t64948_def14a.htm
SCHEDULE
14A
(RULE
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934
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Preliminary
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Confidential,
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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-11c or Section
240.14a-12
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Waste
Connections, Inc.
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(Name
of Registrant as Specified In Its Charter)
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of Person(s) Filing Proxy Statement if other than the
Registrant)
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![WASTE CONNECTIONS INC](img001.jpg)
Folsom,
California
March 30,
2009
Dear
Stockholders:
You
are cordially invited to attend the Waste Connections, Inc. Annual Meeting of
Stockholders on Thursday, May 14, 2009, at 10:00 a.m. (California time). The
meeting will be held at Waste Connections’ corporate headquarters, 2295 Iron
Point Road, Suite 200, Folsom, California 95630. Directions to Waste
Connections’ corporate headquarters appear on the back cover of this notice of
annual meeting and proxy statement.
The
matters to be acted upon are described in the accompanying notice of annual
meeting and proxy statement. At the meeting, we will also report on Waste
Connections’ operations. As always, we are looking forward to meeting our
stockholders in person, and responding to any questions you may have about the
company.
YOUR
VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting of
Stockholders, we urge you to vote and submit your proxy in order to ensure the
presence of a quorum. You may do so by returning your proxy card by mail or,
pursuant to instructions you receive from your bank or broker, by using the
Internet or your telephone. If you attend the meeting, you will have the right
to revoke any proxy you previously submitted and vote your shares in
person.
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Very
truly yours,
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Chairman
and Chief Executive Officer
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Waste
Connections, Inc.
2295
Iron Point Road, Suite 200
Folsom,
California 95630
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
The
Annual Meeting of Stockholders of Waste Connections, Inc. will be held on
Thursday, May 14, 2009, at 10:00 a.m. (California time). The meeting will be
held at Waste Connections’ corporate headquarters, 2295 Iron Point Road, Suite
200, Folsom, California 95630, for the following purposes:
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1.
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To
elect Michael W. Harlan and William J. Razzouk to serve as Class II
directors for a term of three years and until a successor for each has
been duly elected and qualified; and
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2.
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To
ratify the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending December 31,
2009.
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Only
stockholders of record of Waste Connections common stock at the close of
business on March 16, 2009, are entitled to receive notice of and to vote at the
Annual Meeting of Stockholders or any adjournment thereof.
Waste
Connections’ Annual Report to Stockholders for the fiscal year 2008 is enclosed
for your convenience.
Important
Notice Regarding the Availability of Proxy Materials for the
Annual
Meeting of Stockholders to be held May 14, 2009
Our
2009 Proxy Materials and Annual Report to Stockholders for the fiscal year
2008
are
available at
http://phx.corporate-ir.net/phoenix.zhtml?c=118605&p=irol-proxy.
Stockholders
of record may vote their proxies by signing, dating and returning the enclosed
proxy card. If your shares are held in the name of a bank or broker, you may be
able to vote on the Internet or by telephone. Please follow the instructions on
the form you receive. The method by which you decide to vote will not limit your
right to vote at the Annual Meeting of Stockholders. If you later decide to
attend the Annual Meeting of Stockholders, you may revoke your previously
submitted proxy and vote your shares in person.
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By
Order of the Board of Directors,
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Secretary
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March
30, 2009
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Your
vote is important. Whether or not you plan to attend the Annual Meeting
of Stockholders, please sign and date the enclosed proxy card or follow any
telephone or Internet procedures established by your bank or broker as promptly
as possible in order to ensure your representation at the annual
meeting.
PROXY
STATEMENT
Table
of Contents
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PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
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1
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GENERAL
INFORMATION
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1
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About
this Proxy Statement
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1
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Who
May Vote
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1
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How
to Vote
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1
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How
Proxies Work
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1
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Quorum
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2
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Votes
Needed
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2
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Attending
in Person
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2
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Counting
the Vote
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2
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PROPOSAL
1 — ELECTION OF DIRECTORS
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3
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CORPORATE
GOVERNANCE AND BOARD MATTERS
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5
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Corporate
Governance Guidelines and Code of Conduct and Ethics
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5
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Board
of Directors and Committees
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Director
Independence
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Independence
of Committee Members
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Our
Director Nomination Process
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How
to Contact Directors
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8
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Compensation
Committee Interlocks and Insider Participation
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Compensation
of Directors for Fiscal Year 2008
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Directors’
Equity Ownership
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10
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PRINCIPAL
STOCKHOLDERS
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EXECUTIVE
COMPENSATION
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Compensation
Discussion and Analysis
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12
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Compensation
Committee Report
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SUMMARY
COMPENSATION TABLE FOR FISCAL YEAR 2008
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GRANTS
OF PLAN BASED AWARDS IN FISCAL YEAR 2008
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OUTSTANDING
EQUITY AWARDS AT 2008 FISCAL YEAR-END
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OPTION
EXERCISES AND STOCK VESTED IN FISCAL YEAR 2008
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PENSION
BENEFITS IN FISCAL YEAR 2008
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NONQUALIFIED
DEFERRED COMPENSATION IN FISCAL YEAR 2008
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EQUITY
COMPENSATION PLAN INFORMATION
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POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
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Termination
by the Company
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28
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Termination
Upon Death or Disability
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Termination
by the Employee
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Change
in Control
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Potential
Payments
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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Review,
Approval or Ratification of Transactions with Related
Persons
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36
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AUDIT
COMMITTEE REPORT
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37
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PROPOSAL
2 — APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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38
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Pre-Approval
Policies and Procedures
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38
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OTHER
INFORMATION
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39
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Section
16(a) Beneficial Ownership Reporting Compliance
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39
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Legal
Proceedings
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Stockholder
Proposals for 2010 Annual Meeting of Stockholders
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39
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Annual
Report to Stockholders and Form 10-K
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40
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Other
Business
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40
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Waste
Connections,
Inc.
2295
Iron Point Road, Suite 200
Folsom,
California 95630
PROXY
STATEMENT
FOR
THE
ANNUAL
MEETING OF STOCKHOLDERS
GENERAL
INFORMATION
About
this Proxy Statement
We
sent you these proxy materials because our Board of Directors is soliciting your
proxy to vote your shares at the Annual Meeting of Stockholders. This proxy
statement includes information that we are required to provide to you under the
rules of the Securities and Exchange Commission, or the SEC, and that is
designed to assist you in voting your shares.
We
will bear the costs of soliciting proxies from our stockholders. In addition to
soliciting proxies by mail, our directors, officers and employees, without
receiving additional compensation, may solicit proxies by telephone or in
person.
We
will arrange for banks and brokers to forward these proxy materials to the
beneficial owners of our common stock for whom they hold shares of record, and
we will reimburse them for reasonable out-of-pocket expenses incurred in
forwarding these materials.
We
began mailing these proxy materials to our stockholders on or about April 1,
2009.
Who
May Vote
Every
holder of Waste Connections common stock, as recorded in our stock register at
the close of business on March 16, 2009, may vote at the annual meeting. As of
March 16, 2009, 80,041,506 shares of our common stock were outstanding and
entitled to vote. Each stockholder of record is entitled to one vote for each
share of our common stock held by the stockholder. In addition, on March 16,
2009, we had 5,882,354 shares of common stock reserved for issuance upon the
conversion of our outstanding 3.75% Convertible Senior Notes due 2026, none of
which is entitled to vote at the annual meeting.
How
to Vote
You
may vote in person at the annual meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You may revoke your proxy before
we vote it at the meeting by submitting a new proxy with a later date, voting in
person at the meeting or notifying our Corporate Secretary in writing at: Waste
Connections, Inc., 2295 Iron Point Road, Suite 200, Folsom, California 95630. We
will count your most current proxy, unless you vote in person at the
meeting.
How
Proxies Work
Our
Board of Directors is asking for your proxy. Giving us your proxy means that you
authorize us to vote your shares at the meeting in the manner you direct. You
can vote by proxy:
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by
mail by signing, dating and mailing the enclosed proxy card;
or
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by
telephone or over the Internet if your shares are held in the name of a
bank or broker, and instructions for voting in this manner are included in
information you receive from your bank or
broker.
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If
you sign your proxy card but do not give voting instructions, we will vote your
shares as follows:
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in
favor of our director candidates; and
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in
favor of the ratification of the appointment of the independent registered
public accounting firm.
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For
any other matters that may properly come before the meeting, your shares will be
voted at the discretion of the proxy holders. You may vote for both, one or
neither of our director candidates. You may also vote for or against the other
proposal, or you may abstain from voting.
You
may receive more than one proxy card depending on how you hold your shares.
Shares registered in your name are covered by one proxy card. If you hold shares
through someone else, such as a broker, you may also receive material from them
asking how you want to vote. You should complete and return each proxy card or
other voting instruction request provided to you.
Quorum
In
order to carry on the business of the annual meeting, we must have a quorum.
This means that at least a majority of the outstanding shares entitled to vote
as of the close of business on the record date must be present at the meeting,
either by proxy or in person.
Abstentions,
directions to withhold authority and broker non-votes are counted as present and
entitled to vote at the meeting for purposes of determining whether we have a
quorum. A broker non-vote occurs when a broker signs and returns a proxy but
does not vote on a particular proposal because the broker does not have
discretionary voting power for that particular item and has not received voting
instructions from the beneficial owner.
Votes
Needed
Directors
are elected by a plurality of shares present at the meeting, meaning the two
nominees that receive the highest number of votes cast in favor of their
election will be elected.
The
ratification of the appointment of the independent registered public accounting
firm requires the favorable vote of a majority of the shares present, either by
proxy or in person, and entitled to vote.
Abstentions
and directions to withhold authority have the same effect as a vote against a
matter because they are considered present and entitled to vote, but are not
voted.
Broker
non-votes will be considered present for quorum purposes but have no effect on
the outcome of the election of directors and will not be counted for any purpose
in determining whether the appointment of the independent registered public
accounting firm has been ratified.
Attending
in Person
Only
stockholders, their proxy holders and our invited guests may attend the meeting.
If you plan to attend, please bring identification and, if you hold shares in
street name, you should bring your bank or broker statement showing your
beneficial ownership of our stock in order to be admitted to the
meeting.
Counting
the Vote
We
will use an automated system administered by our transfer agent to tabulate the
votes at the annual meeting. Under certain circumstances, a broker or other
nominee may have discretionary authority to vote certain shares of common stock
if the broker or nominee has not received instructions from the beneficial owner
or other person entitled to vote.
PROPOSAL
1 — ELECTION OF DIRECTORS
Our
Board of Directors is currently composed of five directors and is divided into
three classes. One class is elected each year for a three-year term. Our Board
of Directors has nominated Michael W. Harlan and William J. Razzouk for
reelection to the Board of Directors to serve as Class II Directors until the
Annual Meeting of Stockholders to be held in 2012 and until a successor for each
has been duly elected and qualified. Proxies will be voted, unless otherwise
indicated, for the reelection of Messrs. Harlan and Razzouk to the Board of
Directors. Proxies will be voted in a discretionary manner if either of Messrs.
Harlan or Razzouk is unable to serve. Each of Messrs. Harlan and Razzouk is
currently a director of Waste Connections.
Certain
information about Messrs. Harlan and Razzouk and the directors serving in Class
I and Class III, whose terms expire in future years, is set forth
below.
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Name
and Background
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Age
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Director
Since
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Nominees
for Class II Directors for Terms Expiring in 2012
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Michael
W. Harlan has been President and Chief Executive Officer of U.S.
Concrete, Inc., a publicly traded producer of ready-mixed concrete,
precast concrete products and concrete-related products to all segments of
the construction industry, since May 2007. Mr. Harlan has also served as a
Director of U.S. Concrete, Inc., since May 2006. Mr. Harlan served as U.S.
Concrete’s Executive Vice President and Chief Operating Officer from April
2003 to May 2007 and as Chief Financial Officer from September 1998 to
November 2004. From November 1997 to January 30, 1998, Mr. Harlan served
as a consultant to Waste Connections on various financial matters. From
March 1997 to August 1998, Mr. Harlan was Vice President and Chief
Financial Officer of Apple Orthodontix, Inc., a publicly traded company
that provides practice management services to orthodontic practices in the
U.S. and Canada. From April 1991 to December 1996, Mr. Harlan held various
positions in the finance and acquisition departments of USA Waste
Services, Inc. (including Sanifill, Inc., which was acquired by USA Waste
Services, Inc.), including serving as Treasurer and Assistant Secretary,
beginning in September 1993. From May 1982 to April 1991, Mr. Harlan held
various positions in the tax and corporate financial consulting services
division of Arthur Anderson LLP, where he was a Manager since July 1986.
Mr. Harlan is on the Board of Directors of the National Ready Mixed
Concrete Association, where he serves on the Executive Committee, and he
is a member of the Board of Trustees for the RMC Research and Education
Foundation. Mr. Harlan is a Certified Public Accountant and holds a B.A.
degree from the University of
Mississippi.
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1998
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William
J. Razzouk has been Chief Executive Officer of Newgistics, Inc., a
provider of intelligent order delivery and returns management solutions
for direct retailers and technology companies, since March 2005. Mr.
Razzouk has also served as a Director of Newgistics, Inc. since March
2005. Mr Razzouk also serves on the Board of Directors of Re-Trans, Inc.,
a privately held transportation management company. From August 2000 to
December 2002, he was a Managing Director of Paradigm Capital Partners,
LLC, a venture capital firm in Memphis, Tennessee that focuses on meeting
the capital and advisory needs of emerging growth companies. From
September 1998 to August 2000, he was Chairman of PlanetRx.com, an
e-commerce company focused on healthcare and sales of prescription and
over-the-counter medicines, health and beauty products and medical
supplies. He was also Chief Executive Officer of PlanetRx.com from
September 1998 until April 2000. From April 1998 until September 1998, Mr.
Razzouk owned a management consulting business and an investment company
that focused on identifying strategic acquisitions. From September 1997
until April 1998, he was the President, Chief Operating Officer and a
Director of Storage USA, Inc., a then publicly traded (now private) real
estate investment trust that owns and operates more than 350 mini storage
warehouses. He served as the President and Chief Operating Officer of
America Online from February 1996 to June 1996. From 1983 to 1996, Mr.
Razzouk held various management positions at Federal Express Corporation,
most recently as Executive Vice President, Worldwide Customer Operations,
with full worldwide profit and loss responsibility. Mr. Razzouk previously
held management positions at ROLM Corporation, Philips Electronics and
Xerox Corporation. He previously was a Director of Fritz Companies, Inc.,
Sanifill, Inc., Cordis Corp., Storage USA, PlanetRx.com, America Online
and La Quinta Motor Inns. Mr. Razzouk holds a Bachelor of Journalism
degree from the University of
Georgia.
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1998
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Name
and Background
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Age
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Director
Since
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Class
I Director Continuing in Office — Term Expiring in 2011
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Robert
H. Davis has been President of Waste Systems International, Inc., a
turnkey solid waste management systems provider of environmentally
acceptable solutions to developing countries outside the U.S., since
November 2007, and a partner in Rubber Recovery Inc., a private,
California-based scrap tire processing and recycling company, since July
2006. Mr. Davis is a member of the board of effENERGY LLC, an alternative
energy company, and he is the conceptual founder and a member of the
external advisory board of the Global Waste Research Institute at
California Polytechnic State University. Prior to acquiring Rubber
Recovery Inc., Mr. Davis was President, Chief Executive Officer and a
Director of GreenMan Technologies, Inc., a publicly traded tire shredding
and recycling company, from 1997 to 2006. Prior to joining GreenMan, Mr.
Davis served as Vice President of Recycling for Browning-Ferris
Industries, Inc., from 1990 to 1997. A 35-year veteran of the solid waste
and recycling industry, Mr. Davis has also held executive positions with
Fibres International, Garden State Paper Company and SCS Engineers, Inc.
Mr. Davis holds a B.S. degree in Mathematics from California Polytechnic
State University, has done graduate work at George Washington University
in Solid Waste Management, and is currently engaged in continuing
education at Stanford University Law School in Corporate
Governance.
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2001
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Class
III Directors Continuing in Office — Terms Expiring in
2010
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Ronald
J. Mittelstaedt has been Chief Executive Officer and a Director of
Waste Connections since the company was formed in September 1997, and was
elected Chairman in January 1998. Mr. Mittelstaedt was also President of
the company from Waste Connections’ formation through August 2004. Mr.
Mittelstaedt has more than 21 years of experience in the solid waste
industry. He is a member of the Board of Trustees for the UC Santa Barbara
Foundation. Mr. Mittelstaedt holds a B.A. degree in Business Economics
with a finance emphasis from the University of California at Santa
Barbara.
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1997
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Edward
E. “Ned” Guillet has been an independent human resources consultant
since January 2007. From October 1, 2005 until December 31, 2006, he was
Senior Vice President, Human Resources for the Gillette Global Business
Unit of The Procter & Gamble Company, a position he held subsequent to
the merger of Gillette with Procter & Gamble. From July 1, 2001 until
September 30, 2005, Mr. Guillet was Senior Vice President, Human Resources
and an executive officer of The Gillette Company, a global consumer
products company. He joined Gillette in 1974 and held a broad range of
leadership positions in its human resources department. Mr. Guillet has
been a Director of CCL Industries Inc., a manufacturer of specialty
packaging and labeling solutions for the consumer products and healthcare
industries, since 2008, where he also serves as a member of the Board of
Directors’ Human Resources Committee. Mr. Guillet is a former member of
Boston University’s Human Resources Policy Institute. He holds a B.A.
degree in English Literature and Secondary Education from Boston
College.
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2007
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THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE
RE-ELECTION OF MESSRS. HARLAN AND RAZZOUK TO THE BOARD OF
DIRECTORS.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Corporate
Governance Guidelines and Code of Conduct and Ethics
We
have adopted Corporate Governance Guidelines to promote the effective
functioning of our Board of Directors and its Committees, to promote the
interests of stockholders and to ensure a common set of expectations concerning
how the Board of Directors, its Committees and management should perform their
respective functions. We have also adopted a Code of Conduct and Ethics that
applies to all of our directors, officers and employees. Copies of our Corporate
Governance Guidelines and our Code of Conduct and Ethics are available on our
website at www.wasteconnections.com. A copy of either may also be obtained, free
of charge, by writing to the Secretary of Waste Connections, Inc., 2295 Iron
Point Road, Suite 200, Folsom, California 95630.
Board
of Directors and Committees
Our
Board of Directors held nine meetings during 2008, four of which were regularly
scheduled and five of which were special meetings held telephonically. The Board
of Directors has five standing committees: an Executive Committee, an Audit
Committee, a Compensation Committee, a Special Equity Award Committee and a
Nominating and Corporate Governance Committee. Each director attended at least
75% of the meetings of the Board of Directors and the committees on which he
served in 2008. Our policy on director attendance at Annual Meetings of
Stockholders is that directors are invited but not required to attend. Mr.
Mittelstaedt, the Chairman of the Board, attended the Annual Meeting of
Stockholders in 2008.
The
Executive Committee, whose chairman is Mr. Mittelstaedt and whose other current
members are Messrs. Harlan and Razzouk, met five times in 2008. The Executive
Committee is authorized to exercise all of the powers and authority of the Board
of Directors in managing our business and affairs, other than to authorize
matters required by Delaware law to be approved by the stockholders, and other
than adopting, amending or repealing any of our Bylaws. Between meetings of the
Board of Directors, the Executive Committee approves all acquisitions by us for
stock and all acquisitions by us for cash or other consideration of $5.0 million
or more.
The
Board of Directors has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the Securities Exchange
Act of 1934, as amended. The Audit Committee, whose chairman is Mr. Harlan and
whose other current members are Messrs. Razzouk and Davis, met five times in
2008. The Board of Directors has determined that all of the members of the Audit
Committee are “financially literate” within the meaning of Section 303A.07 of
the New York Stock Exchange Listed Company Manual. The Board of Directors has
also determined that Mr. Harlan is an “audit committee financial expert” as
defined in Item 407(d)(5) of Regulation S-K. The committee’s duties are
discussed below under “Audit Committee Report.” A current copy of the Audit
Committee Charter, which our Board of Directors has adopted, is available on our
website at www.wasteconnections.com. A copy of the Audit Committee Charter may
also be obtained, free of charge, by writing to the Secretary of Waste
Connections, Inc., 2295 Iron Point Road, Suite 200, Folsom, California
95630.
The
Compensation Committee, whose chairman is Mr. Razzouk and whose other current
members are Messrs. Harlan and Guillet, met two times in 2008. This committee is
responsible for establishing our executive officer compensation policies and
administering such policies. The Compensation Committee studies, recommends and
implements the amount, terms and conditions of payment of any and all forms of
compensation for our directors and executive officers; approves and administers
any guarantee of any obligation of, or other financial assistance to, any
officer or other employee; and approves the grant of options, warrants,
restricted stock and other forms of equity incentives to officers, directors,
employees, agents and consultants. See “Executive Compensation — Compensation
Discussion and Analysis” for more information regarding compensation and the
Compensation Committee. A current copy of the Compensation Committee Charter is
available on our website at www.wasteconnections.com. A copy of the Compensation
Committee Charter may also be obtained, free of charge, by writing to the
Secretary of Waste Connections, Inc., 2295 Iron Point Road, Suite 200, Folsom,
California 95630.
The
Special Equity Award Committee, which the Board of Directors established on
October 25, 2005, is empowered with separate but concurrent authority with the
Compensation Committee to make awards to all eligible individuals - typically
new hires - under the company’s various equity incentive plans, subject to
certain exceptions and limitations set by the Board of Directors. The Special
Equity Award Committee may not, for example, grant annual awards to the
company’s employees, officers, directors and consultants, which are typically
authorized by the Compensation Committee annually in February; the committee may
not grant awards to the company’s executive officers or directors; and the
committee may not grant more than 10,000 options and warrants or more than 5,000
restricted stock and restricted stock unit awards to an eligible individual in
any given calendar year. Mr. Mittelstaedt is the chair and sole member of the
Special Equity Award Committee.
The
Nominating and Corporate Governance Committee, whose chairman is Mr. Davis and
whose other current members are Messrs. Guillet and Razzouk, met two times in
2008. This committee is responsible for recommending director nominees to the
Board of Directors and developing and implementing corporate governance
principles. A copy of the Nominating and Corporate Governance Committee Charter
is available on our website at www.wasteconnections.com. A copy of the
Nominating and Corporate Governance Committee Charter may also be obtained, free
of charge, by writing to the Secretary of Waste Connections, Inc., 2295 Iron
Point Road, Suite 200, Folsom, California 95630.
Director
Independence
The
Board of Directors has determined that each of Messrs. Harlan, Razzouk, Davis
and Guillet is “independent” within the meaning of the standards set forth in
our Corporate Governance Guidelines. Messrs. Davis, Harlan and Razzouk together
make up the Board’s Audit Committee. Messrs. Guillet, Harlan and Razzouk
together make up the Board’s Compensation Committee. Messrs. Davis, Guillet and
Razzouk together make up the Board’s Nominating and Corporate Governance
Committee. These independent, non-management directors meet in an executive
session, without management, at each of our four regularly scheduled Board of
Directors meetings. The Chair of the Audit Committee, currently Mr. Harlan,
presides over each meeting of the company’s non-management
directors.
As
set forth in our Corporate Governance Guidelines, a majority of the members of
our Board of Directors must be independent. For a director to be considered
independent, the Board of Directors must determine that the director is
“independent” within the meaning of Section 303A.02 of the New York Stock
Exchange Listed Company Manual. In addition, for a director to be considered
independent, the Board of Directors must determine that the director has no
material relationship with the company, either directly or indirectly as a
partner, shareholder or officer of an organization that has a relationship with
the company. No director who is a former employee of the company, is a former
employee or affiliate of any current auditor of the company or its subsidiaries,
is a part of an interlocking directorate in which any executive officer of the
company serves on the compensation committee of another company that
concurrently employs such director or has an immediate family member in any of
the foregoing categories, can be independent until three years after such
employment, affiliation or relationship has ceased.
The
Board of Directors reviews all commercial, industrial, banking, consulting,
legal, accounting, charitable and familial relationships of each director to
assess whether any of them is a material relationship so as to impair that
director’s independence. A “material relationship” means a direct or indirect
commercial, industrial, banking, consulting, legal, accounting, charitable or
familial relationship that is reasonably likely to affect the independent and
objective judgment of the director in question, provided that the direct or
indirect ownership of any amount of our stock is not deemed to constitute a
material relationship. The following commercial or charitable relationships are
not considered to be material relationships that would impair a director’s
independence: if a director of Waste Connections (a) is also an executive
officer of another company that does business with Waste Connections and the
annual sales to, or purchases from, Waste Connections are less than the greater
of one million dollars or two percent of the annual revenue of that other
company; (b) is an executive officer of another company that is indebted to
Waste Connections, or to which Waste Connections is indebted, and the total
amount of either company’s indebtedness to the other is less than one percent of
the total consolidated assets of that other company; or (c) serves as an
officer, director or trustee of a charitable organization, and Waste
Connections’ discretionary charitable contributions to that organization are
less than one percent of that organization’s total annual receipts. The Board of
Directors reviews annually whether its members satisfy these categorical
independence tests before any non-management member stands for re-election to
the Board of Directors.
All
relationships not covered by the preceding paragraph are reviewed by the
directors who satisfy the independence tests set forth above to determine
whether they are material so as to impair a director’s independence. If the
Board of Directors determines that any relationship is immaterial even though it
does not meet the categorical tests for immateriality set forth above, we will
explain in our next proxy statement the basis for the Board of Director’s
determination.
In October 2008, Mr.
Davis informed the Board of Directors that he intended to join the external
advisory board of the Global Waste Research Institute, or the GWRI. The GWRI, of
which Mr. Davis is a conceptual founder, is being developed in conjunction with
California Polytechnic State University, San Luis Obispo. The GWRI’s mission is
to advance state-of-the-art research and development of sustainable technologies
and practices to more effectively manage existing and emerging wastes and
byproducts. Waste Connections has agreed to make gifts to the GWRI totaling up
to $1,000,000 over the next nine years, subject to certain conditions. Based on
information provided to the Board of Directors by Mr. Davis, these gifts will
initially constitute more than one percent of the total annual receipts of the
GWRI, which caused the relationship to fall outside the criteria of the
independence tests set forth above and required the Board of Directors to review
and decide whether to approve Mr. Davis’ involvement with the GWRI. After a
review of the relevant facts and the mission of the GWRI, the Board of Directors
determined that Mr. Davis’ participation in the GWRI as a member of it external
advisory board coupled with Waste Connections’ contributions to the GWRI would
not be a material relationship that would impair Mr. Davis’ independence as a
director of Waste Connections.
Waste
Connections does not make any personal loans or extend credit to any director or
officer, other than those expressly permitted under applicable laws and
regulations. All such arrangements must be administered by the Compensation
Committee, and such arrangements not already maintained on July 30, 2002, must
also be approved in advance by the Compensation Committee. As of December 31,
2008, Waste Connections did not have any loans outstanding to any of its
directors or executive officers. No independent director or his or her immediate
family member may provide personal services to Waste Connections for
compensation, other than as permitted under New York Stock Exchange
rules.
Independence
of Committee Members
In
addition to the general requirements for independent Board members described
above, members of the Audit Committee must also satisfy the additional
independence requirements of the New York Stock Exchange and Rule 10A-3 of the
Securities Exchange Act of 1934, as amended. These rules, among other things,
prohibit a member of the Audit Committee, other than in his capacity as a member
of the Audit Committee, the Board of Directors or any other committee of the
Board of Directors, from receiving any compensatory fees from or being an
affiliated person of Waste Connections or any of its subsidiaries. As a matter
of policy, the Board of Directors also applies this additional requirement to
members of the Compensation and Nominating and Corporate Governance
Committees.
Our
Director Nomination Process
Our
Board of Directors believes that directors must have the highest personal and
professional ethics, integrity and values. They must be committed to
representing the long-term interests of our stockholders. They must have
objective perspective, practical wisdom, mature judgment and expertise, and
operational or financial skills and knowledge useful to the oversight of our
business. Our goal is to have a Board of Directors that represents diverse
experiences at policy-making levels in business and other areas relevant to our
activities. Directors should be committed to serving on the Board for an
extended period of time.
In
addition to the foregoing qualities, the Nominating and Corporate Governance
Committee will take a number of other factors into account in considering
candidates as nominees for the Board of Directors, including the following: (i)
whether the candidate is independent within the meaning of our Corporate
Governance Guidelines; (ii) relevant business, academic or other experience;
(iii) willingness and ability to attend and participate actively in Board and
Committee meetings and otherwise to devote the time necessary to serve, taking
into consideration the number of other boards on which the candidate serves and
the candidate’s other business and professional commitments; (iv) potential
conflicts of interest; (v) whether the candidate is a party to any adverse legal
proceeding; (vi) the candidate’s reputation; (vii) specific expertise and
qualifications relevant to any Committee that the candidate is being considered
for, such as whether a candidate for the Audit Committee meets the applicable
financial literacy or audit committee financial expert criteria; (viii)
willingness and ability to meet our director’s equity ownership guidelines; (ix)
willingness to adhere to our Code of Conduct and Ethics; (x) ability to interact
positively and constructively with other directors and management; (xi)
willingness to participate in a one-day new director orientation session; (xii)
willingness to attend educational forums or workshops to enhance understanding
of new and evolving governance requirements; and (xiii) the size and composition
of the current Board.
When
seeking director candidates, the Nominating and Corporate Governance Committee
may solicit suggestions from incumbent directors, management, third party
advisors, business and personal contacts, and stockholders. The Nominating and
Corporate Governance Committee may also engage the services of a search firm.
After conducting an initial evaluation, the Nominating and Corporate Governance
Committee will make arrangements for candidates it considers suitable to be
interviewed by one or more members of the committee. Each candidate will be
required to complete a standard directors’ and officers’ questionnaire,
completed by all of the directors annually. The Nominating and Corporate
Governance Committee may also ask the candidate to meet with members of our
management. If the Nominating and Corporate Governance Committee believes that
the candidate would be a valuable addition to the Board of Directors, it will
recommend the candidate for nomination to the Board.
The
Nominating and Corporate Governance Committee will apply the criteria described
above when considering candidates recommended by stockholders as nominees for
the Board of Directors. In addition, any of our stockholders may nominate one or
more persons for election as a director of the company at an Annual Meeting of
Stockholders if the stockholder complies with the notice, information and
consent provisions contained in our Amended and Restated Bylaws. We have an
advance notice Bylaw provision relating to the nomination of Directors. Pursuant
to that provision, to be considered for inclusion in our proxy materials, notice
of a stockholder’s nomination of a person for election to the Board of Directors
must be received by the Secretary of Waste Connections in writing at the address
listed on the first page of this Proxy Statement no later than the close of
business (California time) on the 120th day prior to the anniversary date of our
proxy statement released to stockholders in connection with the previous year’s
Annual Meeting of Stockholders. To be considered timely, stockholder nominations
submitted after this deadline must be received as set forth above no later than
the close of business (California time) on the 90th day
prior to the Annual Meeting of Stockholders. The stockholder’s written notice
must include information about the proposed nominee, including name, age,
business address, residence address, telephone number, email address, principal
occupation, number of shares of our common stock beneficially owned, and any
other information required in proxy solicitations for the election of directors,
including employment history, participation as a director of other public or
private corporations, and information about any relationship or understanding
between the proposing stockholder and the candidate or any other person (naming
that person) pursuant to which the nomination is to be made. The written notice
must be accompanied by the executed consent of each nominee to serve as a
director if elected. In addition, the stockholder giving the notice must include
the following information: such stockholder’s name, record address, phone
number, email address, number of shares of our common stock beneficially owned,
and a description of all arrangements or understandings between the stockholder
and each nominee and any other person (naming such person) pursuant to which
each nomination is to be made by the stockholder.
Before
nominating a sitting director for re-election at an Annual Meeting of
Stockholders, the Nominating and Corporate Governance Committee will consider
the director’s performance and contribution to the Board of
Directors.
How
to Contact Directors
Stockholders
and other interested parties may communicate with the Board of Directors
generally, with the non-management directors as a group or with a specific
director at any time by writing to the Board of Directors, the non-management
directors or a specific director, care of the Secretary of Waste Connections,
Inc., 2295 Iron Point Road, Suite 200, Folsom, California 95630. The Secretary
will forward all communications to the Board of Directors, the non-management
directors or a specific director, as applicable, as soon as practicable after
receipt without screening the communication. Stockholders and other interested
parties are requested to provide their contact information and to state the
number of shares of our common stock that they beneficially own in their
communications to the Board of Directors. Because other appropriate avenues of
communication exist for matters that are not of stockholder interest, such as
general business complaints or employee grievances, stockholders and other
interested parties are urged to limit their communications to the Board of
Directors to matters that are of stockholder interest and that are appropriate
for consideration at the Board level.
Compensation
Committee Interlocks and Insider Participation
In
2008, the Compensation Committee of our Board of Directors consisted of Messrs.
Razzouk, Harlan and Guillet. None of our executive officers served as a director
or member of the compensation committee of another entity which had an executive
officer that served as a director or member of our Compensation
Committee.
Compensation
of Directors for Fiscal Year 2008
The
following table provides compensation information for the year ended December
31, 2008, for each member of our Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
Stock
Awards
($)(3)
|
|
Option
Awards
($)(4)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
Ronald J.
Mittelstaedt(1)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Eugene V.
Dupreau(1)(2)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Robert
H. Davis
|
|
45,000
|
|
155,589
|
(5)
|
—
|
(9)
|
|
—
|
|
—
|
|
—
|
|
200,589
|
|
Edward
E. “Ned” Guillet
|
|
43,500
|
|
154,014
|
(6)
|
—
|
(10)
|
|
—
|
|
—
|
|
—
|
|
197,514
|
|
Michael
W. Harlan
|
|
49,500
|
|
155,589
|
(7)
|
—
|
(11)
|
|
—
|
|
—
|
|
—
|
|
205,089
|
|
William
J. Razzouk
|
|
45,000
|
|
155,589
|
(8)
|
—
|
(12)
|
|
—
|
|
—
|
|
—
|
|
200,589
|
|
|
Directors
who are officers or employees of Waste Connections do not currently
receive any compensation as directors or for attending meetings of the
Board of Directors or its committees.
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|
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|
Mr.
Dupreau did not stand for re-election at Waste Connections’ 2008 Annual
Meeting of Stockholders held on May 15, 2008. Accordingly, his term as a
Class I director expired on that date.
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|
|
Stock
awards consist of restricted stock units granted under our Second Amended
and Restated 2004 Equity Incentive Plan. Amounts shown do not reflect
compensation actually received by the director. Instead, the amounts shown
are the dollar amounts recognized by us as compensation expense for
financial reporting purposes in 2008 for stock awards pursuant to the
Financial Accounting Standards Board’s Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based
Payment, or SFAS 123R, excluding estimates of forfeitures related
to service-based vesting conditions. Although the amounts shown do not
reflect estimated forfeitures, the amounts actually recognized in our
financial statements are reduced for estimated forfeitures pursuant to
SFAS 123R. The assumptions used to calculate the value of stock awards are
set forth under Note 1 of the Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, filed with the SEC on February 10, 2009. These
compensation expense amounts reflect stock awards granted in 2008, 2007
and 2006 (the first year in which we granted stock awards to independent
directors). The following table sets forth the amount included in the 2008
“Stock Awards” column with respect to awards granted in 2008 and prior
years.
|
|
|
Amount
included in Table
Attributable
to
|
|
|
|
Prior
Year
Awards
|
|
Fiscal
2008
Awards
|
|
|
Robert
H. Davis
|
$ |
|
12,971 |
|
$ |
|
142,618 |
|
|
Edward
E. “Ned” Guillet
|
|
|
11,396 |
|
|
|
142,618 |
|
|
Michael
W. Harlan
|
|
|
12,971 |
|
|
|
142,618 |
|
|
William
J. Razzouk
|
|
|
12,971 |
|
|
|
142,618 |
|
|
|
|
No
option awards were made to any of our directors as compensation for their
service as directors or for attending meetings of the Board of Directors
or its committees in 2008. See the “Principal Stockholders” table on page
12 for details on the amount of our common stock beneficially owned by
each of our directors as of February 28, 2009.
|
|
|
|
The
grant date fair value of the 2008 award computed in accordance with SFAS
123R is $150,009, and disregards estimates of forfeitures related to
service-based vesting conditions. As of December 31, 2008, Mr. Davis had
an aggregate of 2,598 shares of stock awards in the form of restricted
stock units outstanding.
|
|
The
grant date fair value of the 2008 award computed in accordance with SFAS
123R is $150,009, and disregards estimates of forfeitures related to
service-based vesting conditions. As of December 31, 2008, Mr. Guillet had
an aggregate of 2,598 shares of stock awards in the form of restricted
stock units outstanding.
|
|
|
|
The
grant date fair value of the 2008 award computed in accordance with SFAS
123R is $150,009, and disregards estimates of forfeitures related to
service-based vesting conditions. As of December 31, 2008, Mr. Harlan had
an aggregate of 2,598 shares of stock awards in the form of restricted
stock units outstanding.
|
|
|
|
The
grant date fair value of the 2008 award computed in accordance with SFAS
123R is $150,009, and disregards estimates of forfeitures related to
service-based vesting conditions. As of December 31, 2008, Mr. Razzouk had
an aggregate of 2,598 shares of stock awards in the form of restricted
stock units outstanding.
|
|
|
|
As
of December 31, 2008, Mr. Davis had an aggregate of 6,400 option awards
outstanding.
|
|
|
|
As
of December 31, 2008, Mr. Guillet had no option awards
outstanding.
|
|
|
|
As
of December 31, 2008, Mr. Harlan had an aggregate of 41,500 option awards
outstanding.
|
|
|
|
As
of December 31, 2008, Mr. Razzouk had an aggregate of 31,500 option awards
outstanding.
|
Each
independent director receives a monthly cash retainer of $2,125 plus a fee of
$4,500 for attending each Board meeting and each committee meeting (unless held
in conjunction with a full Board meeting) in person. Each Board member is also
eligible for reimbursement of reasonable expenses incurred. Committee chairs
receive the following additional cash compensation, which amounts are added to
their monthly retainers: Audit Committee Chair - $500, Compensation Committee
Chair - $125, and Nominating and Corporate Governance Committee Chair - $125.
The monthly cash retainer is intended to compensate independent directors for
participation in meetings held by conference call and for incidental
participation in company affairs between meetings.
Other
than Mr. Guillet, who the Board of Directors elected on March 1, 2007, to fill a
new directorship it created, we granted each independent director an option to
purchase shares of our common stock at the time of his initial election or
appointment. Historically, we have also granted each independent director an
option to purchase between 16,875 and 45,000 shares of our common stock each
year during which the director served on the Board of Directors. However,
consistent with our intention of granting restricted stock units in lieu of
stock options to our management team, on February 5, 2008, we granted each
independent director 5,196 restricted stock units under our Second Amended and
Restated 2004 Equity Incentive Plan and no options. The units vested in two
successive, equal installments upon the February 5, 2008 grant date and the
first anniversary of the grant date. The annual grants made to each of our
independent directors in 2009 consisted of 5,698 restricted stock units and no
options. The units granted in 2009 were granted under our Second Amended and
Restated 2004 Equity Incentive Plan (as amended and restated) and vest in two
successive, equal installments upon the February 11, 2009 grant date and the
first anniversary of the grant date.
Directors’
Equity Ownership
The
Board of Directors has a policy that requires each non-management director of
the company to own a number of shares of the company’s common stock having a
market value of at least $200,000, as measured by current market value or
purchase price, whichever is higher. Unless otherwise satisfied, current
directors and new directors will achieve this requirement by retaining one half
of all restricted stock unit grants as they vest, measured on an after tax
basis, until the value of their holdings reaches the required
level.
PRINCIPAL
STOCKHOLDERS
The
following table shows the amount of our common stock beneficially owned, as of
February 28, 2009, by: (i) each person or entity that we know owns more than
five percent of our common stock; (ii) our named executive officers and each of
our directors and nominees; and (iii) all of our current directors and executive
officers as a group. An asterisk in the Percent of Class column indicates
beneficial ownership of less than one percent by a director or
nominee.
|
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|
|
|
|
|
|
Name of Beneficial
Owner(1)
|
|
|
Amount
and
Nature
of
Beneficial
Ownership(2)
|
|
Percent
of
Class
|
|
T. Rowe Price
Associates, Inc.(3)
|
|
|
6,039,027
|
|
|
7.55
|
%
|
Barclays Global
Investors, NA(4)
|
|
|
4,799,703
|
|
|
6.00
|
|
Eagle Asset
Management, Inc.(5)
|
|
|
4,716,464
|
|
|
5.89
|
|
Dos Mil Doscientos
Uno, Ltd.(6)
|
|
|
4,100,100
|
|
|
5.12
|
|
Steven
F. Bouck
|
|
|
874,047
|
(7)
|
|
1.08
|
|
Ronald
J. Mittelstaedt
|
|
|
304,383
|
(8)
|
|
0.38
|
|
Worthing
F. Jackman
|
|
|
212,939
|
(9)
|
|
0.27
|
|
Darrell
W. Chambliss
|
|
|
137,670
|
(10)
|
|
0.17
|
|
Eric
M. Merrill
|
|
|
85,538
|
(11)
|
|
0.11
|
|
Michael
W. Harlan
|
|
|
61,920
|
(12)
|
|
*
|
|
William
J. Razzouk
|
|
|
49,670
|
(13)
|
|
*
|
|
Robert
H. Davis
|
|
|
18,769
|
(14)
|
|
*
|
|
Edward
E. “Ned” Guillet
|
|
|
12,545
|
|
|
*
|
|
All
executive officers and directors as a group (16 persons)
|
|
|
2,048,777
|
(15)
|
|
2.51
|
|
|
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the SEC. In
general, a person who has voting power and/or investment power with
respect to securities is treated as the beneficial owner of those
securities. Except as otherwise indicated by footnote, we believe that the
persons named in this table have sole voting and investment power with
respect to the shares of common stock shown.
|
|
|
(2)
|
Shares
of common stock subject to options and/or warrants currently exercisable
or exercisable within 60 days after February 28, 2009, shares of common
stock into which convertible securities are convertible within 60 days
after February 28, 2009, and shares which will become issuable within 60
days after February 28, 2009, pursuant to outstanding restricted stock
units count as outstanding for computing the percentage beneficially owned
by the person holding such options, warrants, convertible securities and
restricted stock units, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other
person.
|
|
|
(3)
|
The
share ownership of T. Rowe Price Associates, Inc. is based on a Schedule
13G/A filed with the SEC on February 11, 2009. T. Rowe Price Associates,
Inc. has sole voting power with respect to 1,630,102 shares and sole
dispositive power with respect to all shares. The address of T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland
21202.
|
|
|
(4)
|
The
share ownership of Barclays Global Investors, NA is based on a Schedule
13G filed with the SEC on February 5, 2009, by Barclays Global Investors,
NA, Barclays Global Fund Advisors, Barclays Global Investors, Ltd,
Barclays Global Investors Japan Limited, Barclays Global Investors Canada
Limited, Barclays Global Investors Australia Limited and Barclays Global
Investors (Deutschland) AG (collectively, “Barclays”). Barclays has sole
voting power with respect to 4,054,331 shares and sole dispositive power
with respect to all such shares. The address of Barclays Global Investors,
NA and Barclays Global Fund Advisors is 400 Howard Street, San Francisco,
California 94105.
|
|
|
(5)
|
The
share ownership of Eagle Asset Management, Inc. is based on a Schedule 13G
filed with the SEC on January 26, 2009. Eagle Asset Management, Inc. has
sole voting and dispositive power with respect to all shares. The address
of Eagle Asset Management, Inc. is 880 Carillon Parkway, St. Petersburg,
Florida
33716.
|
(6)
|
The
share ownership of Dos Mil Doscientos Uno, Ltd. is based on a Schedule 13G
filed with the SEC on January 29, 2009. Dos Mil Doscientos Uno, Ltd. has
sole voting and dispositive power with respect to all shares. The address
of Dos Mil Doscientos Uno, Ltd. is Ronda Universitat, 31 1-1, Barcelona,
Spain 08007.
|
|
|
(7)
|
Includes
616,393 shares subject to options exercisable within 60 days of February
28, 2009. Excludes 3,900 shares owned by Mr. Bouck’s two minor sons as to
which Mr. Bouck disclaims beneficial ownership.
|
|
|
(8)
|
Includes
216,238 shares subject to options exercisable within 60 days of February
28, 2009, and 88,145 shares held by Mittelstaedt Enterprises, L.P., of
which Mr. Mittelstaedt is a limited partner. Excludes 2,850 shares held by
the Mittelstaedt Family Trust as to which Mr. Mittelstaedt disclaims
beneficial ownership.
|
|
|
(9)
|
Includes
202,814 shares subject to options exercisable within 60 days after
February 28, 2009.
|
|
|
(10)
|
Includes
33,756 shares subject to options exercisable within 60 days after February
28, 2009. |
|
|
(11)
|
Includes
76,500 shares subject to options exercisable within 60 days after February
28, 2009. |
|
|
(12)
|
Includes
41,500 shares subject to options exercisable within 60 days after February
28, 2009. |
|
|
(13)
|
Includes
31,500 shares subject to options exercisable within 60 days after February
28, 2009. |
|
|
(14)
|
Includes
6,400 shares subject to options exercisable within 60 days after February
28, 2009.
|
|
|
(15)
|
Includes
1,490,320 shares subject to options exercisable within 60 days after
February 28,
2009.
|
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Philosophy
and
Objectives
Throughout
this proxy statement, the individuals who served as our Chief Executive Officer
and our Chief Financial Officer during 2008, as well as our three other most
highly compensated executive officers in 2008, are referred to as the named
executive officers, or the NEOs.
The
Compensation Committee’s philosophy with respect to the compensation of the NEOs
does not differ materially from the philosophy that applies to other executive
officers. The Compensation Committee believes that compensation paid to NEOs
should be closely aligned with our performance on both a short-term and
long-term basis, linked to specific, measurable results intended to create value
for stockholders and should assist us in attracting and retaining key executives
critical to our long-term success.
In
establishing compensation for NEOs, the Compensation Committee’s objectives are
to:
|
|
|
|
●
|
Attract
and retain individuals with superior leadership ability and managerial
talent by providing competitive compensation and rewarding outstanding
performance;
|
|
|
|
|
●
|
Ensure
that NEO compensation is aligned with our corporate strategies, business
objectives and the long-term interests of our stockholders;
and
|
|
|
|
|
●
|
Provide
an incentive to achieve key strategic and financial performance measures
by linking incentive award opportunities to the achievement of performance
goals in these areas.
|
Our
overall compensation program is structured to attract and retain highly
qualified executive officers by paying them competitively consistent with our
success. We believe that compensation should be structured to ensure that a
significant portion is directly related to our stock’s performance and other
factors that directly and indirectly influence stockholder value. Accordingly,
our approach to compensation is to provide a base salary, annual
performance-based compensation tied to goals that are intended to link NEO
compensation to our operating and financial performance, and long-term equity
grants intended to align NEO compensation with stockholder returns and to aid in
retention.
Our
compensation program provides compensation in the form of both cash and equity
to provide incentives to reward both our short-term and long-term performance.
The Compensation Committee allocates total compensation between cash and equity
based on comparisons with other companies and the judgment of the Committee
members. The balance between cash and equity compensation among NEOs and other
members of the senior executive team is evaluated annually.
Approach
to Compensation
The
Compensation Committee has the primary authority for the consideration and
determination of the compensation we pay to our executive officers and
directors, including the amount of equity-based compensation. To aid the
Compensation Committee in making its determination, the Chief Executive Officer
meets with the Compensation Committee and provides recommendations annually to
the Compensation Committee regarding the compensation of all executive officers,
other than himself. The Compensation Committee also holds executive sessions not
attended by any members of management or non-independent directors. The
Compensation Committee is not bound to follow the Chief Executive Officer’s
recommendations. The Compensation Committee also has the authority to engage its
own independent advisors to assist it in carrying out its duties.
In
determining the level of base salary, performance-based compensation and
long-term equity-based compensation paid to the NEOs, the Compensation Committee
considers: (i) the compensation structure and practices of a peer group of
companies that we believe are our leading competitors in the solid waste
industry; (ii) a comparator group of companies, most of which are non-solid
waste companies, with comparable financial profiles; and (iii) its own judgment
as to an appropriate level of compensation for a company of our size and
financial performance. These peer and comparator groups are identified and
discussed below. While the Compensation Committee uses compensation consultants
from time to time, it does not engage consultants every year. For 2008, the
Compensation Committee had available a tally sheet that included, for each
officer (including the NEOs), current base salary, salary paid in 2007, bonus
percentage, cash bonus paid in 2007, options granted in 2007, restricted stock
units granted in 2007, dollar amount of 401(k) and deferred compensation plan
matches in 2007, payments and reimbursements for various expenses that could be
considered perquisites, the value realized from the exercise of options and sale
of the underlying stock in 2007, the value of vested and unvested unexercised
options and unvested restricted stock units as of the end of the year, and the
amount payable to each officer under various severance scenarios, including on a
change in control. In determining the amount of compensation for the NEOs, the
Compensation Committee does not take into account amounts realized from prior
equity-based compensation grants because the Compensation Committee seeks to
provide compensation that takes into account the cost of replacing the NEOs on a
market competitive basis and what is equitable based on our performance. To some
extent, appreciation reflected in the amounts realized from prior equity-based
compensation grants confirms the Compensation Committee’s success in aligning
compensation with our stockholders’ interests, thus validating our compensation
philosophy.
We provide the Chief Executive Officer with greater compensation and
benefits than that provided to the other NEOs to reflect his importance and
value to us as well as the increased level of responsibility and risk faced by
him as our Chairman and Chief Executive Officer. Mr. Mittelstaedt’s compensation
also differs as a direct result of the Compensation Committee’s review of the
comparator group compensation data, and reflects the competitive nature of
compensation paid to chief executive officers of companies within the comparator
group. The Compensation Committee believes that Mr. Mittelstaedt’s competitive
compensation package is important to reward, motivate and retain him as a highly
valued chief executive whose leadership and strategic vision have helped create
value for stockholders since our inception.
Transition
in Compensation Practices
Our compensation plan for
2008 reflects a three-year transition in compensation practices that culminated
in 2007. The transition, which the Compensation Committee launched in 2004 as it
reviewed our compensation philosophy primarily in anticipation of the
requirement that stock options be expensed, also addressed our evolution from an
early growth stage to a mature public company. In connection with its review in
2004, the Compensation Committee engaged Pearl Meyer & Partners, a
nationally known compensation consulting firm, to assist it in the determination
of the key elements of the compensation program. The Compensation Committee
requested that Pearl Meyer establish a comparator group, provide an analysis of
how the compensation of our NEOs compares to that of named executive officers in
the comparator group, advise the Compensation Committee on alternative forms of
compensation and make recommendations to the Committee. Pearl Meyer reported
directly to the Compensation Committee, and its services directly related to
executive compensation. Pearl Meyer has not performed any other service for the
company.
Compensation
Benchmarking
An
important component of setting and structuring compensation for our executive
officers is determining the compensation packages offered by three leading
national waste services companies – Waste Management, Inc., Republic Services,
Inc. and Allied Waste Industries, Inc. Allied Waste Industries, Inc. merged with
Republic Services, Inc. in December 2008. While we do not specifically benchmark
our compensation to a peer group, we do periodically perform our own survey of
the compensation practices of this peer group of companies to assess our
competitiveness. In doing so, we take into account factors such as the relative
financial performance of those companies and factors that differentiate us from
them. Each of the companies in this peer group is substantially larger than we
are and the Compensation Committee takes this into account when comparing
compensation.
In
2006, Pearl Meyer, following discussions with management, established a
comparator group consisting of the following companies with financial profiles
comparable to ours: Aaron Rents, Inc.; Covanta Holding Corporation; EMCOR Group,
Inc.; G & K Services, Inc.; McGrath Rentcorp; Mobile Mini, Inc.; Pacar
International; Quanta Services, Inc.; Republic Services, Inc.; Rollins, Inc.;
ServiceMaster Company; Stericycle, Inc.; United Rentals, Inc.; and Williams
Scotsman International, Inc. Allied Waste Industries, Inc. and Waste Management,
Inc. were included as additional reference companies. We did not engage Pearl
Meyer to update this group for 2008.
Determination
of Compensation Components
In
light of the 2004 review, the Compensation Committee decided to implement a
series of changes to our compensation philosophy for the NEOs and other
officers. We (i) increased base salary to more competitive levels over a
three-year period through 2007; (ii) decreased equity-based compensation as a
percentage of total compensation for these individuals relative to historic
levels; and (iii) implemented a program to transition the equity-based
compensation of these individuals from stock options to restricted stock unit
awards. In 2007, the Compensation Committee adopted the Senior Management
Incentive Plan governing the annual performance bonuses and the annual long-term
equity incentive grants for 2007 and subsequent years to the five individuals
who were our NEOs at that time and to such other executives and employees as may
be determined by the Compensation Committee. The Compensation Committee’s
objective was to set base salaries of our NEOs close to the median of the
comparator group by 2007, before adjustment for inflation and geographic
differences. The Committee also reconfirmed its goal of setting equity-based
compensation awards over time such that the after-tax income statement impact
resulting from company-wide equity-based compensation awards would not exceed
approximately five to six percent of projected net income at that time. These
goals are based on estimates of future results and actual results of
compensation decisions could vary materially. Moreover, the Compensation
Committee reserves the right to alter compensation goals and philosophies at any
time.
Base
Salary. Effective
February 1, 2008, for Messrs. Mittelstaedt, Jackman, Bouck and Chambliss, and
June 1, 2008, for Mr. Merrill, the anniversary of Mr. Merrill’s employment
agreement, we established the following base salaries for our
NEOs:
|
|
|
|
|
Name
|
|
|
Annual
Base
Salary
|
|
|
|
|
|
|
Ronald
J. Mittelstaedt
|
|
$
|
538,200
|
|
Worthing
F. Jackman
|
|
$
|
320,850
|
|
Steven
F. Bouck
|
|
$
|
398,475
|
|
Darrell
W. Chambliss
|
|
$
|
346,725
|
|
Eric
M. Merrill
|
|
$
|
270,000
|
|
Performance
Bonuses. Our
compensation program includes a performance bonus to reward executive officers
based on our performance and the individual executive’s contribution to that
performance. Under our Senior Management Incentive Plan, which is explained in
detail below, each participant in the Plan has an opportunity to earn an annual
performance bonus based on a targeted percentage of the participant’s annual
base salary for the year. The objective of the annual performance bonus is to
provide participants with an incentive to manage the company to achieve certain
targeted levels of financial performance based on budgeted revenue each
year.
Equity-Based
Compensation. We
believe that equity ownership in our company is important to tie the ultimate
level of an executive officer’s compensation to the performance of our stock and
stockholder gains while creating an incentive for sustained growth. To meet
these objectives, our senior management team receives equity-based
compensation.
In
2008, the Compensation Committee granted only restricted stock unit awards to
our NEOs; as was the case in 2007, no stock options were granted to our NEOs in
2008. The Compensation Committee believes that the use of restricted stock unit
awards will reduce the overall compensation cost to us compared to the cost of
granting options at levels consistent with previous years, yet will offer our
NEOs a competitive and more stable level of equity-based compensation, providing
them the opportunity to be owners of and to share in the success of the company.
In 2008, our restricted stock unit grants for our NEOs were authorized and made
on February 5, 2008, and vest in equal increments over five years.
The
Compensation Committee generally makes company-wide annual grants of
equity-based compensation to our executive officers and other employees in late
January or in February. This timing coincides with a number of events that make
that timing optimum from the Compensation Committee’s standpoint: first, the
Compensation Committee has available financial results from the previous year;
second, making the grants at this time allows management to notify employees of
the amount of their annual grant award at or around the same time that
management notifies employees of the amount of their cash performance bonus with
respect to the previous year, which we typically pay in February. In addition,
due to seasonal declines in our business and other market factors, the market
price of our stock tends to be lower in the first quarter of each year. The
Compensation Committee believes that it is in our best interests and the best
interests of our stockholders to confer the benefit of a lower stock price on
our employees, if possible, in order to enhance employee morale and minimize the
cost of equity-based compensation to the company.
Senior
Management Incentive Plan
Under
the Senior Management Incentive Plan, each participant has the opportunity to
earn up to 175% of his targeted performance bonus based on our achievement of
certain targeted levels of financial performance established by the Compensation
Committee and based on recommendations of the Chief Executive Officer. Each
targeted performance goal is weighted in order to calculate an overall
percentage achievement against targeted performance goals; the resulting
percentage is then used as a multiplier to determine the annual performance
bonus earned.
The
performance goals for 2008, which the Compensation Committee adopted in February
2008, were measured against achievement of targeted levels of: (1) EBITDA,
weighted at 20%; (2) operating income, or EBIT, weighted at 20%; (3) operating
income as a percentage of revenue, or EBIT Margin, weighted at 30%; and (4) net
cash provided by operating activities, or CFFO, as a percentage of revenue,
weighted at 30%. Because the operating budget adopted by the Board of Directors
is a compilation of stretch goals set for each District, the targeted
performance goals reflect a percentage or factor of the final budget, as set
forth below:
|
|
|
|
|
|
|
|
|
|
|
|
2008
Budget
|
|
|
2008
Factor
|
|
|
2008
Targeted
Performance
Goal
|
|
EBITDA
|
|
$ |
324.7M |
|
|
|
97.5 |
% |
|
$ |
316.6M |
|
EBIT
|
|
$ |
229.4M |
|
|
|
96.0
|
% |
|
$ |
220.3M |
|
EBIT
Margin
|
|
|
22.1
|
% |
|
|
N/A |
|
|
|
21.2
|
% |
CFFO
Margin
|
|
|
24.5
|
% |
|
|
97.5
|
% |
|
|
23.9
|
% |
Under
the terms of the Plan, the Compensation Committee, in its complete and sole
discretion, may adjust the targeted performance goals if an acquisition,
significant new contract or extraordinary event results in a significant impact
relative to the goals in order to exclude or reduce the impact of that
acquisition, contract or event. For these purposes, the Compensation Committee
determines operating income by adjusting for any gains or losses on disposal of
assets, and determines EBITDA by adding depreciation and amortization to
operating income. The Compensation Committee chose these measures of performance
because they are widely used by investors as valuation measures in the solid
waste industry and because the targeted goals encourage improving free cash flow
and returns on invested capital. The target bonuses are set at 100% of the Chief
Executive Officer’s base salary and 50% of the base salary of each of the other
participants, and a multiplier is used so that if the company achieves 100% of
its target, the participants receive 100% of their performance bonuses. The
multiplier may result in the participants being paid a greater (but not more
than 175%) or lesser (down to zero percent) percentage of their targeted
performance bonuses, based on whether the company’s performance is greater or
less than 100% of the target, in accordance with the following sliding
scale:
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Target
Achievement
|
|
Target
%
Multiplier
|
|
Bonus
as
%
of Base Salary
|
|
|
|
CEO
|
|
Other
Participants
|
|
105%
or Higher
|
|
|
175
|
%
|
|
|
175
|
%
|
|
|
87.5
|
%
|
|
104
|
%
|
|
|
160
|
%
|
|
|
160
|
%
|
|
|
80.0
|
%
|
|
103
|
%
|
|
|
145
|
%
|
|
|
145
|
%
|
|
|
72.5
|
%
|
|
102
|
%
|
|
|
130
|
%
|
|
|
130
|
%
|
|
|
65.0
|
%
|
|
101
|
%
|
|
|
115
|
%
|
|
|
115
|
%
|
|
|
57.5
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
50.0
|
%
|
|
99
|
%
|
|
|
80
|
%
|
|
|
80
|
%
|
|
|
40.0
|
%
|
|
98
|
%
|
|
|
60
|
%
|
|
|
60
|
%
|
|
|
30.0
|
%
|
|
97
|
%
|
|
|
40
|
%
|
|
|
40
|
%
|
|
|
20.0
|
%
|
|
96
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
10.0
|
%
|
|
95
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0.0
|
%
|
|
Payments
under this program are contingent on continued employment at the time of payout,
subject to the terms of any applicable employment agreements.
2008
Adjusted Target Goals and Results
Adjusted
targeted performance goals and adjusted results and corresponding target
percentages for 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Target(1)
|
|
|
Adjusted
Results(1)
|
|
|
Adjusted
Results
as %
of
Target
|
|
|
Weighting
|
|
|
Target
Achievement
|
|
EBITDA
|
|
$ |
321.6M |
|
|
$ |
311.4M |
|
|
|
96.9 |
% |
|
|
20 |
% |
|
|
19.4 |
% |
EBIT
|
|
$ |
222.7M |
|
|
$ |
215.6M |
|
|
|
96.8
|
% |
|
|
20
|
% |
|
|
19.4
|
% |
EBIT
Margin
|
|
|
21.0
|
% |
|
|
20.8
|
% |
|
|
99.5
|
% |
|
|
30
|
% |
|
|
29.8
|
% |
CFFO
Margin
|
|
|
23.9
|
% |
|
|
25.6
|
% |
|
|
107.3
|
% |
|
|
30
|
% |
|
|
32.2
|
% |
Overall
Achievement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100.8
|
% |
(1)
|
The
Compensation Committee adjusted the targets and results during 2008 to
exclude or reduce the impact of certain acquisitions and fuel costs not
incorporated in the original
budget.
|
In
addition to the foregoing Target Achievements, in determining actual bonus
payouts the Compensation Committee considered uncontrollable decreases in market
prices for recycled commodities in late 2008 that negatively impacted results,
as well as management’s success in raising over $600 million of capital in
volatile financial markets to position the company for additional growth
opportunities. For 2008, targeted and actual annual performance bonuses as a
percentage of each participant’s annual base salary were as
follows:
|
|
|
|
|
|
|
|
Name
|
|
|
Targeted
Bonus
%
of Base Salary
|
|
Actual
Bonus % of
Base
Salary
|
|
Ronald
J. Mittelstaedt
|
|
100
|
|
|
|
|
|
Worthing
F. Jackman
|
|
50
|
|
|
|
|
|
Steven
F. Bouck
|
|
50
|
|
|
|
|
|
Darrell
W. Chambliss
|
|
50
|
|
|
|
|
|
In
lieu of paying an annual performance bonus in cash, the Compensation Committee,
in its complete and sole discretion, may choose to pay the annual performance
bonus in restricted stock units issued under our Second Amended and Restated
2004 Equity Incentive Plan (as amended and restated) or any succeeding plan we
adopt. If restricted stock units are issued, their value, as determined by the
Compensation Committee, will be at least 125% of the earned cash bonus to
compensate for the risk and vesting period associated with the underlying stock.
Mr. Merrill, who became an NEO in 2008, is not a participant in the Senior
Management Incentive Plan. Pursuant to his employment agreement, Mr. Merrill is
eligible to receive a maximum annual cash bonus equal to 40% of his beginning
base salary in the applicable year, which is payable if the Board of Directors
determines, in its sole and exclusive discretion, that such year’s financial
objectives have been fully met. For 2008, Mr. Merrill’s actual bonus equaled
40.8% of his base salary at the beginning of that year.
Equity-Based
Compensation
Under
our Senior Management Incentive Plan, each participant also receives an annual
long-term incentive grant of restricted stock units based on the performance of
both the company and the individual, subject to a vesting schedule approved by
the Compensation Committee. The size of the grant is targeted between 125% and
150% of the participant’s base salary. For 2008, the size of the grant was
approximately 150% of the participant’s base salary. The objective of the
long-term incentive grant is to supplement each participant’s base salary and
annual performance bonus in order to maintain total compensation at the
Compensation Committee’s targeted percentile of the comparator group and vest in
equal increments over five years. In the case of the Chief Executive Officer,
the target was the median of the comparator group.
Amended
and Restated Senior Management Incentive Plan
In
2008, our Board of Directors adopted the Amended and Restated Senior Management
Incentive Plan (the “Amended SMIP”), which was subsequently approved by our
stockholders. The Amended SMIP is a performance-based incentive compensation
plan similar to the Senior Management Incentive Plan adopted in 2007. Under the
Amended SMIP, designated senior executives of the company are eligible to
receive performance bonus payments and equity-based compensation. The
Compensation Committee has designated the one-year period commencing January 1,
2009, as the first performance period under the Amended SMIP. For 2009, the
participants under the Amended SMIP are Messrs. Mittelstaedt, Jackman, Bouck and
Chambliss. The Amended SMIP is designed with the intent to allow us to pay
performance-based compensation under Section 162(m) of the United States
Internal Revenue Code, or the IRC.
Stock
Ownership
Guidelines
To
encourage long-term stock ownership, the Senior Management Incentive Plan
provides that each participating NEO is expected to retain at least 50% of all
after-tax shares of common stock received from long-term incentive grants until
such NEO meets and maintains the following stock ownership thresholds, as valued
by the Compensation Committee:
|
|
|
|
●
|
For
the Chief Executive Officer and President, three times such participant’s
base salary; and
|
|
|
|
|
●
|
For
other participating NEOs, two and one-half times such participant’s base
salary.
|
|
Non-Equity
Incentive Plan, Defined Contribution Plan, Nonqualified Deferred
Compensation Plan Compensation and Other
Benefits
|
Other
than cash performance bonuses, we do not provide non-equity incentive plan
compensation, nor do we provide defined benefit retirement plans to our NEOs.
The NEOs are entitled to participate in a company-sponsored 401(k) profit
sharing plan on the same terms as all employees. We make a matching contribution
of $0.50 for each dollar of an employee’s pre-tax contributions until the
employee’s contributions equal five percent of the employee’s base salary,
subject to certain limitations imposed by the IRC. Employees are eligible to
participate in the 401(k) plan beginning on the June 1 or December 1 first
following completion of one full year of employment. Our matching contributions
vest over five years.
The
NEOs and certain other highly compensated employees are also entitled to
participate in the nonqualified deferred compensation plan, which we put in
place to mitigate the impact of our officers and other highly compensated
employees being unable to make the maximum contribution permitted under the
401(k) plan due to certain limitations imposed by the IRC. The deferred
compensation plan allows a highly compensated employee to voluntarily defer
receipt of a portion of the employee’s earned base salary and all or a portion
of cash performance bonuses, if any. Earnings on contributions to the deferred
compensation plan are determined by reference to the returns on one or more
select mutual funds (as determined by the participant) that are also available
for investment by the general public. We make a matching contribution of $0.50
for each dollar of an employee’s pre-tax contributions until the employee’s
contributions equal five percent of the employee’s base salary, less the amount
of any match we make on behalf of the employee under the company-sponsored
401(k) plan, and subject to the same limits that apply to the 401(k) plan except
that our matching contributions are 100% vested when made. The earnings on these
funds may exceed or fall short of market rate returns, depending on the
performance of the funds selected compared to the markets in
general.
We
also offer a number of benefits to the NEOs pursuant to benefit programs that
provide for broad-based employee participation. In addition to the 401(k) plan
described above, the benefits include medical, prescription drugs, dental and
vision insurance, long-term disability insurance, life and accidental death and
dismemberment insurance, health and dependent flexible spending accounts, a
cafeteria plan and employee assistance benefits. These generally available
benefits do not specifically factor into decisions regarding an individual
executive’s total compensation or equity-based compensation package. These
benefits are designed to help us attract and retain employees as we compete for
talented individuals in the marketplace, where such benefits are commonly
offered.
Perquisites
and Other Personal Benefits
The
material components of our NEOs’ compensation are described above. We do not
provide our NEOs extensive perquisites. Those that are provided are summarized
in the Summary Compensation Table for Fiscal Year 2008 and the accompanying
footnotes. Perquisites are valued at the incremental cost to the
company.
Tax
Deductibility Considerations
Within
our performance-based compensation program, we aim to compensate the NEOs in a
manner that is tax effective, but we do not let tax considerations drive
compensation decisions. Section 162(m) of the IRC generally disallows an income
tax deduction to publicly held corporations for compensation in excess of
$1,000,000 paid for any fiscal year to the corporation’s “covered employees,”
which is defined in Section 162(m) as the Chief Executive Officer and the three
other most highly compensated executive officers, other than the Chief Financial
Officer. However, the statute exempts qualifying performance-based compensation
from the deduction limit if certain requirements are met. The policy of the
Compensation Committee in the past has been to attempt to structure the
compensation of our executive officers to avoid the loss of the deductibility of
any compensation, even though Section 162(m) does not preclude the payment of
compensation in excess of $1,000,000. In certain situations, the Compensation
Committee may approve compensation that will not meet these requirements in
order to assure competitive total compensation for the NEOs. Bonuses paid under
the Senior Management Incentive Plan and compensation deemed paid with respect
to stock option awards, direct stock issuances and restricted stock unit awards
under the Second Amended and Restated 2004 Equity Incentive Plan (as amended and
restated) may be subject to the $1,000,000 limitation, unless considered
“performance-based” compensation. Bonuses paid under the Amended and Restated
Senior Management Incentive Plan are intended to be “performance-based”
compensation.
Severance
and Change in Control
Arrangements
The
provisions regarding severance and change in control contained in each NEO’s
employment agreement are described elsewhere in this proxy statement, under
“Potential Payments Upon Termination or Change in Control.” With slight
variations, the agreements for our NEOs other than Mr. Merrill generally provide
for severance payments under various conditions in an amount approximately equal
to three times the NEO’s base salary and bonus, plus the maximum bonus available
for the year of termination under the officer’s employment agreement. Mr.
Merrill’s employment agreement generally provides for a severance payment under
various conditions in an amount approximately equal to the lesser of his base
salary for a period of one year and his base salary for the remainder of the
term of his employment agreement, plus the pro-rated maximum bonus available to
him for the year of termination under his employment agreement. The Compensation
Committee believes that these levels of severance are appropriate in light of
what it understands is the level of severance offered by the comparator group,
and because our relatively low base salaries would result in payments comparable
to those that peer companies would pay given a lower multiple but higher
base.
The
primary factor considered in establishing the change in control benefits was the
competitive marketplace. In the case of payment of a multiple of the employee’s
annual base salary and bonus in the event of a change in control, the
Compensation Committee believes that this is appropriate because such payment
generally motivates the executive to act in the best interests of the
stockholders by removing the distraction of post change in control uncertainties
faced by such executive with regard to his or her compensation. In addition, the
company believes that the multiple of the payment is appropriate because the
company’s executives have base salaries and bonuses that are low relative to
their industry peers; therefore, the multiple would result in payments
comparable to those that peer companies would pay given a lower multiple but
higher base and bonus. In the case of payment of a bonus in the event of a
change in control, the company adopted this approach because, in addition to the
rationale discussed above, it would be impractical and potentially unfair,
following a change in control, to continue to measure the company’s performance
based on goals and targets previously set for an independent, freestanding
company. In the case of accelerated vesting of stock options, the company uses
stock options to provide compensation only to the extent the company’s stock
price increases over the term of the option. In the case of full value awards,
such as restricted stock units, the company uses such awards to enable
recipients to share in both the risk and rewards of stock ownership through
stock depreciation or appreciation and provide a type of compensation used by
competitors. Immediate vesting upon a change in control permits recipients of
such awards to participate in any price appreciation associated with a change in
control on the basis similar to that available to stockholders as a whole,
without the necessity of placing receipt of that compensatory element at the
risk of the actions of an acquirer.
The
Compensation Committee reserves the right to alter severance payment levels
going forward, though this action would require the consent of each NEO to an
amendment to his existing employment agreement.
Compensation
Committee
Report
The
Compensation Committee of the Board of Directors has reviewed and discussed with
management the Compensation Discussion and Analysis to be included in this Proxy
Statement. Based on the review and discussions referred to above, the Committee
recommended to the Board of Directors that the Compensation Discussion and
Analysis be incorporated by reference into our Annual Report on Form 10-K for
the fiscal year ended December 31, 2008, and included in this Proxy
Statement.
This
report is submitted on behalf of the Compensation Committee.
|
|
|
William
J. Razzouk, Chairman
Edward
E. “Ned” Guillet
Michael
W. Harlan
|
SUMMARY
COMPENSATION TABLE FOR FISCAL YEAR 2008
The
following table summarizes the total compensation earned by each of our named
executive officers in 2008, 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
|
Year
|
|
|
Salary
($)(1)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(2)(3)
|
|
|
Option
Awards
($) (2)(4)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)(5)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)(6)
|
|
|
Total
($)
|
|
Ronald
J. Mittelstaedt
|
|
|
2008 |
|
|
|
536,939 |
|
|
|
— |
|
|
|
454,101 |
|
|
|
77,063 |
|
|
|
656,370 |
|
|
|
— |
|
|
|
58,564 |
(7)
|
|
|
1,783,037 |
|
Chief
Executive Officer
|
|
2007
|
|
|
|
512,462 |
|
|
|
— |
|
|
|
305,036 |
|
|
|
85,009 |
|
|
|
573,622 |
|
|
|
— |
|
|
|
88,424 |
|
|
|
1,564,553 |
|
and
Chairman
|
|
2006
|
|
|
|
444,288 |
|
|
|
— |
|
|
|
103,411 |
|
|
|
74,419 |
|
|
|
— |
|
|
|
— |
|
|
|
23,690 |
|
|
|
645,808 |
|
Worthing
F. Jackman
|
|
2008
|
|
|
|
319,640 |
|
|
|
— |
|
|
|
210,942 |
|
|
|
43,344 |
|
|
|
195,533 |
|
|
|
— |
|
|
|
7,852 |
|
|
|
777,311 |
|
Executive
Vice President
|
|
2007
|
|
|
|
305,154 |
|
|
|
— |
|
|
|
140,398 |
|
|
|
47,817 |
|
|
|
170,882 |
|
|
|
— |
|
|
|
9,262 |
|
|
|
673,513 |
|
and
Chief Financial Officer
|
|
2006
|
|
|
|
259,808 |
|
|
|
— |
|
|
|
45,623 |
|
|
|
41,860 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
347,291 |
|
Steven
F. Bouck
|
|
2008
|
|
|
|
397,741 |
|
|
|
— |
|
|
|
256,310 |
|
|
|
52,989 |
|
|
|
242,839 |
|
|
|
— |
|
|
|
10,131 |
(8)
|
|
|
960,010 |
|
President
|
|
2007
|
|
|
|
380,154 |
|
|
|
— |
|
|
|
169,709 |
|
|
|
58,441 |
|
|
|
212,224 |
|
|
|
— |
|
|
|
10,491 |
|
|
|
831,019 |
|
|
|
2006
|
|
|
|
334,288 |
|
|
|
— |
|
|
|
55,964 |
|
|
|
51,163 |
|
|
|
— |
|
|
|
— |
|
|
|
4,030 |
|
|
|
445,445 |
|
Darrell
W. Chambliss
|
|
2008
|
|
|
|
345,417 |
|
|
|
— |
|
|
|
213,695 |
|
|
|
43,344 |
|
|
|
211,301 |
|
|
|
— |
|
|
|
8,056 |
|
|
|
821,813 |
|
Executive
Vice President
|
|
2007
|
|
|
|
330,692 |
|
|
|
— |
|
|
|
141,788 |
|
|
|
47,817 |
|
|
|
184,663 |
|
|
|
— |
|
|
|
8,612 |
|
|
|
713,572 |
|
and
Chief Operating Officer
|
|
2006
|
|
|
|
290,327 |
|
|
|
— |
|
|
|
46,839 |
|
|
|
41,860 |
|
|
|
— |
|
|
|
— |
|
|
|
325 |
|
|
|
379,351 |
|
Eric
M. Merrill
|
|
2008
|
(9)
|
|
|
258,942 |
|
|
|
100,000 |
|
|
|
168,242 |
|
|
|
23,123 |
|
|
|
— |
|
|
|
— |
|
|
|
2,959 |
|
|
|
553,266 |
|
Senior
Vice President –
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
People,
Safety and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
shown reflect salary earned by the named executive officers for 2008, and
reflect increases that Messrs. Mittelstaedt, Jackman, Bouck and Chambliss
received on February 1 of that year and an increase that Mr. Merrill
received on June 1 of that year.
|
|
|
|
|
Stock
awards consist of restricted stock units granted under our Second Amended
and Restated 2004 Equity Incentive Plan. Amounts shown do not reflect
compensation actually received by the named executive officer. Instead,
the amounts shown are the dollar amounts recognized by us as compensation
expense for financial reporting purposes in 2008 for stock and option
awards pursuant to SFAS 123R, excluding estimates of forfeitures related
to service-based vesting conditions. Although the amounts shown do not
reflect estimated forfeitures, the amounts actually recognized in our
financial statements are reduced for estimated forfeitures pursuant to
SFAS 123R. The assumptions used to calculate the value of stock and option
awards are set forth under Note 1 of the Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2008, filed with the SEC on February 10,
2009.
|
|
|
|
|
These
compensation expense amounts reflect stock awards granted in 2008, 2007
and 2006 (the first year in which we granted stock awards to the named
executive officers). The following table sets forth the amount included in
the 2008 “Stock Awards” column with respect to awards granted in 2008 and
prior
years.
|
|
|
|
Amount
included in Table
Attributable
to
|
|
|
|
|
Prior
Year
Awards
|
|
|
Fiscal
2008
Awards
|
|
|
Ronald
J. Mittelstaedt
|
|
$ |
292,573 |
|
|
$ |
161,528 |
|
|
Worthing
F. Jackman
|
|
|
134,870 |
|
|
|
76,072 |
|
|
Steven
F. Bouck
|
|
|
162,944 |
|
|
|
93,366 |
|
|
Darrell
W. Chambliss
|
|
|
136,121 |
|
|
|
77,574 |
|
|
Eric
M. Merrill
|
|
|
120,837 |
|
|
|
47,405 |
|
|
These
compensation expense amounts reflect option awards granted in 2006 only.
We accelerated outstanding option awards granted to our employees,
including the named executive officers, prior to that year on October 27,
2005, and incurred a non-cash charge of approximately $1.6 million, or
$1.0 million net of taxes, associated with those accelerated option awards
in 2005. We did not grant any option awards in 2007 or 2008. The
following table sets forth the amount included in the 2008 “Option Awards”
column with respect to awards granted in
2006.
|
|
|
Amount
included in Table
Attributable
to
|
|
|
|
Prior
Year
Awards
|
|
Fiscal
2008
Awards
|
|
|
Ronald
J. Mittelstaedt
|
$
|
|
77,063 |
|
$
|
|
— |
|
|
Worthing
F. Jackman
|
|
|
43,344 |
|
|
|
— |
|
|
Steven
F. Bouck
|
|
|
52,989 |
|
|
|
— |
|
|
Darrell
W. Chambliss
|
|
|
43,344 |
|
|
|
— |
|
|
Eric
M. Merrill
|
|
|
23,123 |
|
|
|
— |
|
|
Amounts
shown reflect annual incentive bonus awards earned by the named executive
officers for 2008 under our Senior Management Incentive Plan, which is
discussed elsewhere in this proxy statement, under “Compensation
Discussion and Analysis.” These amounts were paid on February 13,
2009.
|
|
|
|
We
make available for business use to our named executive officers and others
a private aircraft, which we own. Our general policy is not to permit
employees, including the named executive officers, to use the aircraft for
purely personal use. Occasionally, employees or their relatives or
spouses, including relatives or spouses of the named executive officers,
may derive personal benefit from travel on our aircraft incidental to a
business function, such as when a named executive officer’s spouse
accompanies the officer to the location of an event the officer is
attending for business purposes. For purposes of our Summary Compensation
Table for Fiscal Year 2008, we value the compensation benefit to the
officer at the incremental cost to us of conferring the benefit, which
consists of additional catering and fuel expenses. In the example given,
the incremental cost would be nominal because the aircraft would have been
used to travel to the event, and the basic costs of the trip would have
been incurred, whether or not the named executive officer’s spouse
accompanied the officer on the trip. However, on the rare occasions when
we permit an employee to use the aircraft for purely personal use, we
value the compensation benefit to such employee (including named executive
officers) at the incremental cost to us of conferring the benefit, which
consists of the average weighted fuel expenses, catering expenses,
trip-related crew expenses, landing fees and trip-related hangar/parking
costs. Since our aircraft is used primarily for business travel, the
valuation excludes the fixed costs that do not change based on usage, such
as pilots’ compensation, the purchase cost of the aircraft and the cost of
maintenance. Our valuation of personal use of aircraft as set forth in
this proxy statement is calculated in accordance with SEC guidance, which
may not be the same as valuation under applicable tax
regulations.
|
|
|
|
Includes
matching contributions by us to our 401(k) Plan on behalf of Mr.
Mittelstaedt ($7,523) and the following perquisites and other personal
benefits: (i) restoration matching contributions by the company to the
Nonqualified Deferred Compensation Plan for eligible employees on behalf
of Mr. Mittelstaedt ($2,125); (ii) health club membership ($2,370); (iii)
personal use of corporate aircraft incidental to a business function (see
footnote (6) above) ($1,106); (iv) purely personal use of corporate
aircraft (see footnote (6) above) ($38,840); and (v) professional
association dues ($6,600).
|
|
|
|
Includes
matching contributions by us to our 401(k) Plan on behalf of Mr. Bouck and
the following perquisites and other personal benefits: (i) restoration
matching contributions by the company to the Nonqualified Deferred
Compensation Plan for eligible employees on behalf of Mr. Bouck; (ii)
health club membership; and (iii) professional association
dues.
|
|
|
|
2008
was the first year in which Mr. Merrill was a named executive
officer.
|
GRANTS
OF PLAN BASED AWARDS IN FISCAL YEAR 2008
The
following table summarizes the amount of awards under the Senior Management
Incentive Plan and equity awards granted in 2008 for each of the named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)(2)
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Potential Payouts
Under
Non-Equity Incentive
Plan Awards (1)
|
|
Estimated
Future Payouts
Under
Equity Incentive
Plan
Awards
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Ronald
J. Mittelstaedt
|
|
2/5/08 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,087 |
|
|
|
— |
|
|
|
— |
|
|
|
984,092 |
|
|
|
|
— |
|
|
|
— |
|
|
|
538,200 |
|
|
|
941,850 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Worthing
F. Jackman
|
|
2/5/08
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,058 |
|
|
|
— |
|
|
|
— |
|
|
|
463,594 |
|
|
|
|
— |
|
|
|
— |
|
|
|
160,425 |
|
|
|
280,743 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Steven
F. Bouck
|
|
2/5/08
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,703 |
|
|
|
— |
|
|
|
— |
|
|
|
568,826 |
|
|
|
|
— |
|
|
|
— |
|
|
|
199,238 |
|
|
|
348,667 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Darrell
W. Chambliss
|
|
2/5/08
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,371 |
|
|
|
— |
|
|
|
— |
|
|
|
472,631 |
|
|
|
|
— |
|
|
|
— |
|
|
|
173,138 |
|
|
|
302,992 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Eric
M. Merrill
|
|
2/5/08
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,000 |
|
|
|
— |
|
|
|
— |
|
|
|
288,700 |
|
|
The
target incentive amounts shown in this column reflect our annual incentive
bonus plan awards provided under the Senior Management Incentive Plan and
represent the target awards pre-established as a percentage of salary. The
maximum is the greatest payout which can be made if the pre-established
maximum performance level is met or exceeded. Actual annual incentive
bonus amounts earned by the named executive officers for 2008 under the
Senior Management Incentive Plan are reflected in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table For Fiscal Year
2008.
|
|
|
|
|
Stock
awards consist of restricted stock units granted under our Second Amended
and Restated 2004 Equity Incentive Plan. The units vest in equal, annual
installments over the five-year period following the date of grant,
beginning on the first anniversary of the date of
grant.
|
|
|
|
|
The
value of a stock award is based on the fair value as of the grant date of
such award determined pursuant to SFAS 123R, and disregards estimates of
forfeitures related to service-based vesting
conditions.
|
We
have entered into an employment agreement with each of our named executive
officers. The material terms of each of these employment agreements is discussed
elsewhere in this proxy statement, under “Potential Payments Upon Termination or
Change in Control.”
OUTSTANDING
EQUITY AWARDS AT 2008 FISCAL YEAR-END
The
following table summarizes unexercised options and restricted stock units that
have not vested and related information for each of our named executive officers
as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)(6)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other Rights
That
Have
Not
Vested
($)
|
|
Ronald
J. Mittelstaedt
|
|
|
22,722
|
|
|
—
|
|
|
—
|
|
|
16.62
|
|
|
2/3/14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
6,015
|
|
|
—
|
|
|
—
|
|
|
16.62
|
|
|
2/3/14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
137,957
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
4,544
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,300
|
(2)
|
|
483,021
|
|
|
—
|
|
|
—
|
|
|
|
|
30,000
|
|
|
30,000
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,200
|
(3)
|
|
890,274
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,087
|
(4)
|
|
1,076,127
|
|
|
—
|
|
|
—
|
|
Worthing
F. Jackman
|
|
|
46,958
|
|
|
—
|
|
|
—
|
|
|
16.62
|
|
|
2/3/14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
18,044
|
|
|
—
|
|
|
—
|
|
|
16.62
|
|
|
2/3/14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
107,955
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
4,545
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,750
|
(2)
|
|
213,098
|
|
|
—
|
|
|
—
|
|
|
|
|
16,875
|
|
|
16,875
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,320
|
(3)
|
|
420,512
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,058
|
(4)
|
|
506,951
|
|
|
—
|
|
|
—
|
|
Steven
F. Bouck
|
|
|
138,613
|
|
|
—
|
|
|
—
|
|
|
10.63
|
|
|
2/1/12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
164,105
|
|
|
—
|
|
|
—
|
|
|
14.50
|
|
|
2/20/13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
162,737
|
|
|
—
|
|
|
—
|
|
|
16.62
|
|
|
2/3/14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
115,457
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
4,544
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,280
|
(2)
|
|
261,400
|
|
|
—
|
|
|
—
|
|
|
|
|
11,997
|
|
|
11,997
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
8,628
|
|
|
8,628
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,960
|
(3)
|
|
503,857
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,703
|
(4)
|
|
622,024
|
|
|
—
|
|
|
—
|
|
Darrell
W. Chambliss
|
|
|
17,072
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,930
|
(2)
|
|
218,780
|
|
|
—
|
|
|
—
|
|
|
|
|
8,247
|
|
|
8,247
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
8,628
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,320
|
(3)
|
|
420,512
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,371
|
(4)
|
|
516,832
|
|
|
—
|
|
|
—
|
|
Eric
M. Merrill
|
|
|
63,000
|
|
|
—
|
|
|
—
|
|
|
22.01
|
|
|
2/23/15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,120
|
(2)
|
|
193,208
|
|
|
—
|
|
|
—
|
|
|
|
|
9,000
|
|
|
9,000
|
|
|
—
|
|
|
23.17
|
|
|
2/14/16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,200
|
(3)
|
|
227,304
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,894
|
(5)
|
|
122,934
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
(4)
|
|
315,700
|
|
|
—
|
|
|
—
|
|
|
The
options vest in equal, annual installments over the four-year period
following the grant date of February 14, 2006.
|
|
|
|
|
The
restricted stock units vest in equal, annual installments over the
five-year period following the grant date of February 14,
2006.
|
|
|
|
|
The
restricted stock units vest in equal, annual installments over the
five-year period following the grant date of February 1,
2007.
|
|
|
|
|
The
restricted stock units vest in equal, annual installments over the
five-year period following the grant date of February 5,
2008.
|
|
|
|
|
The
restricted stock units vest in equal, annual installments over the
five-year period following the grant date of June 1,
2007.
|
|
|
|
|
Based
on the closing price of our common stock of $31.57 on the New York Stock
Exchange on December 31,
2008.
|
OPTION
EXERCISES AND STOCK VESTED IN FISCAL YEAR 2008
The
following table summarizes each exercise of stock options, each vesting of
restricted stock units and related information for each of our named executive
officers on an aggregated basis during 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
|
Value
Realized
on
Exercise
($)
|
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
|
Value
Realized
on
Vesting
($)
|
|
Ronald
J. Mittelstaedt
|
|
|
207,515 |
|
|
|
4,037,786 |
|
|
|
12,150 |
|
|
|
364,104 |
|
Worthing
F. Jackman
|
|
|
50,000 |
|
|
|
941,037 |
|
|
|
5,580 |
|
|
|
167,146 |
|
Steven
F. Bouck
|
|
|
51,700 |
|
|
|
1,092,412 |
|
|
|
6,750 |
|
|
|
202,223 |
|
Darrell
W. Chambliss
|
|
|
38,385 |
|
|
|
546,989 |
|
|
|
5,640 |
|
|
|
168,971 |
|
Eric
M. Merrill
|
|
|
— |
|
|
|
— |
|
|
|
5,713 |
|
|
|
174,289 |
|
PENSION
BENEFITS IN FISCAL YEAR 2008
None
of our named executive officers participates in or has account balances in
qualified or non-qualified defined benefit plans sponsored by us.
NONQUALIFIED
DEFERRED COMPENSATION IN FISCAL YEAR 2008
The
following table summarizes the participation of our named executive officers
during 2008 in our Nonqualified Deferred Compensation Plan, which is our only
plan that provides for the deferral of compensation on a basis that is not
tax-qualified.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Executive
Contributions
in
Last
Fiscal
Year
($)(1)
|
|
|
Registrant
Contributions
in
Last
Fiscal
Year
($)(1)
|
|
|
Aggregate
Earnings
in
Last
Fiscal
Year
($)(2)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance
at
Last
Fiscal
Year
End
($)
|
|
Ronald
J. Mittelstaedt
|
|
|
611,118 |
|
|
|
2,125 |
|
|
|
(195,641 |
) |
|
|
13,485 |
|
|
|
515,835 |
|
Worthing
F. Jackman
|
|
|
20,000 |
|
|
|
7,629 |
|
|
|
(37,320
|
) |
|
|
13,354 |
|
|
|
70,434 |
|
Steven
F. Bouck
|
|
|
204,779 |
|
|
|
4,245 |
|
|
|
(105,354
|
) |
|
|
6,262 |
|
|
|
198,470 |
|
Darrell
W. Chambliss
|
|
|
117,332 |
|
|
|
4,747 |
|
|
|
(86,714
|
) |
|
|
— |
|
|
|
154,545 |
|
Eric
M. Merrill
|
|
|
— |
|
|
|
— |
|
|
|
(6,702
|
) |
|
|
7,059 |
|
|
|
9,333 |
|
|
Amounts
in these columns represent the deferred portion of base salary and/or cash
performance bonus and our annual matching contributions in lieu of
matching contributions into our 401(k) plan. Contributions by an NEO are
reported in the Summary Compensation Table for Fiscal Year 2008 elsewhere
in this proxy statement under “Salary” and matching contributions we make
to an NEO’s account are reported in the Summary Compensation Table for
Fiscal Year 2008 under “All Other Compensation.”
|
|
|
|
Amounts
in this column represent the aggregate decrease in the balance of each
executive officer’s account at December 31, 2008, over the balance of his
accounts at December 1, 2007, without giving effect to any withdrawals or
distributions.
|
The
named executive officers and certain other highly compensated employees are
entitled to participate in the Nonqualified Deferred Compensation Plan, which we
put in place to mitigate the impact of our officers and other highly compensated
employees being unable to make the maximum contribution permitted under our
401(k) plan due to certain limitations imposed by the IRC. The Nonqualified
Deferred Compensation Plan allows a highly compensated employee to voluntarily
defer receipt of a portion (up to 80%) of the employee’s earned base salary and
all or a portion of cash performance bonuses, if any. Earnings on contributions
to the Nonqualified Deferred Compensation Plan are determined by reference to
the returns on one or more select mutual funds, as determined by the participant
(and which may be changed at any time by the participant), that are also
available for investment by the general public. We make a matching contribution
of $0.50 for each dollar of an employee’s pre-tax contributions until the
employee’s contributions equal five percent of the employee’s base salary, less
the amount of any match we make on behalf of the employee under the
company-sponsored 401(k) plan, and subject to the same limits that apply to the
401(k) plan except that our matching contributions are 100% vested when made.
The earnings on these funds may exceed or fall short of market rate returns,
depending on the performance of the funds selected compared to the markets in
general.
Distributions
from the Nonqualified Deferred Compensation Plan are automatically triggered by
the occurrence of certain events. Upon retirement, as defined in the plan, a
participant will receive a distribution from the plan in the form he previously
selected - either in a lump sum or in annual installments over any period
selected, up to fifteen years. Payments will commence within 60 days after the
last day of the six-month period immediately following the retirement date. Upon
termination of employment, a participant will receive a distribution from the
plan in a lump sum within 60 days after the last day of the six-month period
immediately following the termination date. If a participant becomes disabled,
he will receive his entire account balance in a lump sum within 60 days of the
date on which he became disabled. Upon the death of a participant during
employment or while receiving his retirement benefits under the plan, his unpaid
account balance will be paid to his beneficiary in a lump sum within 60 days of
the date the plan committee is notified of his death.
Participants
also elect whether to receive a distribution of their entire account balance in
a lump sum upon a change in control of our company, as defined in the plan, or
whether to have their account balance remain in the plan after a change in
control. In the absence of such an election, a participant will receive a
distribution after a change in control occurs. Participants may also choose
to receive lump sum distributions of all or a portion of their account balances
upon optional, scheduled distribution dates or upon an unforeseeable financial
emergency. Optional distribution dates must be a January 1 that is at least
three years after the end of the plan year in which the deferral election is
made. Optional distributions may be postponed, subject to certain conditions
specified in the plan. Distributions upon an unforeseeable financial emergency
are also subject to certain restrictions specified in the plan.
EQUITY
COMPENSATION PLAN INFORMATION
The
following is a summary of all of our equity compensation plans and individual
arrangements that provide for the issuance of equity securities as compensation,
as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity
Compensation Plan Category
|
|
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
|
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and
rights
|
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
|
Approved by
stockholders(1)
|
|
|
|
3,266,827
|
(2)(3)
|
|
|
$
|
19.53
|
(4)
|
|
|
|
2,460,522
|
(3)(5)
|
|
Not approved by
stockholders(8)
|
|
|
|
1,033,782
|
(6)
|
|
|
$
|
18.50
|
(7)
|
|
|
|
241,480
|
(6)
|
|
Total
|
|
|
|
4,300,609
|
|
|
|
$
|
19.23
|
(4)(7)
|
|
|
|
2,713,252
|
|
|
|
Consists
of: (a) the Second Amended and Restated 2004 Equity Incentive Plan (as
amended and restated) (the “2004 Plan”); (b) the 2002 Senior Management
Equity Incentive Plan (the “Senior Incentive Plan”); and (c) the Second
Amended and Restated 1997 Stock Option Plan (the “1997
Plan”).
|
|
|
|
Includes
an aggregate of 1,332,312 restricted stock units.
|
|
|
|
While
options granted under the 1997 Plan remain outstanding, the term of the
plan expired in 2007, and as a result no further awards may be granted
under the plan.
|
|
|
|
Excludes
restricted stock units.
|
|
|
|
The
remaining 1,460,522 shares reserved for issuance under the 2004 Plan will
be issuable upon the exercise of future stock option grants or pursuant to
future restricted stock or restricted stock unit awards that vest upon the
attainment of prescribed performance milestones or the completion of
designated service periods. The remaining 1,000,000 shares reserved for
issuance under the Senior Incentive Plan will be issuable upon the
exercise of future stock option grants made thereunder.
|
|
|
|
While
options granted under the 2002 Stock Option Plan remain outstanding, the
Board of Directors unanimously adopted resolutions in 2008 approving the
reduction of the shares available for future issuance under the plan from
128,636 to zero, and as a result no further awards may be granted under
the plan.
|
|
|
|
Excludes
restricted stock.
|
|
|
|
Consists
of the plans summarized
below.
|
The
material features of our equity compensation plans not approved by stockholders
are described below.
2002
Stock Option Plan
In
2002, our Board of Directors authorized the 2002 Stock Option Plan.
Participation in the 2002 Stock Option Plan is limited to consultants and
employees, other than officers and directors. Options granted under the 2002
Stock Option Plan are nonqualified stock options and have a term of no longer
than ten years from the date they are granted. Options generally become
exercisable in installments pursuant to a vesting schedule set forth in each
option agreement. The Compensation Committee currently administers the 2002
Stock Option Plan. The Compensation Committee authorizes the granting of options
and determines the employees and consultants to whom options are to
be granted, the number of shares subject to each option, the exercise price,
option term, vesting schedule and other terms and conditions of the options.
However, while options previously granted under the 2002 Stock Option Plan
remain outstanding, the Board of Directors unanimously adopted resolutions in
2008 approving the reduction of the shares available for future issuance under
the plan from 128,636 to zero, and as a result no further awards may be granted
under the plan. Options previously granted under the plan have exercise prices
per share as determined by the Compensation Committee at the time of grant.
Immediately prior to a change in control, all outstanding options under the 2002
Stock Option Plan will automatically accelerate and become immediately
exercisable. The Compensation Committee may in its discretion provide that the
shares subject to an option under the 2002 Stock Option Plan may (i) continue as
an immediately exercisable option, (ii) be assumed as immediately exercisable
options by the surviving corporation or its parent, (iii) be substituted by
immediately exercisable options granted by the surviving corporation or its
parent with substantially the same terms for the option, or (iv) be cancelled
after payment to optionee of an amount in cash or other consideration delivered
to the stockholders of the company reduced by the exercise price.
2002
Restricted Stock Plan
In
2002, our Board of Directors adopted the 2002 Restricted Stock Plan in which
selected employees, other than executive officers and directors, may
participate. Restricted stock awards under the 2002 Restricted Stock Plan may or
may not require a cash payment from a participant to whom an award is made. The
awards become free of the stated restrictions over periods determined at the
date of the grant, subject to continuing employment, the achievement of
particular performance goals and/or the satisfaction of certain vesting
provisions applicable to each award of shares. The Compensation Committee
currently administers the 2002 Restricted Stock Plan. The Compensation Committee
authorizes the grant of any stock awards and determines the employees to whom
shares are awarded, number of shares to be awarded, award period and other terms
and conditions of the awards. Shares of restricted stock may be forfeited and
revert to us if a plan participant resigns from Waste Connections and its
subsidiaries, is terminated for cause or violates the terms of any
non-competition or non-solicitation agreements to which that plan participant is
bound (if such plan participant has been terminated without cause). Immediately
prior to a change in control, all restrictions imposed by the Compensation
Committee on any outstanding restricted stock award under the 2002 Restricted
Stock Plan will be immediately automatically cancelled and such award will be
fully vested, and any applicable performance goals will be deemed achieved at
not less than the target level.
2002
Consultant Incentive Plan
In
2002, our Board of Directors authorized the 2002 Consultant Incentive Plan,
under which warrants to purchase our common stock may be issued to certain of
our consultants. Warrants awarded under the Consultant Incentive Plan are
subject to a vesting schedule set forth in each warrant agreement. Historically,
warrants issued have been fully vested and exercisable at the date of grant. The
Compensation Committee currently administers the 2002 Consultant Incentive Plan.
The Compensation Committee authorizes the issuance of warrants and determines
the consultants to whom warrants are to be issued, the number of shares subject
to each warrant, the purchase price, exercise date and period, warrant term and
other terms and conditions of the warrants. All warrants granted under the plan
shall have purchase prices per share at least equal to the fair market value of
the underlying common stock on the date of grant.
Non-Plan
Warrants
Prior
to the Board of Directors’ approval of the 2002 Consultant Incentive Plan, we
issued warrants to purchase our common stock on an individual basis to certain
consultants that assisted us in various capacities and certain employees.
Historically, these warrants were issued fully vested and were exercisable at
the date of grant. The Board of Directors authorized the issuance of such
warrants and determined the consultants and employees to whom such warrants were
issued, the number of shares subject to each warrant, the purchase price,
exercise date and period, warrant term and other terms and conditions of the
warrants.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We
have entered into employment agreements with each of our named executive
officers. Each of these agreements provides for certain payments to the named
executive officer in the event of his termination, resignation, death or
disability, or upon a change in control of our company.
Termination
by the Company
We
may terminate a named executive officer’s employment with or without cause.
Terminations for cause are subject to a sixty-day notice and right to cure
provision in each named executive officer’s employment agreement. “Cause” is
generally defined in each of these employment agreements as
follows:
|
|
|
|
|
a
material breach of any of the terms of the agreement that is not
immediately corrected following written notice of default specifying such
breach;
|
|
|
|
|
|
except
in Mr. Mittelstaedt’s case, a breach of any of the provisions of the
non-competition and non-solicitation provisions of the
agreement;
|
|
|
|
|
|
repeated
intoxication with alcohol or drugs while on company premises during its
regular business hours to such a degree that, in the reasonable judgment
of the other managers of the company, the employee is abusive or incapable
of performing his duties and responsibilities under the
agreement;
|
|
|
|
|
|
conviction
of a felony; or
|
|
|
|
|
●
|
misappropriation
of property belonging to the company and/or any of its
affiliates.
|
Termination
Upon Death or Disability
In
the event of the disability or death of a named executive officer, in addition
to the payments listed in the tables below, the named executive officer may
receive benefits under our long-term disability insurance and our life and
accidental death and dismemberment insurance plans, which provide for
broad-based employee participation.
Termination
by the Employee
Each
named executive officer may terminate his employment without good reason. In
addition, except for Mr. Merrill, each named executive officer may terminate his
employment for good reason. “Good Reason” is generally defined in each of these
employment agreements as follows:
|
|
|
|
|
assignment
to the employee of duties inconsistent with his responsibilities as they
existed on the date of the agreement, a substantial alteration in the
title(s) of the employee (so long as the existing corporate structure of
the company is maintained) or a substantial alteration in the status of
the employee in the company organization as it existed on the date of the
agreement;
|
|
|
|
|
|
the
relocation of the company’s principal executive office to a location more
than 50 miles from its present location;
|
|
|
|
|
|
a
reduction by the company in the employee’s base salary without the
employee’s prior approval;
|
|
|
|
|
●
|
a
failure by the company to continue in effect, without substantial change,
any benefit plan or arrangement in which the employee was participating or
the taking of any action by the company which would adversely affect the
employee’s participation in or materially reduce his benefits under any
benefit plan (unless such changes apply equally to all other management
employees of company);
|
|
|
|
|
|
any
material breach by the company of any provision of the agreement without
the employee having committed any material breach of his obligations
thereunder, which breach is not cured within 20 days following written
notice thereof to the company of such breach; or
|
|
|
|
|
●
|
the
failure of the company to obtain the assumption of the agreement by any
successor entity.
|
Change
in Control
A
change in control of Waste Connections is generally treated as a termination
without cause of the named executive officer, unless he elects in writing to
waive the applicable provision of his employment agreement. Under each of these
employment agreements, a “Change in Control” is generally deemed to have
occurred if:
|
|
there
shall be consummated (a) any reorganization, liquidation or consolidation
of the company, or any merger or other business combination of the company
with any other corporation, other than any such merger or other
combination that would result in the voting securities of the company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by
the voting securities of the company or such surviving entity outstanding
immediately after such transaction; or (b) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the
company;
|
|
|
|
|
|
any
person (as defined in the agreement), shall become the beneficial owner
(as defined in the agreement), directly or indirectly, of 50% or more of
the company’s outstanding voting securities; or
|
|
|
|
|
|
during
any period of two consecutive years, individuals who at the beginning of
such period constituted the entire Board of Directors shall cease for any
reason to constitute at least one-half of the membership thereof unless
the election, or the nomination for election by the company’s
stockholders, of each new director was approved by a vote of at least
one-half of the directors then still in office who were directors at the
beginning of the
period.
|
In
addition to his severance payments described in the tables below, in the event
of a change in control after which any previously outstanding option, warrant or
other right relating to our capital stock fails to remain outstanding, each of
the named executive officers would be entitled to receive either: (i) options to
purchase that number of shares of stock of the acquiring company that he would
have received had he exercised his terminated Waste Connections options,
warrants or rights immediately prior to the acquisition resulting in a change in
control and received for the shares acquired on exercise of such options shares
of the acquiring company in the change in control transaction (the aggregate
exercise price for the shares covered by such options would be the aggregate
exercise price for the terminated Waste Connections options, warrants or
rights); or (ii) a lump sum payment equal on an after-tax basis to at least the
net after-tax gain he would have realized on exercise of such options of the
acquiring company and sale of the underlying shares.
Potential
Payments
The
following tables estimate the payments we would be obligated to make to each of
our named executive officers as a result of his termination or resignation or
because of a change in control of our company pursuant to the employment
agreements we have entered into with each of our named executive officers and
certain other arrangements noted in the tables. We have calculated these
estimated payments to meet SEC disclosure requirements. The estimated payments
are not necessarily indicative of the actual amounts any of our NEOs would
receive in such circumstances.
For
illustrative purposes only, the tables assume that: (a) a notice of termination
was received by the employee or a change in control in our company occurred on
December 31, 2008, as applicable; (b) the price per share of our common stock is
$31.57, the closing price on December 31, 2008, the last business day of that
year; and (c) the reason for a termination for cause is not susceptible to the
named executive officer’s 60-day right to cure under his employment
agreement.
In
addition to the amounts reflected in the tables, on termination of a named
executive officer’s employment agreement by us or by him as provided in his
agreement, all deferred compensation and other retirement benefits payable to
the employee under benefit plans in which he then participated would be paid to
him in accordance with the provisions of the respective plans. These plans
include our voluntary 401(k) plan and our Nonqualified Deferred Compensation
Plan.
Ronald
J. Mittelstaedt, Chairman and Chief Executive
Officer
In
the event Mr. Mittelstaedt voluntarily terminates his employment without good
reason or his employment is terminated for cause, we have the option to make him
subject to the terms of the non-competition and non-solicitation provisions of
his employment agreement for a period of 18 months from the date of termination,
referred to as the Optional Restricted Period, in which case he would be
entitled to the same severance benefits to which he would be entitled in the
event of a termination without cause.
Mr.
Mittelstaedt’s employment agreement defines the term “Total Compensation,” used
in the table below, to equal the sum of: (i) twelve months of his base salary as
of the termination date; (ii) the maximum bonus of 100% of such base salary; and
(iii) the amount of all vehicle allowance and vehicle-related, telephone and
facsimile reimbursements that were payable to him with respect to the twelve
months preceding the termination date.
Mr.
Mittelstaedt’s employment agreement also defines the term “Health Insurance
Benefit,” used in the table below, as an amount equal to the excess of (i) the
premiums payable by him to cover himself, his wife and his children for a
three-year period beginning on the termination date under a health
insurance plan that provides benefits comparable to those available under
our health insurance plan then in effect, over (ii) the premiums that would be
payable by him if he were still employed by us to cover himself, his wife and
his children for that three-year period under our health insurance plan in
effect on the termination date. In the case of a termination on death, the
Health Insurance Benefit shall be calculated with respect to coverage only for
Mr. Mittelstaedt’s wife and children. In both cases, for illustrative purposes
only, we have used the cost for an employee plus unlimited dependents that Mr.
Mittelstaedt or his family would pay under the Consolidated Omnibus Budget
Reconciliation Act, or COBRA, if they elected to extend their health coverage
under our group health plan for the period indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for
Cause
Not
Subject
to
Optional
Restricted
Period
|
|
Termination
for
Cause
Subject
to
Optional
Restricted
Period
|
|
Termination
Without
Cause
|
|
Termination
on
Disability
|
|
Termination
on
Death
|
|
Termination
by
Employee
For
Good
Reason
|
|
Termination
by Employee
Without
Good
Reason
Not
Subject to
Optional
Restricted
Period
|
|
Termination
by
Employee
Without
Good
Reason
Subject
to
Optional
Restricted
Period
|
|
Change
in
Control
|
|
Base Salary
|
|
|
$
|
—
|
(1)
|
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
$
|
1,699,470
|
(8)
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
|
$
|
—
|
(1)
|
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
Bonus
|
|
|
|
—
|
(2)
|
|
|
538,200
|
(5)
|
|
538,200
|
(5)
|
|
538,200
|
(5)
|
|
538,200
|
(5)
|
|
538,200
|
(5)
|
|
|
—
|
(2)
|
|
|
538,200
|
(5)
|
|
538,200
|
(5)
|
Severance
Payment
|
|
|
|
—
|
|
|
|
3,265,055
|
(6)
|
|
3,265,055
|
(6)
|
|
—
|
|
|
3,265,055
|
(6)
|
|
3,265,055
|
(6)
|
|
|
—
|
|
|
|
3,265,055
|
(6)
|
|
3,265,055
|
(6)
|
Unvested
Stock Options,
Restricted
Stock
Units
and Other Equity
in Company
|
|
|
|
—
|
(3)
|
|
|
2,701,422
|
(7)
|
|
2,701,422
|
(7)
|
|
2,701,422
|
(7)
|
|
2,701,422
|
(7)
|
|
2,701,422
|
(7)
|
|
|
—
|
(3)
|
|
|
2,701,422
|
(7)
|
|
2,701,422
|
(7)
|
Gross
Up Payment
|
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
—
|
(4)
|
TOTAL
|
|
|
$
|
—
|
|
|
$
|
6,504,677
|
|
$
|
6,504,677
|
|
$
|
4,939,092
|
(5)
|
$
|
6,504,677
|
|
$
|
6,504,677
|
|
|
$
|
—
|
|
|
$
|
6,504,677
|
|
$
|
6,504,677
|
|
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
|
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
|
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled upon such a
termination.
|
|
|
|
Reflects
a gross up payment to the employee to be paid within ten days after the
Internal Revenue Service or any other taxing authority issues a notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to his
termination, subject to certain rights of the company to challenge the
application of such tax.
|
|
|
|
Reflects
a lump sum payment of the prorated portion of the maximum bonus available
to the employee under his employment agreement for the year in which the
termination occurs, which is 100% of his base salary at the time of
termination.
|
|
Reflects
a lump sum payment equal to the sum of: (i) an amount equal to three times
the employee’s Total Compensation and (ii) the employee’s Health Insurance
Benefit.
|
|
|
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the company’s
capital stock as of the date of termination. The exercisability of any
such equity-based award, together with all vested equity-based awards held
by the employee, will be extended to the earlier of the expiration of the
term of such equity-based award or the fifth anniversary of the date of
termination.
|
|
|
|
Reflects
a lump sum payment equal to the base salary payable to employee through
the end of the term of his employment agreement, which for Mr.
Mittelstaedt is extended by one year on each anniversary of his employment
agreement, thus extending the term to three years. The term of Mr.
Mittelstaedt’s employment agreement currently expires on February 28,
2012.
|
|
|
|
Worthing
F. Jackman, Executive Vice President and Chief Financial
Officer
|
|
|
Termination
for
Cause
|
|
Termination
Without
Cause
|
|
Termination
on
Disability
|
|
Termination
on
Death
|
|
Termination
by
Employee
For
Good
Reason
|
|
Termination
by
Employee
Without
Good
Reason
|
|
Change
in
Control
|
|
Base
Salary
|
|
|
$
|
—
|
(1)
|
|
$
|
—
|
(5)
|
$
|
741,657
|
(9)
|
$
|
—
|
(5)
|
$
|
—
|
(5)
|
|
$
|
—
|
(1)
|
|
$
|
—
|
(5)
|
Bonus
|
|
|
|
—
|
(2)
|
|
|
160,425
|
(6)
|
|
160,425
|
(10)
|
|
160,425
|
(6)
|
|
160,425
|
(6)
|
|
|
—
|
(2)
|
|
|
160,425
|
(6)
|
Severance
Payment
|
|
|
|
—
|
|
|
|
1,443,825
|
(7)
|
|
—
|
|
|
1,443,825
|
(7)
|
|
1,443,825
|
(7)
|
|
|
—
|
|
|
|
1,443,825
|
(7)
|
Unvested
Stock Options,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in Company
|
|
|
|
—
|
(3)
|
|
|
1,282,311
|
(8)
|
|
1,282,311
|
(8)
|
|
1,282,311
|
(8)
|
|
1,282,311
|
(8)
|
|
|
—
|
(3)
|
|
|
1,282,311
|
(8)
|
Gross
Up
Payment
|
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
TOTAL
|
|
|
$
|
—
|
|
|
$
|
2,886,561
|
|
$
|
2,184,393
|
|
$
|
2,886,561
|
|
$
|
2,886,561
|
|
|
$
|
—
|
|
|
$
|
2,886,561
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled upon such a
termination.
|
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after the
Internal Revenue Service or any other taxing authority issues a notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to his
termination, subject to certain rights of the company to challenge the
application of such tax.
|
|
|
(5)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (7) for
payment terms.
|
|
|
(6)
|
Reflects
the full (not prorated) maximum bonus available to the employee under his
employment agreement for the year in which the termination occurs, which
is 50% of his base salary at the time of termination. See footnote (7) for
payment
terms.
|
(7) |
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (5) and (6), this
amount will be paid as
follows: one-third
on date of termination and, provided employee has complied with the up to
three-year non-competition and three-year non-solicitation provisions of
his employment agreement, one-third on each of the first and second
anniversaries of the date of termination; except in the event of a change
in control, deemed a termination without cause unless the employee elects
in writing otherwise, in which case such payments will be made in a lump
sum on the date of termination.
|
|
|
(8)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the company’s
capital stock as of the date of termination. The exercisability of any
such equity-based award, together with all vested equity-based awards held
by the employee, will be extended to the earlier of the expiration of the
term of such equity-based award or the third anniversary of the date of
termination.
|
|
|
(9)
|
Reflects
base salary payable to the employee through the end of the term of his
employment agreement, which for Mr. Jackman is extended by one year on
each anniversary of his employment agreement, thus extending the term to
three years. The term of Mr. Jackman’s employment agreement currently
expires on April 25, 2011. See footnote (10) for payment
terms.
|
|
|
(10)
|
Reflects
the prorated portion of the maximum bonus available to the employee under
his employment agreement for the year in which the termination occurs,
which is 50% of his base salary at the time of termination. Together with
the payment under footnote (9), this amount will be paid in a lump sum.
For purposes of a termination on disability only, the termination date
will be deemed to be thirty days after notice of termination is given
under the employment agreement.
|
|
|
|
Steven
F. Bouck,
President
|
|
|
Termination
for
Cause
|
|
Termination
Without
Cause
|
|
Termination
on
Disability
|
|
Termination
on
Death
|
|
Termination
by
Employee
For
Good
Reason
|
|
Termination
by
Employee
Without
Good
Reason
|
|
Change
in
Control
|
|
Base
Salary
|
|
|
$
|
—
|
(1)
|
|
$
|
—
|
(5)
|
$
|
1,095,806
|
(9)
|
$
|
—
|
(5)
|
$
|
—
|
(5)
|
|
$
|
—
|
(1)
|
|
$
|
—
|
(5)
|
Bonus
|
|
|
|
—
|
(2)
|
|
|
199,238
|
(6)
|
|
199,238
|
(10)
|
|
199,238
|
(6)
|
|
199,238
|
(6)
|
|
|
—
|
(2)
|
|
|
199,238
|
(6)
|
Severance
Payment
|
|
|
|
—
|
|
|
|
1,793,138
|
(7)
|
|
—
|
|
|
1,793,138
|
(7)
|
|
1,793,138
|
(7)
|
|
|
—
|
|
|
|
1,793,138
|
(7)
|
Unvested
Stock Options,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in Company
|
|
|
|
—
|
(3)
|
|
|
1,560,531
|
(8)
|
|
1,560,531
|
(8)
|
|
1,560,531
|
(8)
|
|
1,560,531
|
(8)
|
|
|
—
|
(3)
|
|
|
1,560,531
|
(8)
|
Gross
Up
Payment
|
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
(4)
|
TOTAL
|
|
|
$
|
—
|
|
|
$
|
3,552,907
|
|
$
|
2,855,575
|
|
$
|
3,552,907
|
|
$
|
3,552,907
|
|
|
$
|
—
|
|
|
$
|
3,552,907
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled upon such a
termination.
|
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after the
Internal Revenue Service or any other taxing authority issues a notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to his
termination, subject to certain rights of the company to challenge the
application of such tax.
|
|
|
(5)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (7) for
payment terms.
|
(6)
|
Reflects
the full (not prorated) maximum bonus available to the employee under his
employment agreement for the year in which the termination occurs, which
is 50% of his base salary at the time of termination. See footnote (7) for
payment terms.
|
|
|
(7)
|
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (5) and (6), this
amount will be paid as follows: one-third on date of termination and,
provided employee has complied with the up to three-year non-competition
and three-year non-solicitation provisions of his employment agreement,
one-third on each of the first and second anniversaries of the date of
termination; except in the event of a change in control, deemed a
termination without cause unless the employee elects in writing otherwise,
in which case such payments will be made in a lump sum on the date of
termination.
|
|
|
(8)
|
Reflects
the immediate vesting of all of the employee’s outstanding but unvested
stock options, restricted stock units and other rights related to the
company’s capital stock as of the date of termination. The exercisability
of any such equity-based award, together with all vested equity-based
awards held by the employee, will be extended to the earlier of the
expiration of the term of such equity-based award or the third anniversary
of the date of termination.
|
|
|
(9)
|
Reflects
base salary payable to employee through the end of the term of his
employment agreement, which for Mr. Bouck is extended by one year on each
anniversary of his employment agreement, thus extending the term to three
years. The term of Mr. Bouck’s employment agreement currently expires on
September 30, 2011. See footnote (10) for payment
terms.
|
|
|
(10)
|
Reflects
the prorated portion of the maximum bonus available to the employee under
his employment agreement for the year in which the termination occurs,
which is 50% of his base salary at the time of termination. Together with
the payment under footnote (9), this amount will be paid in a lump sum.
For purposes of a termination on disability only, the termination date
will be deemed to be thirty days after notice of termination is given
under the employment agreement.
|
|
|
|
Darrell
W. Chambliss, Executive Vice President and Chief Operating
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Employee
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Termination
|
|
Termination
|
|
by
Employee
|
|
Without
|
|
|
|
|
|
for
|
|
Without
|
|
on
|
|
on
|
|
For
Good
|
|
Good
|
|
Change
in
|
|
|
|
Cause
|
|
Cause
|
|
Disability
|
|
Death
|
|
Reason
|
|
Reason
|
|
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
$
|
—
|
(1)
|
|
|
$
|
—
|
(5)
|
|
|
$
|
836,141
|
(9)
|
|
|
$
|
—
|
(5)
|
|
|
$
|
—
|
(5)
|
|
|
$
|
—
|
(1)
|
|
|
$
|
—
|
(5)
|
|
Bonus
|
|
|
|
—
|
(2)
|
|
|
|
173,363
|
(6)
|
|
|
|
173,363
|
(10)
|
|
|
|
173,363
|
(6)
|
|
|
|
173,363
|
(6)
|
|
|
|
—
|
(2)
|
|
|
|
173,363
|
(6)
|
|
Severance
Payment
|
|
|
|
—
|
|
|
|
|
1,560,263
|
(7)
|
|
|
|
—
|
|
|
|
|
1,560,263
|
(7)
|
|
|
|
1,560,263
|
(7)
|
|
|
|
—
|
|
|
|
|
1,560,263
|
(7)
|
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in
Company
|
|
|
|
—
|
(3)
|
|
|
|
1,297,875
|
(8)
|
|
|
|
1,297,875
|
(8)
|
|
|
|
1,297,875
|
(8)
|
|
|
|
1,297,875
|
(8)
|
|
|
|
—
|
(3)
|
|
|
|
1,297,875
|
(8)
|
|
Gross
Up Payment
|
|
|
|
—
|
(4)
|
|
|
|
—
|
(4)
|
|
|
|
—
|
(4)
|
|
|
|
—
|
(4)
|
|
|
|
—
|
(4)
|
|
|
|
—
|
(4)
|
|
|
|
—
|
(4)
|
|
TOTAL
|
|
|
$
|
—
|
|
|
|
$
|
3,031,501
|
|
|
|
$
|
2,307,379
|
|
|
|
$
|
3,031,501
|
|
|
|
$
|
3,031,501
|
|
|
|
$
|
—
|
|
|
|
$
|
3,031,501
|
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled upon such a
termination.
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after the
Internal Revenue Service or any other taxing authority issues a notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to his
termination, subject to certain rights of the company to challenge the
application of such tax.
|
|
|
|
(5)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (7) for
payment terms.
|
|
|
|
(6)
|
Reflects
the full (not prorated) maximum bonus available to the employee under his
employment agreement for the year in which the termination occurs, which
is 50% of his base salary at the time of termination. See footnote (7) for
payment terms.
|
|
|
|
(7)
|
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (5) and (6), this
amount will be paid as follows: one-third on date of termination and,
provided employee has complied with the up to three-year non-competition
and three-year non-solicitation provisions of his employment agreement,
one-third on each of the first and second anniversaries of the date of
termination; except in the event of a change in control, deemed a
termination without cause unless the employee elects in writing otherwise,
in which case such payments will be made in a lump sum on the date of
termination.
|
|
|
|
(8)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the company’s
capital stock as of the date of termination. The exercisability of any
such equity-based award, together with all vested equity-based awards held
by the employee, will be extended to the earlier of the expiration of the
term of such equity-based award or the third anniversary of the date of
termination.
|
|
|
|
(9)
|
Reflects
base salary payable to employee through the end of the term of his
employment agreement, which for Mr. Chambliss is extended by one year on
each anniversary of his employment agreement, thus extending the term to
three years. The term of Mr. Chambliss’ employment agreement currently
expires on May 31, 2011. See footnote (10) for payment
terms.
|
|
|
|
(10)
|
Reflects
the prorated portion of the maximum bonus available to the employee under
his employment agreement for the year in which the termination occurs,
which is 50% of his base salary at the time of termination. Together with
the payment under footnote (9), this amount will be paid in a lump sum.
For purposes of a termination on disability only, the termination date
will be deemed to be thirty days after notice of termination is given
under the employment agreement.
|
|
|
|
Eric
M. Merrill, Senior Vice President – People, Safety and
Development
|
|
|
Termination
|
|
Termination
|
|
Termination
|
|
TerminationE
|
|
|
|
|
|
|
|
for
|
|
Without
|
|
on
|
|
on
|
|
Termination
|
|
Change
in
|
|
|
|
Cause(1)
|
|
Cause(5)
|
|
Disability
|
|
Death
|
|
by Employee(1)
|
|
Control
|
|
Base
Salary
|
|
|
$
|
—
|
(2)
|
|
|
$
|
—
|
(6)
|
|
|
$
|
—
|
(6)
|
|
|
$
|
—
|
(6)
|
|
|
$
|
—
|
(2)
|
|
|
$
|
—
|
(6)
|
|
Bonus
|
|
|
|
—
|
(3)
|
|
|
|
108,000
|
(7)
|
|
|
|
108,000
|
(7)
|
|
|
|
108,000
|
(7)
|
|
|
|
—
|
(3)
|
|
|
|
108,000
|
(7)
|
|
Severance
Payment
|
|
|
|
—
|
|
|
|
|
274,715
|
(8)
|
|
|
|
274,715
|
(8)
|
|
|
|
270,000
|
(10)
|
|
|
|
—
|
|
|
|
|
270,000
|
(11)
|
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in
Company
|
|
|
|
—
|
(4)
|
|
|
|
934,746
|
(9)
|
|
|
|
934,746
|
(9)
|
|
|
|
934,746
|
(9)
|
|
|
|
—
|
(4)
|
|
|
|
934,746
|
(9)
|
|
TOTAL
|
|
|
$
|
—
|
|
|
|
$
|
1,317,461
|
|
|
|
$
|
1,317,461
|
|
|
|
$
|
1,312,746
|
|
|
|
$
|
—
|
|
|
|
$
|
1,312,746
|
|
|
(1)
|
Upon
such a termination, employee would be required to repay a pro rata portion
of certain relocation costs previously reimbursed to him by Waste
Connections. As of December 31, 2008, this pro rata portion equaled
approximately $43,292.
|
(2)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
|
|
(3)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
|
|
(4)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled upon such a
termination.
|
|
|
|
(5)
|
Upon
such a termination, Waste Connection would pay as incurred Mr. Merrill’s
expenses, up to $15,000, associated with career counseling and resume
development.
|
|
|
|
(6)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnotes (8), (10)
and (11) for payment terms.
|
|
|
|
(7)
|
Reflects
the prorated maximum bonus available to the employee under his employment
agreement for the year in which the termination occurs, which is 40% of
his base salary at the time of termination. See footnotes (8), (10) and
(11) for payment terms.
|
|
|
|
(8)
|
Reflects
an amount equal to the sum of: (i) an amount equal to the lesser of (a)
the employee’s annual base salary for a period of one year, and (b) the
employee’s annual base salary for the remainder of the term of his
employment agreement; plus (ii) an amount equal to Waste Connections’
portion (but not the employee’s portion) of the cost of medical insurance
at the rate in effect on the date of termination for a period of one year
from the date of termination. For illustrative purposes only, we have used
the cost for an employee that Mr. Merrill would pay under COBRA if he
elected to extend his health coverage under our group health plan for the
period indicated. Together with the payments under footnotes (6) and (7),
this amount will be paid in accordance with Waste Connections’ normal
payroll practices and not as a lump sum.
|
|
|
|
(9)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the company’s
capital stock as of the date of termination. The exercisability of any
such equity-based award, together with all vested equity-based awards held
by the employee, will be extended to the earlier of the expiration of the
term of such equity-based award or the first anniversary of the date of
termination.
|
|
|
|
(10)
|
Reflects
an amount equal to the lesser of (a) the employee’s annual base salary for
a period of one year, and (b) the employee’s annual base salary for the
remainder of the term of his employment agreement. Together with the
payments under footnotes (6) and (7), this amount will be paid in
accordance with Waste Connections’ normal payroll practices and not as a
lump sum.
|
|
|
|
(11)
|
Reflects
an amount equal to the lesser of (a) the employee’s annual base salary for
a period of one year, and (b) the employee’s annual base salary for the
remainder of the term of his employment agreement. Together with the
payments under footnotes (6) and (7), this amount will be paid in a lump
sum.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Since
January 20, 2005, Namen Chambliss has held the position of Network Manager for
the company. Mr. N. Chambliss is the brother of Darrell Chambliss, our Executive
Vice President and Chief Operating Officer. Previously, Mr. N. Chambliss held
the position of Systems Operations Supervisor for the Eastern Region, and was
based in our regional office in Memphis, Tennessee. The total salary and bonus
compensation we paid to Mr. N. Chambliss in 2008 was $108,309. In addition, Mr.
N. Chambliss realized a gain of $11,913 in 2008 on the sale of common stock
received on exercise of options granted to him in previous years, and he had
$19,736 of restricted stock units vest in 2008. In 2008, we granted Mr. N.
Chambliss 750 restricted stock units. The units were granted on the same general
terms and conditions as units granted to other employees at the same management
level. As Network Manager, Mr. N. Chambliss’ annual salary is $93,600 as of
January 29, 2009.
Review,
Approval or Ratification of Transactions with Related Persons
The
charter of our Board of Directors’ Nominating and Corporate Governance Committee
provides that among the Committee’s responsibilities is the review and approval
of any material transaction between us and any of our directors or executive
officers or any entity affiliated with such a person, including assessing
whether the transaction is fair and in our interests, why we should enter into
it with a related rather than an unrelated party, and whether public disclosure
is required.
In
addition, the Nominating and Corporate Governance Committee developed and the
Board of Directors approved our Corporate Governance Guidelines and our Code of
Conduct and Ethics, including a Code of Ethics for the Chief Executive Officer
and Senior Financial Officers, as required by Section 406 of the Sarbanes-Oxley
Act. The Committee reviews the Guidelines and Code on an annual basis, or more
frequently if appropriate, and recommends to the Board of Directors changes as
necessary.
In
addressing conflicts of interest, Section 1 of the Code provides that no
officer, director or employee may be subject to influences, interests or
relationships that conflict with the best interests of the company. It states
that a conflict of interest exists when a person is in a position to influence a
decision that may personally benefit that person or a person he or she is
related to by blood or marriage as a result of the company’s business dealings.
The Code provides that each officer, director and employee of the company must
avoid any investment, interest or association that interferes or might interfere
with that person’s independent exercise of judgment in the company’s best
interests, and that service to the company should never be subordinated to
personal gain or advantage.
In
an effort to help avoid these and other conflicts of interest, the Code sets
forth certain rules the company has adopted, including rules that prohibit: (a)
officers, directors or any employees who buy or sell goods or services or have
responsibility connected to buying and selling for or on behalf of the company
and members of their respective families from having certain economic interests
in business concerns that transact business with the company or are in
competition with it; (b) officers, directors or employees or members of their
respective families from giving or accepting certain gifts to or from any person
soliciting or doing business with the company; (c) officers or employees of the
company from serving as a director of any other company that is organized for
profit without the written approval of the Nominating and Corporate Governance
Committee; and (d) officers, directors or employees from having any material
interest in a business that deprives the company of any business opportunity or
is in any way detrimental to the company.
Each
officer and director must report all actual or potential conflicts of interest
to the Nominating and Corporate Governance Committee. Directors must also comply
with the conflict provisions relating to directors set forth in our Corporate
Governance Guidelines. The Nominating and Corporate Governance Committee will
resolve all conflicts of interest involving officers or directors. If a conflict
involves a member of the Nominating and Corporate Governance Committee, that
committee will resolve the conflict only if there are two disinterested
directors remaining on that committee. Otherwise, the matter will be resolved by
the entire Board of Directors. If a significant conflict exists involving a
director that cannot be resolved and cannot be waived, the director must
resign.
The
Nominating and Corporate Governance Committee has the sole authority to waive
provisions of our Code of Conduct and Ethics with respect to executive officers
and directors in specific circumstances where it determines that such waiver is
appropriate, subject to compliance with applicable laws and regulations. Any
such waivers will be promptly disclosed to our stockholders to the extent
required by applicable laws and regulations.
AUDIT
COMMITTEE REPORT
The
Audit Committee has prepared the following report for Waste Connections’
stockholders.
The
Audit Committee, whose chairman is Mr. Harlan and whose other current members
are Messrs. Razzouk and Davis, met five times in 2008. The Audit Committee
operates under a written charter adopted by the Board of Directors.
Management
is responsible for Waste Connections’ internal controls and the financial
reporting process. The company’s independent registered public accounting firm
is responsible for: (i) auditing the effectiveness of the company’s internal
control over financial reporting based on its audit; and (ii) performing an
independent audit of the company’s consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee’s responsibilities are to review the company’s
internal controls and the objectivity of its financial reporting, and to meet
with appropriate financial personnel and the company’s independent registered
public accounting firm in connection with these reviews. The Audit Committee
also reviews the professional services provided by the company’s independent
registered public accounting firm and reviews such other matters concerning
Waste Connections’ accounting principles and financial and operating policies,
controls and practices, its public financial reporting policies and practices,
and the results of its annual audit as the Audit Committee may find appropriate
or as may be brought to the Audit Committee’s attention.
In
this context, the Audit Committee has met and held discussions with Waste
Connections’ management and its independent registered public accounting firm.
Management represented to the Audit Committee that Waste Connections’
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the audited consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee discussed
with the independent registered public accounting firm the matters required to
be discussed by the Statement on Auditing Standards No. 61 (Communication with
Audit Committee), as amended, as adopted by the Public Company Accounting
Oversight Board, or the PCAOB, in Rule 3200T.
The
Audit Committee has received the written disclosures and the letter from the
independent registered public accounting firm required by applicable
requirements of the PCAOB regarding the independent registered public accounting
firm’s communication with the Audit Committee concerning independence. The Audit
Committee discussed with the independent registered public accounting firm that
firm’s independence and considered the compatibility of non-audit services with
the auditors’ independence.
Based
on the Audit Committee’s review and discussions referred to above, the Audit
Committee recommended that the Board of Directors include the audited
consolidated financial statements in Waste Connections’ Annual Report on Form
10-K for the fiscal year ended December 31, 2008, filed with the
SEC.
This
report is submitted on behalf of the Audit Committee.
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Michael
W. Harlan, Chairman
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Robert
H. Davis
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William
J. Razzouk
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PROPOSAL
2 — APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers
LLP audited our consolidated financial statements for the fiscal year 2008. The
Audit Committee of the Board of Directors requests that stockholders ratify its
selection of PricewaterhouseCoopers LLP to serve as the company’s independent
registered public accounting firm for the fiscal year 2009. We expect
representatives of PricewaterhouseCoopers LLP to be present at the Annual
Meeting of Stockholders. They will have an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
Ratification by stockholders is not required by law, our Amended and Restated
Certificate of Incorporation or our Amended and Restated Bylaws in order for the
Audit Committee to appoint an independent registered public accounting firm, but
the appointment is submitted to you by the Audit Committee in order to give
stockholders a voice in the appointment of the company’s independent registered
public accounting firm. If the stockholders should fail to ratify the
appointment of PricewaterhouseCoopers LLP, the Audit Committee would reconsider
the appointment. Even if stockholders approve the appointment, the Audit
Committee in its discretion may direct the appointment of a different
independent registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of the company and
our stockholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
2009.
The
following table sets forth fees billed for professional services rendered in
2008 and 2007 by PricewaterhouseCoopers LLP.
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2008
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2007
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Audit
Fees
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$ |
1,591,009 |
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$ |
1,553,276 |
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Audit-Related
Fees
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— |
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— |
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Tax
Fees
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55,500 |
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— |
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All
Other Fees
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3,000 |
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3,000 |
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Total
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$ |
1,649,509 |
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$ |
1,556,276 |
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Audit
Fees consist of fees associated with both the audit of our consolidated
financial statements and the audit of our internal control over financial
reporting for fiscal years 2008 and 2007, review of the consolidated financial
statements included in our quarterly reports on Form 10-Q, comfort letters,
consents, assistance with review of documents filed with the SEC, and accounting
consultations.
Tax
Fees consist of fees associated with tax compliance, advice and planning
in 2008. Tax compliance, advice and planning principally included analyses to
determine the amount of tax basis associated with acquisitions in
2008.
All
Other Fees consist of a license fee for an online accounting and
reporting research
database.
The
Audit Committee considers the services provided by PricewaterhouseCoopers LLP
described under “Tax Fees” and “All Other Fees” to be compatible with
PricewaterhouseCoopers LLP’s independence during the periods
covered.
Pre-Approval
Policies and Procedures
The
Audit Committee has adopted a policy that requires advance approval of all
audit, audit-related, tax and other services performed by the independent
registered public accounting firm. The policy provides for pre-approval by the
Audit Committee of specifically defined audit and non-audit services. Unless the
specific service has been previously pre-approved with respect to that year, the
Audit Committee must approve the permitted service before the independent
registered public accounting firm is engaged to perform it. The Audit Committee
has delegated to the chairman of the Audit Committee authority to approve
permitted services, provided that the chairman reports all approvals to the
Audit Committee at its next meeting. All of the fees described above under
“Audit Fees”, “Tax Fees” and “All Other Fees” were approved by the Audit
Committee.
OTHER
INFORMATION
Section
16(a) Beneficial Ownership Reporting Compliance
Based
solely upon a review of reports on Forms 3, 4 and 5, and amendments to those
reports, furnished to us during and with respect to fiscal year 2008 pursuant to
Section 16 of the Securities Exchange Act of 1934, as amended, and written
representations from the executive officers and directors that no other reports
were required, we believe that no executive officers, directors or beneficial
owners of more than ten percent of a registered class of our equity securities
were late in filing such reports during 2008.
Legal
Proceedings
On
October 25, 2006, a purported shareholder derivative complaint captioned Travis
v. Mittelstaedt, et al. was filed in the United States District Court for
the Eastern District of California, naming certain of our directors and officers
as defendants, and naming us as a nominal defendant. On January 30, 2007, a
similar purported derivative action, captioned Pierce
and Banister v. Mittelstaedt, et al., was filed in the same federal court
as the Travis
case. The Travis
and Pierce
and Banister cases have been consolidated. The consolidated complaint in
the action alleges violations of various federal and California securities laws,
breach of fiduciary duty, waste, and related claims in connection with the
timing of certain historical stock option grants. The consolidated complaint
names as defendants certain of our current and former directors and officers,
and names us as a nominal defendant. On June 22, 2007, we and the individual
defendants filed motions to dismiss the consolidated action. On March 19, 2008,
the Court granted our motion to dismiss and provided the plaintiffs leave to
file an amended consolidated complaint, which the plaintiffs filed with the
Court on April 8, 2008.
On
October 30, 2006, we were served with another purported shareholder derivative
complaint, naming certain of our current and former directors and officers as
defendants, and naming us as a nominal defendant. The suit, captioned Nichols
v. Mittelstaedt, et al. and filed in the Superior Court of California,
County of Sacramento, contains allegations substantially similar to the
consolidated federal action described above. On April 3, 2007, a fourth
purported derivative action, captioned Priest
v. Mittelstaedt, et al., was filed in the Superior Court of California,
County of Sacramento, and contains allegations substantially similar to the
consolidated federal action and the Nichols
suit. The Nichols
and Priest
suits have been consolidated and captioned In
re Waste Connections, Inc. Shareholder Derivative Litigation and stayed
pending the outcome of the consolidated federal action.
In
July 2008, the parties reached a preliminary agreement to settle all of these
derivative actions, and in August 2008, the consolidated federal action was
stayed as a result of the preliminary agreement. In March 2009, the parties
executed and filed with the court a stipulation of settlement. Under the terms
of the stipulation of settlement, we agreed to reaffirm and/or implement certain
corporate governance measures and our insurance carrier agreed to pay not more
than $3 million to plaintiffs’ counsel to cover plaintiffs’ counsel’s fees and
costs, which are subject to court approval. The defendants expressly deny any
wrongdoing and will receive a complete release of all claims. The stipulation of
settlement is subject to standard conditions, including final court approval.
There can be no assurance that final court approval will be
obtained.
We
completed a review of our historical stock option granting practices, including
all option grants since our initial public offering in May 1998, and reported
the results of the review to the Audit Committee of our Board of Directors. The
review identified a small number of immaterial exceptions to non-cash
compensation expense attributable to administrative and clerical errors. These
exceptions are not material to our current and historical financial statements,
and the Audit Committee concluded that no further action was necessary. As with
any litigation proceeding, we cannot predict with certainty the eventual outcome
of the pending federal and state derivative litigation, nor can we estimate the
amount of any losses that might result.
Stockholder
Proposals for 2010 Annual Meeting of Stockholders
To
be considered for inclusion in next year’s proxy materials, stockholder
proposals to be presented at the company’s 2010 Annual Meeting of Stockholders
must be in writing and be received by the Secretary of Waste Connections, at the
address set forth on the first page of this Proxy Statement, no later than the
close of business (California time) on November 30, 2009. Stockholder proposals
submitted after that date will be considered untimely, within the meaning of
Rules 14a-5(e)(2) and 14a-4(c)(1) under the Securities Exchange Act of 1934 and
Article II, Section 10 of our bylaws, unless received as set forth above no
later than the close of business (California time) on the 90th day
prior to the date of the 2010 Annual Meeting of Stockholders.
Annual
Report to Stockholders and Form 10-K
Our
Annual Report on Form 10-K for the fiscal year 2008 filed with the SEC, and the
exhibits filed with it, are available on the company’s web site at
www.wasteconnections.com. Upon request by any stockholder to the company’s
Secretary at the company’s address listed on the first page of this Proxy
Statement, a copy of our 2008 Form 10-K, without exhibits, will be furnished
without charge, and a copy of any or all exhibits to our 2008 Form 10-K will be
furnished for a fee which will not exceed our reasonable expenses in furnishing
the exhibits.
Other
Business
The
Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting of Stockholders. It is important that the
proxies are returned promptly and that your shares are represented. Stockholders
are urged to mark, date, execute and promptly return the accompanying proxy card
in the enclosed envelope.
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By
Order of the Board of Directors,
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![GRAPHIC](img004.jpg) |
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Secretary
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March 30,
2009
Directions
to Waste Connections, Inc. Corporate Headquarters
2295 Iron
Point Road, Suite 200, Folsom, CA. (916) 608-8200
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Directions
from Sacramento International Airport (~ 38 miles):
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I-5
South to Hwy
50 East (to South Lake Tahoe)
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Proceed East on Hwy
50 to East
Bidwell Road
exit
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Turn left at exit
signal onto East Bidwell Road, proceed North to Iron
Point
Road
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Turn
left onto Iron Point Road, proceed West for ~ 1 mile, past Broadstone
Parkway
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Turn left onto
1st
driveway leading to 2295
Iron Point
Road
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Directions
from I-80 (San Francisco) :
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I-80
East to Bus 80 East to Hwy 50 East (to South Lake
Tahoe)
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Then
follow rest of Airport directions, above
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Directions
from I-80 (Reno) or Business 80 (north end):
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●
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I-80
West to I-5 South, or Bus 80 West to Hwy 50 East (to South Lake
Tahoe)
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Then
follow rest of Airport directions, above
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Directions
from I-5 or Hwy 99 (south end):
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●
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I-5
or Hwy 99 North to Hwy 50 East (to South Lake Tahoe)
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●
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Then
follow rest of Airport directions,
above
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PROXY
WASTE
CONNECTIONS, INC.
ANNUAL
MEETING OF STOCKHOLDERS
Thursday,
May 14, 2009
10:00
A.M., California Time
WASTE
CONNECTIONS, INC.
2295 Iron
Point Road, Suite 200
Folsom,
California 95630
Waste
Connections, Inc.
2295
Iron Point Road, Suite 200
Folsom,
California 95630
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proxy
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This
proxy is solicited on behalf of the Board of Directors for use at the Annual
Meeting on May 14, 2009.
The
undersigned holder of Common Stock of Waste Connections, Inc. (“WCI”)
acknowledges receipt of WCI’s Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated March 30, 2009, and Annual Report to Stockholders for
the fiscal year 2008. The undersigned revokes all prior proxies and
appoints Ronald J. Mittelstaedt and Worthing F. Jackman, and each of them,
individually and with full powers of substitution and resubstitution, proxies
for the undersigned to vote all shares of WCI Common Stock that the undersigned
would be entitled to vote at the Annual Meeting of Stockholders to be held on
Thursday, May 14, 2009, at 10:00 a.m., California time, at WCI’s corporate
headquarters, 2295 Iron Point Road, Suite 200, Folsom,
California 95630, and any adjournment thereof, as designated on the
reverse side of this Proxy Card.
THIS
PROXY WILL BE VOTED ACCORDING TO THE SPECIFICATIONS YOU MAKE ON THE REVERSE
SIDE. IF YOU DO NOT MAKE SPECIFICATIONS ON THE REVERSE SIDE BUT YOU DO
SIGN AND DATE THIS PROXY CARD, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND
2 REFERRED TO ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON
ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
PLEASE
MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
TO
VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS
BELOW,
SIMPLY
SIGN, DATE, AND RETURN THIS PROXY CARD.
The
Board of Directors Recommends a Vote FOR Proposals 1 and 2.
1.
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Election
of directors:
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01
Michael W. Harlan
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Vote
FOR
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Vote
WITHHELD
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02 William
J. Razzouk
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all
nominees
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from
all nominees
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(except
as marked)
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(Instructions:
To withhold authority to vote for any indicated nominee, write the
number(s) of the nominee(s) in the box provided to the
right.) |
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2.
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Ratification
of appointment of PricewaterhouseCoopers LLP as WCI’s independent
registered public accounting firm for the fiscal year ending December 31,
2009.
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o
For
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o
Against
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o
Abstain
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IN
THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Date
____________________________________, 2009
Address
Change? Mark Box o Indicate changes
below:
If you plan to attend the Annual
Meeting of Stockholders, please mark the following box. n
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Signature(s)
in Box
Please
sign exactly as your name(s) appears on the proxy. If the
shares of common stock represented by the proxy are held in joint tenancy,
all persons should sign. Trustees, administrators, etc., should include
title and authority. Corporations should provide full name of corporation
and title of authorized officer signing the
proxy.
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