served as a director of Summit Mutual Funds through 2009. The Board believes that Mr. Phillips' years of service as a
certified public accountant, which qualify him as an "audit committee financial expert" under SEC guidelines, give him significant experience in preparing, auditing, analyzing and evaluating financial statements and dealing with the complex
accounting issues, all of which is valuable to Cintas.
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Joseph Scaminace
3 & 4
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Joseph Scaminace was appointed a Director of Cintas in 2010. Mr. Scaminace is Chairman, President and CEO of the OM Group, Inc (OMG). Prior to joining OMG, Mr. Scaminace was the President and Chief Operating
Officer of The Sherwin-Williams Company where he had worked in various capacities since 1983. He is a member of the Board of Trustees of The Cleveland Clinic. Mr. Scaminace is also a Director of The Parker Hannifin Corporation. The Board
believes that Mr. Scaminace's principal executive officer experience and service as a director of another publicly-traded company, which have provided him insight into high-level corporate governance and executive compensation matters, as well
as his independent director status, make him an integral member of Cintas' Board.
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Ronald W. Tysoe
2 & 4
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Ronald W. Tysoe was elected a Director of Cintas in 2008. He is the Chairman of the Audit Committee. Mr. Tysoe served as Senior Advisor of Perella Weinberg Partners LP from October 2006 to September 2007.
He served as Vice Chairman of Federated Department Stores, Inc. from April 1990 to October 2006. Mr. Tysoe is also a Director of Canadian Imperial Bank of Commerce, Scripps Networks Interactive, Inc., Pzena Investment Management,
Inc. and Taubman Centers, Inc. He served as a director of Macy's Inc. (formerly known as Federated Department Stores, Inc.) from 1988 until 2005, Ohio Casualty Corporation from 2006 until 2007 and NRDC Acquisition Corp. (now
known as Retail Opportunity Investments Corp.) from 2007 until 2009. The Board believes that Mr. Tysoe's service as a Vice Chairman of another publicly-traded company, his independent director status and the fact that he is an "audit committee
financial expert" under SEC guidelines, given his understanding of accounting and financial reporting, disclosures and controls, make his Board service extremely beneficial to Cintas.
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Richard
T. Farmer is the father of Scott D. Farmer.
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1
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Member
of the Executive Committee of the Board of Directors.
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2
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Member
of the Audit Committee of the Board of Directors.
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3
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Member
of the Compensation Committee of the Board of Directors.
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Member
of the Nominating and Corporate Governance Committee of the Board of Directors.
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CORPORATE GOVERNANCE
Cintas is a Washington corporation and, therefore, governed by the corporate laws of Washington. Since its stock is publicly traded on the NASDAQ
Global Select Market and it files reports with the SEC, it is also subject to the rules of NASDAQ as well as various provisions of federal securities laws and the Sarbanes-Oxley Act of 2002 ("SOX").
Governance
of the corporation is placed in the hands of the directors who, in turn, elect officers to manage the business operations. The Board of Directors oversees the management of Cintas on your
behalf. It reviews Cintas' long-term strategic plans and exercises direct decision making authority in all major decisions, such as significant acquisitions and the declaration of
dividends. The Board also reviews financial and internal controls and management succession plans.
During
fiscal 2010, the Board of Directors met on four occasions. In addition, the independent directors met in executive session on four occasions during fiscal 2010 without the presence of
management directors. The Lead Director presided over each session.
Cintas
expects all directors to attend all Board and shareholder meetings. All directors attended the 2009 Annual Meeting of Shareholders. Each of Cintas' directors attended all meetings of the Board
and committees of which they were a member with the exception of Gerald Adolph and Joyce Hergenhan who did not attend one committee meeting due to travel delays.
Shareholders
may communicate with the full Board or individual directors on matters concerning Cintas by mail or through our website. Such communication should be sent to the attention of the
Secretary.
The
Board has adopted the Cintas Code of Conduct and Business Ethics applicable to officers, directors and employees. A copy of the Cintas Code of Conduct and Business Ethics is available on our
website, www.cintas.com, under Investors Corporate Governance. Cintas intends to post on its website within four business days after approval any amendments or waivers to the Code
of Conduct and Business Ethics.
The
Directors have organized themselves into the committees described below to help carry out Board responsibilities. In particular, Board committees work on key issues in greater detail than would be
possible at full Board meetings. Each committee reviews the results of its meetings with the full Board.
The
Executive Committee is composed of David C. Phillips (Chairman), Scott D. Farmer and Robert J. Kohlhepp. It acts for the Board as required between Board meetings. This
Committee had no meetings in fiscal 2010, but took five actions in writing.
Each
of the Nominating and Corporate Governance Committee, Audit Committee and Compensation Committee is composed entirely of nonemployee directors each of whom meets the relevant independence
requirements established by NASDAQ and SOX that apply to their particular assignments.
Board Leadership Structure
The Board is responsible for evaluating and determining Cintas' leadership structure. Currently, two separate individuals serve in the capacities of
Chairman and Chief Executive Officer (CEO). Mr. Robert J. Kohlhepp was elected our Chairman of the Board in 2009 and Mr. Scott D. Farmer has been our CEO since 2003. As
Chairman, Mr. Kohlhepp is responsible for presiding over all meetings of the Board and shareholders, setting agendas for Board meetings and providing advice and counsel to Cintas' management
regarding Cintas' business and operations. As CEO, Mr. S. D. Farmer is responsible for the general management, oversight, supervision and control of the business and affairs of Cintas,
and ensuring that all orders and resolutions of the Board are carried
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into
effect. With their many years of experience with Cintas, Cintas believes that Mr. Kohlhepp and Mr. S. D. Farmer are uniquely qualified to be Cintas' Chairman and CEO, respectively.
We believe that this leadership structure is currently the most appropriate for Cintas.
In
electing the Chairman and the CEO, the Board considers nominees' knowledge of and experience with Cintas and its corporate culture, general industry experience and other executive skills. Our Board
recognizes that, depending on the circumstances, leadership models other than the current model might be appropriate. Our corporate governance guidelines provide that the Board selects the Chairman of
the Board in the manner that it determines to be in the best interests of Cintas' shareholders.
The
Board considers it to be useful and appropriate to designate a nonemployee director to serve in a lead capacity to preside over meetings of independent directors, coordinate the activities of the
other nonemployee directors, act as liaison among other directors, preside at Board meetings in the absence of the Chairman and to perform such other duties and responsibilities as the Board may
determine. The Board has designated David C. Phillips as the Lead Director.
The Board's Role in Risk Oversight
The entire Board of Directors, rather than a separate board committee, oversees Cintas' risk management process. Cintas relies on a comprehensive
enterprise risk management (ERM) process to aggregate, monitor, measure and manage risks. The ERM approach is designed to enable the Board to establish a mutual understanding with management of the
effectiveness of Cintas' risk management practices and capabilities, to review Cintas' risk exposure and to elevate certain key risks for discussion at the Board level as appropriate.
Cintas
has established a risk committee which is responsible for overseeing and monitoring Cintas' risk strategy and chartering risk mitigation related actions. The risk committee is chaired by the
CEO and has broad-based functional representation including senior management from Cintas' corporate audit, legal, operations, security and finance areas. The CEO is the only member of the Board on
the risk committee.
The
risk committee meets quarterly. At its meetings, the risk committee discusses risks to Cintas' business (operational, financial and legal), the potential impact to the business and the probability
of occurrence in order to determine the best solution and identify the need for resource allocation. This process includes evaluating management's preparedness to respond to the risk if realized.
One
risk committee meeting annually focuses on ERM and is attended by the Chairman of the Board. The risk profiles and current and future mitigating actions are discussed and refined during subsequent
meetings with senior management, the CEO and the Chairman. Thereafter, the risk committee presents a comprehensive report to the Board in an interactive session during which the Board has the
opportunity to further discuss the risk committee's assessments and conclusions.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for nominating persons for election as directors at each annual shareholders'
meeting, making recommendations for filling any Board vacancies that may arise between meetings due to resignation or other factors and developing and recommending to the Board corporate governance
policies and guidelines for Cintas. Cintas does not have a formal policy regarding diversity in determining director nominees. However, in nominating directors, the Nominating and Corporate Governance
Committee takes into account, among other factors which it may deem appropriate, the judgment, skill, diversity, business experience and needs of the Board as its function relates to the business of
Cintas. The Nominating and Corporate Governance Committee will consider nominees recommended by
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security
holders in written correspondence directed to the Secretary of Cintas. However, in no event shall any nomination made by a shareholder be binding on Cintas unless it is made in strict
accordance with Cintas' Bylaws as they may be amended from time to time. A copy of the Nominating and Corporate Governance Committee Charter is available on our website, www.cintas.com, under
Investors Corporate Governance.
Committee
members: David C. Phillips (Chairman), Gerald S. Adolph, Gerald V. Dirvin, Joyce Hergenhan, James J. Johnson, Joseph Scaminace and Ronald W. Tysoe.
Meetings
last year: Three
Audit Committee
The Audit Committee is governed by a written charter adopted by the Board. A copy of the Audit Committee Charter is available on our website,
www.cintas.com, under Investors Corporate Governance. Ronald W. Tysoe and David C. Phillips have been designated as Audit Committee financial experts by the Board of
Directors and satisfy the expertise standards required by NASDAQ.
The
Audit Committee is solely responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The Audit Committee also evaluates
information received from the independent registered public accounting firm and management to determine whether the registered public accounting firm is independent of management. The independent
registered public accounting firm reports directly to the Audit Committee.
The
Audit Committee has established procedures for the receipt, retention and treatment of complaints received by Cintas concerning accounting, internal accounting controls or auditing matters and has
established procedures for the confidential and anonymous submission by employees of any concerns they may have regarding questionable accounting, auditing or financial matters.
The
Audit Committee approves all audit and nonaudit services performed for Cintas by its independent registered public accounting firm prior to the time that those services are commenced. The Chairman
also has the authority to approve these services between regularly scheduled meetings. In this event, the Chairman reports approvals made by him to the full Committee at each of its meetings. For
these purposes, the Committee, or its Chairman, is provided with information as to the nature, extent and purpose of each proposed service, as well as the approximate time frame and proposed cost
arrangements for that service.
Committee
members: Ronald W. Tysoe (Chairman), James J. Johnson and David C. Phillips
Meetings
last year: Ten (Seven of which were telephonic meetings).
AUDIT COMMITTEE REPORT
The Audit Committee oversees Cintas' financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of internal controls. As part of the oversight processes, the Audit Committee regularly meets with management of Cintas,
Cintas' independent registered public accounting firm and Cintas' internal auditors. The Audit Committee regularly meets with each of these groups separately in closed sessions. Throughout the year,
the Audit Committee had full access to management, the independent registered public accounting firm and internal auditors for Cintas. To fulfill its responsibilities, the Audit Committee did, among
other things, the following:
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(a)
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reviewed
and discussed Cintas' audited financial statements for fiscal 2010 with Cintas' management and the independent registered public accounting firm,
including a discussion of the quality, not just the acceptability, of the accounting principles, the
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RESPECTFULLY
SUBMITTED BY THE MEMBERS OF THE AUDIT COMMITTEE, Ronald W. Tysoe (Chairman), James J. Johnson and David C. Phillips
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The
Audit Committee appointed Ernst & Young LLP as the independent registered public accounting firm to audit the fiscal 2010 financial statements.
Fees
billed for services in fiscal 2010 and fiscal 2009 are as follows:
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Fiscal 2010
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Fiscal 2009
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Audit Fees
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$
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788,500
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$
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790,145
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Audit Related Fees
(1)
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$
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117,775
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$
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143,873
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Tax Fees
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$
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205,723
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$
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351,377
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All Other Fees
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$
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0
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$
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0
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(1)
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Audit
related fees include review of SEC registration statements, benefit plan audits and consultation on accounting standards or
transactions.
Compensation Committee
The Compensation Committee is governed by a written charter adopted by the Board. A copy of the Compensation Committee Charter is available on our
website, www.cintas.com, under Investors Corporate Governance. In discharging the responsibilities of the Board of Directors relating to compensation of Cintas' CEO and other
senior executive officers, the purposes of the Compensation Committee are, among others, (i) to review and approve the compensation of Cintas' CEO and other senior executive officers,
(ii) to oversee the compensation policies and programs of Cintas, including adopting, administering and approving
Cintas' incentive compensation and stock plans and awards and amendments to the plans or awards and performing such duties and responsibilities under the terms of any executive compensation plan,
incentive-compensation plan or equity-based plan and (iii) to oversee management succession planning. The Compensation Committee has the authority to delegate any of its responsibilities to
subcommittees as the Compensation Committee may deem appropriate in its sole discretion. In fiscal 2010, the Committee believes it reviewed the necessary resources available to survey the compensation
practices of Cintas' peers and keep abreast of compensation developments in the marketplace. As a result, while the Compensation Committee has in the past considered and expects to consider in the
future the use of outside consultants in assisting with recommending the amount or form of executive or director compensation, neither Cintas nor the Committee engaged any outside compensation
consultants for the fiscal year ended May 31, 2010.
Cintas'
executive compensation policies are designed to support the corporate objective of maximizing the long-term value of Cintas for its shareholders and employee-partners. To achieve
this objective, the Committee believes it is important to provide competitive levels of compensation to attract and retain the most qualified employees, to recognize individuals who exceed
expectations and to closely link executive compensation with corporate performance. The methods by which the Committee believes Cintas' long-term objectives can best be achieved are
through incentive and equity compensation plans.
The
Compensation Committee processes and procedures for the consideration and determination of executive and director compensation are discussed in the section entitled "Executive Compensation".
Committee
members: Gerald V. Dirvin (Chairman), Gerald S. Adolph, Joyce Hergenhan and Joseph Scaminace.
Meetings
last year: Three
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Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee, listed above, has ever been an officer or employee of Cintas, nor have they been an executive
officer of another entity at which one of our executive officers serves on the Board of Directors. No named executive officer of Cintas serves as a director or as a member of a committee of any
company of which any of Cintas' nonemployee directors are executive officers.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of
Regulation S-K with management. Based on the review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in Cintas' Proxy Statement.
Committee
Members: Gerald V. Dirvin (Chairman), Gerald S. Adolph, Joyce Hergenhan and Joseph Scaminace.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section discusses and analyzes the compensation awarded to, earned by, or paid to the executive officers set forth in the Summary Compensation
Table of this proxy statement (collectively, the named executive officers). It also discusses the principles underlying our policies and decisions.
Overview of Compensation Program
The Compensation Committee oversees the compensation programs of Cintas, with particular attention to the compensation for its CEO and the other
executive officers. It is the responsibility of the Committee to review and approve or, as the case may be, recommend to the Board of Directors for approval, changes to Cintas' compensation policies
and benefit plans, to administer Cintas' stock plans including recommending and approving stock-based awards to executive officers, and to otherwise ensure that Cintas' compensation philosophy is
consistent with the best interests of Cintas and its shareholders and is properly implemented and monitored. Generally, the types of compensation and benefits provided to all executive officers are
similar.
The
day-to-day administration of savings plans, profit sharing plans, stock plans, health, welfare and paid-time-off plans and policies applicable to
salaried employees in general are handled by Cintas' human resources, finance and legal department employees. The responsibility for certain fundamental changes outside the
day-to-day requirements necessary to maintain these plans and policies belongs to the Committee.
Cintas
has no policy regarding share ownership by executive officers. Cintas strongly encourages executive officers to retain shares acquired through the long-term equity incentive
program.
Compensation Objectives
The primary focus of our executive compensation program is to support the corporate objective of maximizing the long-term value for our
shareholders and employee-partners. We also strive to provide a competitive level of total compensation to all of our employee-partners, including the executive officers, that attracts and retains
talented and experienced individuals and that motivates them to contribute to Cintas' short-term and long-term success.
Our
incentive compensation program is designed to reward both individual and team performance, measured by overall Cintas results and the attainment of individual goals. The objectives remained the
same as the previous fiscal year because these objectives are important and the company continues to make progress on these objectives. The Executive Incentive Plan for fiscal 2010 applies to all of
our executive officers. The incentive compensation arrangement for our CEO, Mr. Scott D. Farmer, was based on Cintas earnings per share (EPS), growth in sales and other performance goals
outlined by the Committee. The incentive compensation arrangement for our
President and Chief Operating Officer, Mr. J. Phillip Holloman, was based on Cintas EPS, growth in sales for operations within his responsibility and the accomplishment of certain individual
goals. The incentive compensation arrangements for our Senior Vice President and Chief Financial Officer, William C. Gale, our Vice President and Secretary General Counsel,
Mr. Thomas E. Frooman and our Vice President and Treasurer, Mr. Michael L. Thompson were based on Cintas EPS and the accomplishment of certain individual goals.
Role of Executive Officers in Compensation Decisions
The Compensation Committee determines the compensation for the executive officers based on recommendations made by management as discussed below.
Annually, the Committee performs a market analysis of executive compensation plans. The analysis looks at companies in Cintas'
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industry
as well as comparable sized companies that we consider to be Cintas' peer group (G&K Services, Unifirst Corporation, Iron Mountain Incorporated, Convergys Corporation, Robert Half
International Inc., Leggett & Platt Incorporated, Chiquita Brands International, Kelly Services, Unisys Corporation and Ecolab Incorporated). The Committee benchmarks base salary, annual
cash incentives, long-term compensation and other compensation. Our analysis shows that our named executive officers receive total compensation less than the total compensation of
respective named executive officers of the majority of the companies in the peer group identified above.
Based
on the market analysis and individual performance, the Chairman of the Board of Directors makes a recommendation to the Committee on the CEO's base salary and annual cash incentive target for
the upcoming fiscal year. The CEO makes a recommendation to the Committee for the base salaries and annual cash incentive targets for the upcoming fiscal year for other executive officers. The Senior
Vice President and Chief Financial Officer makes a recommendation to the Committee on the base salary and annual cash incentive target of his direct reports for the upcoming fiscal year.
Elements Used to Achieve Compensation Components
The table below summarizes the fiscal 2010 compensation program elements for our named executive officers:
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Element
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Form of Compensation
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Purpose
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Base Salaries
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Cash
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Provides competitive, fixed compensation to attract and retain exceptional executive talent.
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Annual Cash Incentives
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Cash
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Provides a variable financial incentive to achieve corporate and individual operating goals.
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Long-Term Equity Incentives
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Non-qualified stock options and restricted stock
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Encourages named executive officers to build and maintain a long-term equity ownership position in Cintas so that their interests are aligned with our shareholders.
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Health, Retirement and Other Benefits
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Eligibility to participate in benefit plans generally available to our employee-partners, including Partners' Plan contributions, health, life insurance and disability plans; deferred compensation plan; and certain
perquisites
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Benefit plans are part of a broad-based employee benefits program. The deferred compensation plan and perquisites provide competitive benefits to our named executive officers.
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We
believe that each element of our compensation program plays a substantial role in maximizing long-term value for our shareholders and employee-partners because of the significant
emphasis on pay-for-performance principles. Generally, approximately 50% of a named executive officer's total compensation is based on Cintas results and the attainment of
individual goals. As a result, Cintas performance has a significant effect on the amount of compensation realized by the executive officers.
13
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Each
of these elements of pay is described in more detail below.
Base Salaries
The Compensation Committee annually reviews the base salaries of our executive officers. The Committee also reviews an executive officer's base
salary whenever there is a change in that executive officer's job responsibilities.
The
factors that influence base salary decisions are level of responsibility, salary level offered by comparably sized companies, overall performance of the individual and overall performance of
Cintas. Taking these factors into account, no named executive officer received a salary increase in fiscal 2010, and following are the fiscal 2010 base salaries that were approved by the Committee for
our named executive offers:
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Officer
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Fiscal 2010
Base Salary
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% increase/(decrease)
over the prior year
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Scott D. Farmer
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$
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725,000
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0
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%
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William C. Gale
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$
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442,000
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0
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%
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Thomas E. Frooman
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$
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407,500
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0
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%
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J. Phillip Holloman
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$
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530,000
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0
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%
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Michael L. Thompson
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$
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310,000
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0
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%
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Annual Cash Incentives
The Compensation Committee strongly believes that variable annual cash incentives provide a direct financial incentive to achieve corporate and
individual operating goals. At the beginning of each fiscal year, the Committee establishes an annual cash incentive target for each named executive officer based on certain financial and
non-financial goals.
The
performance components and targets were derived from the operating plans for Cintas for fiscal 2010 and represent goals for that year that the Committee believes will be challenging for Cintas,
yet achievable if senior and operating management meet or surpass their business unit goals and objectives.
The
Committee anticipates that similar performance components and targets will be utilized in fiscal 2011 because these objectives are important and Cintas continues to make progress on these
objectives. However, the Committee reserves the right to determine on an ongoing basis the performance components and targets it will use in developing the performance-based portion of the named
executive officers' compensation.
For
fiscal 2010, the Committee approved a total compensation plan for Mr. S. D. Farmer. The aggregate amount of Mr. S. D. Farmer's annual cash incentive for fiscal
2010 is comprised of the financial objectives of fiscal 2010 Cintas EPS, fiscal 2010 sales and certain corporate non-financial goals. The EPS and sales growth goals were established with
reference to the operating plans for Cintas for fiscal 2010. The EPS goals for all participants were identical. The percentage of the target annual cash incentive related to the fiscal 2010 Cintas
EPS, the growth of fiscal 2010 sales and the non-financial goals relating to employee diversity, global expansion and safety were 37.5%, 37.5% and 25%, respectively. The Executive
Incentive Plan provided that if Cintas met the targeted EPS and sales and the other non-financial goals, Mr. S. D. Farmer would receive a target annual cash incentive of
$480,000. Based upon the overall achievement of these objectives, Mr. S. D. Farmer could earn 0% up to a maximum of 200% of the target annual cash incentive.
14
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Under
the Executive Incentive Plan, annual cash incentive calculations for achievement of financial goals are based on actual results, subject to adjustment at the discretion of the Compensation
Committee to exclude items that are not operational, such as accounting principle changes or revenue from an acquisition that was not in the business plan.
The
annual cash incentive payout percentage multiplier for each component of Mr. S. D. Farmer's target annual cash incentive is provided in the following tables:
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EPS Component Level of Achievement
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EPS Goals
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Annual
Cash Incentive
Payout
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Below Threshold
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<$1.34
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0
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%
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Threshold
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$1.34
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25
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%
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Target
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$1.48
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100
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%
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Maximum
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$1.63
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200
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%
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Sales Growth Component Level of Achievement
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Sales Growth
Goals (% growth
over fiscal 2009)
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Annual
Cash Incentive
Payout
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Below Threshold
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(9.0)% or below
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0
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%
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Threshold
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(8.5)%
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25
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%
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Target
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(7.0)%
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100
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%
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Maximum
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0.0%
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200
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%
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Cintas'
fiscal 2010 target plan was for revenue to decrease by 7.0%. Cintas expected the difficult economic environment of fiscal 2009 to continue during fiscal 2010. The planned revenue decrease
reflected that expectation.
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Employee Diversity, Global Expansion and Safety Component Level of Achievement
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Annual
Cash Incentive
Payout
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Does Not Meet Goals
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0
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%
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Meets Most Goals
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50
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%
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Meets Goals
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100
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%
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Exceeds Goals
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150
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%
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Outstanding Achievement
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200
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%
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The
Grants of Plan-Based Awards for Fiscal 2010 table outlines estimated future payouts under non-equity incentive plan awards. Based on Cintas' EPS and sales growth for fiscal
2010, Mr. S. D. Farmer received a bonus of $387,000. As with all named executive officers, the Compensation Committee adjusted Cintas' EPS for fiscal 2010 of $1.40 per diluted share to
exclude certain one-time special charges totaling $0.09 per diluted share. As a result, fiscal 2010 EPS adjusted for one-time special charges was $1.49 per diluted share
compared to a fiscal 2010 plan EPS of $1.48 per diluted share. Mr. S. D. Farmer received $95,000 based on the performance of the non-financial goals outlined above.
Mr. S. D. Farmer's total fiscal 2010 annual cash incentive award was $482,000.
15
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For
fiscal 2010, the Committee approved a total compensation plan for Mr. Holloman. The aggregate amount of Mr. Holloman's annual cash incentive for fiscal 2010 is comprised of the
financial objectives of fiscal 2010 Cintas EPS, fiscal 2010 sales for operations within his responsibility and the accomplishment of certain corporate non-financial goals. The sales growth
goals were established with reference to the operating plans for operations within Mr. Holloman's responsibility for fiscal 2010. The percentage of the target annual cash incentive related to
fiscal 2010 Cintas EPS, the growth of fiscal 2010 sales for operations within his responsibility and the non-financial goals relating to employee diversity, turnover and safety are 37.5%,
37.5% and 25%, respectively. The Executive Incentive Plan provided that if Cintas met the targeted
EPS and sales for operations within his responsibility and the other non-financial goals, Mr. Holloman would receive a target annual cash incentive of $212,000. Based upon the
overall achievement of these objectives, Mr. Holloman could earn 0% up to a maximum of 200% of the target annual cash incentive.
The
annual cash incentive payout percentage multiplier for each financial component of Mr. Holloman's target annual cash incentive is provided in the following tables:
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EPS Component Level of Achievement
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EPS Goals
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Annual
Cash Incentive
Payout
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Below Threshold
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<$1.34
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0
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%
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Threshold
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$1.34
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50
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%
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Target
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$1.48
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100
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%
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Maximum
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$1.63
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200
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%
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Sales Growth Component Level of Achievement
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Sales Growth
Goals (% growth
over fiscal 2009)
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Annual
Cash Incentive
Payout
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Below Threshold
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<(11.0)%
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0
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%
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Threshold
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(11.0)%
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50
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%
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Target
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(9.5)%
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100
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%
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Maximum
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0.0%
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200
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%
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Cintas'
fiscal 2010 target plan for revenue for operations within Mr. Holloman's responsibility was a revenue decrease of 9.5%. Cintas expected the difficult economic environment of fiscal 2009
to continue during fiscal 2010. The planned revenue decrease reflected that expectation.
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Individual Performance Component Level of Achievement
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Annual
Cash Incentive
Payout
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Does Not Meet Goals
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0
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%
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Meets Most Goals
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50
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%
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Meets Goals
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100
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%
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Exceeds Goals
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150
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%
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Outstanding Achievement
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200
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%
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The
Grants of Plan-Based Awards for Fiscal 2010 table outlines estimated future payouts under non-equity incentive plan awards. Based on Cintas EPS and sales growth for
operations within his
16
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responsibility
for fiscal 2010, Mr. Holloman received a bonus of $171,580 for these components. Mr. Holloman received $63,294 based on the performance of the non-financial
goals outlined above. Mr. Holloman's total fiscal 2010 annual cash incentive award was $234,874.
For
fiscal 2010, the Committee approved total compensation plans for Mr. Gale, Mr. Frooman and Mr. Thompson. The aggregate amount of annual cash incentive for fiscal 2010 for
Mr. Gale, Mr. Frooman and Mr. Thompson is comprised of the sum of that named executive officer's incentive for the Cintas EPS component and the individual performance component.
Based upon overall performance, the eligible named executive officers could earn 0% up to a maximum of 200% of the annual cash incentive target. The following table sets forth the annual cash
incentive target and performance criteria that were reviewed and approved by the Committee:
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Name
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Annual
Cash Incentive
Target
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EPS
Component
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Individual
Performance
Component
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William C. Gale
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$
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196,100
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50
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%
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50
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%
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Thomas E. Frooman
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$
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198,750
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50
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%
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50
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%
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Michael L. Thompson
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$
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63,600
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50
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%
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50
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%
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The
annual cash incentive payout percentage multiplier for each component is provided in the following tables:
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EPS Component Level of Achievement
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EPS Goals
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Annual
Cash Incentive
Payout
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Below Threshold
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<$1.34
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0
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%
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Threshold
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$1.34
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50
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%
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Target
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$1.48
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100
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%
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Maximum
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$1.63
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200
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%
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Individual Performance Component Level of Achievement
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Annual
Cash Incentive
Payout
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Does Not Meet Goals
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0
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%
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Meets Most Goals
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50
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%
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Meets Goals
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100
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%
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Exceeds Goals
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150
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%
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Outstanding Achievement
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200
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%
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The
Grants of Plan-Based Awards for Fiscal 2010 table outlines estimated future payouts under non-equity incentive plan awards. As presented to and approved by the Compensation
Committee, the actual annual cash incentive payments earned for fiscal 2010 as reflected in the Summary Compensation Table are as follows: Mr. Gale earned a fiscal 2010 annual cash incentive
award of $227,150. His individual performance level was "Exceeds Goals" and Cintas EPS was "Above Target". Mr. Frooman earned a fiscal 2010 annual cash incentive award of $304,750. His
individual performance level was "Outstanding Achievement" and Cintas EPS was "Above Target".
17
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Mr. Thompson
earned a fiscal 2010 annual cash incentive award of $81,620. His individual performance level was "Exceeds Goals" and Cintas EPS was "Above Target".
Long-Term Equity Incentives
Long-term equity incentive compensation is comprised of non-qualified stock options and restricted stock. With respect to
Mr. S. D. Farmer, equity awards are made at the discretion of the Compensation Committee and subjectively based on Cintas' performance and his individual performance during fiscal 2010.
With respect to Mr. Holloman, these awards are based on criteria outlined in the Executive Incentive Plan, but are subject to the discretion of the Compensation Committee. With respect to
Mr. Gale, Mr. Frooman and
Mr. Thompson, these awards are made pursuant to the criteria outlined in the Executive Incentive Plan. The purpose of such awards is to incentivize named executive officers to profitably grow
Cintas' long-term business objectives and encourage named executive officers to build and maintain a long-term equity ownership position in Cintas so that their interests are
aligned with those of our shareholders.
Under
the Executive Incentive Plan, the amount of equity awards eligible for Mr. Holloman is based on a target level of Cintas EPS and sales for operations within his responsibility.
Under
the Executive Incentive Plan, the amount of equity awards eligible for Mr. Gale, Mr. Frooman and Mr. Thompson is based on a target level of Cintas EPS and achievement of
individual goals.
The
tables below provide more detail with respect to the award percentage multiplier tied to each milestone level of achievement:
The
EPS goals for Mr. Holloman, Mr. Gale, Mr. Frooman and Mr. Thompson were established in light of the operating plans for Cintas for fiscal 2010.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS Component Level of Achievement
|
|
|
|
EPS Goals
|
|
|
|
Equity Award %
|
|
|
|
|
Below Threshold
|
|
|
|
<$1.34
|
|
|
|
|
0
|
%
|
|
|
|
Threshold
|
|
|
|
$1.34
|
|
|
|
|
50
|
%
|
|
|
|
Target
|
|
|
|
$1.48
|
|
|
|
|
100
|
%
|
|
|
|
Maximum
|
|
|
|
$1.63
|
|
|
|
|
200
|
%
|
|
The
sales growth component for Mr. Holloman is identical to the table shown previously under the Annual Cash Incentives section.
The
individual performance components for Mr. Gale, Mr. Frooman and Mr. Thompson were established in light of the operating plans for Cintas for fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Performance Component Level of Achievement
|
|
|
|
Equity Award %
|
|
|
|
|
Does Not Meet Goals
|
|
|
|
|
0
|
%
|
|
|
|
Meets Most Goals
|
|
|
|
|
50
|
%
|
|
|
|
Meets Goals
|
|
|
|
|
100
|
%
|
|
|
|
Exceeds Goals
|
|
|
|
|
150
|
%
|
|
|
|
Outstanding Achievement
|
|
|
|
|
200
|
%
|
|
18
Table of Contents
For
fiscal 2010, the Committee determined that equity awards made under the Executive Incentive Plan would be based on an established target for Mr. Gale, Mr. Frooman and
Mr. Thompson. The factors that influence the setting of targets are level of responsibility, market compensation analyses and overall performance of the individual. The Compensation Committee
reviewed and approved the targets at the beginning of the fiscal year, and the award was granted based upon that named executive officer's performance compared to the targets outlined above.
Non-Qualified Stock Options
Mr. S. D. Farmer's awards were granted on the date the Compensation Committee met to discuss Mr. S. D. Farmer's
performance against his performance goals. On July 26, 2010, the Committee awarded 20,589 non-qualified stock options to Mr. S. D. Farmer based on a subjective
analysis of his level of performance versus his goals.
On
July 22, 2010, Mr. Holloman was awarded 13,726 non-qualified stock options based objectively on Cintas' fiscal 2010 EPS and fiscal 2010 sales for operations within his
responsibility, and Mr. Frooman and Mr. Thompson were awarded 11,500 and 3,208 non-qualified stock options, respectively, based on Cintas' fiscal 2010 EPS and their
individual performance level, as outlined under the Annual Cash Incentives section. In accordance with the 2005 Equity Compensation Plan, stock options are not granted to individuals age 55 or older,
but instead, any stock option awards that would have been awarded are awarded as restricted shares instead. As Mr. Gale is over the age of 55, he did not receive any non-qualified
stock options, but received restricted shares instead.
As
dictated by the 2005 Equity Compensation Plan, stock option awards have an exercise price equal to the closing stock price on the date of the award. As a result, stock options awarded to the named
executive officers increase in value only if the market price of the common stock increases.
Restricted Stock
Mr. S. D. Farmer's awards were granted on the date the Compensation Committee met to discuss Mr. S. D. Farmer's
performance against his performance goals. On July 26, 2010, the Committee awarded 11,280 restricted stock shares to Mr. S. D. Farmer based on a subjective analysis of his level
of performance versus his goals.
On
July 22, 2010, Mr. Holloman was awarded 4,575 restricted stock shares based objectively on Cintas' fiscal 2010 EPS and fiscal 2010 sales for operations within his responsibility, and
Mr. Gale, Mr. Frooman and Mr. Thompson were awarded 5,792, 3,833 and 770 restricted stock shares, respectively, based on Cintas' fiscal 2010 EPS and their individual performance
level, as outlined under the Annual Cash Incentives section.
Health, Retirement and Other Benefits
Cintas' benefits program includes retirement plans and group insurance plans. The objective of our group insurance plans is to provide our executive
officers with reasonable and competitive levels of protection from events which could interrupt the executive officer's employment and/or income received as an active employee.
The
retirement plans offered to executive officers include Cintas' Partners' Plan and the Deferred Compensation Plan. The Partners' Plan is a noncontributory employee stock ownership plan and
profit sharing plan with a 401(k) savings feature which covers substantially all employees. The Deferred Compensation Plan is discussed in more detail in the Nonqualified Deferred Compensation for
Fiscal 2010 table of this proxy statement, and its accompanying narrative and footnotes.
19
Table of Contents
Executive
perquisites are kept by the Committee to a minimal level and do not play a significant role in executive compensation. These benefits and their incremental cost to Cintas are described in
the Summary Compensation Table and its footnotes. The Committee believes these perquisites to be reasonable, comparable with peer companies and consistent with Cintas' overall compensation practices.
Change in Control Agreements
Cintas has no policy regarding change in control agreements. For a further discussion on this topic, please see the section titled "Potential
Payments Upon Termination, Retirement or Change of Control" of this proxy statement.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation we may deduct in any one year
with respect to each named executive officer. There is an exception to the $1 million limitation for performance-based compensation meeting certain requirements. The Committee believes that all
compensation paid to the named executive officers for fiscal year 2010 is properly deductible under Section 162(m).
Recovery of Prior Awards
We do not have a policy with respect to adjustment or recovery of awards or payments if relevant company performance measures upon which previous
awards were based are restated or otherwise adjusted in a manner that would reduce the size of such award or payment. Under those circumstances, we expect that the Compensation Committee would
evaluate whether compensation adjustments were appropriate based upon the facts and circumstances surrounding the applicable restatement or adjustment.
20
Table of Contents
SUMMARY COMPENSATION TABLE
The following table provides information regarding the compensation earned by our Chief Executive Officer, Chief Financial Officer and our three
other most highly compensated executive officers during fiscal 2010, fiscal 2009 and fiscal 2008. These individuals are collectively referred to as our named executive officers.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
|
|
Fiscal
Year
|
|
|
|
Salary
($)
|
|
|
|
Bonus
(1)
($)
|
|
|
|
Stock
Awards
(2)
($)
|
|
|
|
Option
Awards
(2)
($)
|
|
|
|
Non-Equity
Incentive Plan
Compensation
(3)
($)
|
|
|
|
All Other
Compensation
(4)
($)
|
|
|
|
Total
($)
|
|
|
|
|
Scott D. Farmer
|
|
|
|
|
2010
|
|
|
|
|
725,000
|
|
|
|
|
|
|
|
|
|
295,874
|
|
|
|
|
166,359
|
|
|
|
|
482,000
|
|
|
|
|
61,946
|
|
|
|
|
1,731,179
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
2009
|
|
|
|
|
725,000
|
|
|
|
|
|
|
|
|
|
129,934
|
|
|
|
|
51,700
|
|
|
|
|
120,000
|
|
|
|
|
70,101
|
|
|
|
|
1,096,735
|
|
|
|
|
and Director
|
|
|
|
|
2008
|
|
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
201,294
|
|
|
|
|
163,200
|
|
|
|
|
235,000
|
|
|
|
|
59,692
|
|
|
|
|
1,359,186
|
|
|
|
|
William C. Gale
|
|
|
|
|
2010
|
|
|
|
|
442,000
|
|
|
|
|
|
|
|
|
|
149,897
|
|
|
|
|
|
|
|
|
|
227,150
|
|
|
|
|
43,549
|
|
|
|
|
862,596
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
2009
|
|
|
|
|
442,000
|
|
|
|
|
|
|
|
|
|
1,035,567
|
|
|
|
|
|
|
|
|
|
147,075
|
|
|
|
|
43,345
|
|
|
|
|
1,667,987
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
2008
|
|
|
|
|
427,330
|
|
|
|
|
|
|
|
|
|
146,519
|
|
|
|
|
|
|
|
|
|
191,463
|
|
|
|
|
27,112
|
|
|
|
|
792,424
|
|
|
|
|
Thomas E. Frooman
|
|
|
|
|
2010
|
|
|
|
|
407,500
|
|
|
|
|
|
|
|
|
|
99,198
|
|
|
|
|
92,920
|
|
|
|
|
304,750
|
|
|
|
|
44,361
|
|
|
|
|
948,729
|
|
|
|
|
Vice President and
|
|
|
|
|
2009
|
|
|
|
|
407,500
|
|
|
|
|
|
|
|
|
|
792,959
|
|
|
|
|
58,421
|
|
|
|
|
149,063
|
|
|
|
|
42,999
|
|
|
|
|
1,450,942
|
|
|
|
|
Secretary General
|
|
|
|
|
2008
|
|
|
|
|
393,594
|
|
|
|
|
|
|
|
|
|
73,710
|
|
|
|
|
130,560
|
|
|
|
|
191,463
|
|
|
|
|
32,615
|
|
|
|
|
821,942
|
|
|
|
|
Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Phillip Holloman
|
|
|
|
|
2010
|
|
|
|
|
530,000
|
|
|
|
|
|
|
|
|
|
118,401
|
|
|
|
|
110,906
|
|
|
|
|
234,874
|
|
|
|
|
23,520
|
|
|
|
|
1,017,701
|
|
|
|
|
President and Chief
|
|
|
|
|
2009
|
|
|
|
|
530,000
|
|
|
|
|
|
|
|
|
|
22,610
|
|
|
|
|
31,020
|
|
|
|
|
53,000
|
|
|
|
|
26,437
|
|
|
|
|
663,067
|
|
|
|
|
Operating Officer
|
|
|
|
|
2008
|
|
|
|
|
405,333
|
|
|
|
|
|
|
|
|
|
237,810
|
|
|
|
|
461,560
|
|
|
|
|
185,500
|
|
|
|
|
28,146
|
|
|
|
|
1,318,349
|
|
|
|
|
Michael L. Thompson
|
|
|
|
|
2010
|
|
|
|
|
310,000
|
|
|
|
|
|
|
|
|
|
19,928
|
|
|
|
|
25,921
|
|
|
|
|
81,620
|
|
|
|
|
34,958
|
|
|
|
|
472,427
|
|
|
|
|
Vice President and
|
|
|
|
|
2009
|
|
|
|
|
310,000
|
|
|
|
|
|
|
|
|
|
727,143
|
|
|
|
|
51,700
|
|
|
|
|
63,600
|
|
|
|
|
35,750
|
|
|
|
|
1,188,193
|
|
|
|
|
Treasurer
|
|
|
|
|
2008
|
|
|
|
|
286,000
|
|
|
|
|
|
|
|
|
|
40,950
|
|
|
|
|
102,000
|
|
|
|
|
75,790
|
|
|
|
|
25,271
|
|
|
|
|
530,011
|
|
|
-
(1)
-
No
discretionary cash bonuses were paid to any named executive officer during fiscal 2010, fiscal 2009 or fiscal 2008. A discretionary cash
bonus is a cash payment made outside of the Executive Incentive Plan and determined at the discretion of the Compensation Committee.
-
(2)
-
The
compensation cost associated with restricted stock and stock options is the aggregate grant date fair value of awards granted during the
fiscal year calculated in accordance with the stock-based compensation accounting rules set forth in Financial Accounting Standards Board Accounting Standards Codification Topic 718.
-
(3)
-
Reflects
the cash awards to the named executive officers under the Executive Incentive Plan discussed in further detail on page 14.
-
(4)
-
All
other compensation includes reimbursements for auto allowances, club dues, restricted stock dividends, executive medical programs and
Partners' Plan contributions. All other compensation also includes financial planning fees for Mr. S. D. Farmer and personal use of Cintas' aircraft by Mr. S. D. Farmer.
21
Table of Contents
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2010
The following table sets forth certain information regarding all grants of plan-based awards made to the named executive officers during
fiscal 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Grant
Date
|
|
|
|
Threshold
($)
|
|
|
|
Target
($)
|
|
|
|
Maximum
($)
|
|
|
|
Threshold
(#)
|
|
|
|
Target
(#)
|
|
|
|
Maximum
(#)
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock
or Units
(#)
|
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
|
Exercise
or Base
Price of
Option
Awards
(7)
($/sh)
|
|
|
|
Grant
Date
Fair
Value of
Stock and
Option
Awards
($)
|
|
|
|
|
Scott D. Farmer
(1)
|
|
|
|
|
11/4/2009
|
|
|
|
|
0
|
|
|
|
|
480,000
|
|
|
|
|
960,000
|
|
|
|
|
0
|
(2)
|
|
|
|
0
|
(2)
|
|
|
|
0
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,589
|
|
|
|
|
26.23
|
|
|
|
|
166,359
|
|
|
|
|
|
|
|
|
|
7/26/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
295,874
|
|
|
|
|
William C. Gale
(3)
|
|
|
|
|
9/10/2009
|
|
|
|
|
0
|
|
|
|
|
196,100
|
|
|
|
|
392,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/10/2009
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
5,000
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,897
|
|
|
|
|
Thomas E. Frooman
(3)
|
|
|
|
|
9/9/2009
|
|
|
|
|
0
|
|
|
|
|
198,750
|
|
|
|
|
397,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/9/2009
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
7,500
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/9/2009
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
2,500
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
|
25.88
|
|
|
|
|
92,920
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,198
|
|
|
|
|
J. Phillip Holloman
(4)
|
|
|
|
|
9/9/2009
|
|
|
|
|
0
|
|
|
|
|
212,000
|
|
|
|
|
424,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/9/2009
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
12,000
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/9/2009
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
4,000
|
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,726
|
|
|
|
|
25.88
|
|
|
|
|
110,906
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,401
|
|
|
|
|
Michael L. Thompson
(3)
|
|
|
|
|
9/14/2009
|
|
|
|
|
0
|
|
|
|
|
63,600
|
|
|
|
|
127,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/14/2009
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
5,000
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/14/2009
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
1,200
|
|
|
|
|
2,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,208
|
|
|
|
|
25.88
|
|
|
|
|
25,921
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,928
|
|
|
-
(1)
-
Mr. S. D.
Farmer is eligible for an annual cash incentive based on the achievement of targeted Cintas EPS and sales growth and
other performance goals outlined by the Compensation Committee. If Cintas meets the targeted EPS, growth in sales and the other key performance indicators, Mr. S. D. Farmer will receive
the target annual cash incentive amount. The annual cash incentive can decrease to 0% or increase up to 200% of the targeted amount, depending on the extent to which these goals are achieved. If the
goals up to certain levels are not met, no annual cash incentive will be paid.
-
(2)
-
Equity
awards granted to Mr. S. D. Farmer were awarded at the discretion of the Compensation Committee after consideration of
Mr. S. D. Farmer's performance versus his goals.
-
(3)
-
Mr. Gale,
Mr. Frooman and Mr. Thompson are eligible for an annual cash incentive and a long-term equity
incentive award based on the achievement of targeted Cintas EPS and individual goals linked to the named executive officer's individual area of responsibility. If Cintas meets the targeted EPS and the
named executive officer achieves his individual goals, he will receive the targeted amount. This amount can decrease to 0% or increase up to 200% of the target depending on the extent to which EPS and
individual goals are achieved. If the goals up to a certain level are not met, no incentive will be paid. Restricted stock and non-qualified stock options awarded will be granted pursuant
to the terms and conditions of the 2005 Equity Compensation Plan.
-
(4)
-
Mr. Holloman
is eligible for an annual cash incentive and a long-term equity incentive award based on the achievement of
targeted Cintas EPS and sales growth for operations within his responsibility and the accomplishment of certain individual goals outlined by the Compensation Committee. If Cintas meets the targeted
EPS, targeted sales growth for operations within his responsibility and Mr. Holloman achieves his individual goals,
22
Table of Contents
Mr. Holloman
will receive the targeted amount. This amount can decrease to 0% or increase up to 200% of the targeted amount, depending on the extent to which these goals are achieved. If the
goals up to certain levels are not met, no incentive will be paid. Restricted stock and non-qualified stock options awarded will be granted pursuant to the terms and conditions of the 2005
Equity Compensation Plan.
-
(5)
-
Stock
option portion of the fiscal 2010 Executive Incentive Plan.
-
(6)
-
Restricted
stock portion of the fiscal 2010 Executive Incentive Plan.
-
(7)
-
The
exercise price of an option is equal to the closing stock price on the date of grant.
23
Table of Contents
OUTSTANDING EQUITY AWARDS AT FISCAL 2010 YEAR-END
The following table provides information regarding unexercised stock options and unvested stock awards held by our named executive officers as of
May 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
(1)
|
|
|
|
Stock Awards
(2)
|
|
|
|
|
Name
|
|
|
|
Grant
Date
(3)
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
|
Option
Exercise
Price
($)
|
|
|
|
Option
Expiration
Date
|
|
|
|
Number of
Shares
or Units of
Stock That
Have Not
Vested
(#)
|
|
|
|
Market
Value of
Shares
or Units of
Stock That
Have Not
Vested
($)
|
|
|
|
|
Scott D. Farmer
|
|
|
|
|
7/24/2000
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
42.67
|
|
|
|
|
7/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/08/2001
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
47.35
|
|
|
|
|
8/08/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/29/2003
|
|
|
|
|
20,000
|
|
|
|
|
30,000
|
|
|
|
|
39.29
|
|
|
|
|
7/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2004
|
|
|
|
|
5,000
|
|
|
|
|
20,000
|
|
|
|
|
42.06
|
|
|
|
|
7/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/01/2005
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
44.43
|
|
|
|
|
8/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2006
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
35.99
|
|
|
|
|
7/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/23/2007
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
38.74
|
|
|
|
|
7/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/21/2008
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
27.88
|
|
|
|
|
7/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2009
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
24.41
|
|
|
|
|
7/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2010
|
|
|
|
|
|
|
|
|
|
20,589
|
|
|
|
|
26.23
|
|
|
|
|
7/26/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,132
|
|
|
|
|
809,432
|
|
|
|
|
William C. Gale
|
|
|
|
|
7/24/2000
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
42.67
|
|
|
|
|
7/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2002
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
41.65
|
|
|
|
|
7/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2003
|
|
|
|
|
4,500
|
|
|
|
|
3,000
|
|
|
|
|
33.57
|
|
|
|
|
2/28/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2004
|
|
|
|
|
3,000
|
|
|
|
|
12,000
|
|
|
|
|
42.06
|
|
|
|
|
7/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/01/2005
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
44.43
|
|
|
|
|
8/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2006
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
36.08
|
|
|
|
|
7/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,409
|
|
|
|
|
1,388,634
|
|
|
|
|
Thomas E. Frooman
|
|
|
|
|
12/28/2001
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
49.69
|
|
|
|
|
12/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2002
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
41.65
|
|
|
|
|
7/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/28/2003
|
|
|
|
|
12,000
|
|
|
|
|
8,000
|
|
|
|
|
33.57
|
|
|
|
|
2/28/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2004
|
|
|
|
|
3,000
|
|
|
|
|
12,000
|
|
|
|
|
42.06
|
|
|
|
|
7/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/01/2005
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
44.43
|
|
|
|
|
8/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2006
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
36.08
|
|
|
|
|
7/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/03/2007
|
|
|
|
|
|
|
|
|
|
6,575
|
|
|
|
|
39.84
|
|
|
|
|
7/03/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
27.30
|
|
|
|
|
7/17/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2009
|
|
|
|
|
|
|
|
|
|
5,650
|
|
|
|
|
22.61
|
|
|
|
|
7/17/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
|
25.88
|
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,534
|
|
|
|
|
975,884
|
|
|
|
|
J. Phillip Holloman
|
|
|
|
|
7/24/2000
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
42.67
|
|
|
|
|
7/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/29/2000
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
43.56
|
|
|
|
|
9/29/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/08/2001
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
47.35
|
|
|
|
|
8/08/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2002
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
41.65
|
|
|
|
|
7/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/2003
|
|
|
|
|
4,500
|
|
|
|
|
3,000
|
|
|
|
|
35.02
|
|
|
|
|
3/28/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/29/2003
|
|
|
|
|
400
|
|
|
|
|
600
|
|
|
|
|
39.29
|
|
|
|
|
7/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2004
|
|
|
|
|
1,500
|
|
|
|
|
6,000
|
|
|
|
|
42.06
|
|
|
|
|
7/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/01/2005
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
44.43
|
|
|
|
|
8/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2006
|
|
|
|
|
|
|
|
|
|
5,650
|
|
|
|
|
36.08
|
|
|
|
|
7/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/03/2007
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
39.84
|
|
|
|
|
7/03/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2008
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
32.82
|
|
|
|
|
1/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
27.30
|
|
|
|
|
7/17/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2009
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
22.61
|
|
|
|
|
7/17/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
13,726
|
|
|
|
|
25.88
|
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,775
|
|
|
|
|
410,150
|
|
|
|
|
Michael L. Thompson
|
|
|
|
|
8/08/2001
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
47.35
|
|
|
|
|
8/08/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2002
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
41.65
|
|
|
|
|
7/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/31/2003
|
|
|
|
|
1,800
|
|
|
|
|
1,200
|
|
|
|
|
41.30
|
|
|
|
|
1/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/29/2003
|
|
|
|
|
1,200
|
|
|
|
|
1,800
|
|
|
|
|
39.29
|
|
|
|
|
7/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2004
|
|
|
|
|
1,000
|
|
|
|
|
4,000
|
|
|
|
|
42.06
|
|
|
|
|
7/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/01/2005
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
44.43
|
|
|
|
|
8/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2006
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
42.73
|
|
|
|
|
1/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2006
|
|
|
|
|
|
|
|
|
|
4,400
|
|
|
|
|
36.08
|
|
|
|
|
7/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/03/2007
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
39.84
|
|
|
|
|
7/03/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
|
27.30
|
|
|
|
|
7/17/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/2009
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
22.61
|
|
|
|
|
7/17/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2010
|
|
|
|
|
|
|
|
|
|
3,208
|
|
|
|
|
25.88
|
|
|
|
|
7/22/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,778
|
|
|
|
|
774,228
|
|
|
24
Table of Contents
-
(1)
-
Stock
options dated after June 1, 2008, have a 10-year term and vest at a rate of 33% per year, beginning on the third
anniversary of the date of grant and ending on the fifth anniversary of the date of grant. Stock options dated prior to June 1, 2008, have a 10-year term and vest at a rate of 20%
per year, beginning on the fifth anniversary of the date of grant with the following exceptions:
Age
51 at fiscal year-end 25% per year vesting, beginning fifth anniversary of grant
Age 52 at fiscal year-end 33% per year vesting, beginning fifth anniversary of grant
Age 53 at fiscal year-end 50% per year vesting, beginning fifth anniversary of grant
Age 54 at fiscal year-end 100% per year vesting, beginning fifth anniversary of grant
Age 55 or older at fiscal year-end stock options are never granted. Those amounts are converted to restricted stock awards.
-
(2)
-
Restricted
stock awards generally vest three years from the date of grant.
-
(3)
-
During
fiscal 2005, the Compensation Committee of the Board of Directors approved a resolution to accelerate the vesting for certain
"out-of-the-money" options. The "out-of-the-money" options that were accelerated were granted to employees during fiscal 2000,
2001, 2002 and 2003.
25
Table of Contents
NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2010
Our named executive officers are eligible to participate in a Deferred Compensation Plan. This Deferred Compensation Plan permits a group of highly
compensated employees of Cintas to defer the receipt of current year compensation which they have earned during the year. This Deferred Compensation Plan is intended to assist Cintas in the retaining
and attracting of individuals of exceptional ability.
Our
named executive officers may elect to defer up to 75% of their base salary and up to 100% of their earned annual cash incentive awards. Amounts deferred are credited to the named executive
officer's account under the Deferred Compensation Plan and are fully vested.
Future
payments are distributed in a lump sum or in annual installments, based on the choice of the named executive officer. If the form of payment selected provides for subsequent payments,
subsequent payments will be made on the anniversary of the initial payment. All amounts are payable in a lump sum if the named executive officer terminates employment prior to the date
specified. All distribution decisions and payments under the Deferred Compensation Plan are subject to compliance with section 409A of the Internal Revenue Code.
While
deferred, amounts are credited with "earnings" as if they were invested as the named executive officer chose in one or more investment options available under the Deferred Compensation Plan. The
named executive officers' accounts under the Deferred Compensation Plan will be adjusted from time to time, up or down, depending upon performance of the investment options chosen.
The
following table provides information relating to the activity in the Deferred Compensation Plan accounts of the named executive officers during fiscal 2010 and the aggregate balance of the
accounts as of May 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Executive
Contributions
in Fiscal 2010
(1)
($)
|
|
|
|
Aggregate
Earnings
in Fiscal 2010
(2)
($)
|
|
|
|
Aggregate
Balance
at May 31, 2010
($)
|
|
|
|
|
Scott D. Farmer
|
|
|
|
|
441,219
|
|
|
|
|
741
|
|
|
|
|
672,159
|
|
|
|
|
William C. Gale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. Frooman
|
|
|
|
|
20,375
|
|
|
|
|
6,799
|
|
|
|
|
63,433
|
|
|
|
|
J. Phillip Holloman
|
|
|
|
|
31,800
|
|
|
|
|
16,334
|
|
|
|
|
127,325
|
|
|
|
|
Michael L. Thompson
|
|
|
|
|
79,552
|
|
|
|
|
42,611
|
|
|
|
|
260,941
|
|
|
-
(1)
-
Executive
contributions are included in the named executive officer's salary and/or non-equity incentive plan compensation, as
applicable and as presented in the Summary Compensation Table.
-
(2)
-
Reflects
the amount of earnings during fiscal 2010 equivalent to the performance of the investment options chosen by the named executive
officer.
26
Table of Contents
POTENTIAL PAYMENTS UPON TERMINATION, RETIREMENT OR CHANGE OF CONTROL
Payments Made Upon Termination
Regardless of the manner in which an executive officer's employment terminates, except for a "for cause" termination, he is entitled to receive
amounts earned during his term of employment. Such amounts include:
-
-
the right to exercise within 60 days of termination all vested stock options granted under Cintas equity
compensation plans as reflected in the Outstanding Equity Awards at Fiscal 2010 Year-End table;
-
-
amounts contributed, earned and vested under the Cintas Partners' Plan;
-
-
amounts contributed and earned under the Deferred Compensation Plan as reflected in the Nonqualified Deferred Compensation
for Fiscal 2010 table.
In
addition, if Cintas elects to terminate an executive officer, he will receive four weeks written notice or four weeks of base salary instead of notice. Generally, Cintas makes no payments to
executives terminated for cause. Cintas has no policy regarding severance payments.
Payments Made Upon Retirement
In the event of the retirement of an executive officer, he is entitled to receive amounts earned during his term of employment. Such amounts
include:
-
-
the right to exercise within one year of retirement all vested stock options granted under Cintas equity compensation
plans as reflected in the Outstanding Equity Awards at Fiscal 2010 Year-End table;
-
-
amounts contributed and vested under the Cintas Partners' Plan;
-
-
amounts contributed and earned under the Deferred Compensation Plan as reflected in the Nonqualified Deferred Compensation
for Fiscal 2010 table.
Cintas
has no policy regarding retirement arrangements.
Payments Made Upon Death or Disability
In the event of the death or disability of an executive officer, in addition to the benefits listed under the heading "Payments Made Upon Retirement"
above, the named executive officer will receive benefits under Cintas' disability plan or payments under Cintas' life insurance plan, as appropriate. These payments are generally available to all
employees.
Payments Made Upon a Change of Control
Cintas has no policy regarding payments made upon a change of control.
27
Table of Contents
NONEMPLOYEE DIRECTOR COMPENSATION FOR FISCAL 2010
For fiscal 2010, Directors who are not employees of Cintas received a $40,000 cash annual retainer, payable quarterly, plus an additional $2,750 for
each meeting attended. Directors received $1,375 for each telephonic meeting attended. Committee members also received $1,200 for each Committee meeting attended and $600 for attending each telephonic
Committee meeting. Committee Chairmen (other than the Audit Committee Chairman) received an additional fee of $5,000. The Audit Committee Chairman received an additional fee of $8,000. Directors are
also reimbursed for reasonable out-of-pocket travel expenses incurred in connection with attendance at Board or Committee meetings. Directors who are employees of Cintas are
not separately compensated for serving as Directors.
Directors
also receive upon annual election or appointment to the Board restricted stock valued at $41,000 based on the closing market price of Cintas stock on the date preceding the grant and options
to purchase Cintas stock valued at $41,000 based on the fair value of these options estimated at the date preceding the grant using a Black-Scholes option-pricing model. The value of the grants is
prorated for Directors appointed to the Board in the middle of the year. With the exception of Mr. Scaminace, each nonemployee Director was therefore granted 1,386 shares of restricted stock
and an option to purchase 3,947 shares of Cintas stock at an exercise price equal
to the closing market price on the date of grant of October 20, 2009. Mr. Scaminace was appointed to the Board on April 26, 2010, and was granted 692 shares of restricted stock
and an option to purchase 1,994 shares of Cintas stock at an exercise price equal to the closing market price on the date of grant. The restricted stock awards vest 100% after three years from the
date of grant. The stock options vest 25% per year, beginning on the first anniversary of the grant.
Nonemployee
directors may choose to defer all or part of these fees into Cintas stock equivalents with dividends or into a deferred account that earns interest at a rate equal to one-year
U.S. Treasury Bills, determined as of the preceding December 31, increased by 100 basis points. Deferred fees are payable either in a lump sum or over a period of 12 to 120 monthly
installments beginning in the month selected by the Director, but in no case later than the first month after the Director leaves the Board.
The
following table details fiscal 2010 compensation paid to nonemployee directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Fees Earned
or Paid
in Cash
(1)
($)
|
|
|
|
Stock
Awards
(2)
($)
|
|
|
|
Option
Awards
(2)
($)
|
|
|
|
Total
($)
|
|
|
|
|
Gerald S. Adolph
|
|
|
|
|
57,000
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
137,666
|
|
|
|
|
Paul R. Carter
(3)
|
|
|
|
|
33,700
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
114,366
|
|
|
|
|
Gerald V. Dirvin
|
|
|
|
|
63,200
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
143,866
|
|
|
|
|
Joyce Hergenhan
|
|
|
|
|
57,000
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
137,666
|
|
|
|
|
James J. Johnson
|
|
|
|
|
83,232
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
163,898
|
|
|
|
|
David C. Phillips
|
|
|
|
|
67,400
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
148,066
|
|
|
|
|
Joseph Scaminace
(4)
|
|
|
|
|
15,150
|
|
|
|
|
19,646
|
|
|
|
|
18,783
|
|
|
|
|
53,579
|
|
|
|
|
Ronald W. Tysoe
|
|
|
|
|
91,432
|
|
|
|
|
40,485
|
|
|
|
|
40,180
|
|
|
|
|
172,098
|
|
|
-
(1)
-
Represents
the amount of cash compensation earned in fiscal 2010 for Board and Committee service. A director may choose to have all or part of
his or her compensation
28
Table of Contents
deferred
in the form of Cintas stock or one-year U.S. treasury bills plus 100 basis points. The Directors who invested in Cintas stock would receive earnings equal to any other
shareholder who invested like money at the same time during fiscal 2010. Mr. Adolph, Mr. Carter, Mr. Johnson, Mr. Phillips and Mr. Tysoe chose to receive all or a
portion of their fees in Cintas stock as described above. Mr. Adolph received 1,093 shares, Mr. Carter received 1,270 shares, Mr. Johnson received
1,009 shares, Mr. Phillips received 2,547 shares and Mr. Tysoe received 1,749 shares.
-
(2)
-
The
compensation cost associated with restricted stock and stock options is the aggregate grant date fair value of awards granted during the
fiscal year calculated in accordance with the stock-based compensation accounting rules set forth in Financial Accounting Standards Board Accounting Standards Codification Topic 718.
-
(3)
-
Paul
R. Carter passed away on October 31, 2009.
-
(4)
-
Joseph
Scaminace was appointed to the Board on April 26, 2010.
Outstanding
option awards for each director at May 31, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Options
Outstanding
(#)
|
|
|
|
|
Gerald S. Adolph
|
|
|
|
|
13,092
|
|
|
|
|
Gerald V. Dirvin
|
|
|
|
|
18,092
|
|
|
|
|
Joyce Hergenhan
|
|
|
|
|
15,092
|
|
|
|
|
James J. Johnson
|
|
|
|
|
6,416
|
|
|
|
|
David C. Phillips
|
|
|
|
|
16,092
|
|
|
|
|
Joseph Scaminace
|
|
|
|
|
1,994
|
|
|
|
|
Ronald W. Tysoe
|
|
|
|
|
10,092
|
|
|
29
Table of Contents
PRINCIPAL SHAREHOLDERS
The following table sets forth the names and addresses of the only shareholders known by Cintas to own beneficially 5% or more of its outstanding
Common Stock as of August 27, 2010:
|
|
|
|
|
|
|
|
|
|
Name of
Beneficial Owner
|
|
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class
|
|
Scott D. Farmer
(1)
|
|
|
15,460,007
|
(4)
|
|
10.3
|
%
|
First Eagle Investment Management, LLC
(2)
|
|
|
15,188,254
|
|
|
10.1
|
%
|
Fiduciary Management, Inc.
(3)
|
|
|
8,910,942
|
|
|
5.9
|
%
|
-
(1)
-
The
mailing address of Scott D. Farmer is Cintas Corporation, 6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, Ohio
45262-5737.
-
(2)
-
The
mailing address of First Eagle Investment Management, LLC is 1345 Avenue of the Americas, New York, New York 10105.
-
(3)
-
The
mailing address of Fiduciary Management, Inc. is 100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
-
(4)
-
Includes
14,083,880 shares held by limited partnerships, 723,669 shares held in trust for the benefit of Mr. S. D.
Farmer's children and 4,038 shares owned by Mr. S. D. Farmer's wife. Mr. S. D. Farmer has sole voting and dispositive power over the shares held by limited
partnerships, and the limited partners are members of the Richard T. Farmer family and trusts for their benefit. Mr. S. D. Farmer disclaims beneficial ownership of the shares held
by the limited partnerships except to the extent of his pecuniary interest.
30
Table of Contents
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table shows the amount of Cintas Corporation Common Stock each director and named executive officer named in the Summary Compensation
Table owned on August 27, 2010:
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|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
Beneficially Owned
(1)
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|
Name and Age of
Beneficial Owner
|
|
Position
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class
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|
Scott D. Farmer
51
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Chief Executive Officer and Director
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15,460,007
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(2)
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10.3
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%
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Richard T. Farmer
75
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|
Chairman Emeritus of the Board
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3,056,885
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(3)
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2.0
|
%
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Robert J. Kohlhepp
66
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|
Chairman of the Board
|
|
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845,662
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(4)
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*
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Gerald S. Adolph
56
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Director
|
|
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11,949
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|
|
*
|
|
Gerald V. Dirvin
73
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|
Director
|
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41,191
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|
|
*
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|
Joyce Hergenhan
68
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|
Director
|
|
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14,949
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|
|
*
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|
James J. Johnson
63
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Director
|
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3,918
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|
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*
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|
David C. Phillips
72
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Director
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|
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16,049
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(5)
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|
*
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|
Joseph Scaminace
57
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Director
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692
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|
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*
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Ronald W. Tysoe
57
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Director
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7,949
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|
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*
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William C. Gale
58
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Senior Vice President and Chief Financial Officer
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89,299
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|
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*
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Thomas E. Frooman
43
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Vice President and Secretary General Counsel
|
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98,117
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|
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*
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J. Phillip Holloman
54
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|
President and Chief Operating Officer
|
|
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72,231
|
|
|
*
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|
Michael L. Thompson
44
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|
Vice President and Treasurer
|
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48,117
|
|
|
*
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|
All Directors and Executive Officers as a Group (14 persons)
|
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19,767,015
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(6)
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|
13.2
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%
|
-
*
-
Less
than 1%
-
(1)
-
Included
in the amount of Common Stock beneficially owned are the following shares of Common Stock for options exercisable within
60 days: Mr. S. D. Farmer 55,000 shares; Mr. Adolph 7,310 shares; Mr. Dirvin 12,310 shares;
Ms. Hergenhan 9,310 shares; Mr. Johnson 1,605 shares; Mr. Phillips 10,310 shares;
Mr. Tysoe 4,060 shares;
31
Table of Contents
Mr. Gale
19,250 shares; Mr. Frooman 59,500 shares; Mr. Holloman 21,100 shares and
Mr. Thompson 12,600 shares.
-
(2)
-
See
Principal Shareholders on page 30.
-
(3)
-
Includes
2,529,842 shares owned by a corporation and a limited partnership controlled by Mr. Farmer, 519,415 shares owned by
Mr. Farmer's wife and 6,490 shares held by a family partnership.
-
(4)
-
Includes
80,000 shares held in trust for members of Mr. Kohlhepp's family.
-
(5)
-
Includes
500 shares held by a family trust.
-
(6)
-
Includes
options for 212,355 shares, which are exercisable within 60 days.
The
following is a description of our non-director named executive officers:
William
C. Gale joined Cintas in April 1995 as Vice President Finance and Chief Financial Officer. He was appointed Senior Vice President in July 2003. He is responsible for
finance, accounting and administration.
Thomas
E. Frooman joined Cintas in December 2001 as Vice President and Secretary General Counsel.
J.
Phillip Holloman joined Cintas in 1996. He has held various positions within Cintas, including Vice President Engineering/Construction from 1996 to 2000, Vice President of the
Distribution/Production Planning Division from 2000 to 2003, Executive Champion of Six Sigma Initiatives from 2003 to 2005 and Senior Vice President Global Supply Chain Management from 2005 to 2008.
He was appointed President and Chief Operating Officer in February 2008.
Michael
L. Thompson joined Cintas in 1994. He has held various positions within Cintas, including Director of Corporate Development and Corporate Controller. He was elected Vice President and
Treasurer in January 2006. On June 1, 2010, he was appointed Senior Vice President, Facility Services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Cintas' executive officers, directors and persons who own more than ten percent
of Cintas' Common Stock to file reports of ownership with the Commission and to furnish Cintas with copies of these reports. Based solely upon its review of reports received by it, or upon written
representation from certain reporting persons that no reports were required, Cintas believes that during fiscal 2010 all filing requirements were met.
32
Table of Contents
RELATED PERSON TRANSACTIONS
Cintas Corporation has a 25% interest in a corporate airplane with its Chairman Emeritus, Richard T. Farmer and his wholly owned company. This
arrangement began on February 23, 2006. Cintas manages the airplane under an operating agreement whereby each party pays their own operating expenses for use of the plane, and common costs are
shared based on ownership percentages. For fiscal 2010, Cintas was reimbursed $1,140,750 under this arrangement.
Cintas
engages Keating Muething & Klekamp PLL for a variety of legal services. Robert E. Coletti, a partner of the firm, is an in-law of Richard T. and Scott D.
Farmer. Cintas paid the firm fees of $8,496,509 for legal services during the fiscal year ended May 31, 2010. Mr. Coletti does not receive any direct compensation from fees paid by
Cintas to the firm.
Cintas
engages Frost Brown Todd LLC for a variety of legal services. Scott D. Phillips, a partner of the firm, is the son of David C. Phillips and James C. Frooman, a
partner of the firm, is the brother of Thomas E. Frooman. Cintas paid the firm fees of $123,604 for legal services during the fiscal year
ended May 31, 2010. Mr. S. D. Phillips and Mr. J. C. Frooman do not receive any direct compensation from fees paid by Cintas to the firm.
Joseph
Automotive Group engages Cintas for a variety of services. George R. Joseph, a principle and part owner, is an in-law of Richard T. and Scott D. Farmer. Joseph
Automotive Group paid Cintas fees of $340,639 for services provided during the fiscal year ending May 31, 2010. Mr. Joseph does not receive any direct compensation from services provided
by Cintas to the company.
Certain
stock exchange rules require Cintas to conduct an appropriate review of all related party transactions (those required to be disclosed by Cintas pursuant to SEC
Regulation S-K Item 404) for potential conflict of interest situations on an ongoing basis and that all such transactions must be approved by the Audit Committee or another
committee comprised of independent directors. As a result, the Audit Committee annually reviews all such related party transactions and approves such related party transactions only if it determines
that it is in the best interests of Cintas. In considering the transaction, the Audit Committee may consider all relevant factors, including as applicable (i) Cintas' business rationale for
entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third
parties, or in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards
imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to Cintas.
While
Cintas adheres to this policy for potential related person transactions, the policy is not in written form (other than as part of listing agreements with stock exchanges to the extent required).
However, approval of such related person transactions is evidenced by Audit Committee resolutions in accordance with our practice of approving transactions in this manner.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
(Item 2 on the Proxy Card)
Although not required, the Board is seeking shareholder ratification of the selection by the Audit Committee of Ernst & Young LLP as
Cintas' independent registered public accounting firm for fiscal 2011. If shareholders do not ratify this selection, the Audit Committee intends to continue the employment of Ernst &
Young LLP at least through fiscal 2011, as the new fiscal year has already commenced. However, the Audit Committee will take the vote into account in selecting the independent registered public
accounting firm for fiscal 2012. Representatives of Ernst & Young LLP
33
Table of Contents
are
expected to be present at the Annual Meeting and will have an opportunity to make a statement, if they desire to do so, and to respond to appropriate questions that may be asked by shareholders.
PROPOSALS FOR NEXT YEAR
Shareholders who desire to have proposals included in the Notice for the 2011 Shareholders' Meeting must submit their proposals in writing to Cintas
at its offices on or before May 19, 2011, and must comply with any and all requirements set forth in Cintas' Bylaws as such may be amended from time to time.
The
form of Proxy for Cintas' Annual Meeting of Shareholders grants authority to the designated proxies to vote in their discretion on any matters that come before the meeting except those set forth
in Cintas' proxy statement and except for matters as to which adequate notice is received. In order for a notice to be deemed adequate for the 2011 Shareholders' Meeting, it must be received prior to
August 3, 2011.
Cintas'
Bylaws require that items of new business and nominees for director be presented at least 90 days prior to the date of the meeting. If there is a change in the anticipated date of next
year's Annual Meeting or these deadlines by more than 30 days, Cintas will notify all shareholders of this change through Form 8-K, 10-Q or 10-K
filings.
OTHER MATTERS
Cintas knows of no other matters to be presented at the meeting other than those specified in the Notice.
QUESTIONS?
If you have questions or need more information about the annual meeting, write to:
Thomas
E. Frooman
Vice President and Secretary General Counsel
6800 Cintas Boulevard
P. O. Box 625737
Cincinnati, Ohio 45262-5737
or
call (513) 459-1200.
For
information about your record holding, call Wells Fargo at 1-800-468-9716. We also invite you to visit Cintas' Internet site at www.cintas.com. Internet site
materials are for your general information and are not part of this proxy solicitation.
34
|
BARCODE 1 OF 2
12 15 See the reverse side of this notice to obtain proxy materials and
voting instructions. Broadridge Internal Use Only Job # Envelope # Sequence #
# of # Sequence # *** Exercise Your Right to Vote *** Important Notice
Regarding the Availability of Proxy Materials for the Shareholder Meeting to
Be Held on You are receiving this communication because you hold shares in
the above named company. This is not a ballot. You cannot use this notice to
vote these shares. This communication presents only an overview of the more
complete proxy materials that are available to you on the Internet. You may
view the proxy materials online at www.proxyvote.com or easily request a
paper copy (see reverse side). We encourage you to access and review all of the
important information contained in the proxy materials before voting. Meeting
Information Meeting Type: For holders as of: Date: Time: Location:
0000074611_1 R2.09.05.010 CINTAS CORPORATION CINTAS CORPORATION 6800 CINTAS
BOULEVARD P.O. BOX 625737 CINCINNATI, OH 45262-5737 ATTN: JUDY GIRTY Investor
Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor
Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY
CITY, ON A1A 1A1 Annual Meeting August 27, 2010 October 26, 2010 October 26,
2010 10:00 AM EDT Cintas Corporation 6800 Cintas Blvd Cincinnati, OH 45262
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|
Internal Use
Only Please Choose One of the Following Voting Methods Vote In Person: Many
shareholder meetings have attendance requirements including, but not limited
to, the possession of an attendance ticket issued by the entity holding the
meeting. Please check the meeting materials for any special requirements for
meeting attendance. At the meeting, you will need to request a ballot to vote
these shares. Vote By Internet: To vote now by Internet, go to
www.proxyvote.com. Have the information that is printed in the box marked by
the arrow available and follow the instructions. Vote By Mail: You can vote
by mail by requesting a paper copy of the materials, which will include a
proxy card. How To Vote XXXX XXXX XXXX Before You Vote How to Access the
Proxy Materials Proxy Materials Available to VIEW or RECEIVE: How to View
Online: Have the information that is printed in the box marked by the arrow
(located on the following page) and visit: www.proxyvote.com. How to Request
and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail
copy of these documents, you must request one. There is NO charge for
requesting a copy. Please choose one of the following methods to make your
request: 1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3)
BY E-MAIL*: sendmaterial@proxyvote.com * If requesting materials by e-mail,
please send a blank e-mail with the information that is printed in the box marked
by the arrow (located on the following page) in the subject line. XXXX XXXX
XXXX XXXX XXXX XXXX 0000074611_2 R2.09.05.010 1. Notice & Proxy Statement
2. Form 10-K Requests, instructions and other inquiries sent to this e-mail
address will NOT be forwarded to your investment advisor. Please make the
request as instructed above on or before October 12, 2010 to facilitate
timely delivery.
|
|
BARCODE
Broadridge Internal Use Only xxxxxxxxxx xxxxxxxxxx Cusip Job # Envelope #
Sequence # # of # Sequence # 0000 0000 0000 Voting items 0000074611_3
R2.09.05.010 The Board of Directors recommends a vote FOR the following: 1.
Election of Directors Nominees 1a. Gerald S. Adolph 1b. Richard T. Farmer 1c.
Scott D. Farmer 1d. James J. Johnson 1e. Robert J. Kohlhepp 1f. David C.
Phillips 1g. Joseph Scaminace 1h. Ronald W. Tysoe The Board of Directors
recommends a vote FOR the following proposal: 2 To ratify Ernst & Young
LLP as our independent registered public accounting firm for fiscal year
2011. NOTE: Such other business as may properly come before the meeting or
any adjournment thereof.
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THIS SPACE
RESERVED FOR SIGNATURES IF APPLICABLE Reserved for Broadridge Internal
Control Information Broadridge Internal Use Only Job # Envelope # Sequence #
# of # Sequence # NAME THE COMPANY NAME INC. - COMMON 123,456,789,012.12345
THE COMPANY NAME INC. - CLASS A 123,456,789,012.12345 THE COMPANY NAME INC. -
CLASS B 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS C
123,456,789,012.12345 THE COMPANY NAME INC. - CLASS D 123,456,789,012.12345
THE COMPANY NAME INC. - CLASS E 123,456,789,012.12345 THE COMPANY NAME INC. -
CLASS F 123,456,789,012.12345 THE COMPANY NAME INC. - 401 K
123,456,789,012.12345 0000074611_4 R2.09.05.010
|
|
000000000000
NAME THE COMPANY NAME INC. - COMMON 123,456,789,012.12345 THE COMPANY NAME
INC. - CLASS A 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS B
123,456,789,012.12345 THE COMPANY NAME INC. - CLASS C 123,456,789,012.12345
THE COMPANY NAME INC. - CLASS D 123,456,789,012.12345 THE COMPANY NAME INC. -
CLASS E 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS F
123,456,789,012.12345 THE COMPANY NAME INC. - 401 K 123,456,789,012.12345 x
02 0000000000 JOB # 1 OF 2 1 OF 2 PAGE SHARES CUSIP # SEQUENCE # THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS: Signature (Joint Owners) Signature [PLEASE SIGN WITHIN
BOX] Date Date CONTROL # SHARES 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0000074699_1 R2.09.05.010 CINTAS CORPORATION 6800 CINTAS BOULEVARD
P.O. BOX 625737 CINCINNATI, OH 45262-5737 ATTN: JUDY GIRTY Investor Address
Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line
4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A
1A1 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3
Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE
STREET ANY CITY, ON A1A 1A1 The Board of Directors recommends a vote FOR the
following: For Against Abstain 1. Election of Directors 1a. Gerald S. Adolph
1b. Richard T. Farmer 1c. Scott D. Farmer 1d. James J. Johnson 1e. Robert J.
Kohlhepp 1f. David C. Phillips 1g. Joseph Scaminace 1h. Ronald W. Tysoe The
Board of Directors recommends a vote FOR the following proposal: For Against
Abstain 2 To ratify Ernst & Young LLP as our independent registered
public accounting firm for fiscal year 2011. NOTE: Such other business as may
properly come before the meeting or any adjournment thereof. Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation
or partnership, please sign in full corporate or partnership name, by
authorized officer. VOTE BY INTERNET - www.proxyvote.com Use the Internet to
transmit your voting instructions and for electronic delivery of information
up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting
instruction form. Electronic Delivery of Future PROXY MATERIALS If you would
like to reduce the costs incurred by our company in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access
proxy materials electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you call and then follow
the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Form 10-K is/are available at
www.proxyvote.com. CINTAS CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS The undersigned hereby appoints Robert J. Kohlhepp, Scott D.
Farmer and William C. Gale and each or any of them, with full power of
substitution, as proxies to vote at the Annual Meeting of Shareholders of
Cintas Corporation (the "Company") to be held at Cintas
Headquarters, 6800 Cintas Boulevard, Cincinnati, Ohio, on Tuesday, October 26,
2010, at 10:00 AM, Eastern Daylight Time, and at any postponement or
adjournment thereof, hereby revoking any proxies heretofore given, all shares
of common stock of the Company, which the undersigned would be entitled to
vote as directed on the reverse side, and, in their discretion, upon such
other matters as may come before the meeting or any postponement of
adjournment thereof. This proxy, when properly executed, will be voted in the
manner directed herein. If no such direction is made, this proxy will be
voted in accordance with the Board of Directors' recommendations. Continued
and to be signed on reverse side 0000074699_2 R2.09.05.010
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