2014 Proxy Statement



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Proposal		Vote Required
Proposal 1 – Election of nominees for director		Plurality vote: the nominees receiving the greatest number of “for” votes cast at the Annual Meeting by proxy or by ballot will be elected. A properly executed proxy card marked “withhold” with respect to the election of the nominees will not be voted.

Proposal 2 – The Davey Tree Expert Company 2014 Omnibus Stock Plan		Affirmative vote of the holders of a majority of the common shares outstanding and entitled to vote at the Annual Meeting.

Proposal 3 – Advisory approval of Named Executive Officer Compensation		Affirmative vote of the holders of a majority of the common shares entitled to vote and represented in person or by Proxy at the Annual Meeting.

Our Board of Directors is now composed of seven directors and two vacancies, three directors in the class whose terms expire in 2014, one director and two vacancies in the class whose terms expire in 2015 and three directors in the class whose terms expire in 2016. Each of our directors serves for a term of three years and until a successor is elected. If the shareholders vote to elect the nominees listed, two vacancies will exist after the Annual Meeting. The Company believes the current directors and the director nominee have the skills and dedication necessary to guide the Company's overall strategic objectives and policies and will not recommend a candidate simply because a vacancy exists. That being said, the Corporate Governance Committee is actively searching for qualified candidates to fill the existing vacancies, but has not identified nominees at this time.

Nominees for Director Whose Terms Will Expire in 2014



	J. Dawson Cunningham, age 67, has been a director of the Company since 2005. He was Executive Vice President and Chief Financial Officer of Roadway Corporation (“Roadway”), an over-the-road truck transport operation, from 1998 until his retirement in 2003. Prior to that, he held various positions as an officer of Roadway beginning in 1986. Mr. Cunningham previously served as Co-Chairman of the Board of Trustees, New York State Teamsters Council Health and Hospital Fund and Conference Pension and Retirement Fund, having served as a trustee since 1992, and was a trustee of the New England Teamster and Trucking Industry Pension Fund from 1996 until January 2007. He served as a member of the Board of Trustees of Akron General Health System, serving as Chairman from 1998 to 2003. He is a past member of the board of directors of the American Red Cross and Junior Achievement.
	Sandra W. Harbrecht, age 64, has been a director of the Company since 2008. She has been President and Chief Executive Officer of Paul Werth Associates, a public relations firm, since 2008 and was President since 1985. Prior to that, she was a Credit Analyst for Bank One, Columbus NA and also an educator for ten years in the Worthington City School system. She is past Chair of the Board of Trustees for Kent State University and serves on the Dean’s Advisory Councils for the Fisher College of Business and the College of Engineering at The Ohio State University. She is also the immediate past Chair of Experience Columbus and a former board member of the Columbus Chamber of Commerce, an accredited member of the Public Relations Society of America, a past chair of the Society’s Counselors Academy and a founding member of the Council of Public Relations Firms. Ms. Harbrecht also serves as a director on the board of the Motorists Mutual Insurance Company, a regional insurance firm.

New Director Nominee Whose Term Would Expire in 2017



	Patrick M. Covey, age 50, has been with the Company since 1991. He has been Chief Operating Officer since February 2012. Mr. Covey was previously appointed to Executive Vice President, Operations in 2007. Prior to that, Mr. Covey served as Vice President and General Manager of the Davey Resource Group and as Vice President, Southern Operations, Utility Services. Mr. Covey has also held various managerial positions with the Company including Manager of Systems and Process Management and Administrative Manager, Utility Services. Mr. Covey holds a bachelor of business administration degree in accounting and finance from the University of Wisconsin - Madison. He is a certified public accountant. Mr. Covey is a board member of Environmental Design, Inc., of Houston, Texas. He also serves on the Junior Achievement of North Central Ohio Board of Directors, as well as the Portage County Development Board. He is a member of the International Society of Arboriculture ("ISA"), Tree Care Industry Association ("TCIA"), and is a member of the American Institute of Certified Public Accountants ("AICPA").

Present Director Whose Term Expires in 2015



	Karl J. Warnke, age 63, has been a director of the Company since 2000 and became Chairman of the Board on May 20, 2009. He was President and Chief Operating Officer from 1999 through December 31, 2006, and has been President and Chief Executive Officer since January 1, 2007. Prior to that, Mr. Warnke was Executive Vice President of the Company from 1993 to 1999 and was Vice President and General Manager, U.S. Utility Services and Operations Support, from 1988 to 1993. Mr. Warnke is a member of the Conference Board’s Executive Council for Mid-Cap Companies, and is a member of the executive committees of the Greater Akron Chamber Board of Directors and the Board of Trustees for the Ohio Chapter of The Nature Conservancy. He was also appointed as a director of the Casey Tree Foundation, a nonprofit organization focused on urban forestry, in Washington, D.C., in 2010.

Present Directors Whose Term Expires in 2016



	William J. Ginn, age 62, has been a director of the Company since 2007. He was named Executive Vice President of The Nature Conservancy, an international nonprofit conservation organization, in 2014, and prior to that was the Chief Conservation Officer. He has also served that organization as its Director of the Global Forest Partnership, Manager of Division Conservation Programs-NEC, and as Senior Advisor to the Asia Pacific Region. Before joining The Nature Conservancy, Mr. Ginn developed one of the first major U.S. companies in the organic recycling area, which was later sold to a Fortune 500 solid-waste management company. He has also taught courses in economics and environment as a visiting faculty member at the College of the Atlantic.
	Douglas K. Hall, age 62, has been a director of the Company since 1998. He retired in February 2008 after serving since 1999 as President and Chief Executive Officer of MDA Federal, Inc. (“MDA Federal”) (formerly Earth Satellite Corporation), a subsidiary of MDA Corporation, a provider of remote sensing systems and data utilizing geographic information systems ("GIS"). Prior to joining MDA Federal, he was Vice President and Chief Operations Officer of The Nature Conservancy, an international nonprofit conservation organization, from 1996 to 1999. From 1993 to 1996, he served as Assistant Secretary for Oceans and Atmosphere and Deputy Administrator of the National Oceanic and Atmospheric Administration ("NOAA") in the U.S. Department of Commerce. He currently serves as a senior fellow for the World Wildlife Fund in Washington, D.C.



	John E. Warfel, age 65, has been a director of the Company since 2008. Mr. Warfel is owner of Warfel Group, Inc., dba Action Coach, a business coaching firm helping business owners with their strategies and results, and is also currently President of Warfel Enterprises, LLC, a consulting company. He had been President of Westfield Financial Corporation, a diverse group of financial services and related companies operating in the United States and Canada and a member of Westfield Group, from 2002 until his retirement in 2008. Prior to joining Westfield Financial Corporation, he was Vice Chairman and President of Oswald Companies, a large regional insurance firm, from 1975 to 2002. He is past President of the Insurance Board of Greater Cleveland, a member of national and local chapters of Property and Casualty Underwriters, past Vice President of the Ohio ESOP Association, past member of the Board of Trustees of Assurex Global, past Chairman of Employees Resource Council, and past board member and Secretary/Treasurer of the National American Heart Association.

The New Plan provides that awards may, in the discretion of the Committee, be subject to conditions established by the Committee, including future service with the Company or the achievement of specific performance objectives. These performance objectives may be based on any of the following business criteria, either alone or in any combination, and on either a consolidated or business unit level: return on net assets, return on equity, return on invested capital, total shareholder return, equity valuation, economic value added, completion of acquisitions, product and market development, technology development, inventory management, working capital management, customer satisfaction, sales, revenue, operating income, cash flow, net income, earnings per share, and other GAAP and non-GAAP measures of financial performance, including earnings before interest and taxes, earnings before interest, taxes, depreciation, and amortization, and similar measures. These business criteria may be clarified by reasonable definitions adopted from time to time by the Committee, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or nonrecurring items, effects of accounting changes, effects of currency fluctuations, effects of financing activities, expenses for restructuring or productivity initiatives, nonoperating items, acquisition expenses, and effects of acquisitions, divestitures, or reorganizations.

Section 162(m) of the Code allows a corporation to take a tax deduction in excess of $1 million per year for compensation paid to certain executive officers. These executives are the Chief Executive Officer, Chief Financial Officer and other employees having total compensation required to be disclosed in the proxy statement by nature of being the three highest compensated officers for the tax year. Compensation that is contingent on the attainment of performance objectives is excluded from the $1 million limit and is, therefore, deductible without regard to that limit. Although it is possible that the attainment of performance objectives may in the future technically enable the Company to deduct compensation in excess of this limit, the Company does not expect or anticipate, in the foreseeable future, to pay to executive officers compensation that exceeds the limit.

In the event of a change in control of the Company, unless the Board of Directors determines otherwise, (i) all outstanding stock options, stock appreciation rights, and stock purchase rights become fully exercisable, (ii) all restrictions and conditions applicable to restricted stock and other awards exercisable for common shares will be deemed to have been satisfied, and (iii) all cash awards will be deemed to have been fully earned. For purposes of the New Plan, a “change in control” generally means that any of the following events has occurred: (1) any person (other than the Company) becomes the beneficial owner of 20% of the common shares of the Company then outstanding; (2) at any time during a period of 24 consecutive months, continuing directors represent less than a majority of the member of the Board of Directors; or (3) a record date is established for determining shareholders entitled to vote upon (a) a merger or consolidation of the Company (if the persons who hold common shares of the Company immediately prior to the merger or consolidation will, immediately after the merger or consolidation, hold less than 80% of the outstanding voting securities of the surviving or resulting entity or its parent), (b) a sale or other disposition of all or substantially all of the assets of the Company, or (c) the dissolution of the Company.

Restricted Stock. Unless an employee makes an election under Section 83(b) of the Code, the employee will recognize no income, and the Company will be entitled to no deduction, at the time restricted stock is awarded to the employee. When the restrictions lapse or are otherwise removed, the employee will recognize compensation income equal to the excess of the fair market value of the restricted stock at that time over the amount, if any, paid by the employee for the restricted stock, and the Company will be entitled to a deduction in the same amount. Dividends paid on restricted stock during any restriction period will, unless the employee has made an election under Section 83(b) of the Code, constitute compensation income, and the Company will be entitled to a deduction in the same amount. Upon disposition of common shares after the restrictions lapse or are otherwise removed, any gain or loss realized by an employee will be treated as capital gain or loss.

Stock Appreciation Rights, Restricted Stock Units, and Performance Restricted Stock Units. The grant of stock appreciation rights, restricted stock units, and performance restricted stock units will have no immediate tax consequences to the Company or the employee receiving the grant. The amount received by the employee upon the exercise of the stock appreciation rights will be included in the employee's ordinary income in the taxable year in which the stock appreciation rights are exercised, and the Company will be entitled to a deduction in the same amount in that year. In general, at the time the Company pays any amount to the employee with respect to the restricted stock units or the performance restricted stock units, the employee will recognize compensation income equal to the amount of that payment, and the Company will be entitled to a deduction in that amount.

In general, the exercise of a stock purchase right under a stock purchase program that does meet the requirements of Section 423 of the Code (a "Section 423 Right") will receive the same treatment as the exercise of an incentive stock option, described above, with the following differences. If the employee disposes of the stock before minimum holding-period requirements are satisfied, the amount of ordinary income recognized by the employee will be the difference between the fair market value of the stock at the time of exercise and the exercise price. If, after minimum holding-period requirements are satisfied, the employee disposes of stock received on exercise of a Section 423 Right at an exercise price of less than 100% of the fair market value of the stock at the time of grant, or dies at any time while holding such stock, the employee will recognize ordinary income in an amount equal to the lesser of the fair market value of the stock at the time of disposition (or the date of death) or the fair market value of the stock at the time of grant over the exercise price. Any additional gain or loss to the employee on a disposition of such stock will be capital, and the amount of any ordinary income will be added to basis for purposes of determining the amount of such gain or loss.

This proposal gives our shareholders the opportunity to express their views on the compensation of our Named executive officers. This vote is not intended to address any specific item of compensation or any single compensation philosophy, policy or practice, but rather the overall compensation of our Named executive officers as described in this Proxy Statement. While the Board of Directors values the opinions of our shareholders, the say-on-pay vote is advisory and is not binding on the Company, the Board of Directors or the Compensation Committee. However, we did consider the results of the advisory vote last taken in 2011 and, due to the strong support demonstrated by our shareholders, determined that no immediate changes to the compensation plan for our Named executive officers were necessary. We will consider the results of the vote when evaluating the perception of our plans by the shareholders and will continue, as has been our ongoing practices, to evaluate whether any future actions will be advisable to address those concerns.

We believe the Board should represent a broad and diversified spectrum of experienced and qualified individuals who are able to contribute to our success. The Corporate Governance Committee is responsible for the review of and recommendation to the Board of Directors nominees for election as directors. The Committee works with the full Board to develop criteria for open Board positions, taking into account the factors that it deems appropriate. These factors may include identifying a nominee whose array and diversity of talents, experiences, qualifications, personal attributes, and skills would complement those already represented on the Board; the level of independence from us; our current needs, business priorities, objectives and goals; and the need for a certain specialized expertise. In applying these criteria, the Committee considers a candidate’s general understanding of elements relevant to the success of a service company in the current business environment, the understanding of our business and our risk factors, senior operating experience with a service company or other organizations, a broad understanding of and direct experience in corporate business and service delivery, as well as the candidate’s educational and professional background. The Board believes that diversity of professional experience, professional training and personal accomplishments are important factors in determining the composition of the Board. The Committee considers candidates suggested by other Board members, management and shareholders. The Committee may also retain a qualified independent third-party search firm to identify and review candidates.

The Board reviews, at least annually, director independence. As part of that review, the Board considers transactions and relationships between each director and any member of his or her family and the Company and its subsidiaries and affiliates. All such relationships are reported under the heading “Transactions with Related-Persons, Promoters and Certain Control Persons” in this Proxy Statement. The purpose of this review is to determine whether any relationships or transactions existed or exist that could be considered inconsistent with a determination that the director is independent. Although our common shares are not listed on the New York Stock Exchange (“NYSE”) or any other exchange, with respect to determining if a director or a director nominee is independent, we use the same definition of independence as used by the NYSE, a national securities exchange.

The present members of the Compensation Committee are Messrs. Cunningham (Chair), Ginn, Hall, and Warfel. The Compensation Committee, which must be composed entirely of independent directors, as that term is defined by the NYSE, recommends to the Board of Directors the salaries and other compensation of our executive officers and supervises the administration of our benefit programs. As more fully set out in the “Compensation Discussion and Analysis” in this Proxy Statement, the Compensation Committee does not delegate its authority to set compensation; however, the Board does review recommendations from our Chief Executive Officer regarding the compensation of other officers. Furthermore, the Committee periodically retains outside consultants to review and discuss compensation and benefit plans. The Compensation Committee met two times in 2013.

When utilized, the outside consultants are provided with specific instructions relating to the research to be performed. Once engaged to conduct a salary and bonus-level review, the consultants are directed to compare our plans with those of companies of similar size and in similar industries. Similarly, the consultants are directed to compare and contrast benefit plans that are applicable to private and public companies of similar size and with similar governance structures. Findings by the consultants are reviewed by the Committee and with the full Board, which then makes the final decisions regarding compensation. The executive officers were directed to engage Pay Governance LLC (“Pay Governance”) in 2011 to conduct a review of the material features of our compensation structure. The Compensation Committee considered the results of their review in 2012, and as outlined in the “Compensation Discussion and Analysis,” beginning on page 15, made changes to the compensation structure in 2013.

Pay Governance has not provided other professional services to date, including advice related to our insurance and employee benefit programs. In 2013, we paid Pay Governance $3,361 for compensation analysis and review services. In order to perform the services that are required of them, Pay Governance does have access to certain confidential information about us; however, they do not participate in the final strategic decision-making process. Further, Pay Governance is compensated on a fee-based structure and no portion of any payment made to them is dependent upon achieving a certain result or is otherwise commission-based. Based on the foregoing, we have determined that there are no compensation consultant conflicts.

The present members of the Audit Committee are Messrs. Cunningham, Ginn, Hall (Chair), and Ms. Harbrecht. The Audit Committee assists the Board in fulfilling its oversight responsibilities relating to: the integrity of our financial statements; our financial reporting process; our systems of internal accounting and financial controls; the performance of our internal and independent auditors; the independent auditors’ qualifications and independence; and our compliance with ethics policies and legal and regulatory requirements. The members of the Committee meet the independence requirements of the NYSE and the Securities Exchange Act of 1934, as amended. The Board has determined that J. Dawson Cunningham qualifies as an audit committee financial expert pursuant to the SEC’s rules. The Audit Committee met two times in 2013. In addition, the Chair and members met with management and the independent auditors by teleconference four times in 2013.

As further described under “Compensation Risk Analysis,” the Compensation Committee is responsible for the oversight of risks relating to employment policies and our compensation and benefits arrangements. To assist in satisfying these oversight responsibilities, the Committee may retain a compensation consultant and meets regularly with management to understand the financial, human resource and shareholder implications of compensation decisions that are made by the Board. The philosophy, process and rationale the Compensation Committee utilized as part of its responsibilities is discussed in detail in the “Compensation Discussion and Analysis” included in this Proxy Statement on pages 15 through 22.

Mr. Warnke is the Chairman of our Board of Directors, Chief Executive Officer and President. Our Board has the authority to choose its chairman in any way it deems best for us at any given point in time. Historically, we have combined the positions of chief executive officer and chairman. We believe this is appropriate because we are employee-owned, and combining the chairman and chief executive officer positions gives our employee-owners a clear leader and improves efficiencies in the decision-making process. We believe we have greatly benefited from having a single person setting our tone and direction, and having primary responsibility for managing our operations. This structure has also allowed the Board to carry out its oversight responsibilities with the full involvement of our independent directors. To date, the Board’s role in the oversight of risk assessment has not caused it to identify any changes to the current leadership structure. However, our Board believes that there is no single leadership structure that would be most effective in all circumstances and, therefore, retains the authority to modify our leadership structure to best address our circumstances as and when appropriate.

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who own more than ten percent of our common shares to file reports of ownership and changes in ownership of our common shares held by them with the SEC. Currently, we file these reports on behalf of our directors and executive officers. Based on our review of these reports, we believe that during the year ended December 31, 2013, except as noted below, all reports were timely filed. The following Forms 4's were inadvertently filed late: director grant of stock appreciation rights for Messrs. Ginn, Hall, Warfel, Cunningham, Cowan and Ms. Harbrecht; settlement of stock appreciation rights upon retirement for Messrs. Adante, and Gaumer; exercise of incentive stock options by Mr. Johnson; and grants of options to Messrs. Warnke, Covey, Paul, Marshall, Stief, Joy, Ober, Ramsey, Repenning, Vaughn, Sucic, Bast and Mss. Conner and Sears.

We, the members of the Compensation Committee of the Board of Directors, which is composed entirely of independent, nonemployee directors, assist the Board of Directors in carrying out its responsibilities for management succession matters, for developing, approving and administering the Company’s executive incentive and benefits programs, recommending director compensation, and for establishing the salaries for the CEO and the President. Our compensation philosophy is to drive and support the Company’s business goals by compensating for measurable performance and achievement of approved goals, regularly assessing whether the Company’s compensation structure establishes appropriate incentives for management and employees, and validating that awards are made with due consideration of balancing risks and rewards.

In the event of a change in control, as defined in the 2004 Omnibus Stock Plan and as disclosed in the “Plan Benefits--December 31, 2013 ‘as-if’ Triggering Event Occurred” table on page 30, unless the Board of Directors determines otherwise: all outstanding stock appreciation rights, stock options and stock purchase rights become fully exercisable; all restrictions on restricted stock and other awards are removed; and all cash awards become fully earned. Any such determination by the Board of Directors that is made after the occurrence of the change in control will not be effective unless a majority of the “continuing directors” then in office are “continuing directors” and the determination is approved by a majority of the “continuing directors.” For this purpose, “continuing directors” include directors who were in office at the time of the change in control or who were recommended or elected to succeed “continuing directors” by a majority of the “continuing directors” then in office. Other than as outlined above, we have no so-called “golden parachute” severance packages with any NEO.

As disclosed in the 2012 Proxy Statement, in 2011 our shareholders approved on an advisory, nonbinding basis the compensation of our Named executive officers by an overwhelming majority. Specifically, as a percentage, 93.8% of the shares voted were to approve the compensation. Given the strong level of shareholder support, our Board of Directors determined that no immediate changes to our compensation plans were necessary. As has been our practice, we regularly evaluate these plans and recommend changes, as we deem appropriate. As described below, we last reviewed the compensation plans of our Named executive officers in 2012 and recommended changes that were implemented in 2013. Our Board of Directors and the Compensation Committee value the opinions of our shareholders and will continue to evaluate any concerns raised by our shareholders regarding executive compensation.

In 2011, we also asked our shareholders to determine, on an advisory, nonbinding basis, the frequency of the advisory vote on the compensation of our Named executive officers. Again, the vast majority of our shareholders agreed with the Board of Directors recommendation that the advisory, nonbinding vote on the compensation of the Named executive officers be held every three years. As a percentage of shares voted, 78.0% of our shareholders voted for the three-year option, 3.4% voted for the two-year option, 16.1% voted for the one-year option and 2.5% voted to abstain. In accordance with the Board of Directors and shareholder directive, the next advisory vote on Named executive officer compensation will occur at this annual shareholders’ meeting, and the next vote on the frequency of the advisory vote on Named executive officer compensation will occur at the 2017 annual shareholders' meeting.

The main objectives of the compensation programs are to: attract and retain qualified personnel; reward personnel for achieving identified goals and objectives; generate a fair return to shareholders on their investment; and do so in a way consistent with the Company’s culture, business objectives and employee ownership structure. To align executive officer compensation with the interests of the Company’s shareholders, we have established a policy whereby a substantial portion of the compensation of the Company’s executive officers, including the PEO and the PFO as well as the other NEOs, is contingent on the Company’s profitability. The compensation programs also contain components based on achieving a specified operating profit and a return on invested capital results.

In order to meet these objectives, we design the programs such that the Company shareholders’ interests are advanced before we approve any incentive payments to the executive officers. To the extent that the efforts of the executive officers result in higher earnings and enhanced shareholder value, we believe the officers should be rewarded. As a result, we intend the compensation programs to create a significant incentive to properly manage the Company, which in turn will create long-term benefits for the shareholders without encouraging the taking of excessive risks that could be detrimental to the interests of the shareholders. Overall, we do not believe that any aspect of the Company’s compensation programs encourages the NEOs to take unnecessary and excessive risks.

The comprehensive compensation program provides a balanced mix of salary, incentive bonus and equity awards. By creating a program that includes both long- and short-term goals and targets, we believe that each element of the overall program, comprised of base salary, annual cash incentive plan awards, and longer-term stock options, stock appreciation rights, and performance-based restricted stock unit grants, complements and rewards annual performance as well as ensures long-term viability, growth and shareholder value. Additionally, to retain and attract qualified executive and management talent, the Board has approved several retirement benefit plans. Conversely, in order to reduce the risk of focusing on too narrow a result, currently no portion of an award under the compensation program is based solely on an increase in the Company’s stock price. Further, no award is grossed-up or otherwise adjusted to account for its tax consequences

We understand that compensation programs should be designed to reduce the opportunity for participants to take unnecessary risks to the detriment of the Company’s shareholders and future viability in order to achieve their performance targets. We have designed the programs to address these risks and minimize the opportunity for any individual to manipulate or undermine the programs. We have accomplished this by tailoring the programs to incorporate objective features. These features include plan and targeted objectives that are set in advance and reviewed periodically by the Board, annual bonus-based calculations, and goals and responsibilities set jointly by us and the PEO and approved by the Board. Further, the Board reviews and approves all executive bonus payments. We designed and implemented these programs prior to the more recent economic turbulence in part to prevent the complications ultimately experienced by others; therefore, after the initial economic downturn, the Board did not determine that any material changes were necessary to preserve the long-term integrity of the programs.

We evaluate the Company’s PEO based on the Company’s annual performance, as well as other performance objectives as established between us and the PEO, including demonstrated capabilities, achievement of results, and development of management employees. These other objectives can and do change annually and may incorporate such things as management succession activities, board governance issues and other objective and individual measures of significance to us. Similarly, the other NEOs are evaluated not only on performance related to achieving certain financial objectives, but on other defined objectives, and on their scope of responsibility, experience and expertise. Annually, the salaries of other executive officers are reviewed by us with the PEO to determine merit and performance increases based on the PEO’s evaluation, as well as our evaluation. We periodically review the NEOs’ performance and have the opportunity to interact with senior executives at various times during the year, which aids in our assessment of each individual’s performance.

The base salary disclosed in the “2013 Summary Compensation Table” on page 23 for each NEO in 2013 and prior years reflects the philosophy outlined above as it relates to executive compensation. The increase in their 2013 over 2012 base salary reflects the NEOs achievement of specific objectives, as well as adjustments based on the results of the 2012 Pay Governance study to align executive compensation with industry benchmarks. For 2013, the specific objectives included goals related to revenues, operating profit, debt levels, and management succession. With regard to these objectives, the Company's sales were a record high and increased 5.0% over the prior year, while operating profit in 2013 was 110% of the targeted operating profit percentage. Long-term debt decreased when compared to the prior year by $4,753,000. Moreover, each NEO was engaged in the management succession planning both with the assistance of the Board of Directors and with other officers and managers of the Company.

In 2002, the Board of Directors adopted a revised Management Incentive Compensation Plan ("MICP"), which was last reviewed in 2012. As part of their annual compensation under this Plan, the executive officers and other key personnel have an opportunity to earn an incentive bonus award based primarily on the annual operating profit achieved; an assessment considered to be a significant measure of financial success for the Company and the shareholders. The focus of this element of the overall compensation program is to reward achievement of annual goals set by us. Consistent with the results of the 2012 Pay Governance study and as approved by the Board of Directors, we updated the MICP to more appropriately align NEO compensation with competitive norms. These incentive awards, as updated in 2013, now approximate 25% to 85% of a participant’s total annual base salary. Currently, there are approximately 48 employees eligible for an incentive award under this Plan. The Board of Directors establishes, as a percentage of sales, a target operating profit percentage each year, calculated as described below. The degree to which the target percentage is underachieved or overachieved affects the total pool available for bonus awards. In addition to the mathematical calculation under the plan formula, we have the option to consider other relevant factors, as determined by the Board of Directors, in setting NEO final incentive awards. Such factors might include segment performance or achievement of individual goals. However, if the Company’s actual operating profit percentage is below 80% of the annual target as set by the Board, generally no incentive bonus awards are paid. The amount of the bonus award will increase the closer the actual results are to the target. Consistent with the Board’s objective of linking performance to compensation, the NEOs have an individual target percentage that ranges from 70% to 85% of base salary. The range for each NEO is based on that NEO’s duties and responsibilities for certain segments and operations of the business. Earning this target incentive is dependent on the Company achieving the overall target operating profit percentage described above. To the extent that the target operating profit percentage is overachieved, the NEO’s incentive award will increase. At 120% of the annual target, the formula is increased such that 150% of the normal target percentage of base salary is granted. At or above 121% of the annual target, an amount equal to 25% of the excess operating profit over 120% of our annual target is added to the annual incentive pool. However, in no event will the annual incentive payments for all participants be greater than 15% of the actual operating profit for that year. We may consider extraordinary or nonrecurring events affecting the annual results in evaluating the achievement of performance targets. To provide motivation for the NEOs to continue to maintain sustainable results and to continue to emphasize the importance of employee ownership, the NEOs receive shares of stock for 10% of the amount of an incentive award above $25,000. For example, if a NEO has earned an incentive award of $50,000, then $47,500 would be paid in cash and $2,500 would be paid in stock at the most recent valuation, usually our year-end valuation: [e.g., ($50,000 - $25,000) = $25,000 x 10% = $2,500]. We also paid discretionary bonuses to most office personnel and paid bonuses under several safety, retention and sales programs to eligible field employees.

For 2013, we set the target operating profit percentage at 6.0%, and the operating profit percentage actually achieved for fiscal year 2013 was 6.6%. We set the target operating profit percentage based on a number of factors, including competitive, economic and environmental factors. While this percentage is deemed to be aggressive, we continue to believe that even with the current economic and regulatory pressures, and including consideration of unforeseen developments, it is achievable. Incentive awards are calculated after year-end financial results are reviewed, and no award is paid until the annual financial statements are certified by the Company’s independent auditors and approved by us and the Board of Directors. Although no NEO’s annual incentive award is based solely on achieving the target operating profit percentage, that factor is an important measure of performance for the Company. As discussed above, other factors such as cash flow, debt levels and management succession planning contribute to the determination of each individual’s annual incentive award. These factors are reviewed by us and failure to achieve certain goals can impact incentive awards.

The actual operating profit percentage is calculated by dividing actual operating profit by net revenues. Operating profit is defined as income from operations as presented in the Company’s financial statements prepared under U.S. GAAP adjusted to exclude: administrative incentive compensation expense; pension expense; stock-based compensation expense; excess declining balance depreciation method expense over straight-line method depreciation expense; and gains and losses on the sale of assets. The number is further adjusted to include state and local income taxes and to remove the effect of any item deemed an extraordinary or nonrecurring event by us. For a given year, each NEO will have a target bonus percent set between 70% and 85%. Because the Pay Governance study indicated that target bonuses fell below competitive norms, for 2013 NEO target bonus percentages set by us were as follows: Mr. Warnke - 85%, Mr. Covey - 75%, and Messrs. Paul, Marshall and Stief - 70%. Each NEO is then evaluated for achievement of the goals and objectives described above and a NEO's failure to achieve these goals and objectives may impact the NEO's incentive award. Although the Company’s earnings were slightly lower in 2013 when compared to 2012, in 2013 the targeted operating profit percentage was 6.0% and the actual performance was 6.6%, or 110% of target. As reflected in the “2013 Summary Compensation Table” on page 23, due to the changes in the annual incentive compensation plan outlined above, as well as achieving 110% of target operating profit percentage or achieving above-target segment results, the payments made to Messrs. Warnke, Covey and Stief were higher in 2013 than in 2012.

Stock options, whether they are ISOs or NQSOs, generally vest in equal installments over five years, beginning on the first anniversary of the grant date. These options provide senior executives with the opportunity to acquire common stock over time at a price that is fixed, based on the most recent stock valuation price as of the date of grant. Under the Plan, option holders may also exchange or “swap” previously-owned shares for option stock that is eligible to be exercised. The swap of qualified options is permitted under IRC Section 1036 as a tax-deferred transaction and authorized under the Plan. Pursuant to a swap, the previously-owned stock is exchanged at the current fair market price for the stock options exercised. The options are exercised at their option exercise price, and the basis of the newly-acquired stock will remain the basis of the previously-owned stock. If the current market price is higher than the stock option price, this permits an option holder to increase the number of shares owned without paying cash for the option exercise or incurring an individual capital gain tax liability on the swap of the previously-owned shares. Swaps involving stock options granted pursuant to nonqualified plans are not eligible for tax deferred treatment.

In the case of a retirement by an option holder, the retiree may exercise any vested stock options within three months after the date of retirement. Upon the death or permanent and total disability of an option holder while employed by the Company or within three months after the date of termination, the option holder or option holder’s representative will have the right to exercise any vested stock options within one year after the date of the option holder’s termination or death. Also, we may accelerate unvested options outstanding at or granted after September 13, 2007, to become immediately exercisable, in-full or in-part, upon death, permanent disability or upon retirement at age 62 or older, provided the option holder has completed at least one year of continuous service. If the option holder’s termination is due to any reason other than those listed above, the option holder may exercise any vested stock options within the three-month period after the date of termination, but only with our consent or that of the Board of Directors. The right to exercise a stock option in these limited circumstances would not result in an extension of that stock option’s initial expiration date. If the stock value increases after the grant of options, the option becomes more valuable. This accomplishes two objectives. First, the employee must remain employed over the vesting period, providing an incentive for the option holder to remain employed by the Company; second, it ties a significant component of the employee’s compensation to the interests of all shareholders by focusing executive officers on longer-term results. In general, option grants to nonexecutive employees occur in the same way as grants to executive officers. Option grants are not specifically timed to enhance overall executive compensation, and we do not time option grants to make up for any shortfalls in annual incentive or other benefit payments. Nonqualified stock options were granted to the NEOs, officers and other management employees in 2013.

We have periodically granted options, taking into account the amount of options currently outstanding, the period of time between grants and changes within management positions, as well as overall performance of the Company and the performance of individual grantees. Although we make the final decision, we may solicit input from our senior executives regarding the performance of other officers and employees. Tax and accounting treatment of any stock option grant is accounted for as required by law and U.S. GAAP. To date, options have not been granted on an annual basis. Options were granted most recently in 2009, 2010, and 2013. Option grants are made after the Board considers alternatives to the practice of periodically granting stock options and after concluding that granting these options is consistent with the goals and objectives of our compensation plans to grant options to management on a periodic basis. These goals and objectives include rewarding management employees for their efforts to maintain or replace contracts, identify new business opportunities and sustain existing business relationships in the face of a continued turbulent economy, as well as the ability to address ever-expanding regulatory burdens and requirements from local, state and the federal government. For 2013, the option awards were based on our analysis of Company results, including sales and operating profit results, and NEO performance. Options granted to NEO's in 2013 are reflected in the outstanding Equity Awards at Fiscal Year-End 2013 on page 26. We have not intentionally timed the grant of stock options to coincide with the release of material nonpublic information, and any policy adopted by us will address the prohibition of timing of option grants in relation to the release or existence of material nonpublic information. We will continue to review the appropriateness of granting options, as well as considering other methods to reward managers for the achievement of goals consistent with the Company’s growth and shareholder value.

Consistent with our objective to move to a more effective longer-term stock-based incentive program, in 2009, as authorized by the 2004 Omnibus Stock Plan, the Board implemented the Stock Appreciation Rights (“SARs”) program. In general, under the SARs, eligible employees may receive annual grants of stock-settled stock appreciation rights or performance restricted stock units. The award level for each participant in the plan is based on that participant’s scope of responsibilities and the ability to achieve success given these responsibilities. As a participant in the SARs program is provided with the opportunity to undertake more responsibility for the success of the Company, that participant may be granted a greater number of rights or units; however, the overall performance of the Company will continue to determine the number and value of the rights or units granted to all participants. We, with input from the PEO, establish the targets based on the participant’s responsibility and position. Since this program will reward sustained stock value improvement over time, we anticipate that this program will further our objective to align the long-term value of the Company’s stock price with financial incentives for the NEOs, officers and managers. Under the plan, the SARs are used to acquire common shares based on the appreciation in the stock price times the number of SARs awarded. The appreciation is calculated by subtracting the stock price at the date of grant from the stock price at the date of redemption. The SARs vest at the rate of 20% per year and are automatically deemed exercised on the tenth anniversary of the effective date of the grant. As with options, SARs were awarded based on our review and analysis of Company and NEO performance including sales growth, successful acquisition integration, cash flow and return on invested capital. Grants to the NEOs in 2013 are detailed in the “2013 Grants of Plan-Based Awards” table on page 25.

Under the frozen ERP, benefits currently being paid to retirees will continue and benefits accrued through December 31, 2008 for employees covered by the ERP will not be affected. However, no further benefits will be accrued under the ERP. Thus, eligible participants who retire will still choose the same payment options and forms of retirement, beginning as early as age 55, as before. The benefit formula will remain .30% of covered compensation for each full or partial year of benefit service, plus .30% of compensation in excess of covered compensation for each full or partial year of benefit service. The minimum guaranteed benefit remains $80 per month. Covered compensation refers to the average of the participant’s social security taxable wage bases for their years of service, to a maximum of 35 years, ending with the calendar year in which the participant reaches social security retirement age. If a participant is vested and terminates before he or she is eligible for retirement and the value of the benefit is less than $5,000, the participant is eligible to receive a one-time lump sum payment. The value of the NEOs ERP benefit is included in the “2013 Pension Benefits” table on page 28.

In connection with the freeze of the ERP, and to help offset the loss of future benefit accruals under the ERP, the Board of Directors implemented enhanced benefits to the 401K effective January 1, 2009. Under the enhanced plan, an employee who is a noncollective bargaining employee, who is at least 21 years old, and has completed one year of continuous service, is automatically enrolled in the 401K. The employee may then elect to opt out of the 401K, and participants can suspend contributions at any time. Participant contributions are on a before-tax basis and the Company makes an annual contribution in Company stock equal to 100% of the first 1% percent and 50% of the next 3% percent of the participant’s W-2 wages, subject to the Internal Revenue Service (“IRS”) limit and not to exceed $255,000 in 2013 or $260,000 in 2014, which is the government-imposed annual compensation limit required for qualified retirement plans. This represents a potential maximum contribution of 2.5%. Participant contributions are always 100% vested, and Company contributions become 100% vested after three years of continuous service, or upon death, permanent disability or retirement of a participant. The 401K offers a variety of investment options with varying levels of risks and returns for the participant’s contributions; however, the investment in Company stock is restricted to no more than 25% of the employee’s annual contributions. The value of the account eligible for distribution is the vested investment value at the time of distribution, and there is no guarantee of any rate of return or investment value.

In 1994, we changed our qualified retirement plans to permit a greater number of employees to participate. These changes created additional restrictions on the ability of NEOs and other management personnel to fully participate. Due to these limitations imposed by the IRC, the affected employees will receive less in retirement benefits as a percentage of final average pay than are available to other employees and to executive officers at comparable companies. As a result, we became concerned with attracting and retaining qualified executive and management talent, as well as with providing additional retirement benefits to executive management. We explored ways to improve the retirement benefits and concluded that the best way to achieve our objectives was to adopt nonqualified retirement plans that supplement the existing qualified retirement plans. We continued to review these nonqualified retirement plans and over the years have made changes that reflect market and industry developments. Currently, the nonqualified retirement plan is The Davey Tree Expert Company 401KSOP Match Restoration Plan (“Match Plan”). The Davey Tree Expert Company Supplemental Executive Retirement Plan

Pursuant to the Match Plan, an employee who has elected to contribute the maximum amount under the qualified 401K plan, but who is precluded by IRC restrictions from receiving the full matching contribution paid by the Company, is eligible to participate in the Match Plan. The Match Plan allows the employee to accumulate an amount that could have been matched if the IRC restrictions had not been in effect. Each participant has two potential match criteria. If the participant is unable to contribute the full matching percentage permitted, we will increase the participant’s Company match such that it, when added to the match under the 401K, will equal 50% of the permitted percentage. Further, the Company will contribute an amount equal to 50% of 3% for any amount above the maximum compensation level, which is set at $255,000 for 2013 and $260,000 for 2014. The Company maintains an account record for each employee who meets this criteria to reflect that employee’s interest in the Match Plan. Interest on each account record, currently set at 7%, is accrued annually on December 31.

Effective in 2013, the Board of Directors elected to close the SERP to future participants. This decision was made after considering the Pay Governance study reflects general changes in executive retirement philosophies including a move away from special executive retirement programs and toward qualified defined contribution and restoration or excess plans. Prior to the closure, the SERP provided a retirement benefit of an amount equal to 30% multiplied by a participant’s Final Average Compensation (“FAC”) calculation, which is then reduced by the sum of the participant’s Restoration Plan benefit, qualified ERP benefit, 401K benefit, Match Plan benefit and one-half of the employee’s Social Security benefit. This amount is further reduced if a participant has less than 20 years of service at age 65. FAC is based on the average of the highest three annual earnings out of the last five years prior to retirement. If at actual retirement the calculation set out above for a participant, excluding the 30% SERP component, is greater than or equal to 30% of FAC, no benefit is payable under the SERP. Although the SERP is closed, current participants will continue to earn limited benefits. The decision to allow current participants to continue to earn limited benefits was made because these participants have relied on the provisions of this plan in making retirement planning and timing decisions. The NEO's listed in this Proxy Statement, except for Messrs. Paul and Adante, will continue to earn limited benefits. The present value of the NEO's executive retirement plans benefits is presented in the “2013 Pension Benefits” table on page 28.

As a supplement to the qualified and nonqualified benefit plans, and as authorized by the 2004 Omnibus Stock Plan, we approved time-based and performance-based restricted stock awards for certain executive officers, including the PEO. We generally make these awards to provide retention incentives that focus on factors other than short-term results, reward superior corporate performance and provide additional retirement benefits. We granted time-based restricted stock awards (“RSU”) primarily to provide retention incentives through additional retirement benefits. We approved the performance-based restricted stock awards (“PRSU”) as another, but more stringent, method to supplement retirement benefits. In general, prior to 2007, awards vested on the earlier of the fifth anniversary of the date of grant or the participant’s termination of employment with us. Each RSU and PRSU was eligible to be paid as soon as practical after it vested, or a participant could elect to defer receipt of a payment to a later date. In 2006, we amended the Plan so that no RSU or PRSU granted after 2006 is paid until the participant retires. In 2009, we amended the Plan such that each RSU or PRSU award would vest as outlined above or as determined by us as set forth in the notice of the award. As with the stock options, tax and accounting treatment of an award is accounted for as required by law and U.S. GAAP. Further, the tax or accounting treatment of an award has not dictated what awards are made or how an award is fashioned.

In 2013, for the same reasons that we closed the SERP, we froze the RSU and PRSU grants under the executive retirement program. Prior to 2013, the RSU awards provided a participant with the opportunity to achieve a total retirement benefit that would equal 40% of the participant’s projected final average annual compensation at retirement. When we selected a participant to receive this award, we determined the RSU award for that participant based upon a calculation that starts with a computation of the participant’s estimated retirement benefits payable from Company-sponsored plans, along with 50% of the participant’s estimated social security benefit. Next, this value was compared to an estimate equal to 40% of the participant’s final average annual compensation, and the difference was deemed the “Benefit Shortfall.” Then, a target value of Company stock was calculated using certain assumptions, including a current compound annual growth rate of 10% (the “Target Share Value”). The Benefit Shortfall was divided by the Target Share Value. This quotient was then divided by the number of years to reach normal retirement, and the resulting number was the initial RSU award. In succeeding years, the named participant received an annual grant of RSUs equal to the initial grant, unless we decided to increase or decrease the award or drop the participant from the plan. Except as it related to the calculation, the RSU award was not based upon or in any way contingent upon the other elements of a participant’s compensation package. Consistent with the decision to freeze these grants in 2013, no RSU awards under this executive retirement program were made in 2013.

The level of an award of PRSUs under the long-term performance plan is made each fiscal year based on the ROAIC, which was set based on an analysis of industry benchmarks. The ROAIC for receiving the maximum award is currently set at 24%, the same as it was when first established by the Board in 2004. Further, if the ROAIC is 8% or less, there will be no PRSU awards. Achieving a ROAIC of more than 8% but less than 24% will result in a participant receiving a portion, but less than the full value, of the available PRSU grant. The actual ROAIC achieved in 2012 was 25.57%, which resulted in 100.0% of potentially available PRSUs being awarded in 2013. We designed the PRSU awards to retain executive talent by enhancing long-term retirement benefits. Except as it relates to the calculation, PRSU awards are not based upon or in any way contingent upon the participant’s compensation package. Each NEO received the PRSU award as disclosed in the second line of the column labeled “All Other Stock Awards” in the “2013 Grants of Plan Based Awards” table on page 25.

For many years we have had an Insider Trading and Public Disclosure Policy in place that prevents NEOs, other officers and management personnel from conducting Company stock transactions based on insider information of any kind. Under this policy, certain persons cannot engage in stock transactions using material nonpublic information that could either positively or adversely affect the value of our stock either through direct transactions with us or through our 401K. Because of the unique nature of the restriction on ownership and sale of stock, as well as the fact that our stock is not publicly traded, we have not identified a need to implement a clawback policy or a prohibition on pledging Company securities. In addition, because of these unique features, it is not feasible to hedge our stock. However, we will continue to monitor our policies and review the advantage of implementing such policies.

As outlined under the “Compensation Philosophy and Objectives” section of the “Compensation Discussion and Analysis,” the Compensation Committee addresses compensation risk analysis as an integral part of its ongoing analysis of compensation programs. As part of the compensation structure review undertaken with the assistance of Pay Governance in 2011 and completed in 2012, as described in this Compensation Discussion and Analysis report, certain changes were made to the Compensation plans in 2013. The Board is not presently aware of any information that would lead it to believe that risks arising from the Company’s employee compensation policies and practices are reasonably likely to have a material adverse effect on the Company. The Committee will continue to regularly consider risk factors associated with any business entity, including the individual components of the compensation plans, as well as the manipulation of sales, expenses or electronic data; and the Committee believes the Company has sufficient controls in place to prevent such occurrence.

As described in the “Compensation Discussion and Analysis,” a NEO’s compensation is based on a number of factors, as determined by the Board of Directors. In setting compensation, the Board utilizes a number of quantitative and qualitative performance-related factors. Although we have not established a specific peer group, the Pay Governance study completed in 2012 reviewed competitive norms and market medians. In general, base salary is generally set near 90% of the market midpoint for similar positions at companies of approximately the same size and complexity. Incentive plan compensation is based primarily upon achieving an annual predetermined target operating profit percentage. PRSU, RSU, SAR, ISO and NQSO awards are granted pursuant to authority under the 2004 Omnibus Stock Plan and are based on achieving predetermined performance targets, as well as achieving goals and objectives set by the Board. No NEO has an employment agreement or arrangement with the Company and each NEO is considered an employee-at-will.

2013 Summary Compensation Table



Name and Principal Position	Year	Salary⁽¹⁾		Stock Awards (PRSU and RSU)⁽²⁾		Option Awards (SAR, NQSO, ISO)⁽³⁾		Non-Equity Incentive Plan Compensation (Management Incentive Plan)⁽⁴⁾		Change in Pension Value and Nonqualified Deferred Compensation Earnings⁽⁵⁾		All Other Compensation⁽⁶⁾		Total
Warnke, Karl J.	2013	$	582,346	$	47,754	$	103,627	$	747,300	$	75,304	$	54,344	$	1,610,675
Chairman, President and	2012	527,731		66,253		34,080		676,450		283,226		36,084		1,623,824
Chief Executive Officer (“PEO”)	2011	512,385		59,268		45,840		376,650		213,488		50,268		1,257,899
Adante, David E. ⁽⁷⁾	2013	$	107,057	$	33,415	$	—	$	—	$	—	$	12,176	$	152,648
Former Executive Vice President,	2012	304,230		46,390		17,040		286,150		75,432		35,044		764,286
Chief Financial Officer and Secretary ("PFO")	2011	295,539		41,495		22,920		158,397		37,779		26,876		583,006
Covey, Patrick M	2013	$	295,831	$	4,737	$	38,959	$	302,748	$	16,707	$	25,723	$	684,705
Chief Operating Officer (“COO”)	2012	275,492		6,560		19,880		300,700		236,013		25,970		864,615
	2011	233,931		5,879		19,100		140,109		64,761		23,788		487,568
Paul, Joseph R ⁽⁷⁾	2013	$	227,692	$	21,530	$	32,746	$	225,011	$	—	$	17,349	$	524,328
Chief Financial Officer and Secretary ("PFO")
Marshall, Steven A.	2013	$	250,089	$	23,855	$	18,671	$	192,353	$	697	$	36,629	$	522,294
Executive Vice President,	2012	241,215		24,883		14,200		196,600		36,982		20,438		534,318
U.S. Utility Operations	2011	230,946		22,354		19,100		106,151		18,675		33,321		430,547
Stief, James F.⁽⁸⁾	2013	$	243,923	$	17,870	$	17,372	$	230,058	$	75,145	$	17,156	$	601,524
Executive Vice President,	2012	221,385		8,696		14,200		215,600		22,457		19,710		502,048
U.S. Residential Operations

NOTE: The table includes both compensation paid to or on behalf of the NEO and values that represent expense, fair value, and actuarial calculations for amounts that are anticipated, under specific circumstances, to be paid sometime in the future. The Salary, Non-Equity Incentive Plan Compensation and All Other Compensation columns are amounts paid to or on behalf of the NEO. The Stock Awards (PRSU/RSU) and Option Awards (SAR/NQSO/ISO) columns represent the aggregate grant date fair value calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification “FASB ASC Topic 718,” Compensation – Stock Compensation and do not reflect cash payments. The Change in Pension Value and Nonqualified Deferred Compensation Earnings column is an actuarial calculation of benefits that could be paid in the future, under specific circumstances, to the NEO.



Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards⁽¹⁾						Estimated Future Payouts Under Equity Incentive Plan Awards⁽²⁾		All Other Stock Awards: Number of Shares of Stock or Units⁽³⁾ #	All Other Option Awards		Exercise or Base Price of Option Awards⁽⁶⁾ $/Sh		Grant Date Fair Value of Stock and Option Awards⁽⁷⁾ $
Name	Grant Date	Threshold $		Target $		Maximum $		Threshold #	Maximum #		Number of Securities Underlying NQSO Awards⁽⁴⁾ #	Number of Securities Underlying Stock Appreciation Rights Awards⁽⁵⁾ #	Exercise or Base Price of Option Awards⁽⁶⁾ $/Sh		Grant Date Fair Value of Stock and Option Awards⁽⁷⁾ $
Warnke, Karl J.	3/8/2013							—	6,500	2,218					$	47,754
	3/8/2013											32,690	$	23.20	103,627
	6/24/2013										6,000		23.20		22,620
		$	256,913	$	513,825	$	770,738
Adante, David E.⁽⁸⁾	3/8/2013							—	—	1,552					$	33,415
		—		—		—
Covey, Patrick M.	3/8/2013							—	3,070	220					$	4,737
	3/8/2013											12,290	$	23.20	38,959
	6/24/2013										4,000		23.20		15,080
		$	112,875	$	225,750	$	338,625
Paul, Joseph R.	3/8/2013							—	2,585	1,000					$	21,530
	3/8/2013											10,330	$	23.20	32,746
	6/24/2013										4,000		23.20		15,080
		$	84,000	$	168,000	$	252,000
Marshall, Steven A.	3/8/2013							—	1,470	1,108					$	23,855
	3/8/2013											5,890	$	23.20	18,671
	6/24/2013										3,000		23.20		11,310
		$	88,323	$	176,645	$	264,968
Stief, James F.	3/8/2013							—	1,370	830					$	17,870
	3/8/2013											5,480	$	23.20	17,372
	6/24/2013										3,000		23.20		11,310
		$	87,850	$	175,700	$	263,550

Outstanding Equity Awards at Fiscal Year-End 2013⁽¹⁾



Name	Option Grant/ Stock Award Date	Option Awards^(2)(3)(4)(6)											Stock Awards⁽⁵⁾⁽⁶⁾
Name	Option Grant/ Stock Award Date	Number of Securities Underlying Unexercised ISO/NQSOs Exercisable	Number of Securities Underlying Unexercised ISO/NQSOs Unexercisable	ISO/ NQSOs Exercise Price		ISO/ NQSOs Expiration Date	Number of SARs That Have Not Vested	SARs Exercise Price		Market Value of SARs That Have Not Vested		SARs Expiration Date	Number of RSUs That Have Not Vested	Market Value of RSUs That Have Not Vested		Number of PRSUs That Have Not Vested	Market Value of PRSUs That Have Not Vested
Warnke, Karl J	3/10/2009						2,400	$	16.40	$	24,000	12/31/2018	2,218	$	58,555	2,192	$	57,869
	3/9/2010						4,800	16.60		47,040		12/31/2019	2,218	58,555		1,170	30,888
	3/9/2011						7,200	18.40		57,600		12/31/2020	2,218	58,555		1,250	33,000
	3/7/2012						9,600	19.70		64,320		12/31/2021	2,218	58,555		1,198	31,627
	3/8/2013						32,690	23.20		104,608		12/31/2022				2,218	58,555
	6/24/2013		6,000	$	23.20	6/24/2023
Covey, Patrick M.	3/10/2009						1,000	$	16.40	$	10,000	12/31/2018	220	$	5,808	218	$	5,755
	11/2/2009	4,000	1,000	$	16.00	11/2/2019
	3/9/2010						2,000	16.60		19,600		12/31/2019	220	5,808		116	3,062
	11/1/2010	4,800	3,200	16.60		11/1/2020
	3/9/2011						3,000	18.40		24,000		12/31/2020	220	5,808		124	3,274
	3/7/2012						5,600	19.70		37,520		12/31/2021	220	5,808		118	3,115
	3/8/2013						12,290	23.20		39,328		12/31/2022				220	5,808
	6/24/2013		4,000	23.20		6/24/2023
Paul, Joseph R	6/5/2006	6,400		$	11.25	6/5/2016
	3/10/2009						200	$	16.40	$	2,000	12/31/2018
	11/2/2009	1,600	400	16.00		11/2/2019
	3/9/2010						400	16.60		3,920		12/31/2019				264	$	6,970
	11/1/2010	1,800	1,200	16.60		11/1/2020
	3/9/2011						600	18.40		4,800		12/31/2020				282	7,445
	3/7/2012						1,600	19.70		10,720		12/31/2021				270	7,128
	3/8/2013						10,330	23.20		33,056		12/31/2022				1,000	26,400
	6/24/2013		4,000	23.20		6/24/2023
Marshall, Steven A.	6/5/2006	20,000		$	11.25	6/5/2016
	3/10/2009						1,000	$	16.40	$	10,000	12/31/2018	684	$	18,058	1,094	$	28,882
	3/9/2010						2,000	16.60		19,600		12/31/2019	684	18,058		584	15,418
	11/1/2010	3,600	2,400	16.60		11/1/2020
	3/9/2011						3,000	18.40		24,000		12/31/2020	684	18,058		624	16,474
	3/7/2012						4,000	19.70		26,800		12/31/2021	684	18,058		598	15,787
	3/8/2013						5,890	23.20		18,848		12/31/2022				1,108	29,251
	6/24/2013		3,000	23.20		6/24/2023
Stief, James F.	3/10/2009						400	$	16.40	$	4,000	12/31/2018
	11/2/2009	1,600	400	$	16.00	11/2/2019
	3/9/2010						1,200	16.60		11,760		12/31/2019				528	$	13,939
	11/1/2010	3,600	2,400	16.60		11/1/2020
	3/9/2011						1,800	18.40		14,400		12/31/2020				468	12,355
	3/7/2012						4,000	19.70		26,800		12/31/2021				448	11,827
	3/7/2013						5,480	23.20		17,536		12/31/2022				830	21,912
	6/24/2013		3,000	23.20		6/24/2023



Name	Option Awards						Stock Awards
Name	Number of ISO/NQSO Shares Acquired on Exercise in 2013	Value of ISO/ NQSO Shares Realized on Exercise⁽¹⁾		Number of SARs Vested in 2013	Appreciation Value Realized on Exercise of SARs (Vested)⁽²⁾		Number of Shares Acquired on Vesting (RSUs and PRSUs Vested in 2013)	Value Realized on Vesting (RSUs and PRSUs)⁽³⁾
Warnke, Karl J.	—	$	—	9,600	$	82,800	4,436	$	117,110
Adante, David E.⁽⁴⁾	—	—		16,800	137,880		14,930	394,152
Covey, Patrick M.	20,000	329,000		4,400	37,180		440	11,616
Paul, Joseph R.	—	—		1,000	8,240		—	—
Marshall, Steven A.	—	—		4,000	34,500		1,792	47,309
Stief, James F.	—	—		2,600	21,380		—	—

For current participants who will continue to earn limited benefits, the SERP provides a retirement benefit equal to 30% multiplied by a Final Average Compensation calculation, which is then reduced by the sum of the employee’s Restoration Plan benefit, ERP benefit, 401K benefit, Match Plan benefit and one-half of the employee’s Social Security benefit. This amount is further reduced if a participant has less than 20 years of service at age 65. “Final Average Compensation” is based on the average of the highest three annual earnings out of the five years prior to retirement. The NEO's listed in this Proxy Statement, except for Messrs. Paul and Adante, will continue to earn limited benefits under the SERP.

Prior to the freeze on December 31, 2008, under the Restoration Plan, an employee whose benefit under the ERP was limited by applicable sections of the IRC was eligible to qualify for a benefit. The Board of Directors determined who, among eligible employees, would participate in the Restoration Plan. The Restoration Plan allowed for a restoration accrual such that the employee would receive a monthly benefit that, when added to the monthly benefit from the ERP, equals the monthly retirement benefit that would have been payable if certain IRC provisions were not in effect. This permitted an affected employee to attain the same percentage benefit value as any employee participant not affected by these limitations.

Plan Benefits--December 31, 2013 “as if” Triggering Event Occurred⁽¹⁾



Name	Plan Name	Frequency	Benefit Payable Upon Triggering Event⁽²⁾
Warnke, Karl J.	SERP⁽³⁾	Annual benefit	$	121,000
	Restoration Plan⁽³⁾	Annual benefit	18,000
	Match Plan	Onetime payment	169,417
	RSU⁽⁴⁾	Onetime payment	234,221
	PRSU⁽⁴⁾	Onetime payment	211,886
Adante, David E.⁽⁵⁾	SERP⁽³⁾	Annual benefit	$	—
	Restoration Plan⁽³⁾	Annual benefit	8,000
	Match Plan	Onetime payment	—
	RSU⁽⁴⁾	Onetime payment	163,891
	PRSU⁽⁴⁾	Onetime payment	148,315
Covey, Patrick M.	SERP⁽³⁾	Annual benefit	$	91,000
	Restoration Plan⁽³⁾	Annual benefit	1,000
	Match Plan	Onetime payment	34,740
	RSU⁽⁴⁾	Onetime payment	23,232
	PRSU⁽⁴⁾	Onetime payment	21,014
Paul, Joseph R.	SERP⁽³⁾	Annual benefit	$	—
	Restoration Plan⁽³⁾	Annual benefit	—
	Match Plan	Onetime payment	3,134
	RSU⁽⁴⁾	Onetime payment	—
	PRSU⁽⁴⁾	Onetime payment	—
Marshall, Steven A.	SERP⁽³⁾	Annual benefit	$	—
	Restoration Plan⁽³⁾	Annual benefit	2,000
	Match Plan	Onetime payment	29,825
	RSU⁽⁴⁾	Onetime payment	72,230
	PRSU⁽⁴⁾	Onetime payment	105,811
Stief, James F.	SERP⁽³⁾	Annual benefit	$	9,000
	Restoration Plan⁽³⁾	Annual benefit	—
	Match Plan	Onetime payment	3,444
	RSU⁽⁴⁾	Onetime payment	—
	PRSU⁽⁴⁾	Onetime payment	57,922

We pay directors who are not our employees a fee of $35,000 per year plus $1,000 for the first and $500 for each additional Board or Committee meeting attended on the same day, plus reasonably incurred travel and lodging expenses. Committee Chairs receive an additional retainer as follows: Audit Committee Chair - $8,000/year; Compensation Committee Chair - $6,000/year; and Governance Committee Chair - $5,000/year. The Chairman of the Board, if not an active employee of the Company, would receive an additional retainer of $7,500/year. Directors receive a fee of $500 for each teleconference meeting or written consent related to considering the authorization or taking of an action without a meeting, except for the Audit Committee members who receive a fee of $1,000 per teleconference meeting. Directors may defer all or part of their fees in cash or stock equivalent units until their retirement as directors.

Beginning in 2009, on the date of the shareholders’ annual meeting, each nonemployee director received an annual grant of 3,000 director stock appreciation rights (“SARs”). The SARs were used to acquire common shares based on the appreciation in the stock price multiplied by the number of SARs awarded, reduced in 2009 and 2010 by the annualized number of stock options granted to a director elected or appointed in 2007 or 2008. The appreciation was calculated by subtracting the stock price at the date of grant from the stock price at the date of exercise. The SARs became exercisable in the amount of 20% of the number of common shares to be acquired on each anniversary of the date of grant commencing with the first anniversary. Unless terminated, SARs would automatically be deemed to be exercised on the tenth anniversary of the effective date of the grant provided the grantee was still a director on the tenth anniversary and a grantee had to be a director on the date of exercise. This program was replaced in 2013, as more fully described below, with the DRSU program.

The five-year cumulative total return graph on page 34 indicates that the Company's return line is below the S&P 500 and our peer group. The change in the Company's performance on this graph compared to historical performance against the S&P 500 and our peer group is driven by the 2008 base year starting point on the graph. The S&P 500 and our peer group value on the 2008 five-year cumulative return graph is artificially low due to the impact of the recession. Both comparison groups experienced a significant decline in value in 2008 while the Company's stock increased in 2008 and throughout the recession. The lower starting point for the S&P 500 and our peer group allows for higher returns over the five years since they are recouping value they lost during the recession. The Company's returns remained positive during the recession; therefore, the cumulative return is not as dramatic on the five-year return graph.

Under the Audit Committee’s charter, the Committee is required to give advance approval of any nonaudit services to be performed by the principal independent auditors, provided that such services are not otherwise prohibited by law or regulation. There is no de minimis exception to the Committee’s preapproval procedures. The Committee may delegate the responsibility for this approval to one or more of its members, so long as the members report any such approvals to the full Committee at its next meeting. Such delegation procedures are presently in place. In addition, the Committee has also set specific limits on the amount of such services which we would obtain from Ernst & Young and requires management to report the specific engagement to the Committee at its next meeting.

As part of its oversight responsibility, the Committee has reviewed and discussed the audited consolidated financial statements, and the results of management’s assessment of the effectiveness of the Company’s internal control over financial reporting and the independent auditor’s audit of internal control over financial reporting with management and Ernst & Young. The Committee reviewed with Ernst & Young the matters required to be discussed by Auditing Standard No. 16, “Communication with Audit Committees,” issued by the PCAOB, and such other matters as the Committee and the auditors are required to discuss under auditing standards generally accepted in the United States. Additionally, the Committee received the written disclosures and the letter from Ernst & Young to the Committee required by applicable requirements of the PCAOB regarding the independent auditor's communications with the Committee concerning independence, and discussed with Ernst & Young their independence from the Company and its management.

Each shareholder has the right to vote cumulatively if any shareholder gives notice in writing to our President, any Vice President or our Secretary at least 48 hours before the time set for the meeting and an announcement of the notice is made at the beginning of the meeting by the Chairman or the Secretary, or by or on behalf of the shareholder giving notice. If cumulative voting is in effect, shareholders will be entitled to cast a number of votes equal to the number of shares voting multiplied by the number of directors to be elected. A shareholder may cast all of these votes for one nominee or distribute them among several nominees, as that shareholder sees fit. If cumulative voting is in effect, shares represented by each properly signed proxy card will also be voted on a cumulative basis, with the votes distributed among the nominees in accordance with the judgment of the persons named in the proxy card.

Among other requirements, Section 423 currently provides that (A) only employees of the Company, or of any direct or indirect subsidiary of the Company designated by the Committee, may receive Stock Purchase Rights that qualify under Section 423 (“Section 423 Rights”), (B) Section 423 Rights may not be granted to any Participant who, immediately after the Section 423 Rights are granted, owns stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company, (C) Section 423 Rights must be granted to all employees of the Company, and of any direct or indirect subsidiary of the Company designated by the Committee, except that there may be excluded (1) employees who have been employed less than two years, (2) employees whose customary employment is 20 hours or less per week, (3) employees whose customary employment is for not more than five months in any calendar year, and (4) highly compensated employees (within the meaning of Section 414(q) of the Code), (D) all employees granted Section 423 Rights must have the same rights and privileges, except that the number of Common Shares that may be purchased by any employee upon exercise of Section 423 Rights may bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of the employee, (E) the exercise price of Section 423 Rights may not be less than eighty-five percent (85%) of the Fair Market Value of the Common Shares at the time Section 423 Rights are granted; (F) Section 423 Rights cannot be exercised after the expiration of 27 months from the date the Section 423 Rights are granted, and (G) no employee may be granted Section 423 Rights, under this Plan and any other stock purchase plans of the Company and its subsidiaries, that permit the purchase of Common shares with a Fair Market Value of more than $25,000 (determined at the time the Section 423 Rights are granted) in any calendar year.

With the approval of the Committee, the delivery of the Common Shares, cash, or any combination thereof subject to an Award may be deferred, either in the form of installments or a single future delivery. The Committee may also permit selected Participants to defer the payment of some or all of their Awards, as well as other compensation, in accordance with procedures established by the Committee to assure that the recognition of taxable income is deferred under the Code. Deferred amounts may, to the extent permitted by the Committee, be credited as cash or Stock Equivalent Units. The Committee may also establish rules and procedures for the crediting of interest on deferred cash payments and dividend equivalents on Stock Equivalent Units.

Prior to the payment of an Award, the Company may withhold, or require a Participant to remit to the Company, an amount sufficient to pay any Federal, state, and local taxes associated with the Award. The Committee may, in its discretion and subject to such rules as the Committee may adopt, permit a Participant to pay any or all taxes associated with the Award (other than an Incentive Stock Option) in cash, by the transfer of Common Shares, by the surrender of all or part of an Award (including the Award being exercised), or by a combination of these methods. The Committee may permit a Participant to pay any or all taxes associated with an Incentive Stock Option in cash, by the transfer of Common Shares, or by a combination of these methods.

In the event of a Change in Control of the Company, unless and to the extent otherwise determined by the Board of Directors, (i) all Stock Appreciation Rights, Stock Options, and other Stock Purchase Rights then outstanding will become fully exercisable as of the date of the Change in Control, (ii) all restrictions and conditions applicable to Restricted Stock and other Stock Awards will be deemed to have been satisfied as of the date of the Change in Control, and (iii) all Cash Awards will be deemed to have been fully earned as of the date of the Change in Control. Any such determination by the Board of Directors that is made after the occurrence of a Change in Control will not be effective unless a majority of the Directors then in office are Continuing Directors and the determination is approved by a majority of the Continuing Directors.



1.	Elect three directors to the class to serve for a three-year term of office expiring at the Company’s 2017 Annual Meeting of Shareholders. The nominees for the Board of Directors are: J. Dawson Cunningham, Sandra W. Harbrecht, and Patrick M. Covey.	o For		o Withhold
1.		Instruction: On the line below, write the name of any nominee for whom authority to vote is withheld. This Proxy cannot be voted for a greater number of persons than the number of nominees named. __________________________________________________________
2.	Approve The Davey Tree Expert Company 2014 Omnibus Stock Plan.	o For	o Against	o Withhold
3.	Approve, on an advisory, nonbinding basis, the compensation of the named executive officers, as disclosed in the Proxy Statement.	o For	o Against	o Withhold
4.	Any other matter that may properly come before the meeting.

To Reliance Trust Co., Trustee of The Davey 401KSOP and ESOP: As a participant, and a named fiduciary in the Plan, I hereby direct the Trustee to vote in person or by proxy at the Annual Meeting of Shareholders to be held May 20, 2014, and at any adjournment or postponement thereof, as shown below.



1.	Elect three directors to the class to serve for a three-year term of office expiring at the Company’s 2017 Annual Meeting of Shareholders. The nominees for the Board of Directors are: J. Dawson Cunningham, Sandra W. Harbrecht, and Patrick M. Covey.	o For		o Withhold
1.		Instruction: On the line below, write the name of any nominee for whom authority to vote is withheld. This Proxy cannot be voted for a greater number of persons than the number of nominees named. __________________________________________________________
2.	Approve The Davey Tree Expert Company 2014 Omnibus Stock Plan.	o For	o Against	o Withhold
3.	Approve, on an advisory, nonbinding basis, the compensation of the named executive officers, as disclosed in the Proxy Statement.	o For	o Against	o Withhold
4.	Any other matter that may properly come before the meeting.



		Sincerely,


		/s/Karl J. Warnke
		KARL J. WARNKE
		Chairman, President and
		Chief Executive Officer



		For the Board of Directors,


		/s/Joseph R. Paul
		JOSEPH R. PAUL
		Secretary



Proposal		Vote to be Cast
Proposal 1 – Election of nominees for director		FOR THE NOMINEES

Proposal 2 – Approval of The Davey Tree Expert Company 2014 Omnibus Stock Plan		FOR THE PLAN

Proposal 3 – Advisory approval of Named Executive Officer Compensation		FOR THE EXECUTIVE COMPENSATION



Name	Number of Shares ^(1)(2)(3)	Percent^{(2) (4)}
Karl J. Warnke	503,238	3.57	%
R. Douglas Cowan	85,930	.61	%
J. Dawson Cunningham	18,957	.13	%
William J. Ginn	13,151	.09	%
Douglas K. Hall	45,954	.33	%
Sandra W. Harbrecht	22,732	.16	%
John E. Warfel	10,686	.08	%
Patrick M. Covey	38,986	.28	%
Joseph R. Paul	25,607	.18	%
David E. Adante⁽⁵⁾	97,567	.69	%
Steven A. Marshall	125,746	.89	%
James F. Stief	172,250	1.22	%
22 directors and officers as a group, including those listed above	1,911,495	13.55	%



Director	Fees Earned or Paid in Cash⁽²⁾		Stock Awards⁽³⁾		Total
Cowan, R. Douglas	$	36,500	$	34,401	$	70,901
Cunningham, J. Dawson	52,000		34,401		86,401
Ginn, William J.	44,500		34,401		78,901
Hall, Douglas K.	54,000		34,401		88,401
Harbrecht, Sandra W.	45,000		34,401		79,401
Warfel, John E.	46,500		34,401		80,901


1.	To elect as directors the nominees named in this Proxy Statement and recommended by the Board of Directors to the class whose term expires in 2017.


2.	To approve The Davey Tree Expert Company 2014 Omnibus Stock Plan.


3.	To approve, on an advisory, nonbinding basis, the compensation of the Named executive officers, as disclosed in this Proxy Statement.


4.	To hear reports and to transact any other business that may properly come before the meeting.



THE DAVEY TREE EXPERT COMPANY TABLE OF CONTENTS

	Page

Proxy Statement	1

Proposal One - Election of Directors	2

Proposal Two - Approval of The Davey Tree Expert Company 2014 Omnibus Stock Plan	6

Proposal Three - Advisory Approval of Named Executive Officer Compensation	10

Corporate Governance	11

Ownership of Common Shares	14

Compensation Discussion and Analysis	15

Report of The Compensation Committee	23

Compensation Risk Analysis	23

Compensation of Executive Officers	23

2013 Director Compensation	31

Company Performance	32

Independent Auditors	34

Report of the Audit Committee	35

General	36

Appendix A - The Davey Tree Expert Company 2014 Omnibus Stock Plan	A-1


3.	What is the difference between holding shares as a shareholder of record and as a beneficial owner?



	After many years of distinguished and dedicated service to the Company, Mr. R. Douglas Cowan is not nominated and will not continue as a Director, effective as of the date of the Annual Meeting. Mr. Cowan began his career with the Company in 1974 as Corporate Controller, was integral to the employees buying the Company from the Davey family in 1979 and was elected a director in 1982. He named President and Chief Operating Officer in 1985, was named Chief Executive Officer in 1988, and was Chairman of the Board from 1997 to 2009. Mr. Cowan retired from the Company in 2006. We thank Mr. Cowan for his many contributions to the Company and wish him continued good fortune.


•	Executive-level experience with a service-based over-the-road transportation public company


•	Served as chief financial officer with responsibility for internal and external financial reporting, including filings with the SEC


•	Executive-level responsibility for corporate-wide human resources, including compensation, benefits, and policy



			April 4, 2014


1.	What is a proxy?


•	Significant involvement in college advisory boards and councils


•	Over twenty-five years of executive-level experience


•	Fifteen years of experience as a CPA with a large international accounting firm and experienced in mergers and acquisitions


•	Extensive experience in business marketing, advertising, promotion, public relations and communications


•	Twenty-two years of experience in the Company with involvement in all U.S. operations and various administrative groups


•	Board member experience with nonprofit and professional organizations


•	Financial auditing experience with a large national accounting firm and the Company


•	Extensive involvement in all aspects of mergers, acquisitions and strategic partnerships


•	Forty-year career in the horticulture, arboriculture, landscape and environmental science industry


•	Board member for multiple nonprofit and professional organizations for over twenty-six years


•	Extensive experience in business management, sales, production, and management of multiple services and subsidiary businesses in the United States and Canada.


•	Over twenty years of executive-level leadership, including as a director for a privately-held employee-owned manufacturing company


•	Extensive experience in environmental conservation, most notably in sustainability, recycling and forest conservation


•	Undergraduate and graduate work in human ecology and landscape architecture


•	Well-versed in the various aspects of starting, managing, and selling a successful recycling business


•	Extensive experience in business leadership, financial management and financial audit


•	Significant involvement in human resource and corporate management


•	Experienced in mergers and acquisitions and strategic planning


•	Extensive and significant experience in property and casualty insurance


•	Business owner, including current ownership of consulting entities


•	Financial acumen and experienced with Employee Stock Ownership Plans ("ESOP")


•	Performance goals that require the management team to maintain and improve profitability in all economic environments to receive target compensation;