SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-1(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Superior Services, Inc.
__________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
__________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________
5) Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount previously Paid:
____________________________________
2) Form, Schedule, or Registration Statement No.:
____________________________________
3) Filing Party:
____________________________________
4) Date Filed:
____________________________________
<PAGE>
SUPERIOR SERVICES, INC.
LOGO
10150 West National Avenue
West Allis, Wisconsin 53227
_____________________________
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 12, 1998
_____________________________
To the Shareholders of
Superior Services, Inc.:
NOTICE IS HEREBY GIVEN THAT the 1998 Annual Meeting of Shareholders of
Superior Services, Inc. will be held on Tuesday, May 12, 1998, at 1:00
p.m., at the offices of Foley & Lardner, 40th Floor, 777 East Wisconsin
Avenue, Milwaukee, Wisconsin, for the following purposes:
1. To elect three directors for three-year terms.
2. To consider and act on an amendment to the Superior Services, Inc.
1996 Equity Incentive Plan, as more fully described in the
accompanying Proxy Statement, to increase the number of shares of
common stock authorized for issuance under the Plan from 1,200,000 to
3,200,000.
3. To consider and act upon any other business which may be properly
brought before the meeting or any adjournment thereof.
Only holders of record of the Common Stock at the close of business on
April 2, 1998, will be entitled to notice of, and to vote at, the annual
meeting and any adjournment thereof.
Shareholders are cordially invited to attend the meeting in person.
Even if you expect to attend the meeting in person, to help ensure that
your vote is represented at the meeting please complete, sign, date, and
return the accompanying proxy in the enclosed postage paid envelope. You
may revoke your proxy at any time before it is actually voted by notice in
writing to the undersigned or by voting in person at the meeting.
Accompanying this Notice of 1998 Annual Meeting of Shareholders is a
form of proxy and proxy statement.
On Behalf of the Board of Directors
Peter J. Ruud, Secretary
West Allis, Wisconsin
April 3, 1998
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
SUPERIOR SERVICES, INC.
LOGO
_____________________________
PROXY STATEMENT
______________________________
Annual Meeting of Shareholders
May 12, 1998
This Proxy Statement and accompanying proxy are being furnished to
the shareholders of Superior Services, Inc. (the "Company") beginning on
or about April 3, 1998, in connection with the solicitation by the Board
of Directors ("Board") of the Company of proxies to be voted at its 1998
Annual Meeting of Shareholders to be held on Tuesday, May 12, 1998, at
1:00 p.m., at the offices of Foley & Lardner, 40th Floor, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin and at any adjournment thereof
(collectively, the "Meeting").
Only record holders of outstanding shares of the Company's Common
Stock ("Common Stock") as of the close of business on April 2, 1998
("Record Date") are entitled to notice of, and to vote at, the Meeting. As
of the Record Date, 26,715,100 shares of Common Stock were outstanding.
The record holder of each outstanding share of Common Stock as of the
Record Date is entitled to one vote per share for each proposal submitted
for shareholder consideration at the Meeting.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the Meeting and to vote in person.
The presence at the Meeting of a shareholder who has signed a proxy does
not in itself revoke a proxy. Any shareholder giving a proxy may revoke it
at any time before it is exercised by giving notice thereof to the
Company's Secretary in writing, by notifying the appropriate personnel at
the Meeting in writing or by voting in person at the Meeting. Unless so
revoked, the shares represented by proxies received by the Board will be
voted at the Meeting in accordance with the instructions thereon. If no
instructions are specified on the proxy, the votes represented thereby
will be voted (i) FOR the Board's three director nominees set forth below,
(ii) FOR the amendment of the Superior Services, Inc. 1996 Equity
Incentive Plan described below and (iii) on such other shareholder matters
which may properly come before the Meeting in accordance with the best
judgment of the persons named as proxies.
ELECTION OF DIRECTORS
General
Three members of the Board are to be elected at the Meeting for
three-year terms to expire at the Company's annual meeting of shareholders
held in the year 2001. G. William Dietrich, Donald Taylor and Francis J.
Podvin are the Board's nominees for such directorships.
The Articles of Incorporation and By-laws of the Corporation provide
that the Board shall be divided into three classes, with one class being
elected each year for a three-year term. Class II Directors will be
elected at the Meeting. The terms of the Class III Directors and Class I
Directors will expire at the Company's annual meetings in 1999 and 2000,
respectively.
It is intended that the persons named as proxies in the accompanying
proxy will vote FOR the election of the Board's three nominees. If any
nominee should become unable to serve as a director prior to the Meeting,
the shares represented by proxies otherwise voted in favor of the Board's
three nominees or which do not contain any instructions will be voted FOR
the election of such other person as the Board may recommend. Under
Wisconsin law, directors are elected by a plurality of the votes cast by
the shares entitled to vote in the election, assuming a quorum is present.
For this purpose, "plurality" means that the individuals receiving the
largest number of votes are elected as directors, up to the maximum number
of directors to be chosen at the election. Therefore, any shares of Common
Stock which are not voted on this matter at the Meeting, whether by
abstention, or otherwise, will have no effect on the election of directors
at the Meeting.
Continuing Directors, Executive Officers and Nominees
Certain information about the Board's nominees and its continuing
members and the executive officers of the Company is set forth below. All
members of the Board have previously been elected to the Board by the
Company's shareholders.
Name Age Company Position Director Since
Joseph P. Tate .......... 54 Chairman and Director July, 1992
(Class III)
G. William Dietrich...... 52 President, Chief Executive Sept., 1994
Officer and Director
(Class II)
Gary G. Edler ........... 51 Director (Class I) July, 1992
Francis J. Podvin(1)..... 56 Director (Class II) July, 1992
Donald Taylor(1)(2)...... 70 Director (Class II) March, 1996
Walter G. Winding(1)(2).. 56 Director (Class III) March, 1996
Warner C. Frazier(1)(2).. 65 Director (Class I) May, 1997
George K. Farr .......... 39 Chief Financial Officer
and Treasurer
Gary Blacktopp .......... 50 Senior Vice President -
Operations
Peter J. Ruud ........... 44 Vice President -
Administration and
Corporate Secretary
Scott S. Cramer ......... 45 Vice President - General
Counsel
Dale Nolder ............. 45 Vice President - Market
Development
______________
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Joseph P. Tate is a co-founder of the Company. Mr. Tate has more than
30 years of experience in the solid waste services industry. In 1967, Mr.
Tate founded the "Valley Group" of companies that was part of the original
consolidation which created the Company in 1993 (the "Consolidation") and,
prior to the Consolidation, was a shareholder, officer and director of
each of these companies. Since the Consolidation he has continued to serve
in various executive capacities with certain of the Company's
subsidiaries. From January 1993 until August 1994, Mr. Tate served as
Chief Executive Officer of the Company. Mr. Tate has been a member of the
Board since the Company's original incorporation in July 1992 and has been
Chairman of the Board of the Company since January 1993. Mr. Tate serves
as a member of Class III of the Board, with a term through the Company's
1999 annual shareholders meeting.
G. William Dietrich joined the Company in February 1994 as Vice
President-Solid Waste and was promoted to President and Chief Operating
Officer in September 1994, with management responsibility for all of the
Company's operations. Mr. Dietrich was promoted to President and Chief
Executive Officer in November 1995. Prior to his employment by the
Company, Mr. Dietrich was employed for over two and one-half years by
Browning-Ferris Industries, Inc. ("BFI") (a national solid waste company),
as a divisional vice president responsible for BFI's solid waste
collection, transportation and disposal operations in Eastern and Northern
Ontario. Prior thereto, Mr. Dietrich was a district manager for Laidlaw
Waste Systems, Inc. (a national solid waste company) for three years with
principal responsibility for Laidlaw's solid waste operations in a
substantial portion of the Northeastern United States. Mr. Dietrich has
been a director of the Company since September 1994 and has been nominated
to continue serving as a member of Class II of the Board, with a term
through the Company's 2001 annual shareholders meeting.
Gary G. Edler is a co-founder of the Company and has more than 29
years of experience in the solid waste services industry. Mr. Edler joined
the Company at the time of the Consolidation as Vice President in charge
of the Company's wastewater biosolids and nonhazardous liquid waste
management operations. For 25 years prior to joining the Company, he
served as President of the "E&K Group" of companies that was a part of the
Consolidation. Mr. Edler has been a director of the Company since the
Company's original incorporation in July 1992 and serves as a member of
Class I of the Board, with a term through the Company's 2000 annual
shareholders meeting.
Francis J. Podvin has been a principal in the law firm of Nash,
Podvin, Tuchscherer, Huttenburg, Weymouth & Kryshak, S.C., Wisconsin
Rapids, Wisconsin, since 1965, currently serving as its President, and
specializes in business combinations, banking and corporate finance. Mr.
Podvin has been a director of the Company since the Company's original
incorporation in July 1992 and has been nominated to continue serving as a
member of Class II of the Board, with a term through the Company's 2001
annual shareholders meeting. Nash, Podvin, Tuchscherer, Huttenburg,
Weymouth & Kryshak, S.C. has from time to time performed, and is expected
to continue to perform, legal services for the Company.
Donald Taylor has been a principal in Sullivan Associates
(specialists in board of directors searches), Milwaukee, Wisconsin, since
1992. Mr. Taylor served as Managing Director of U.S.A. Anatar Investments,
Ltd. (a venture capital firm) from 1989 to 1992, and prior thereto as
Chairman and Chief Executive Officer of Rexnord, Inc. (a manufacturer of
power transmission equipment), Milwaukee, Wisconsin. Mr. Taylor is a
director of Banta Corporation and Harnischfeger Industries, Inc. Mr.
Taylor has been a director of the Company since March, 1996 and has been
nominated to continue serving as a member of Class II of the Board of
Directors, with a term through the Company's 2001 annual shareholders
meeting.
Walter G. Winding has been the owner and Chief Executive Officer of
Winding and Company (business consultants for closely-held companies),
Hartland, Wisconsin, since 1995. From January 1994 to January 1996, Mr.
Winding was Senior Vice President of HM Graphics Inc. (commercial printing
company), West Allis, Wisconsin. For six years prior thereto, Mr. Winding
served as President and Chief Executive Officer of Schweiger Industries,
Inc. (furniture manufacturer), Jefferson, Wisconsin, and prior thereto
was Schweiger's Vice President-Administration for four years. Prior
thereto, Mr. Winding served in various management positions with Jos.
Schlitz Brewing Company (brewery and beer distributor), Milwaukee,
Wisconsin. Mr. Winding currently serves on numerous boards of directors of
privately-held companies. Mr. Winding serves as a member of Class III of
the Board, with a term through the Company's 1999 annual shareholders
meeting.
Warner C. Frazier has been the Chairman and Chief Executive Officer
of Simplicity Manufacturing, Inc. (a manufacturer of lawn and garden power
equipment), Port Washington, Wisconsin, since 1983, and also served as
President of that firm from 1980 to 1996 and as Vice President of
Marketing from 1976 to 1980. Prior thereto, Mr. Frazier served in various
management positions with Allis-Chalmers, in Milwaukee, Wisconsin, Los
Angeles, California, and Seattle, Washington. Mr. Frazier currently serves
on the board of directors of ABTCO and Northwestern Steel & Wire Co. and
several privately-held companies. Mr. Frazier serves as a member of Class
I of the Board, with a term through the Company's 2000 annual shareholders
meeting.
George K. Farr joined the Company in February 1993 as Corporate
Controller, with financial reporting responsibility for all of Superior's
operating locations. In December 1994, he was promoted to Chief Financial
Officer of the Company, with responsibility for the oversight of all of
the Company's financial matters. Prior to joining the Company, he served
as the Market Development Controller for Sanifill, Inc. (a solid waste
service company), Houston, Texas, from February 1991 to July 1992, where
he was responsible for supervising the financial due diligence process and
subsequent integration of Sanifill's major acquisitions. Prior thereto, he
held various financial management positions, including Executive Vice
President-Finance and Administration, at BancPlus Savings Association (a
savings and loan institution), Houston, Texas, for five years.
Gary Blacktopp has more than 13 years of experience in the solid
waste services industry. Mr. Blacktopp joined the Company in June 1994 in
the dual role of General Manager of the Superior-Sheboygan solid waste
collection and transfer operations and Vice President-
Equipment/Maintenance. In November 1995, Mr. Blacktopp was promoted to
the position of Operating Vice President-Lake Region, with responsibility
for the Company's solid waste operations in Eastern and Southern Wisconsin
and Northern Illinois. In May 1997, Mr. Blacktopp's area of
responsibility was increased to include the Company's operations located
in the Northwest Region, including Northwest Wisconsin, Minnesota and
Iowa. The Lake Region and Northwest Region were combined and are now
known as the Midwest Region. In August 1997 Mr. Blacktopp was promoted to
the position of Senior Vice President-Operations, with responsibility for
all of the Company's operations.
Peter J. Ruud joined the Company in September 1993 as Vice President-
General Counsel and Corporate Secretary, with responsibility for all of
the Company's legal matters. In November 1995, Mr. Ruud also assumed
oversight responsibility for the Company's human resources and health and
safety functions. In August 1997, Mr. Ruud was promoted to Vice President
- Administration and Corporate Secretary with responsibilities for the
Company's human resources and health and safety functions, public
relations, governmental affairs and corporate governance. Prior to
joining the Company, Mr. Ruud was in private practice with the law firm of
Davis & Kuelthau, S.C., Milwaukee, Wisconsin, since 1978, specializing in
environmental and corporate law and regulatory compliance. Mr. Ruud also
served as a member of the firm's managing Board of Directors. While a
shareholder of Davis & Kuelthau, S.C., Mr. Ruud was actively involved in
the formation of the Company and the Consolidation.
Scott S. Cramer joined the Company in July 1997 as Vice President-
General Counsel, with responsibility for all of the Company's legal
matters. Prior to joining the Company, Mr. Cramer served in various legal
capacities for more than 13 years with BFI. Most recently Mr. Cramer was
Senior Corporate Counsel to BFI. Mr. Cramer also was European Regional
Counsel, Vice President and Director of Legal Affairs as well as Corporate
Secretary for Browning Ferris Industries Europe, Inc. in Utrecht, The
Netherlands from July 1989 to January 1993. Prior to joining BFI, Mr.
Cramer was counsel to Pennzoil Company which followed his tenure in
private practice.
Dale O. Nolder has more than 12 years of experience in the solid
waste services industry. Mr. Nolder was named Vice President - Market
Development for Superior in November 1996 responsible for all external
growth activities of the Company. Immediately prior to joining the
Company, during the summer of 1996, Mr. Nolder headed BFI's growth program
in the Greater New York market. Prior thereto, he was the southern
regional market development manager for BFI, with responsibility for all
market development activity in his region, including acquisitions,
municipal marketing, infrastructure development and marketplace planning.
Mr. Nolder also served in various financial and market development
capacities with Chambers Development Company, Inc. from May 1985 to
November 1993.
Board Committees and Meetings of the Board
The Board has established two standing committees, the Audit
Committee and the Compensation Committee, to exercise certain of the
Board's functions and to assist the Board in the discharge of its
responsibilities. The Board as a whole nominates directors for election
and will consider nominees recommended in writing by shareholders,
together with appropriate background data, if such recommendations are
made in accordance with the Company's By-laws.
During 1997, ten meetings of the Board were held. Each of the
directors, except Warner C. Frazier, attended more than 75% of the
aggregate of the total number of meetings of the Board of Directors and
the total number of meetings held by all committees of the Board on which
he served during 1997.
The Audit Committee's principal functions are to recommend annually a
firm of independent certified public accountants to serve as the Company's
auditor, to meet with and review reports of the Company's auditor, approve
the audit fee payable to the auditors, to recommend to the Board such
actions within the scope of its authority as it deems appropriate, and to
approve related party transactions. The Audit Committee currently consists
of Donald Taylor (Chairman), Walter G. Winding and Warner C. Frazier. The
Audit Committee met twice in 1997.
The Compensation Committee, which met six times in 1997, is
responsible for reviewing and approving the compensation, bonuses, and
benefits of officers and other key employees of the Company and its
subsidiaries and the administration of the Company's 1993 Incentive Stock
Option Plan and 1996 Equity Incentive Plan. The Compensation Committee
currently consists of entirely independent directors, including Francis J.
Podvin (Chairman), Donald Taylor, Walter Winding, and Warner C. Frazier.
See "Executive Compensation-Report on Executive Compensation."
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record
Date with respect to the beneficial ownership of Common Stock by (a) all
persons or entities known to the Company to be the beneficial owner of
more than five percent or more of the Common Stock; (b) each Executive
Officer named in the Summary Compensation Table set forth below; (c) each
of the current directors and nominees; and (d) all Executive Officers and
directors as a group. Unless otherwise noted, each person has sole
investment and voting power with respect to the shares indicated (subject
to applicable marital property laws).
Shares beneficially owned
Name of beneficial owner Number Percent
Joseph P. Tate(1)(2)(4). . . . . . . . . 2,639,235 9.9
G. William Dietrich(3)(4). . . . . . . . 253,768 *
George K. Farr(4). . . . . . . . . . . . 113,759 *
Peter J. Ruud(4) . . . . . . . . . . . . 41,926 *
Gary G. Edler(1)(4). . . . . . . . . . . 553,749 2.1
Francis J. Podvin(4)(5). . . . . . . . . 43,098 *
Donald Taylor(4) . . . . . . . . . . . . 9,667 *
Walter G. Winding(4) . . . . . . . . . . 9,667 *
Warner C. Frazier(4) . . . . . . . . . . 3,934 *
Gary Blacktopp(4). . . . . . . . . . . . 31,623 *
Raymond M. Cash(6) . . . . . . . . . . . 1,510,300 5.7
Pilgrim Baxter & Associates, Ltd(7). . . 1,332,570 5.0
Paul M. Burke(8) . . . . . . . . . . . . 1,879,839 7.0
All executive officers and directors
as a group (10 persons)(4). . . . . . . 3,700,426 13.6
------------------
* Indicates less than 1%.
(1) Address is c/o 10150 West National Avenue, Suite 350, West Allis,
Wisconsin 53227. The listed number of shares for Mr. Edler includes
1,300 shares owned by Mr. Edler's spouse.
(2) The listed shares include 228,700 shares owned by a trust established
by Mr. Tate, in which Mr. Tate acts as trustee.
(3) The listed shares include 1,000 shares owned by Mr. Dietrich's
spouse.
(4) The shares listed for Messrs. Tate, Dietrich, Farr, Ruud, and
Blacktopp include 11,804, 252,568, 113,659, 41,926, and 27,198
shares, respectively, subject to acquisition upon the exercise of
stock options currently exercisable or exercisable within sixty (60)
days of the Record Date. The shares listed for Messrs. Edler,
Podvin, Taylor, Winding and Frazier include 1,760, 9,167, 9,167,
9167, and 3,334 shares, respectively, subject to acquisition upon the
exercise of stock options currently exercisable or exercisable within
sixty (60) days of the Record Date. The shares listed for all
executive officers and continuing directors as a group include
479,750 shares subject to acquisition upon exercise of stock options
currently exercisable or exercisable within 60 days of the Record
Date.
(5) The listed shares include 13,000 shares owned by Mr. Podvin's spouse.
(6) Address is 4696 Oakdale Road, Smyrna, Georgia 30080. Except to the
extent information is believed to be otherwise known by the Company,
the information with respect to Mr. Cash is as of July 7, 1997, as
reported by Mr. Cash in his Schedule 13D dated July 7, 1997.
Pursuant to such Schedule 13D, the listed shares include 960,974
shares owned by The Cash Family Limited Partnership. Mr. Cash is the
sole shareholder and director of Cash Resources, Inc., the sole
general partner of The Cash Family Limited Partnership.
(7) Address is 825 Duportail Road, Wayne, Pennsylvania 19087. The
information with respect to Pilgrim Baxter & Associates, Ltd. is as
of January 20, 1998, as reported by Pilgrim Baxter in its Schedule
13G dated January 20, 1998.
(8) Address is 2806 Juniper Hill Court, Louisville, Kentucky 40206.
EXECUTIVE COMPENSATION
Report on Executive Compensation
The Compensation Committee of the Board is responsible for reviewing
and approving the compensation program for the Company's executive
officers, including the Chairman of the Board and the President/Chief
Executive Officer. The philosophy underlying the Company's executive
compensation program is that executive compensation should be designed and
implemented in a manner which attracts, motivates, and retains qualified
senior managers, including its executive officers, who are committed to
achieving sustainable growth in shareholder value.
The Company's executive compensation program includes base salary,
cash bonus and stock option bonus elements. The base salary paid to each
executive officer is based upon the Committee's evaluation of various
factors including the executive's role and responsibilities, past
performance, present and future value to the Company, market compensation
data for executives of other companies in the solid waste industry
(including most of those included in the Company's peer group for
measuring shareholder total return) and non-solid waste industry
companies, and other relevant factors. Consistent with the Company's
compensation philosophy, the executive compensation program, which
includes elements of both cash bonus and incentive and nonqualified stock
options, is weighted towards incentive compensation directly tied to
performance goals which contribute significantly to long-term growth in
shareholder value. By including stock options in the incentive
compensation program, the Company intends to align the interests of the
participating executives with those of shareholders by providing value to
the executive through appreciation in share value.
The Company's management incentive compensation plan for 1997
included qualifying criteria and measurement targets based upon the
Company's earnings per share. These financial performance criteria were
designed and intended to directly link executive compensation to the
shareholders' interest in the creation of shareholder value through growth
of the Company's earnings. In addition, the incentive compensation plan
for each individual executive officer included non-financial criteria tied
to the executive's expected contribution to the Company's continuous
improvement programs. The Committee retained the discretion to modify or
deviate from financial performance measures where consistent with the
primary objective of long-term growth in shareholder value.
Cash bonuses and stock option grants are awarded by the Committee to
the named Executive Officers subsequent to the end of the Company's fiscal
year. Bonus awards are based upon the Committee's review with Mr. Dietrich
of the Company's achievement of financial performance criteria and each
named Executive Officer's achievement of his individual non-financial
criteria. In some circumstances, special stock option grants may also be
awarded or prior grants may be modified by the Committee during the
Company's fiscal year, for example to adjust the compensation package of
an executive officer who has been assigned additional responsibilities or
to recognize extraordinary performance related to a specific event or
activity.
In determining the 1997 base salary of Mr. Dietrich, the Compensation
Committee considered (i) the Company's financial performance in 1996, (ii)
Mr. Dietrich's critical role in the successful initial public offering
which was completed in 1996, (iii) his development and direction of long-
term strategic growth plans for the Company, and (iv) the compensation
practices of other companies (including most of those included in the
Company's peer group for measuring shareholder total return) for
executives with similar levels of responsibility. In addition, the
Compensation Committee engaged the services of an outside compensation
consultant for the purpose of reviewing executive compensation survey
data. The terms of the Employment Agreements and the Key Executive
Employment and Severance Agreements ("KEESAs") between the Company and
certain executive officers, including Mr. Dietrich, were based upon a
similar evaluation. See "Executive Compensation-Employment and
Noncompetition Agreements" and "Executive Compensation-Change-in-Control
Arrangements."
The CEO's compensation plan for 1997 was heavily weighted to pay-for-
performance compensation. Mr. Dietrich's base salary was increased from
$182,000 for 1996 to $236,600 for 1997. The increase was intended to
reflect Mr. Dietrich's role in the Company's 1996 financial performance
(specifically, the substantial increase in earnings and significant
increase in profitability during a time of accelerating growth) and to
keep the CEO's salary comparable with compensation of executives of other
companies in the solid waste industry, including most of those in the
Company's Self-Determined Peer Group Index, as well as executives of other
companies with comparable revenues who have similar responsibilities. The
annual cash bonus incentive awarded to Mr. Dietrich for 1997 was $307,580,
based upon the earnings per share qualifying criteria and measurement
targets under the Company's 1997 management incentive plan. The incentive
compensation awarded to Mr. Dietrich for 1997 represented the maximum
possible payout under his 1997 compensation plan. In February 1998, Mr.
Dietrich also was granted stock options exercisable for 100,000 shares at
the fair market value of the stock on the grant date, based upon achieving
the 1997 earnings per share measurement targets under the Company's 1997
management incentive plan. In addition to the stock options granted to
Mr. Dietrich under the Company's 1997 compensation plan, the Compensation
Committee also authorized a special award to Mr. Dietrich in October, 1997
of stock options for 100,000 shares at the stock's fair market value on
the grant date, in recognition of Mr. Dietrich's extraordinary
contribution to the Company's successful common stock public offering
which was completed in September, 1997.
Since the Company believes its stock option plans have been adopted
and are being administered in accordance with Internal Revenue Code
Section 162(m), it is the Committee's position that no further action is
necessary to conform its compensation plans to comply with the regulations
proposed under Internal Revenue Code Section 162(m) relating to the $1
million cap on executive compensation deductibility.
By the Compensation Committee:
Francis J. Podvin, Chairman
Donald Taylor
Walter G. Winding
Warner C. Frazier
Summary Compensation Information
The following table sets forth certain information concerning
compensation paid by the Company for the last three fiscal years to the
Company's Chief Executive Officer and the Company's other executive
officers who were serving as such as of December 31, 1997 (or for any part
of the fiscal year ended December 31, 1997) whose salary and bonus exceed
$100,000. The persons named in this table are sometimes referred to
herein as the named Executive Officers.
Summary Compensation Table
Shares
underlying
Name and principal Fiscal Annual Annual options All other
position year salary bonus(1) granted(2) compensation(3)
Joseph P. Tate...... 1997 $155,000 $155,000 24,495 $3,873
Chairman 1996 $155,000 $134,816 8,300 $3,873
1995 $140,000 $140,000 0 $2,814
G. William Dietrich. 1997 $236,600 $307,580 180,000 $9,794
President and CEO 1996 $182,000 $285,000 10,435 $4,184
1995 $160,000 $250,000 350,000 $2,776
George K. Farr ..... 1997 $150,000 $150,000 146,530 $2,705
Chief Financial 1996 $135,000 $101,000 5,739 $2,665
Officer and Treasurer 1995 $110,400 $ 60,000 105,460 $2,313
Gary Blacktopp ..... 1997 $153,482 $128,426 101,558 $4,193
Senior Vice
President-Operations
Peter J. Ruud ...... 1997 $120,708 $120,708 71,530 $2,432
Vice President - 1996 $140,000 $105,000 8,522 $2,844
Administration and 1995 $134,000 $ 70,000 20,000 $2,356
Corporate Secretary
----------
(1) The value of perquisites and other personal benefits received by any
named Executive Officer did not exceed the lesser of $50,000 or 10%
of the named Executive Officer's salary and bonus. Annual bonus is
reflected in the year earned, even though it may have been paid in
the subsequent year.
(2) Options are reflected in the year of grant, even thought they may
have been based upon performance in the year preceding grant. See
"Stock Options" below.
(3) The majority of other compensation is Company contributions to the
Company's 401(k) Plan. Also includes life insurance premiums paid by
the Company on executive group policy insurance in excess of $50,000
payable to the named Executive Officers or their respective families.
1997 includes $1,790 club dues for G. William Dietrich. 1997 also
includes $3,187 imputed interest for G. William Dietrich, see
"Certain Transactions."
Stock Options
Option Grants. The following table sets forth certain information
with respect to stock options granted during 1997 to each of the named
Executive Officers:
<TABLE>
<CAPTION>
% of total Potential realizable value at
options assumed annual rates of stock
Number of shares granted to price appreciation for option
underlying options employees in Exercise price Expiration term(4)
Name granted(1) 1997 per share(2) date(3) 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tate 24,495 3.02% $ 23.65 02/11/02 $ 92,837 $ 268,856
G. William Dietrich 80,000 9.87% $ 21.50 02/11/07 $1,081,699 $2,741,237
100,000 12.34% $25.0625 10/20/07 $1,576,167 $3,994,317
George K. Farr 46,500 5.74% $ 21.50 02/11/07 $ 629,143 $1,594,372
100,000 12.34% $25.0625 10/20/07 $1,576,167 $3,994,317
Peter J. Ruud 46,530 5.74% $ 21.50 02/11/07 $ 629,143 $1,594,372
25,000 3.08% $25.0625 10/20/07 $ 394,042 $ 998,579
Gary Blacktopp 1,558 0.19% $ 21.50 02/11/07 $ 21,066 $ 53,386
30,000 3.70% $ 21.50 05/23/07 $ 405,637 $1,027,964
70,000 8.64% $ 24.375 08/26/07 $1,073,051 $2,719,323
(1) Includes nonqualified stock options and incentive stock options granted under the Company's 1996 Equity Incentive Plan.
(2) Exercise price is equal to the market value of the Common Stock on the date of grant.
(3) The stock options have varying vesting schedules, but generally vest at the rate of 25% after the first 12 months after
grant and 6.25% per quarter thereafter. Although not a provision of the 1996 Plan, all option agreements evidencing
option grants made under the 1996 Plan have historically included, and are expected to continue to include, a provision
allowing the Board to accelerate the vesting of all outstanding options represented thereby upon the occurrence of a
change in control of the Company.
(4) The potential realizable values set forth under the columns represent the difference between the stated option exercise
price and the market value of the Common Stock based on certain assumed rates of stock price appreciation and assuming
that the options are exercised on their stated expiration date; the potential realizable values set forth do not take
into account applicable tax and expense payments which may be associated with such option exercises. Actual realizable
value, if any, will be dependent on the future stock price of the Common Stock on the actual date of exercise, which may
be earlier than the stated expiration date. The 5% and 10% assumed rates of stock price appreciation over the ten-year
exercise period of the options used in the table above are mandated by rules of the SEC and do not represent the
Company's estimate or projection of the future price of the Common Stock on any date. There can be no assurance that the
stock price appreciation rates for the Common Stock assumed for purposes of this table will actually be achieved.
</TABLE>
Option Values; Option Exercises. The following table sets forth the
aggregate value of unexercised options at December 31, 1997, held by each
of the named Executive Officers and information regarding option exercises
during 1997 by each of the named Executive Officers.
<TABLE>
1997 Option Exercises
and
Year-End Option Values
<CAPTION>
Number of securities underlying Value of unexercised
unexercised options at fiscal in-the-money
Shares acquired Value year end (2) options at fiscal year end(3)
Name on exercise realized(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Tate 0 $ 0 3,631 29,164 $ 58,913 $ 203,741
G. William Dietrich 125,000 $1,725,000 229,565 185,870 $4,463,692 $1,073,241
George K. Farr 55,000 $ 759,000 86,260 149,759 $1,717,268 $ 780,513
Peter J. Ruud 150,000 $2,067,187 23,728 76,324 $ 488,274 $ 521,767
Gary Blacktopp 10,000 $ 173,612 12,826 130,906 $ 184,414 $ 913,849
(1) The value realized is the difference between the gross proceeds from sale of the acquired shares less the exercise price
paid to acquire the shares.
(2) Includes nonqualified stock options and incentive stock options granted under the Company's 1993 Incentive Stock Option
Plan (the "1993 Plan") and the Company's 1996 Equity Incentive Plan (the "1996 Plan") with prices equal to the market
value of the Common Stock on the date of grant. The stock options generally vest at the rate of 25% after the first 12
months after grant and 6.25% per quarter thereafter. As provided in the 1993 Plan and as historically provided in option
agreements evidencing options under the 1996 Plan, the Board may accelerate the vesting of all outstanding options under
the 1993 Plan and 1996 Plan upon the occurrence of a change in control of the Company.
(3) The dollar values were calculated by determining the difference between the fair market value of the underlying Common
Stock and the various applicable exercise prices of the named Executive Officers' outstanding options at the end of 1997.
The last reported sale price of the Company's Common Stock on The Nasdaq Stock Market on December 31, 1997 was $28.875
per share.
</TABLE>
Employment and Noncompetition Agreements
The Company has entered into employment agreements with Messrs.
Dietrich, Farr, and Ruud. The employment agreements provide for three-year
terms which are renewable automatically for successive three-year terms,
unless either party gives 30 days advance notice of nonrenewal. The
Company may also terminate any of the employment agreements at any time
for "cause" as defined in the Executive Officer's KEESA. See "Severance
and Change in Control Arrangements. " If the Company terminates the named
officer's employment other than for cause or the officer's death or
disability or if the Company elects not to renew the officer's employment
agreement, the officer is entitled to receive a severance payment equal to
three (3) years base salary plus an amount equal to the officer's annual
bonus for the year preceding termination prorated to the time of
termination.
The Company has also entered into employment agreements with Mr.
Blacktopp and Mr. Cramer. The employment agreements provide for a two-
year and one-year term, respectively, which are renewable automatically
for successive two-year and one-year terms, respectively, unless either
party gives 60 days advance notice of nonrenewal. The Company may also
terminate either of the employment agreements at any time for "cause" as
defined in the employment agreements. If the Company elects to terminate
Mr. Blacktopp's or Mr. Cramer's employment other than for cause or his
death or disability such individual is entitled to receive a severance
payment equal to the unpaid balance of the employee's base salary through
the expiration of the initial term or the renewal term within which
termination takes place, subject to the change of control provisions
described below.
If the employment of any of the above officers is terminated as a
result of his death, his estate or representative is entitled to receive
an amount equal to the officer's base salary for the month in which he
dies. If the employment of any of the above officers is terminated as a
result of his disability, the officer is entitled to receive his base
salary for a period of 180 days after the Company notifies the officer of
such termination, reduced by the amount of any disability benefits
received under the Company's disability benefit plan.
Mr. Dietrich is subject to a noncompetition agreement which prohibits
him during the term of his employment and for one year thereafter from
competing with the Company within 50 miles of any Company facility or from
using or disclosing confidential information of the Company. Mr. Ruud,
Mr. Farr, Mr. Cramer, and Mr. Blacktopp are also subject to noncompetition
agreements substantially identical to Mr. Dietrich's, except that the
noncompetition term extends for two years following the termination of
their respective employment with the Company.
Severance and Change in Control Arrangements
The Company has KEESAs with Messrs. Dietrich, Farr, and Ruud which
provide that, following a "change in control" of the Company (as defined
in the KEESAs), such named Executive Officer will be employed for three
years in the same position, performing equivalent duties, and at the same
location as in effect immediately prior to the change of control.
Under the terms of the KEESAs, the named Executive Officer is
entitled to receive compensation at the same rate in effect at the date of
change in control (subject to increase by the Compensation Committee)
during an officer's employment period following the change in control and
to be included in the Company's benefit plans available to employees of
comparable status. If during the employment period the officer's
employment is terminated by the Company, other than for "cause" (as
defined in the KEESAs) or the officer's disability, or the officer's
duties are changed substantially without his written consent and the
officer terminates his employment as a result, the officer is entitled to
receive a lump sum payment equal to three times the officer's average
annual total compensation for the five years prior to the change in
control (or, if employed for less than three years, three times the
officer's highest amount of total annual compensation), plus the
actuarially determined present value of the benefit accruals that would
have been made through the end of the employment period under the
Company's retirement plans applicable to the officer. Each of the KEESAs
provide that the present value of the total amounts received by any
officer thereunder will be limited so as not to constitute an "excess
parachute payment" as defined in Section 280G of the Internal Revenue
Code. The officer and his eligible dependents are also entitled to
coverage under the Company's medical benefit plans through the end of the
employment period. Each officer also has the right under the KEESAs to
voluntarily terminate his employment with the Company for any reason
whatsoever during the 90-day period commencing on and after the occurrence
of a change in control and still be entitled to receive the lump sum
termination payments and benefits described above.
Under the terms on the employment agreements with Mr. Blacktopp and
Mr. Cramer, if either officer is terminated due to a "change in control"
(as defined in the employment agreements) the officer is entitled to
receive a lump sum severance payment equal to two years or one year,
respectively, of his base salary in effect on the effective date of the
change in control.
401(k) Plan
The Company maintains an Employees' Retirement Savings Plan ("401(k)
Plan") for employees who elect to participate. Subject to certain
limitations, participants may contribute up to 15% of their compensation
on a pre-tax basis to the 401(k) Plan and the Company will contribute
matching funds in an amount equal to 25% of the amount contributed by each
participant up to the first 8% of the participant's compensation. Amounts
attributable to participant contributions under the 401(k) Plan are fully
vested at all times (with Company contributions vesting in the following
increments: 10% after one year of service, 30% after two years, 50% after
three years, 75% after four years and 100% after five years).
Participants are entitled to receive their vested 401(k) Plan accounts,
including investment earnings, upon death, retirement, or other
termination of employment.
Director Compensation
Under the Company's director compensation policy, each independent
director receives an annual retainer fee of $16,000, plus $500 for
attending each committee meeting which is not held in conjunction with a
Board meeting, in addition to reimbursement of out-of-pocket expenses.
The Chairman of the Compensation Committee of the Board receives an
additional annual retainer fee of $1,000.
In addition, under the Company's 1996 Equity Incentive Plan (the
"1996 Plan"), on the effective date of the Company's initial public
offering (March 7, 1996), each then serving independent director was
automatically granted non-qualified stock options under the 1996 Plan to
purchase 10,000 shares of Common Stock at a per share exercise price equal
to the initial public offering price of $11.50 per share. Each new
independent director joining the Board will automatically receive an
initial non-qualified stock option to purchase 10,000 shares of Common
Stock exercisable at the closing sale price of the Common Stock on the
date of grant. Each independent director's initial option grant will vest
ratably over an approximate three-year period, provided that the
independent director continues to serve as a member of the Board at the
end of each vesting period with respect to the increment then vesting. The
1996 Plan also provides that, at time of each annual meeting, each then
serving and continuing independent director will receive automatically an
additional non-qualified stock option to purchase 2,500 shares of Common
Stock at an exercise price equal to the closing sale price of the Common
Stock on the date of grant. These annual option grants will vest in full
within six months from the date of grant. Notwithstanding the
aforementioned vesting provisions, all outstanding options granted to
independent directors under the 1996 Plan will vest immediately upon a
change in control, or the director's death or disability. All options
granted to independent directors under the 1996 Plan will expire upon the
earlier to occur of five years from the grant or one year from the
independent director ceasing to hold such position.
Independent Director Share Ownership Requirement
Pursuant to the Company's Restated By-laws, each independent director
is required to own, directly or through one or more affiliates, at least
500 shares of Common Stock within six months of the date of the election
of such director.
<PAGE>
STOCK PERFORMANCE INFORMATION
The following performance graph compares the cumulative total return of
the Company's Common Stock to the cumulative total return of (i) the
Standard and Poor's 500 Composite Index and (ii) an index of peer group
issuers selected in good faith (the "Self-Determined Peer Group Index").
The Self-Determined Peer Group Index includes Allied Waste Industries,
Inc., Browning-Ferris Industries, Inc., American Waste Services, Inc., USA
Waste Services, Inc., and Waste Management, Inc. The comparison in the
graph assumes the investment of $100 in the Company's Common Stock, and
Standard and Poor's 500 Composite Index, and the Self-Determined Peer
Group Index on March 8, 1996 (first trading day following the Company's
initial public offering), and the reinvestment of all dividends. The
source of the performance graph is the Center for Research in Security
Prices at the University of Chicago Graduate School of Business.
[graph]
<PAGE>
Comparison of Five-Year Cumulative Total Returns
Performance Report for
SUPERIOR SERVICES, INC.
[INSERT PEER GROUP PERFORMANCE CHART]
12/31/93 12/31/94 12/31/95 3/8/96 12/31/96 12/31/97
Superior
Services, Inc. - - - $100 $154 $218
S&P 500
Composite Index $69 $70 $97 $100 $119 $159
Composite Peer
Group Index $82 $85 $97 $100 $107 $118
CERTAIN TRANSACTIONS
The Company purchased trucking and other related services in 1997
from corporations and certain other affiliates of Gary G. Edler and his
immediate family. Mr. Edler is a director of the Company. Also, a
subsidiary of the Company is the lessee of a 20,000 square foot
office/warehouse facility owned by Mr. Edler in Fond du Lac, Wisconsin.
Base rent is $9,802 per month, plus real estate taxes, insurance and
routine building maintenance. The Company paid Mr. Edler and his
affiliates in the aggregate of $687,325 in 1997. The Company believes
such arrangements were on terms no less favorable to the Company than
could be obtained from an unaffiliated third party.
The Company loaned G. William Dietrich $75,000 in June 1994. The loan
is represented by an unsecured promissory note, with interest accruing
beginning on June 29, 1997, payable annually at the prime rate as adjusted
from time to time and principal payable in one lump sum payment 90 days
after Mr. Dietrich terminates employment with the Company for any reason.
The principal amount outstanding at December 31, 1997, was $75,000 with
$3,187 interest accrued.
AMENDMENT OF SUPERIOR SERVICES, INC.
1996 EQUITY INCENTIVE PLAN
General
The Company currently has in effect the 1996 Equity Incentive Plan
(the "1996 Plan"). The plan was approved by the shareholders in February
1996. The purpose of the 1996 Plan is to allow the Company to promote its
best interest and the best interests of its shareholders by providing key
employees of the Company and its subsidiaries, and directors of the
Company who are not otherwise employees ("Independent Directors"), with an
opportunity to acquire, or increase, their proprietary interest in the
Company. It is intended that the 1996 Plan, as amended, will promote
continuity of management and increased incentive and personal interest in
the welfare of the Company by those key employees who are primarily
responsible for shaping or carrying out the long-range plans of the
Company and securing the Company's continued growth and financial success.
In addition, by promoting stock ownership by Independent Directors, the
Company seeks to attract and retain on its Board persons of exceptional
competence and to furnish added incentive for them to continue their
association with the Company. As of the Record Date, less than 1,000
shares of Common Stock remained available for the granting of additional
options under the 1996 Plan.
To allow for additional stock options awards to be made by the
Company, the Board has approved, subject to ratification by the
shareholders at the Meeting, an amendment to the 1996 Plan to increase the
number of shares reserved under the 1996 Plan from 1,200,000 to 3,200,000
(the "Proposed Amendment"). Assuming a quorum is present, the affirmative
vote of a majority of the votes represented at the Meeting is required for
approval of the Proposed Amendment. Any shares not voted at the Meeting,
whether by broker non-votes or otherwise will have no impact on the
proposal, but abstention will be considered votes against the proposal.
Administration
The 1996 Plan is administered by the Compensation Committee of the
Board. The Compensation Committee is responsible for selecting the key
employees of the Company eligible to receive awards under the 1996 Plan.
Awards Under the 1996 Plan
The 1996 Plan authorizes the granting of: (a) stock options, which
may be either incentive stock options meeting the requirements of Section
422 of the Code or nonqualified stock options; (b) stock appreciation
rights ("SARs"); (c) restricted stock; (d) performance shares; and (e)
automatic stock option grants to Independent Directors. The 1996 Plan
provides that up to a total of 1,200,000 shares of Common Stock
(3,200,000, if the Proposed Amendment is approved) will be available for
the granting of awards thereunder. The issuance by the Company of the
1,200,000 shares currently authorized for issuance under the 1996 Plan
have been registered under the Securities Act of 1933, and the additional
2,000,000 shares which would be reserved under the Proposed Amendment will
be similarly registered.
Options. The exercise price per share of Common Stock subject to an
option granted under the 1996 Plan by key employees is determined by the
Compensation Committee, but may not be less than 100% of the fair market
value of a share of Common Stock on the date of grant. The term of an
option granted under the 1996 Plan is as determined by the Compensation
Committee, but may not exceed ten years. Options granted under the 1996
Plan become exercisable in such manner and within such period or periods
and in such installments or otherwise as determined by the Compensation
Committee. Options may be exercised by payment in full of the exercise
price, either in cash and/or shares of Common Stock or other consideration
having a fair market value on the date of exercise equal to the option
exercise price. Although not a provision of the 1996 Plan, all option
agreements evidencing option grants made under the 1996 Plan have
historically included, and are expected to continue to include, a
provision allowing the Board to accelerate the vesting of all outstanding
options represented thereby upon the occurrence of a "change in control"
of the Company.
SARs. An SAR granted under the 1996 Plan confers on the holder a
right to receive, upon exercise thereof, the excess of (a) the fair market
value of one share of Common Stock on the date of exercise over (b) the
grant price of the SAR as specified by the Compensation Committee. The
grant price of an SAR under the 1996 Plan may not be less than the fair
market value of a share of Common Stock on the date of grant. The grant
price, term, methods of exercise, methods of settlement (including whether
the holder of a SAR will be paid in cash, shares of Common Stock or other
consideration) and any other terms and conditions of any SAR granted under
the 1996 Plan are determined by the Compensation Committee.
Restricted Stock. Restricted shares of Common Stock granted to key
employees under the 1996 Plan are subject to such restrictions as the
Compensation Committee may impose, including any limitation on the right
to vote such shares or receive dividends thereon. The restrictions
imposed on the shares may lapse separately or in combination at such time
or times, or in such installments or otherwise, as the Compensation
Committee deems appropriate. The number of shares of Common Stock which
may be granted to key employees as restricted stock will not exceed
120,000 shares. Except as otherwise determined by the Compensation
Committee, upon termination of a key employee's employment for any reason
during the applicable restriction period, all shares of restricted stock
still subject to restriction are subject to forfeiture by the key
employee. Under the 1996 Plan, the Compensation Committee has the
authority, at its discretion, to waive in whole or in part any or all
remaining restrictions with respect to shares of restricted stock granted
to a key employee.
Performance Shares. The 1996 Plan also provides for the granting of
performance shares to key employees. The Compensation Committee
determines the applicable performance period, the performance goal or
goals to be achieved during any performance period, the proportion of
payments, if any, to be made for performance between the minimum and full
payment of performance shares, the restrictions applicable to shares of
restricted stock received upon payment of performance shares if payment is
made in such manner, and any other terms, conditions and rights relating
to the grant of performance shares. Performance goals established by the
Compensation Committee under the 1996 Plan may be based on one or more
measures such as return on shareholders' equity, earnings or such other
standard or standards deemed relevant by the Compensation Committee,
measured internally or relative to other organizations and before or after
extraordinary items. Payment on performance shares held by key employees
will be made in shares of Common Stock (which, at the discretion of the
Compensation Committee, may be shares of restricted stock) equal to the
number of performance shares payable. The Compensation Committee may
provide that, during a performance period, key employees will be paid cash
amounts with respect to each performance share held by such key
employees, equal to the cash dividend, if any, paid on a share of Common
Stock. Participating key employees will have no voting rights with
respect to performance shares held by them.
Independent Director Options. Under the 1996 Plan, each new
Independent Director upon joining the Board will automatically receive an
option grant exercisable for 10,000 shares of Common Stock at the closing
sale price of the Common Stock on the date of grant. Each Independent
Director's initial option grant will vest ratably over an approximate
three-year period, provided that the Independent Director continues to
serve as a member of the Board at the end of each vesting period with
respect to the increment then vesting. The 1996 Plan also provides that
on each annual shareholder meeting date, each then serving and continuing
Independent Director will receive non-qualified stock options to purchase
2,500 shares of Common Stock at the closing sale price of the Common
Stock on the date of grant. These options will vest in full within six
months from the date of grant. Notwithstanding the aforementioned vesting
provisions, all outstanding options granted to an Independent Director
under the 1996 Plan will vest immediately upon a "change in control",
death or disability. All options granted to Independent Directors under
the 1996 Plan will expire on the earlier to occur of the fifth anniversary
of the grant date or one year after the optionee ceases to be an
Independent Director.
Federal Income Tax Consequences
Incentive Stock Options. In general, a participant will not
recognize any income for Federal income tax purposes at the time of grant
or exercise of an incentive stock option. (However, at the time of
exercise, the excess of the fair market value of the acquired Common Stock
over the Option exercise price may be treated as an adjustment for
purposes of the alternative minimum tax.) If the participant holds Common
Stock acquired through exercise of an incentive stock option for at least
two years from the date of grant, any gain (or loss) realized upon sale of
the Common Stock generally will be treated as long-term capital gain (or
loss) and the Company will not be entitled to any deductions with respect
to the grant or exercise of the incentive stock option.
If these holding periods are not satisfied, the sale will be a
"disqualifying disposition", and a participant will be treated as
receiving ordinary income (and the Company will be allowed a deduction) in
an amount equal to the lesser of (a) the excess of the fair market value
of the Common Stock on the date of exercise or (b) the amount realized on
the disposition of the Common Stock over the Option price. Any additional
gain realized by the participant over the fair market value of the Common
Stock on the date of exercise generally will be treated as short-term or
long-term capital gain depending on the length of time the Common Stock
was held. If the amount realized is less than the Option price, then the
difference generally will be treated as a short-term or long-term capital
loss depending on the length of time the Common Stock was held.
Nonstatutory Stock Options and Stock Appreciation Rights. The grant
of nonstatutory stock options or SARs will not cause participants to
recognize income subject to immediate Federal income taxation.
Participants generally recognize ordinary income upon exercise (or at the
time liability under section 16(b) of the Securities Exchange Act of 1934
lapses if the option is exercised within six months of the date of grant)
in an amount equal to the excess of the fair market value of the acquired
Common Stock (determined as of the date income is recognized) over the
Option exercise price. Upon exercise of an SAR, the value, determined as
of the date of exercise, of the cash and/or Common Stock received will be
taxed as ordinary income to the participant. A subsequent disposition of
the Common Stock acquired through exercise of a nonstatutory stock option
or SAR generally will give rise to capital gain or loss, which will be
short-term or long-term depending on the length of time the Common Stock
was held. The amount of ordinary income recognized by a participant upon
exercise of a nonstatutory stock option or SAR will be deductible as a
compensation expense by the Company.
Outstanding Options. Except for the stock options required to be
automatically granted to the non-employee directors under the 1996 Plan,
the Company cannot now determine the number of options SARs or other
grants to be issued in the future to key employees under the 1996 Plan.
Such determinations are made from time to time by the Compensation
Committee. Since the 1996 Plan was approved by the shareholders in
February 1996, options for a total of 1,220,012 shares have been granted
under the 1996 Plan, including options for a total of 57,500 shares
granted to non-employee directors. All options were granted at an
exercise price equal to 100% of the fair market value of shares on the
date of grant (except for options issued to key employees who were also
owners of 10% or more of the Company's outstanding stock which were
granted at an exercise price equal to 110% of the fair market value of
shares on the date of grant). Individual option grants under the 1996
Plan, and the aggregate amount of all individual grants under the 1996
Plan, to the executive officers named in the Summary Compensation Table
are set out in the table entitled "Summary Compensation Table." As of
March 31, 1998, options to purchase 1,169,052 shares were outstanding
under the 1996 Plan.
On February 24, 1998, the last reported sale price per share of the
Common Stock on the Nasdaq National Market System was $25.875.
Vote Required
The affirmative vote of the holders of a majority of the shares
represented at the Meeting is required for approval of the Proposed
Amendment. Any shares not voted at the Meeting, whether by broker non-
vote or otherwise will have no impact on the proposal, but abstention will
be considered votes against proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENT TO THE 1996 PLAN.
OTHER MATTERS
Representatives from Ernst & Young LLP, the Company's independent
auditors for the current year as well as for all years since the Company
began operations in 1993, are expected to be present at the Meeting and
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
The Board does not intend to present at the Meeting any matters for
shareholder action other than the matters described in the Notice of
Annual Meeting. The Board knows of no other matters to be brought before
the Meeting which will require the vote of shareholders. For other
business to be properly brought before the Meeting by a shareholder, such
shareholder must have given written notice of such proposed business
complying with the Company's By-laws to the Secretary of the Company not
before February 12, 1998, or after March 13, 1998. The Company received no
such notices within that time period. If any other business or matters
should properly come before the Meeting, the proxies named in the
accompanying proxy will vote on such business or matters in accordance
with their best judgment.
The Company's Annual Report on Securities and Exchange Commission
Form 10-K for its 1997 fiscal year which ended December 31, 1997, has been
provided to all shareholders of record as of the Record Date as part of
the Company's 1997 Annual Report to Shareholders.
The cost of soliciting proxies will be paid by the Company. The
Company expects to solicit proxies primarily by mail. Proxies may also be
solicited personally and by telephone by certain officers and regular
employees of the Company. It is not anticipated that anyone will be
specially engaged to solicit proxies or that special compensation will be
paid for that purpose, but the Company reserves the right to do so should
it conclude that such efforts are needed. The Company will reimburse
brokers and other holders of record for their expenses in communicating
with the persons for whom they hold shares of Common Stock.
Any shareholder proposal intended for consideration at the 1999
annual meeting of shareholders must be received by the Company no later
than December 5, 1998, in order to be considered for inclusion in the
Company's proxy statement and proxy for that meeting.
On Behalf of the Board of Directors
Peter J. Ruud
Secretary
West Allis, Wisconsin
April 3, 1998
<PAGE>
-------------------------------------------------------------------------
PROXY
SUPERIOR SERVICES, INC.
1998 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 12, 1998
The undersigned constitutes and appoints G.W. Dietrich and Peter J.
Ruud, and each of them, each with full power to act without the other, and
each with full power of substitution, the true and lawful proxies of the
undersigned, to represent and vote, as designated below, all shares of
Common Stock of Superior Services, Inc., which the undersigned is entitled
to vote at the 1998 Annual Meeting of Shareholders of such corporation to
be held on the 40th Floor of the Firstar Center at the offices of Foley &
Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin, on Tuesday,
May 12, 1998, 1:00 p.m. local time, and at any adjournment thereof.
1. Election of Directors [_] FOR all [_] WITHHOLD authority
nominees listed to vote for all
below (Except as nominees listed below.
marked to the
contrary below)
Terms Expiring at 2001 Annual Meeting: G. William Dietrich,
Donald Taylor and Francis J. Podvin
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
____________________________________________________________________
2. Amendment of the [_] FOR Proposed Amendment [_] AGAINST Proposed
Superior Services, Amendment
1996 Equity Incentive [_] ABSTAIN from
Plan Proposed Amendment
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting and at any
adjournment thereof. The Board of Directors recommends a vote for
all nominees set forth above and for the proposed amendment to the
Company's 1996 Equity Incentive Plan.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE
THREE SPECIFIED DIRECTOR NOMINEES, "FOR" THE PROPOSED AMENDMENT TO
THE COMPANY'S 1996 EQUITY INCENTIVE PLAN AND ON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PROXIES NAMED HEREIN.
(Continued, and to be signed, on back)
-------------------------------------------------------------------------
<PAGE>
The undersigned acknowledges receipt of the Notice of said Annual Meeting
and the accompanying Annual Report to Shareholders.
Dated:____________________________ 1998
Signed:_____________________________________
____________________________________________
(Please print your name)
Note: Please sign exactly as your name
appears hereon. Joint owners should each
sign personally. A corporation should sign
full corporate name by duly authorized
officers and affix corporate seal, if any.
When signing as attorney, executor,
administrator, trustee, or guardian, give
full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SUPERIOR
SERVICES, INC.
-------------------------------------------------------------------------
