<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WMX Technologies, Inc.
(Name of Registrant as Specified In Its Charter)
The Board of Directors of WMX Technologies, Inc.
(Name of Person(s) Filing Proxy Statement if other than 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>
LOGO
WMX TECHNOLOGIES, INC.
3003 Butterfield Road -- Oak Brook, Illinois 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 1997
You are cordially invited to attend the annual meeting of stockholders of
WMX Technologies, Inc. which will be held at the Drury Lane Theater, 100 Drury
Lane (Illinois Highway 83 and Roosevelt Road), Oakbrook Terrace, Illinois, on
Friday, May 9, 1997, at 2:00 p.m., Central time, for the following purposes:
1. To elect directors.
2. To consider and vote upon an amendment to the Company's Restated
Certificate of Incorporation, as amended, to change the Company's
name from "WMX Technologies, Inc." to "Waste Management, Inc."
3. To consider and vote upon an amendment to the Company's Restated
Certificate of Incorporation, as amended, to provide for annual
election of directors.
4. To consider and vote upon a proposal to approve the WMX Technologies,
Inc. 1997 Equity Incentive Plan. A copy of the plan is included as
Exhibit A to the accompanying Proxy Statement.
5. To ratify the appointment of Arthur Andersen LLP as independent
auditors for 1997.
6. To consider and vote upon a stockholder proposal which is set forth
and described in the accompanying proxy statement.
7. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on March 19, 1997 are
entitled to vote at the meeting. A list of such stockholders will be available
for examination by any stockholder for any purpose germane to the meeting,
during normal business hours, at the principal office of the Company, 3003
Butterfield Road, Oak Brook, Illinois, for a period of 10 days prior to the
meeting.
It is important that your shares be represented at the meeting regardless of
how many you hold. Whether or not you intend to attend in person, we urge you
to mark, date and sign the enclosed proxy and return it in the enclosed
envelope, which does not require postage if mailed in the United States.
/s/ Herbert A. Getz
Herbert A. Getz
Senior Vice President and Secretary
Oak Brook, Illinois
March 28, 1997
YOU ARE URGED TO MARK, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
Printed on recycled
paper [RECYCLING LOGO]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice of Annual Meeting
Proxy Statement........................................................... 1
Election of Directors (Proxy Item No. 1)................................ 2
Securities Ownership of Management.................................... 5
Securities Ownership of Certain Beneficial Owners..................... 9
Meetings and Committees of the Board.................................. 10
Compensation.......................................................... 11
Report of the Compensation and Stock Option Committee................. 18
Certain Transactions.................................................. 27
Amendment of Restated Certificate of Incorporation to Change the
Company's Name (Proxy Item No. 2)...................................... 29
Amendment of Restated Certificate of Incorporation to Provide for Annual
Election of Directors (Proxy Item No. 3)............................... 30
Proposal to Approve the WMX Technologies, Inc. 1997 Equity Incentive
Plan (Proxy Item No. 4)................................................ 31
Ratification of Appointment of Independent Auditors (Proxy Item No. 5).. 34
Stockholder Proposal Regarding Director Independence (Proxy Item No. 6). 34
General Information..................................................... 36
Exhibit A: WMX Technologies, Inc. 1997 Equity Incentive Plan.............. A-1
</TABLE>
<PAGE>
WMX TECHNOLOGIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of WMX Technologies, Inc. (the "Company") of proxies for
use at the annual meeting of stockholders of the Company to be held at the
Drury Lane Theater, 100 Drury Lane (Illinois Highway 83 and Roosevelt Road),
Oakbrook Terrace, Illinois at 2:00 p.m., Central time, on May 9, 1997, and at
any adjournment of the meeting. Proxies properly signed and returned on time
will be voted at the meeting in accordance with the directions noted on the
proxy. If no direction is indicated, they will be voted for the election of
the nominees named in this proxy statement as directors, for the proposal to
amend the Restated Certificate of Incorporation, as amended (the "Restated
Certificate of Incorporation"), to change the Company's name to "Waste
Management, Inc.," for the proposal to amend the Restated Certificate of
Incorporation to provide for annual election of directors, for the proposal to
approve the WMX Technologies, Inc. 1997 Equity Incentive Plan, for the
ratification of the appointment of Arthur Andersen LLP as independent auditors
for 1997, against the stockholder proposal and on other matters presented for
a vote in accordance with the judgment of the persons acting under the
proxies. Any stockholder giving a proxy has the power to revoke it at any time
before it is voted, either in person at the meeting, by written notice to the
Secretary of the Company or by delivery of a later-dated proxy.
Election of each director requires the affirmative vote of the holders of a
plurality of the shares of the Company's common stock present in person or
represented by proxy and entitled to vote at the meeting. Approval of the
proposal to amend the Company's Restated Certificate of Incorporation to
change the Company's name requires the affirmative vote of the holders of a
majority of the outstanding shares. Approval of the proposal to approve the
1997 Equity Incentive Plan, the proposal to ratify the appointment of the
independent auditors, and the stockholder proposal requires in each case the
affirmative vote of the holders of a majority of the shares of the Company's
common stock present in person or represented by proxy and entitled to vote at
the meeting. Approval of the proposal to amend the Company's Restated
Certificate of Incorporation to provide for the annual election of directors
requires the approval of the holders of shares representing at least 80% of
the outstanding shares of common stock of the Company. Abstentions and broker
non-votes are counted as shares present in the determination of whether the
shares of stock represented at the meeting constitute a quorum. Each is
tabulated separately. Abstentions are counted in tabulations of the votes cast
on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
The Board of Directors has adopted a confidential voting policy. Any proxy,
written consent or ballot submitted to the Company by a stockholder in
connection with the annual meeting will be kept confidential and not be
disclosed to the Company or any of its directors, officers, or employees
except in the event of a contested proxy solicitation or whenever necessary to
meet applicable legal requirements (including asserting or defending a claim
by or against the Company and investigating possible voting irregularities).
The Company's transfer agent may continue to send the Company any proxy card
on which a stockholder has written a comment. The confidential voting policy
also provides that the vote tabulators and inspectors of election acting at
the meeting will be independent.
The Company's executive offices are located at 3003 Butterfield Road, Oak
Brook, Illinois 60521 (telephone 630/572-8800). It is expected that proxy
materials will be mailed to stockholders beginning on or about March 28, 1997.
1
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SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on March 19, 1997 are
entitled to vote at the annual meeting of stockholders. The only voting stock
of the Company outstanding is its common stock, of which 494,797,430 shares
were outstanding of record as of the close of business on March 19, 1997. Each
share of common stock is entitled to one vote.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
Four directors are to be elected at the meeting. The persons named below
have been designated by the Board as nominees for election as Class III
directors, for a term expiring at the annual meeting of stockholders in 2000.
Three of the nominees are serving as Class III directors as of the date
hereof. One nominee, Robert S. Miller, is not currently serving as a director
of the Company. Howard H. Baker, Jr. and Peter H. Huizenga, who are presently
serving as Class III directors, have each informed the Board of Directors that
he will retire from the Board at the end of his current term, which expires at
the upcoming annual meeting of stockholders. Phillip B. Rooney, who had served
as Chief Executive Officer of the Company since June 1996 and as a director of
the Company since 1981, resigned from those positions on February 17, 1997.
Unless otherwise instructed, properly signed proxies which are returned on
time will be voted for election of the four nominees for Class III directors.
If, however, any of such nominees should be unable to be a nominee because of
an unexpected occurrence, the proxies will be voted for such other person or
persons as will be determined by the holders of the proxies in their
discretion, or the Board of Directors may make an appropriate reduction in the
number of directors to be elected. The Class I and Class II directors named
below have terms which expire in 1998 and 1999, respectively.
As used herein, "WTI" means Wheelabrator Technologies Inc., which is an
approximately 65%-owned subsidiary of the Company, "WM International" means
Waste Management International plc, which is a subsidiary owned approximately
56% by the Company and 12% by each of WTI and Rust International Inc.
("Rust"), which is a subsidiary owned approximately 60% by the Company and 40%
by WTI, and "CWM" means Chemical Waste Management, Inc., formerly a publicly
traded company and since January 1995, a wholly owned subsidiary of the
Company.
NOMINEES FOR TERMS EXPIRING AT THE ANNUAL MEETING IN 2000 (CLASS III
DIRECTORS):
DEAN L. BUNTROCK, age 65, has been a director of the Company
[PHOTO] and has served as its Chairman of the Board since 1968 and as
its Chief Executive Officer from 1968 until June 1996 and as its
Acting Chief Executive Officer since February 17, 1997. From
September 1980 to November 1984, he also served as President of
the Company. Mr. Buntrock is also a director of WTI, WM
International and Boston Chicken, Inc.
ROBERT S. MILLER, age 55, is Vice Chairman of Morrison Knudsen
[PHOTO] Corporation, an engineering and construction firm. He served as
Chief Executive Officer of Federal Mogul Corporation, an
automotive parts manufacturing firm, from September until
November 1996, and as Chairman of Morrison Knudsen Corporation
from April 1995 until September 1996. In addition, since 1993 he
has served as Vice President and Treasurer of Moore Mill and
Lumber, a privately-held forest products firm, and from 1992
until 1993, he served as a Senior Partner of James D.
Wolfensohn, Inc., an investment banking firm. From 1979 to 1992,
Mr. Miller worked at Chrysler Corporation, an automobile and
truck manufacturing firm, rising to become Vice Chairman of the
Board after serving as the company's Chief Financial Officer.
Mr. Miller is a director of The Coleman Company, Inc., Federal
Mogul Corporation, Fluke Corporation, Morrison Knudsen
Corporation, Pope & Talbot, Inc., and Symantec Corporation.
2
<PAGE>
[PHOTO] PAUL M. MONTRONE, age 55, has served as a director of the
Company since January 1997. Since December 1991, Mr. Montrone
has been President, Chief Executive Officer and a director of
Fisher Scientific International, Inc., a provider of scientific
equipment and supplies. He also served as Vice Chairman of the
Board of Abex, Inc., a designer and manufacturer of engineered
components for aerospace, defense, industrial and commercial
markets, or its predecessors, from 1992 to 1995. Since prior to
1989, Mr. Montrone has also been President and a director of The
General Chemical Group, Inc., a chemical company. From prior to
1989 until 1992, he served as the Managing Director--President
of The Henley Group, Inc. Mr. Montrone was a director of WTI or
a predecessor thereof from prior to 1989 until January 1997.
PEER PEDERSEN, age 72, has been a director of the Company
[PHOTO] since 1979 and Chairman of the Board and Managing Partner of the
law firm of Pedersen & Houpt, P.C. for more than the past five
years. Mr. Pedersen is also a director of Aon Corporation,
Boston Chicken, Inc., Latin American Growth Fund, Tennis
Corporation of America and Extended Stay America, Inc.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1998 (CLASS I
DIRECTORS):
H. JESSE ARNELLE, age 63, has been a director of the Company
[PHOTO] since 1992 and senior partner of Arnelle, Hastie, McGee, Willis
and Greene, a San Francisco-based law firm, for more than the
past ten years. He currently also serves as Chairman of the
Pennsylvania State University Board of Trustees. Mr. Arnelle is
also a director of Florida Power & Light (FPL Group), Eastman
Chemical Corporation, Textron Corporation, Wells Fargo & Company
and Wells Fargo Bank N.A., Armstrong World Industries and Union
Pacific Resources, Inc.
JERRY E. DEMPSEY, age 64, has served as a director of the
[PHOTO] Company since 1984, and since September 1993, as Chairman and
Chief Executive Officer of PPG Industries, Inc., a glass,
coatings and chemicals company. From April 1984 to May 1988, Mr.
Dempsey served as Vice Chairman of the Board of the Company.
From May 1988 to June 1993, Mr. Dempsey was Senior Vice
President of the Company. From September 1991 to May 1993, Mr.
Dempsey served as Chairman of the Board of CWM. Mr. Dempsey is
also a director of Navistar International Corp. and PPG
Industries, Inc.
[PHOTO] DR. JAMES B. EDWARDS, age 69, has served as a director of the
Company since 1995 and has been President of the Medical
University of South Carolina since November 1982. From January
1981 to November 1982, he served as the United States Secretary
of Energy, and previously as Governor of the State of South
Carolina. Dr. Edwards is also a director of Phillips Petroleum
Company, SCANA Corporation, Imo Industries Inc. and National
Data Corporation.
3
<PAGE>
ALEXANDER B. TROWBRIDGE, age 67, has served as a director of
[PHOTO] the Company since 1985 and President of Trowbridge Partners,
Inc., a consulting services firm, since January 1990. He was
President of the National Association of Manufacturers,
Washington, D.C., from January 1980 to January 1990. Mr.
Trowbridge also served as U.S. Secretary of Commerce in 1967 and
1968 and as Vice Chairman of Allied Chemical Corp. from 1976 to
1980. He also serves as a director of New England Life Insurance
Co., The Rouse Co., Harris Corp., Sun Co. Inc., The Gillette
Co., Warburg-Pincus Counsellors Funds and Icos Corp.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1999 (CLASS II
DIRECTORS):
DR. PASTORA SAN JUAN CAFFERTY, age 56, has served as a
[PHOTO] Professor since 1985 at the University of Chicago's School of
Social Service Administration where she has been a member of the
faculty since 1971. She was elected a director of the Company in
July 1994. Dr. Cafferty also serves as a director of Kimberly-
Clark Corporation and People's Energy Corporation and on the
boards of the Rush-Presbyterian-St. Luke's Medical Center and
the Lyric Opera Association, both in Chicago.
DONALD F. FLYNN, age 57, has served as a director of the
[PHOTO] Company since 1981 and as Chairman of the Board and President of
Flynn Enterprises, Inc., a financial advisory and venture
capital firm, since February 1988. He also served as Chairman of
the Board and Chief Executive Officer of Discovery Zone, Inc.,
an operator of indoor fun and fitness centers for children, from
July 1992 until February 1996 and May 1995, respectively. In
March 1996, Discovery Zone, Inc. announced that it filed a
voluntary petition under Chapter 11 of the U.S. Bankruptcy Code.
Mr. Flynn was a Senior Vice President of the Company from May
1975 to January 1991. He also served as the Company's Chief
Financial Officer from March 1972 to December 1989 and the
Company's Treasurer from May 1979 to December 1986. Mr. Flynn is
also a director of Extended Stay America, Inc., Psychemedics
Corporation, WTI and WM International.
JAMES R. PETERSON, age 69, has been a director of the Company
[PHOTO] since 1980 and was a director and President and Chief Executive
Officer of The Parker Pen Company from January 1982 to January
1985. The Parker Pen Company was principally involved in the
manufacture and distribution of writing instruments and in
providing temporary help services. Mr. Peterson is also a
director of The Dun & Bradstreet Corporation and Cognizant
Corporation.
STEVEN G. ROTHMEIER, age 50, has served as a director of the
[PHOTO] Company since March 1997 and has been Chairman and Chief
Executive Officer of Great Northern Capital, a private
investment management, consulting and merchant banking firm,
since March 1993. From November 1989 until March 1993, he was
President of IAI Capital Group, a venture capital and merchant
banking firm. For more than 10 years prior thereto, he served
Northwest Airlines, Inc. or its parent corporation, NWA, Inc.,
in various executive capacities, including Chairman and Chief
Executive Officer from 1986 to 1989. Mr. Rothmeier is also a
director of Honeywell, Inc., Department 56, Inc., E. W. Blanch
Holdings, Inc. and Precision Castparts Corp.
4
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth certain information as of February 1, 1997 as
to the beneficial ownership of common stock of the Company by the directors,
the nominee for director, the Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of December 31, 1996,
and by all directors, the nominee for director and persons serving as
executive officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARERS
OF COMMON STOCK PERCENT OF
OF THE COMPANY COMMON STOCK
BENEFICIALLY OF THE
NAME OWNED(2)(3) COMPANY(3)(5)
---- ----------------- -------------
<S> <C> <C>
Directors (Other than Executive Officers)
and Nominee
H. Jesse Arnelle.......................... 15,827(4) *
Howard H. Baker, Jr....................... 22,000(4) *
Pastora San Juan Cafferty................. 11,000 *
Jerry E. Dempsey.......................... 420,020 *
James B. Edwards.......................... 7,766 *
Donald F. Flynn........................... 595,712 *
Peter H. Huizenga......................... 8,086,250 1.7
Robert S. Miller.......................... 1,000 *
Paul M. Montrone.......................... 0 *
Peer Pedersen............................. 231,985(4) *
James R. Peterson......................... 84,068(4) *
Steven G. Rothmeier....................... 0 *
Alexander B. Trowbridge................... 2,400(4) *
Executive Officers(1)
Dean L. Buntrock.......................... 3,267,250 *
Joseph M. Holsten......................... 52,007 *
William P. Hulligan....................... 234,200 *
James E. Koenig........................... 264,020 *
Phillip B. Rooney......................... 1,403,945 *
All directors, the nominee for director and
executive officers as a group including
persons named above
(22 persons)............................... 15,262,023 3.1
</TABLE>
- --------
*Less than 1 percent.
(1) Pursuant to the Company's Non-Qualified Profit Sharing and Savings Plus
Plan, Messrs. Buntrock, Hulligan, Rooney and all executive officers as a
group acquired beneficial ownership of the equivalent of an additional
76,541, 22,206, 64,854 and 188,189 shares, respectively, of common stock
of the Company in connection with their voluntary deferral of bonus
payments earned under the Company's Corporate Incentive Bonus Plan for
1995 and 1996.
(2) Directors, the nominee and executive officers included in the group have
sole voting power and sole investment power over shares listed, except (i)
shares covered by options granted under the Company's stock option plans
which were exercisable within 60 days of February 1, 1997; (ii) shares
held pursuant to the Company's Profit Sharing and Savings Plan; (iii)
Messrs. Edwards, Pedersen and Peterson, whose shares listed above include
312, 12,856 and 1,668 shares issuable upon conversion of the convertible
subordinated notes due 2005 of WMX ("WMX Notes"), respectively; and (iv)
Messrs. Buntrock, Huizenga, Koenig, Miller, Pedersen and Rooney, and all
executive officers and directors as a group (including such individuals),
who have shared voting and investment power over 146,559, 225,719, 52,661,
1,000 19,129, 58,392, and 545,448 shares, respectively. Such shares shown
for Messrs. Buntrock, Huizenga, Pedersen and Rooney are held in trusts or
foundations over which such individuals share voting and investment power
with
5
<PAGE>
other co-trustees or directors of such trusts and foundations. Such shares
shown for Messrs. Koenig and Miller are held jointly with their respective
spouses. Ownership of shares shown for Messrs. Buntrock, Dempsey, Edwards,
Huizenga and Rooney, and for all executive officers and directors as a
group, includes shares of common stock of the Company not held directly by
them but held by or for the benefit of (i) their spouses or (ii) their
minor children and other children residing with them, as to which they have
neither investment power nor voting power. Shares were held by or for the
benefit of such spouses or children of the following persons and the
executive officers and directors as a group at February 1, 1997, in the
amounts indicated: Mr. Buntrock-43,439 (held by spouse); Mr. Dempsey-1,000
(held by spouse); Dr. Edwards-254 (held by spouse with 104 such shares
issuable upon conversion of WMX Notes); Mr. Huizenga-680,836 (held by
spouse directly and as trustee); Mr. Rooney-103,146 (held by spouse
directly and as trustee for children); and all executive officers and
directors as a group (including such individuals)-828,972. Additionally,
ownership of shares shown for Mr. Koenig includes 1,200 shares held by him
as trustee of a family trust in which Mr. Koenig has no pecuniary interest.
Each of the above named persons and the members of such group disclaim any
beneficial ownership of such shares.
(3) The numbers and percentages of shares shown in the table above are based
on the assumption that currently outstanding stock options covering shares
of the Company's common stock which were exercisable within 60 days of
February 1, 1997 had been exercised as follows: Mr. Arnelle-15,000; Mr.
Baker-20,000; Mr. Buntrock-659,662; Dr. Cafferty-9,000; Mr. Edwards-6,000;
Mr. Flynn-87,617; Mr. Koenig-164,128; Mr. Rooney-774,935; and all
executive officers and directors as a group (including such individuals)-
2,454,267. Such persons and the members of such group disclaim any
beneficial ownership of the shares subject to such options.
(4) Pursuant to the Company's Deferred Directors' Fee Plan, described below
under "Outside Directors' Plans," Messrs. Arnelle, Baker, Pedersen, and
Peterson have also acquired beneficial ownership of the equivalent of 987,
4,401, 27,600 and 4,876 shares, respectively, of the Company's common
stock through their voluntary deferral of all or a portion of their
directors' fees. Pursuant to the Company's Directors' Phantom Stock Plan,
described below under "Outside Directors' Plans," Messrs. Baker, Pedersen,
Peterson and Trowbridge have also acquired beneficial ownership of the
equivalent of 10,000, 40,000, 40,000 and 40,000 shares, respectively, of
the Company's common stock.
OWNERSHIP OF WTI COMMON STOCK
The following table sets forth certain information as of February 1, 1997 as
to the beneficial ownership of WTI common stock by the directors, the nominee
for director, the Chief Executive Officer and the four other most highly
compensated executive officers of the Company as of December 31, 1996, and by
all directors, the nominee for director and persons serving as executive
officers of the Company as a group:
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WTI COMMON PERCENT OF
STOCK BENEFICIALLY WTI COMMON
NAME OWNED(1)(2)(3) STOCK(2)(3)
---- ------------------ -----------
<S> <C> <C>
Directors (Other than Executive Officers)
and Nominee
H. Jesse Arnelle.......................... 0 *
Howard H. Baker, Jr....................... 0 *
Pastora San Juan Cafferty................. 0 *
Jerry E. Dempsey.......................... 34,336 *
James B. Edwards.......................... 0 *
Donald F. Flynn........................... 45,245 *
Peter H. Huizenga......................... 0 *
Robert S. Miller.......................... 0 *
Paul M. Montrone.......................... 256,000 *
Peer Pedersen............................. 0 *
James R. Peterson......................... 0 *
Steven G. Rothmeier....................... 0 *
Alexander B. Trowbridge................... 0 *
Executive Officers
Dean L. Buntrock.......................... 116,377(4) *
Joseph M. Holsten......................... 0 *
William P. Hulligan....................... 0 *
James E. Koenig........................... 121,500 *
Phillip B. Rooney......................... 374,769 *
All directors, the nominee for director and
executive officers as a group including
persons named above
(22 persons)................................ 1,327,017 *
</TABLE>
- --------
*Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over WTI shares listed, except (i) WTI
shares covered by options exercisable within 60 days of February 1, 1997;
(ii) 10,000 WTI shares deemed to be beneficially owned by each of Messrs.
Buntrock, Flynn and Rooney as a result of restricted units granted
pursuant to WTI's Restricted Unit Plan for Non-Employee Directors and
(iii) Mr. Koenig, who has shared voting and investment power over 1,500
WTI shares with his spouse. Such persons disclaim any beneficial ownership
of the WTI shares subject to such restricted units.
(2) Excludes an aggregate of 104,621,810 WTI shares beneficially owned by the
Company that may be deemed beneficially owned by Mr. Buntrock because he
may be deemed to be an affiliate of the Company. Mr. Buntrock disclaims
any beneficial ownership of such WTI shares.
(3) The numbers and percentages of WTI shares shown in the table above are
based on the assumption that currently outstanding stock options covering
WTI shares which were exercisable within 60 days of February 1, 1997 had
been exercised as follows: Mr. Montrone--256,000; Mr. Koenig--120,000 and
all executive officers and directors as a group (including such
individuals)-- 712,842. Such persons and the members of such group
disclaim any beneficial ownership of the shares subject to such options.
(4) Pursuant to WTI's Deferred Director's Fee Plan, Mr. Buntrock has acquired
beneficial ownership of the equivalent of an additional 8,297 WTI shares
through his voluntary deferral of previously accrued director's fees.
OWNERSHIP OF WM INTERNATIONAL ORDINARY SHARES
The following table sets forth certain information as of February 1, 1997 as
to the beneficial ownership of WM International ordinary shares (including
ordinary shares represented by American Depositary Shares) by the directors,
the nominee for director, the Chief Executive Officer and the four
7
<PAGE>
other most highly compensated executive officers of the Company as of December
31, 1996, and by all directors, the nominee for director and persons serving
as executive officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WM INTERNATIONAL ORDINARY PERCENT OF
SHARES BENEFICIALLY WM INTERNATIONAL
NAME OWNED(1)(2)(3) ORDINARY SHARES(2)(3)
---- ---------------------------- ---------------------
<S> <C> <C>
Directors (Other than
Executive Officers) and
Nominee
H. Jesse Arnelle....... 0 *
Howard H. Baker, Jr.... 1,000 *
Pastora San Juan
Cafferty............... 0 *
Jerry E. Dempsey....... 10,000 *
James B. Edwards....... 4,000 *
Donald F. Flynn........ 300,000 *
Peter H. Huizenga...... 550,000 *
Robert S. Miller....... 0 *
Paul M. Montrone....... 0 *
Peer Pedersen.......... 10,000 *
James R. Peterson...... 0 *
Steven G. Rothmeier.... 0 *
Alexander B.
Trowbridge............. 600 *
Executive Officers
Dean L. Buntrock....... 223,200 *
Joseph M. Holsten...... 208,666 *
William P. Hulligan.... 120,000 *
James E. Koenig........ 105,000 *
Phillip B. Rooney...... 220,000 *
All directors, the
nominee for director and
executive officers as a
group including persons
named above (22 persons). 1,832,866 *
</TABLE>
- --------
*Less than 1 percent.
(1) Directors and executive officers included in the group have sole voting
power and sole investment power over WM International shares listed,
except (i) WM International shares covered by options exercisable within
60 days of February 1, 1997; and (ii) Messrs. Koenig, and Trowbridge, and
all executive officers and directors as a group (including such
individuals), who have shared voting and investment power over 5,000, 600
and 6000 WM International shares, respectively. Such WM International
shares shown for Messrs. Koenig and Trowbridge are held jointly with their
respective spouses. Ownership of shares shown for Messrs. Buntrock,
Dempsey and Huizenga includes WM International shares not held directly by
them but held by or for the benefit of their spouses as to which they have
neither investment power nor voting power. WM International shares were
held by or for the benefit of such spouses of the following persons at
February 1, 1997 in the amounts indicated: Mr. Buntrock--3,000; Mr.
Dempsey--10,000; and Mr. Huizenga--30,000. Each of the above named persons
disclaim any beneficial ownership of such shares.
(2) Excludes an aggregate of 300,000,000 WM International shares beneficially
owned by the Company that may be deemed beneficially owned by Mr. Buntrock
because he may be deemed to be an affiliate of the Company. Excludes an
aggregate of 45,000,000 WM International shares beneficially owned by WTI
that may be deemed beneficially owned by Mr. Koenig because he may be
deemed to be an affiliate of WTI. Each such person disclaims any
beneficial ownership of such WM International shares.
(3) The numbers and percentages of WM International shares shown in the table
above are based on the assumption that currently outstanding stock options
covering WM International shares which
8
<PAGE>
were exercisable within 60 days of February 1, 1997 had been exercised as
follows: Messrs. Buntrock, Flynn and Rooney--200,000 each; Mr. Koenig--
100,000; Mr. Holsten--206,666; and all executive officers and directors as a
group (including such individuals)--986,666. Such persons and members of
such group disclaim any beneficial ownership of the shares subject to such
options.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company does not know of any person who, as of February 1, 1997, directly
owned more than five percent of the Company's outstanding common stock. The
Company, however, received a copy of a Schedule 13D filed by a group consisting
of George Soros, Soros Fund Management LLC, Quantum Industrial Partners LDC,
QIH Management Investor, L.P., QIH Management, Inc., Stanley F. Druckenmiller,
and Duquesne Capital Management, L.L.C. The Schedule 13D filed by such persons
indicate that such persons may be deemed to be a group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. The
Company also received a Schedule 13G for the year ended December 31, 1996 from
FMR Corp., Edward C. Johnson 3d, and Abigail P. Johnson (collectively, "FMR").
Pursuant to the aggregation and attribution rules relating to the beneficial
ownership of securities promulgated under the Securities Exchange Act of 1934,
as amended, FMR is deemed to be the beneficial owner of such shares shown
because FMR is the parent company of various investment management companies
which exercise discretionary investment management over accounts holding such
shares. No managed account alone owns five percent or more of the Company's
common stock. The information presented in the following table is taken from
the above-referenced Schedules 13D and 13G:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
TITLE OF NAME AND ADDRESS OF BENEFICIAL PERCENT
CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------- ------------------- ----------------- --------
<C> <S> <C> <C>
Common Stock FMR Corp. 26,491,118 5.5
Edward C. Johnson 3d
Abigail P. Johnson
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock George Soros 25,225,600 5.2
Soros Fund Management LLC
QIH Management Investor, L.P.
QIH Management, Inc.
Stanley F. Druckenmiller
888 Seventh Avenue, 33rd Floor
New York, New York 10106
Quantum Industrial Partners LDC
Kaya Flamboyan 9
Curacao, Netherlands Antilles
Duquesne Capital
Management, L.L.C.
2579 Washington Road, Suite 322
Pittsburgh, Pennsylvania 15241-
2591
</TABLE>
9
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has designated several committees of the Board,
including a Compensation and Stock Option Committee, an Audit Committee and a
Nominating Committee. The Board of Directors held an aggregate of six regular
and special meetings in 1996.
The Compensation and Stock Option Committee is responsible for making
recommendations to the Board of Directors regarding salaries and incentive
awards to be paid to executive officers of the Company and for the
administration of the Company's 1982 Stock Option Plan, as amended (the "1982
Company Plan"), and the administration of and the grant of options under the
Company's 1992 Stock Option Plan (the "1992 Company Plan") and, subject to
stockholder approval at this annual meeting, the Company's 1997 Equity
Incentive Plan (the "1997 Company Plan" and together with the 1982 Company
Plan and the 1992 Company Plan, the "Employee Plans"). The Audit Committee's
functions include making recommendations to the Board of Directors on the
selection of the Company's auditors, reviewing the arrangements for and scope
of the independent auditors' examination, meeting with the independent
auditors, the Board of Directors and certain officers of the Company to review
the adequacy of internal controls and reporting, reviewing compliance with the
Company's policies on business ethics and environmental compliance and
performing any other duties or functions deemed appropriate by the Board. The
Nominating Committee's principal function is to identify and propose to the
full Board qualified nominees to fill vacancies on the Board as they occur.
The Compensation and Stock Option Committee currently consists of Messrs.
Pedersen (Chairman), Edwards, Montrone, Peterson and Dr. Cafferty; the Audit
Committee currently consists of Messrs. Peterson (Chairman), Arnelle, Edwards,
Flynn, Rothmeier and Trowbridge; and the Nominating Committee currently
consists of Messrs. Trowbridge (Chairman), Arnelle, Baker, Flynn, Montrone and
Huizenga.
During 1996, the Compensation and Stock Option Committee met six times, the
Audit Committee met three times and the Nominating Committee met one time. In
1996, during the time each director served in such capacity, nine directors
attended 100% of the aggregate of the regular and special meetings of the
Board of Directors and applicable committee meetings, two other directors
attended at least 85% of the aggregate of all meetings of the Board of
Directors and applicable committee meetings, and Mr. Flynn attended 70% of the
aggregate of all meetings of the Board of Directors and applicable committee
meetings.
10
<PAGE>
COMPENSATION
The following table sets forth certain information with respect to
compensation for services in all capacities paid by the Company and its
subsidiaries for the past three years, to or on behalf of the Chief Executive
Officer of the Company at December 31, 1996, and each of the four other most
highly compensated executive officers of the Company serving at December 31,
1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------- ------------------------------------------
BONUS AWARDS PAYOUTS
--------------------- ----------- ---------
OTHER SECURITIES LONG-
ANNUAL RESTRICTED UNDERLYING TERM ALL OTHER
NAME AND PRINCIPAL STOCK- COMPEN- STOCK OPTIONS INCENTIVE COMPEN-
POSITION YEAR SALARY CASH BASED SATION (2) AWARDS (5) (SHARES)(6) PAYOUTS SATION(7)
- --------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock 1996 $1,250,000 $ 0 $ 0 $ 88,516(3) 0 176,656 0 $ 750
Chairman and 1995 1,400,000 0 1,792,000(1) 437,980(1)(3) 0 205,505 0 10,500
Acting Chief 1994 1,400,000 1,120,000 0 77,420(3) 0 158,640 0 10,500
Executive Officer
Phillip B. Rooney 1996 1,250,000 0 435,247(1) 124,880(1) 0 476,183 0 230,861
former President 1995 1,000,000 0 1,141,000(1) 261,280(1) 0 146,789 0 10,500
and Chief Executive 1994 1,000,000 1,029,280 0 -- 0 113,314 0 10,500
Officer
James E. Koenig, 1996 600,000 355,000 0 -- $1,485,000 186,514 0 750
Executive Vice 1995 517,000 420,000 0 -- 0 62,615 0 10,500
President 1994 500,000 250,000 0 -- 0 42,493 0 10,500
William P. Hulligan 1996 475,000 0 95,000(1) 19,000(1) 0 48,699 0 750
Executive Vice 1995 445,000 365,790 0 -- 0 36,743 0 10,500
President, Waste 1994 425,000 382,500 0 -- 0 36,119 0 10,500
Management, Inc.
Joseph M. Holsten 1996 440,000 252,058 0 225,280(4) 0 173,253 0 0
Executive Vice 1995 400,000 246,750 0 96,957(4) 0 175,780 0 10,500
President and Chief 1994 250,000 225,000 0 71,938(4) 0 11,898 0 10,500
Operating Officer
</TABLE>
- --------
(1) All of the amounts shown under "Bonus--Stock-Based" were deferred and are
deemed to be invested in shares of the Company's common stock, and thus
fully "at risk" until after retirement or other termination of employment.
The deferring officers received a 20% Company match of the bonus deferred,
included under "Other Annual Compensation," which vests over a four-year
period and is also deemed invested and "at risk" in the same manner as the
deferred bonus. See note 1 to the "Ownership of Company Common Stock"
table on page 5.
(2) Excludes perquisites and other benefits, unless the aggregate amount of
such compensation is at least the lesser of either $50,000 or 10 percent
of the total annual salary and bonus reported for the named executive
officer.
(3) Includes financial planning expenses of $68,000 paid by the Company on
behalf of the named executive officer in 1994, 1995 and 1996.
(4) Includes foreign service premium ($96,000 in 1996, $40,000 in 1995, and
$36,136 in 1994), housing allowance ($96,000 in 1996 and $40,000 in 1995),
and moving expense reimbursement ($35,428 in 1994).
(5) The value shown is as of the date of issuance. Dividends are paid or
accrued on restricted stock awards at the same rate as paid to all
stockholders. For a description of the restrictions on such stock, see
"Certain Transactions".
(6) The numbers shown in the table above represent options for the purchase of
shares of the Company's common stock granted to the named persons under
the Employee Plans. For Mr. Holsten, such numbers include the following
numbers of shares underlying options to acquire common stock of WM
International: 160,000 in 1996 and 140,000 in 1995.
(7) Amounts of All Other Compensation are amounts contributed by the Company
for fiscal years 1994, 1995 and 1996 under the Company's Profit Sharing
and Savings Plan and for fiscal year 1994 and 1995 under the Company's
Profit Sharing and Savings Plus Plan for the persons named above. For Mr.
Rooney for 1996, such amounts also include the dollar value of the benefit
of premiums paid for a split-dollar life insurance policy projected on an
actuarial basis ($214,723) and a bonus equal to the premium cost paid by
Mr. Rooney's life insurance trust ($15,388).
11
<PAGE>
STOCK OPTIONS
The following tables set forth certain information with respect to stock
options granted to the persons named in the Summary Compensation Table during
the year ended December 31, 1996. No options were granted to the persons named
in the Summary Compensation Table during the year ended December 31, 1996 by
CWM, Rust, WTI or, except as noted below, WM International.
COMPANY OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
POTENTIAL REALIZABLE
PERCENTAGE VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF
NUMBER OF COMPANY STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(6)
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------------------
NAME GRANTED(1) IN 1996 (PER SHARE) DATE(5) 0% 5% 10%
---- ---------- ---------- ----------- ---------- -- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock 176,656(2) 4.31 $31.70 4/1/06 $ 0 $ 3,521,807 $ 8,924,950
Phillip B. Rooney 126,183(3) 3.08 31.70 4/1/06 0 2,515,579 6,374,972
350,000(3) 8.53 35.03 6/7/06 0 7,710,563 19,540,079
James E. Koenig 61,514(2) 1.50 31.70 4/1/06 0 1,226,341 3,107,788
125,000(4) 3.05 31.63 8/13/06 0 2,486,492 6,301,259
William P. Hulligan 48,699(2) 1.19 31.70 4/1/06 0 970,861 2,460,353
Joseph M. Holsten(7) 13,253(2) 0.32 31.70 4/1/06 0 264,211 669,563
All Stockholders as a
group(8) -- -- $31.70 4/1/06 $ 0 $9,861,317,347 $24,990,514,307
</TABLE>
- --------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of the Company's common stock, and to have
shares withheld to satisfy tax withholding requirements in connection with
the exercise of options. Such options become immediately exercisable upon
a Change in Control of the Company, as defined in the option plan. Options
are non-transferable other than by will or the laws of descent and
distribution.
(2) Options become exercisable in three equal cumulative annual installments
commencing April 1, 1997.
(3) Options became fully exercisable on February 17, 1997. See "Certain
Transactions."
(4) Options become exercisable in three equal cumulative annual installments
commencing August 13, 1997.
(5) Options have a term of ten years, subject to earlier termination in
certain events related to termination of employment.
(6) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's stock. Such amounts are based on the
assumption that the named persons hold the options granted for their full
term. The actual value of the options will vary in accordance with the
market price of the Company's common stock. The column headed "0%" is
included to demonstrate that the options were granted at fair market value
and optionees will not recognize any gain without an increase in the stock
price, which increase benefits all stockholders commensurately.
(7) In addition to the grant of Company options shown in the table, Mr.
Holsten received a grant from WM International of options to acquire
160,000 of its shares, representing 7.01 percent of the total options
granted by WM International to its employees in 1996. The exercise price
is (Pounds)3.65 per
12
<PAGE>
share, and such options expire on May 1, 2003. The potential realizable
value of such options is (Pounds)237,747 and (Pounds)554,051, assuming
annual rates of stock price appreciation of 5% and 10%.
(8) Based upon the price of the Company's stock and the total shares
outstanding as of the date of grant, if the price of the Company's common
stock increased at the 5% or 10% rates shown in the table above,
stockholders as a group would realize aggregate gains (excluding
dividends) in the amounts shown above during the period from grant date to
the April 1, 2006 option expiration date.
The following table sets forth certain information as to each exercise of
stock options during the year ended December 31, 1996 by the persons named in
the Summary Compensation Table and the fiscal year-end value of unexercised
options:
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT DECEMBER 31, THE-MONEY OPTIONS AT
SHARES 1996 DECEMBER 31, 1996(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dean L. Buntrock
Company Options........ 174,264 $1,160,223 586,925 386,696 $ 0 $1,179,181
WTI Options............ 33,336 234,499 0 0 0 0
WM International
Options............... 0 0 200,000 0 0 0
Phillip B. Rooney
Company Options........ 0 0 744,463 628,304 933,024 842,265
WM International
Options............... 0 0 200,000 0 0 0
James E. Koenig
Company Options........ 12,648 124,581 132,846 245,994 294,992 463,076
WTI Options............ 0 0 120,000 0 881,628 0
WM International Op-
tion.. 0 0 100,000 0 0 0
William P. Hulligan
Company Options........ 0 0 157,681 89,408 209,384 240,093
Joseph M. Holsten
Company Options........ 0 0 43,195 41,072 139,872 159,726
WM International
Options................ 0 0 206,666 253,334 0 0
</TABLE>
- --------
(1) Market value less exercise price, before payment of applicable income
taxes.
13
<PAGE>
LONG TERM INCENTIVE PLAN AWARDS
The following table sets forth certain information as to awards under the
WMX Technologies, Inc. Long Term Incentive Plan (the "LTIP") with respect to
the year ended December 31, 1996 to the persons named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
PERFORMANCE
NUMBER OF OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
SHARES, UNITS PERIOD UNTIL NON-STOCK PRICE BASED PLANS(3)
OR OTHER MATURATION --------------------------------
NAME RIGHTS(1) OR PAYOUT(2) THRESHOLD TARGET MAXIMUM
- ---- ------------- ------------ -------------------- -----------
<S> <C> <C> <C> <C> <C>
Dean L. Buntrock........ -- 3 years $ 625,000 $ 625,000 $ 1,875,000
Phillip B. Rooney(4).... -- 3 years 625,000 625,000 1,875,000
James E. Koenig......... -- 3 years 240,000 240,000 720,000
William P. Hulligan..... -- 3 years 190,000 190,000 570,000
</TABLE>
- --------
(1) Awards consist of the designation of target percentages of annual salary
at the end of the performance period to be paid if the Company achieves
certain performance objectives. No payout occurs unless the Company
achieves certain threshold performance objectives. Above the threshold,
payouts may be greater than the target percentage to the extent that the
Company's performance exceeds or fails to meet the target objectives
specified in the plan. Payouts under the LTIP are based on the rank of the
Company's total stockholder return (stock price appreciation plus
reinvested dividends) among the total stockholder returns of the companies
that comprise the Dow Jones Industrial Average over the performance
period.
(2) The performance period includes calendar years 1996, 1997 and 1998.
(3) At the end of the performance period, an amount equal to 50% of the
performance award, if any, is to be paid in cash, and the remaining 50% is
to be deemed to be invested in common stock of the Company. The
participant is entitled to receive the value of such deemed investment on
the date three years after the end of the performance period; provided
that the participant is an officer of the Company or one of its
subsidiaries on that date. Estimated future payouts were calculated using
1996 salaries, assume that a performance award will be earned at the
levels shown, and do not reflect any possible subsequent increase or
decrease in the value of the portion of the award which would be required
to be deferred under the terms of the plan. No payments have been made
under the plan for prior periods.
(4) Pursuant to the terms of Mr. Rooney's employment agreement, Mr. Rooney
will not receive any awards under this plan. See "Certain Transactions."
14
<PAGE>
PENSION AND RETIREMENT PLANS
The following table sets forth estimated annual benefits payable upon
retirement under the Company's Pension Plan and its Supplemental Executive
Retirement Plan ("SERP") to employees of the Company in specified remuneration
and years of service classifications. For purposes of the following table, it
is assumed that the five executive officers named in the cash compensation
table are eligible for the SERP benefits and that each such officer's
annualized Final Average Compensation (as defined below) will be equal to his
average annual compensation for the three years ended December 31, 1996.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(2)(3)
---------------------------------------------------------
REMUNERATION(1) 15 20 25 30 35 40
--------------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000........ $ 90,000 $120,000 $150,000 $180,000 $ 210,000 $ 240,000
500,000........ 112,500 150,000 187,500 225,000 262,500 300,000
600,000........ 135,000 180,000 225,000 270,000 315,000 360,000
700,000........ 157,500 210,000 262,500 315,000 367,500 420,000
800,000........ 180,000 240,000 300,000 360,000 420,000 480,000
900,000........ 202,500 270,000 337,500 405,000 472,500 540,000
1,000,000........ 225,000 300,000 375,000 450,000 525,000 600,000
1,100,000........ 247,500 330,000 412,500 495,000 577,500 660,000
1,200,000........ 270,000 360,000 450,000 540,000 630,000 720,000
1,300,000........ 292,500 390,000 487,500 585,000 682,500 780,000
1,400,000........ 315,000 420,000 525,000 630,000 735,000 840,000
1,500,000........ 337,500 450,000 562,500 675,000 787,500 900,000
1,600,000........ 360,000 480,000 600,000 720,000 840,000 960,000
1,700,000........ 382,500 510,000 637,500 765,000 892,500 1,020,000
1,800,000........ 405,000 540,000 675,000 810,000 945,000 1,080,000
1,900,000........ 427,500 570,000 712,500 855,000 997,500 1,140,000
2,000,000........ 450,000 600,000 750,000 900,000 1,050,000 1,200,000
</TABLE>
- --------
(1) Upon normal retirement at age 65 or after completing five years of
participation in the Company's Pension Plan, whichever is later, a
participant is entitled to a pension based on the average of the
participant's eligible compensation for the highest five consecutive years
out of his or her last 10 years of service. For this purpose, a
participant's eligible compensation generally includes all of his or her
cash compensation, subject, in 1996, to the statutory maximum of $150,000.
The annual lifetime benefit is equal to (i) 1% of average eligible
compensation, multiplied by (ii) the number of his or her years of
service, and, for a participant retiring at age 65 with 10 years of
service, may not be less than $100 per month. Under the SERP, eligible
participants who retire following age 60, or retire with at least 30 years
of service, are entitled to a monthly benefit equal to (i) 1.5% of the
participant's Final Average Compensation per year of service (Final
Average Compensation is the monthly average compensation of such
participant for the highest three consecutive calendar years out of his or
her last 10 calendar years of service), reduced by (ii) the amount of such
participant's monthly benefit under the Pension Plan. Compensation used
for calculating benefits under the SERP includes only the participant's
salary and annual incentive bonus. Eligible participants are those
officers who have served in such capacities for at least 10 years at the
time of retirement. Payment of benefits under the SERP is made on the same
basis as payments under the Pension Plan, and both plans provide for
reduced payouts in the event of early retirement.
(2) At December 31, 1996, the credited years of service for Messrs. Buntrock,
Rooney, Koenig, Hulligan and Holsten were 40, 27, 19, 18 and 14,
respectively.
(3) Benefits shown are computed on a straight-life annuity basis at normal
retirement age. Provision is made for payment of pensions in joint and
survivor form and in various other forms and at other times, on an
actuarially equivalent basis. Benefits are not subject to reduction for
social security benefits.
15
<PAGE>
COMPENSATION OF DIRECTORS
Each member of the Board of Directors of the Company who is not an employee
of the Company is paid an annual retainer of $45,000 ($50,000 effective with
the 1997 annual meeting of stockholders). Such directors also receive $1,000
for each meeting they attend of each Committee of the Board of which such
directors are members. The Company maintains a major medical expense insurance
policy which is available to all directors of the Company. The policy covers
the medical and dental expenses of the directors in excess of the coverage
provided by the director's primary health insurance program.
OUTSIDE DIRECTORS' PLANS
The Company has two unfunded deferred compensation plans for non-employee
members of its Board of Directors. Under the Deferred Directors' Fee Plan,
such directors may make an irrevocable election annually to defer receipt of
all or a portion of the directors' fees payable to them until termination of
their membership on the Board of Directors. Such deferred amounts are deemed
to be invested in the Company's common stock or, at the election of the
director, in the common stock of any of the Company's majority-owned public
subsidiaries, and during the period of deferral, such deferred amounts are
credited with the dividends or stock splits that would be received had such
investment actually been made. Upon termination of the director's service, the
common stock deemed reflected by his or her deferred account is deemed to be
sold, and the deemed proceeds of such sale (or an amount equal to the amount
originally deferred, if greater) will be distributed to the director in cash,
in a lump sum or installments. Under a similar plan maintained by WTI, Mr.
Buntrock has deferred fees for services rendered as a director of WTI prior to
the Company's acquisition of a majority interest of WTI in September 1990.
Under the Directors' Phantom Stock Plan, certain non-employee directors
received a one-time grant of 5,000 Phantom Shares at the time of adoption of
such plan or at the time they first became directors. Each of such Phantom
Shares was initially deemed to be equal in value to one share of the Company's
common stock at the time of award. Phantom Shares are credited to a
bookkeeping account which is adjusted to reflect stock (but not cash)
dividends or stock splits which would be received with respect to an
equivalent number of shares of the Company's common stock. Upon termination of
the director's service, the director is paid an amount in cash, in a lump sum
or installments, for each Phantom Share then credited to his or her account,
equal to the then difference between the market price of the Company's common
stock at the time of award and the average closing prices of one share of the
Company's common stock on the New York Stock Exchange Composite Tape for the
most recent 10 consecutive trading days immediately preceding such
termination. In 1991, the Company's Board of Directors terminated its
authority to make additional grants under the Directors' Phantom Stock Plan.
STOCK OPTION PLANS FOR NON-EMPLOYEE DIRECTORS
The 1992 Stock Option Plan for Non-Employee Directors (the "Directors Plan")
of the Company provides for the awards of options covering an aggregate of
150,000 shares of the Company's common stock. Each director of the Company
first elected in 1997 or thereafter who is neither an officer nor full-time
employee of the Company or any of its subsidiaries, upon election or
appointment to the Board of Directors, is granted an option to purchase 3,000
shares of the Company's common stock on the date of election and on the next
four anniversaries if re-elected. Each such director elected before 1997
received an option to purchase a total of 15,000 shares of the Company's
common stock on the date of his or her election. All options under the
Directors Plan are granted at the fair market value of the stock at the time
of grant and are for a term of 10 years from the date of grant. Options
granted in 1997 or thereafter become exercisable after one year following the
grant date. Options granted prior to 1997 become exercisable with respect to
20% of the total number of shares subject to the option six months after the
date of grant and with respect to an additional 20% at the end of each 12-
month period thereafter on a cumulative basis during the succeeding four
years.
16
<PAGE>
Under the Directors Plan, in the event that the Company's shares of common
stock are changed by a stock dividend, split or combination of shares, or a
merger, consolidation or reorganization with another company in which holders
of the Company's common stock receive other securities, or any other relevant
change in the capitalization of the Company, a proportionate or equitable
adjustment will be made in the number or kind of shares subject to unexercised
options or available for options and in the purchase price for shares. If an
option expires or is terminated or cancelled unexercised as to any shares,
such released shares may again be optioned (including a grant in substitution
for a cancelled option). Shares subject to options may be made available from
unissued or reacquired shares of common stock.
Options are not transferable by the optionee otherwise than by will or the
laws of descent and distribution, provided that the Board of Directors may
grant options that are transferable, without payment of consideration, to
immediate family members of the optionee or to trusts or partnerships for such
partnerships for such family members or to charitable organizations (each an
"Option Transferee"), subject to the Company's procedures for administration,
and may amend outstanding options to provide for such transferability. Options
terminate if the optionee ceases to be a director of the Company for any
reason other than death, permanent disability, resignation or retirement. If
the optionee ceases to be a director because of death or permanent disability,
the optionee or the optionee's heirs, legatees, legal representative or the
Option Transferee may exercise the option in full at any time during its term
within three months after the date of termination. In the event of resignation
or retirement, an option may be exercised by the optionee (or if the optionee
dies within three months after such termination, by the optionee's heirs,
legatees or legal representative) or the Option Transferee at any time during
its specified term prior to three months after the date of such resignation or
retirement, but only to the extent it was exercisable at the date of such
resignation or retirement.
Prior to January 1, 1992, upon election to the Board of Directors non-
employee directors received options for 10,000 shares under the Company's 1981
Stock Option Plan for Non-Employee Directors (the "1981 Plan"), the terms of
which are substantially similar to the Directors Plan. No person who is the
holder of an option granted under the 1981 Plan or the Employee Plans or who
has purchased shares upon the exercise of such an option is eligible for a
grant of options under the Directors Plan.
DIRECTORS' CHARITABLE ENDOWMENT PROGRAM
The Company maintains the Directors' Charitable Endowment Program pursuant
to which the Company has purchased life insurance policies on members of the
Board of Directors. Under the program, death benefits will be paid to the
Company, and the Company in turn will donate such death benefits (up to
$100,000 for each year of service on the Company's Board of Directors, subject
to a $1,000,000 limit) to one or more charitable organizations recommended by
the director. Directors derive no financial benefit from this program because
all charitable deductions accrue solely to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Company's Board of
Directors consisted during 1996 of Messrs. Pedersen (Chairman), Edwards,
Peterson and Dr. Cafferty. Mr. Pedersen is Chairman of the Board of the law
firm of Pedersen & Houpt, P. C. Although the Company utilized the services of
such firm during 1996, as a result of a policy adopted by the Board of
Directors in May 1996, the Company will not retain such firm for any new
matters arising after such date. For 1996, the professional fees received by
such firm from the Company were no more than approximately 1% of such firm's
gross revenues. In 1996, Mr. Buntrock served on the Compensation Committee of
the Board of Directors of WTI. Mr. Rooney, who was an executive officer of WTI
during 1996, served as a director of the Company during 1996.
17
<PAGE>
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Report of the
Compensation and Stock Option Committee" and "Company Stock
Performance" will not be deemed to be filed or to be proxy soliciting
material or incorporated by reference in any prior or future filings by
the Company under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The compensation of the Company's executive officers is determined or
recommended by the Compensation and Stock Option Committee (the "Compensation
Committee") of the Board of Directors. Each member of the Compensation
Committee is a director who is not an employee of the Company or any of its
affiliates. In addition, the Board of Directors in 1996 adopted Board
Practices Guidelines requiring all members of certain Board committees,
including the Compensation Committee, to be independent. Independence
requires, among other things, that committee members not be affiliated with
any firms which provide professional services to the Company or its
subsidiaries, except as to matters pending when the Board of Directors adopted
the Guidelines.
GENERAL POLICIES
The Company's executive compensation program includes a substantial
incentive component (approximately one-half to two-thirds of total targeted
compensation) which is "at risk" based on the performance of the Company's
business, in substantial part as reflected in the achievement of pre-
determined financial or other performance goals and, in the case of Dean L.
Buntrock, the Company's Chairman and Chief Executive Officer, and Phillip B.
Rooney, the Company's former President and Chief Executive Officer, based on
furthering the Company's environmental principles. As an executive officer's
level of management responsibility increases, a greater portion of his or her
potential total compensation depends upon the performance of the Company or
one or more of its business units as measured by objective standards over one
or more years.
In assessing the competitiveness of the compensation payable to the
Company's executive officers, the Compensation Committee considers data from
surveys of other companies. As to the Company's most senior executive
officers, the Compensation Committee reviews primarily compensation data for a
group of comparator companies compiled with the assistance of the Company's
independent compensation consultant (the "Comparator Companies"). The
Comparator Companies were selected primarily because their size (between $4.3
and $17.7 billion in annual revenue) and operating and financial
characteristics make it likely that they will compete for the services of
executives who have experience and skills similar to those which the Company
requires. The Company's annual revenue for 1995 placed it approximately in the
middle group of the Comparator Companies. References in this report to the
Comparator Companies include published survey data furnished by the Company's
compensation consultant in the case of several officers.
Under the Omnibus Budget Reconciliation Act of 1993, compensation paid to
certain executive officers of the Company in excess of $1 million in 1995 and
subsequent years may be non-deductible for federal income tax purposes unless
the compensation qualifies as "performance-based" compensation or is otherwise
exempt under the law and Internal Revenue Service regulations. The Company's
policy is to seek to structure its executive officer incentive compensation to
qualify as "performance-based" compensation so as to attempt to preserve its
deductibility for federal income tax purposes. However, there can be no
assurance that such compensation will continue to be deductible for federal
income tax purposes. The Compensation Committee may also determine in any year
in light of all applicable circumstances that it would be in the best
interests of the Company for awards to be paid under its incentive
compensation plans or otherwise in a manner that would not satisfy the
requirements of such tax law and regulations for deductibility.
18
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
RELEVANT FACTORS
The Compensation Committee annually establishes the base salaries, subject
to the approval of the Board of Directors, and incentive compensation which
will be paid to the Company's executive officers. In setting compensation, the
Compensation Committee generally takes into account a number of factors,
including the Company's results of operations and other Company performance
measures, competitive compensation data, comparisons of salaries, incentive
compensation terms and responsibilities among the Company's executive
officers, the desired proportion of incentive compensation in the officer's
total compensation package and qualitative factors bearing on an individual's
experience, responsibilities, management and leadership abilities and job
performance. The Compensation Committee does not generally expressly assign
greater weight to any one or more such factors than to others.
1995 COMPANY PERFORMANCE AND MANAGEMENT INITIATIVES
In the process of determining 1996 compensation for the Company's executive
officers, the Compensation Committee considered a number of factors that
showed substantial improvement in the Company's overall 1995 corporate
performance compared to 1994. The Company's revenue and earnings per share
from continuing operations increased 7.25% and 10.5%, respectively, over 1994
(excluding the effect of various 1995 special charges which the Compensation
Committee determined were either the result of adverse market conditions
beyond management's control or the result of restructuring decisions taken by
the Board of Directors pursuant to the Company's strategic business review).
The Compensation Committee noted that management had met its goal of double-
digit earnings growth and of generating more than $500 million of cash flow
during 1995. The Compensation Committee also noted that the Company achieved
these results despite poor conditions in the market for hazardous waste
services, a less-than-expected performance by Rust International Inc.'s
("Rust") engineering and construction operations and difficult operating
conditions in certain Waste Management International plc ("WM International")
markets. An unexpectedly strong market for recyclable commodities during the
first half of 1995 also benefited the Company's results.
The Compensation Committee also considered the Company's performance as
shown by several other performance measures. Compared to the performance
results of the Comparator Companies, the Company's three-year measurement of
return on equity and one-year and three-year return on sales placed the
Company between the 50th and 75th percentiles, although the Company's one-year
and three-year return on assets and one-year return on equity placed it below
the Comparator Companies' 50th percentile. The Compensation Committee was also
aware that the Company's share price continued to underperform the broad stock
market indices.
The Compensation Committee also considered management's continuation of the
strategic business review of the Company's operations and structure. The
Compensation Committee found that during 1995, management took a number of
significant actions to continue to develop and implement the principal
strategic concepts developed in that review, including simplifying the
organization of the Company, realigning the Company's operations and pursuing
a financial strategy focused significantly on generating free cash flow from
operations.
SALARY
Salary increases for Company executive officers other than Messrs. Buntrock
and Rooney ranged from 1.6% to 20%. The Compensation Committee's actions in
respect of Messrs. Buntrock's and Rooney's salaries are described under
"Compensation of the Chief Executive Officer -- Salary" below.
19
<PAGE>
INCENTIVE COMPENSATION PLANS
In administering the Company's incentive compensation plans in which the
executive officers participate, the Compensation Committee considers the
Company's results of operations and other Company performance measures and
management's plans for the Company's growth and profitability and achievement
of strategic goals, determines the corporate performance criteria to be used
for the determination of incentive compensation awards, and fixes award
levels. The Company has typically had in effect at any one time both an annual
and multi-year incentive compensation plan, as well as a stock option plan.
Annual Plan
For 1996, most of the Company's executive officers were named participants
in the Company's Corporate Incentive Bonus Plan (the "Annual Plan"). Under the
Annual Plan, target awards for such officers, ranging from 30% to 80% of the
participant's salary at year-end, were payable depending for most executive
officers upon the extent to which the Company achieved its budgeted earnings
per share and cash flow goals. In the case of three executive officers, awards
were also based in part upon the extent to which a business unit of the
Company achieved its budgeted pre-tax core business income and cash flow
goals. The Annual Plan also provided that no payment under the Annual Plan was
to be made to Messrs. Buntrock or Rooney if the Compensation Committee
determined that he had not furthered the implementation of the Company's
environmental principles.
For most executive officers (including, prior to Mr. Rooney's becoming Chief
Executive Officer, Messrs. Buntrock and Rooney), the target awards of the
Annual Plan applicable for 1996 were the same as in 1995. However, in
recognition of the increasing importance placed by the Board on achievement of
the company's cash flow goals, the Compensation Committee added a cash flow
component to the 1996 award calculation matrix, supplementing the earnings per
share or pretax income components which have been used for many years. The
Company did not meet the threshold earnings per share or pretax income levels
for 1996. However, the Company exceeded its cash flow goals for 1996 and
accordingly a portion of the target awards previously established by the
Compensation Committee was paid out under the Annual Plan for 1996 to
participants other than Mr. Buntrock. Mr. Buntrock requested, and the
Compensation Committee agreed, that he not be paid a 1996 bonus.
Long Term Plan
Under the Company's Long Term Incentive Plan (the "Long Term Plan"), the
Compensation Committee determines participants' target awards as a percentage
of the participant's salary at the end of each performance period, which
normally lasts for three years. The target award would be payable depending on
the Company's total return to stockholders compared to that of the 30
companies comprising the Dow Jones Industrial Average (the "DJIA") during the
performance period. Total return to stockholders is defined for this purpose
as the sum of price appreciation plus reinvested dividends over the
performance period, divided by the share price at the beginning of the period.
Under the Long Term Plan, participants will be paid target awards if the
Company's total stockholder return places it at the 50th percentile of the
DJIA companies. The percentage of the target awards to be paid will vary
upwards to 300% of the target award if the Company's total stockholder return
places it at a higher percentile ranking in relation to the DJIA companies. If
the Company's total stockholder return places it below the 50th percentile
ranking in relation to the DJIA companies, then no award is to be paid for the
relevant performance period. The Long Term Plan also mandates that the payment
of one-half of any award otherwise payable at the end of a performance period
be deferred for an additional three-year period and deemed invested in shares
of the Company, subject to increase or decrease in value over the deferral
period and subject to forfeiture if the officer voluntarily leaves the
Company.
20
<PAGE>
During 1996, there were three ongoing performance periods, 1994 through 1996
(which has expired without there being any awards payable for the performance
period), 1995 through 1997, and 1996 through 1998. For the 1996 through 1998
performance period, most of the Company's executive officers were again named
as plan participants having the same target award participations as had been
approved in 1995 for the 1995 through 1997 performance period. No payments
have been made to date under the Long Term Plan.
Equity Incentives
Stock options are granted to key employees, including the Company's
executive officers, by the Compensation Committee under the WMX Technologies,
Inc. 1992 Stock Option Plan (the "1992 Plan"). The Company's executive
officers typically receive grants each year determined by dividing percentages
of the officers' salaries, which percentages ranged from 100% to 400% in the
1996 stock option grant, by the market price of the Company's stock at the
time of grant. The Compensation Committee generally intends stock option
grants to constitute approximately one-half of the officers' total targeted
"at risk" compensation. All options under the 1992 Plan are non-qualified
stock options which are granted at an exercise price equal to 100% of fair
market value on the date of grant. These options typically have a term of ten
years and become exercisable in cumulative increments of one-third of the
total number of shares subject to the option during each of the first three
years of the option term.
Executive officers of the Company who serve as directors or executive
officers of WTI or WM International, both of which are subsidiaries of the
Company, are also eligible to participate in stock option plans maintained by
those companies. See "Compensation -- Stock Options" for information as to
stock option grants by these subsidiaries to Company executive officers. In
making stock option grants to the Company's executive officers, the
Compensation Committee considers prior grants made to them under both the
Company's plan and subsidiaries' plans.
In August 1996, the Compensation Committee recommended, and the Company's
Board of Directors approved, restricted stock grants and employment agreements
for two senior executive officers of the Company. The Compensation Committee
intended these restricted stock grants (which will vest, in the ordinary
course, on the tenth anniversary of the grant date) to be substantial
incentives to the officers to remain with the Company and continue the
development and implementation of the Company's strategic plans. See the
discussion as to Herbert A. Getz and James E. Koenig under "Certain
Transactions" herein.
OFFICER STOCK OWNERSHIP AND DEFERRED COMPENSATION PROGRAMS
In 1995, the Company instituted an officer stock ownership program. Under
the program, Company officers are expected to acquire and maintain specified
levels of ownership of stock of the Company and its publicly held
subsidiaries, ranging from total stock value of one and one-half times salary
for certain officers to five times salary in the case of Messrs. Buntrock and
Rooney. Also in 1995, the Company adopted a deferred compensation program
whereby Company officers are encouraged to defer payments under the Annual
Plan into an unfunded investment account that tracks the performance of the
Company's stock. Officers who participate have their deferral investment
"matched" by a 20% credit to the officer's deferral account, subject to
vesting requirements. The value of the deferral accounts is subject to
increase or decrease in accordance with Company stock price movements and
hence is fully "at risk." The deferral continues for so long as the officer is
an employee of the Company and thereby effectively commits the participating
officers to an equity investment in the Company for the duration of their
careers with the Company.
As of October 31, 1996, the end of the first year of the policy, officers
subject to the stock ownership policy owned an aggregate of approximately
3,861,000 shares of Company common stock,
21
<PAGE>
with a total market value on that date of approximately $132,722,000. While
compliance with the full ownership levels of the policy is to be phased-in
over a five-year period, as of October 31, 1996, the total stock ownership by
such officers substantially exceeded the full five-year goal for the group.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICERS
In considering the compensation for 1996 of Mr. Buntrock as the Company's
Chief Executive Officer prior to Mr. Rooney's election to that position, and
of Mr. Rooney from the time of his election, the Compensation Committee
evaluated the Company's 1995 performance as discussed above under "1995
Company Performance and Management Initiatives," in addition to the factors
discussed below as to several components of their respective compensation.
Based on the Comparator Company data presented to it, the Compensation
Committee believed that if the target awards described below under the
Company's incentive compensation plans were to be achieved, the total Chief
Executive Officer compensation of each of Messrs. Buntrock and Rooney for 1996
would appropriately be between the 50th and 75th percentiles of the range of
total compensation paid to Comparator Company chief executive officers.
SALARY
In reviewing the 1996 base compensation of Mr. Buntrock, the Compensation
Committee considered the data furnished by the Company's compensation
consultant concerning Mr. Buntrock's compensation relative to that of the
chief executive officers of the Comparator Companies. The report concluded
that Mr. Buntrock's salary was within the bounds of reasonableness for a
company targeting salary at a median level. Based on Mr. Buntrock's request
that his salary not be increased, however, the Compensation Committee
determined not to increase Mr. Buntrock's base compensation for the year 1996,
the third consecutive year in which, on his own request, Mr. Buntrock received
no salary increase. In June 1996, upon the election of Mr. Rooney as Chief
Executive Officer, the Compensation Committee, again at Mr. Buntrock's
request, reduced Mr. Buntrock's salary as Chairman to $1.25 million to reflect
his change in position.
In connection with Mr. Rooney's becoming Chief Executive Officer in June
1996, the Compensation Committee recommended, and the Board of Directors
approved, an increase in Mr. Rooney's salary to $1.25 million in light of his
expanded responsibilities. The Compensation Committee noted that the new
salary for Mr. Rooney would place him in the top quartile of the Comparator
Company group but below the midpoint of the range of reasonable salary levels
determined by the Company's compensation consultant from the Comparator
Company data. The Compensation Committee also noted that Mr. Rooney's salary
had not increased since 1993.
INCENTIVE COMPENSATION PLANS
Annual Plan
For 1996, prior to Mr. Rooney's election as Chief Executive Officer, the
Compensation Committee awarded Mr. Buntrock a target Annual Plan participation
of 80% of his 1996 salary, the same target participation level as had been
awarded to Mr. Buntrock for 1995. This target participation was expected, if
achieved, to place Mr. Buntrock in the range of the 50th to 75th percentiles
of the annual incentive compensation payments of the Comparator Companies and
slightly above the Comparator Company 75th percentile targeted total cash
compensation and between the 50th and 75th percentiles of Comparator Company
targeted total compensation. In connection with the election of Mr. Rooney to
the position of Chief Executive Officer, Mr. Buntrock requested that his own
Annual Plan target be reduced. In accordance with this request, the
Compensation Committee adjusted Mr. Buntrock's Annual Plan 1996 target
participation to 70% of his annual salary. Although Mr. Buntrock qualified for
22
<PAGE>
an Annual Plan bonus as a result of the Company's cash flow performance during
1996, Mr. Buntrock requested, and the Compensation Committee agreed, that Mr.
Buntrock not be paid a bonus for 1996.
Upon Mr. Rooney's election to the Chief Executive Officer position, the
Compensation Committee increased his target Annual Plan participation for 1996
from 70% to 80% of annual salary. The Compensation Committee noted that the
Comparator Company actual annual incentive compensation payments for the chief
executive officer position amounted to slightly more than 100% of annual
salary at the Comparator Companies' median and that the 80% target
participation level has been the amount historically awarded by the
Compensation Committee to link a substantial portion of Chief Executive
Officer compensation to the Company's financial performance.
Long Term Plan
Under the Company's Long Term Plan, for the performance period ending
December 31, 1998, the Compensation Committee awarded each of Messrs. Buntrock
and Rooney a target award of 50% of his salary as of the end of such period,
the same as his preceding year's Long Term Plan award. The Compensation
Committee's selection of the 50% participation level for each of Messrs.
Buntrock and Rooney reflects the Company's compensation practices, under which
incentive compensation under the Long Term Plan, together with the Annual Plan
and stock options, is to comprise between one-half and two-thirds of total
targeted compensation. The Compensation Committee also considered the level of
awards typically made by the Company and data as to long-term compensation
awards by the Comparator Companies, which showed Mr. Buntrock's targeted Long
Term Plan award would place him slightly above the median of the Comparator
Companies on a dollar basis. The Compensation Committee also noted that Mr.
Buntrock's total compensation package (before reductions upon the election of
Mr. Rooney to the Chief Executive Officer position) was expected to place him
between the 50th and 75th percentiles of the Comparator Companies but below
the average. As noted above, no payment will be made to Messrs. Buntrock or
Rooney, if ever, until the completion of the relevant performance period and
the Company's achievement of the required performance criterion. In this
regard, the 1993-1995 and 1994-1996 performance periods under the Long Term
Plan have ended with no award being paid to Messrs. Buntrock or Rooney or any
other participating officers.
Stock Options
The Compensation Committee's 1996 annual grant of options to each of Messrs.
Buntrock and Rooney under the 1992 Plan was determined by dividing four times
their respective base compensation by the option exercise price, which was the
fair market value of a share of the Company's common stock as of the date of
grant. In selecting this stock option formula, the Compensation Committee
considered again both the goal of maintaining incentive compensation as a
substantial portion of their targeted total compensation and Comparator
Company data as to targeted long-term incentive compensation. The Compensation
Committee considered data showing that, as compared to the Comparator Company
chief executive officer position, this stock option award level was below the
median Comparator Company award level on a dollar basis and also left the
total long-term incentive compensation level for that position below the
median Comparator Company award level. In addition, in connection with the
election of Mr. Rooney to the Chief Executive Officer position, the
Compensation Committee awarded Mr. Rooney options under the 1992 Plan for
350,000 Company shares at an exercise price equal to the market value on the
grant date and vesting in three equal annual increments. The Compensation
Committee approved this grant to provide a significant new incentive to Mr.
Rooney in his new role, particularly in light of the Company's need to
continue developing and implementing its strategic initiatives.
Employment Agreement
In connection with Mr. Rooney's becoming the Company's Chief Executive
Officer, the Compensation Committee also reviewed his employment agreement,
which had been originally
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<PAGE>
entered into in 1986 and which the Compensation Committee believed had become
outdated in a number of respects. The Compensation Committee approved and
recommended to the full Board of Directors the terms of Mr. Rooney's new
employment agreement, which are set forth in this Proxy Statement under
"Certain Transactions." The new employment agreement reflected several
modifications in favor of the Company as compared to the previous agreement.
These included elimination of a salary escalation provision, the addition of a
fixed limit on termination payments to Mr. Rooney (in place of the former
provision under which termination payments increased as Mr. Rooney's
compensation increased) and a three-year extension of Mr. Rooney's agreement
not to compete with the Company following termination of employment.
1997 ARRANGEMENTS
As a result of the resignation of Mr. Rooney as Chief Executive Officer, the
Chief Executive Officer's duties were assigned by the Board to Mr. Buntrock on
an interim basis. The Committee subsequently reviewed Mr. Buntrock's
compensation arrangement in light of his change in duties. In this regard, Mr.
Buntrock requested that the Committee take steps to make his 1997 compensation
100% performance-based or "at risk". Mr. Buntrock advised the Committee of his
confidence in the ability of the Company's revised strategy to create long
term shareholder value and in the ability of the Company's management team to
meet the financial goals approved by the Board in its 1997 annual budgeting
process. After considering this request, the Committee acted to grant Mr.
Buntrock 150,000 stock options priced at $33 per share, and having an
estimated value under the Black-Scholes valuation method of approximately
$1,161,000, in lieu of the payment to Mr. Buntrock of any cash salary for
1997. The Committee also acted to award Mr. Buntrock participation interests
in the Annual Plan for 1997 and in the LTIP for the 1997-99 performance
period, with his target awards being set at amounts equal to 70% of the target
award level that would have been granted to the former Chief Executive Officer
with respect to such periods.
Peer Pedersen, Chairman
Pastora San Juan Cafferty
James B. Edwards
James R. Peterson
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<PAGE>
COMPANY STOCK PERFORMANCE
The following graphs and tables compare the yearly percentage change in the
cumulative total returns on the Company's common stock, the Standard & Poors
500 Stock Index and the Smith Barney Solid Waste Index (in each case assuming
dividend reinvestment) for the 10-year and five-year periods ended December
31, 1996:
COMPARISON OF 10-YEAR CUMULATIVE RETURN
VS. S&P 500 AND SMITH BARNEY SOLID WASTE INDICES(1)
LOGO
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company $100 $137 $152 $259 $261 $318 $306 $205 $208 $242 $269
- ----------------------------------------------------------------------------------
S&P 500 Index 100 105 123 162 157 204 220 242 245 337 415
- ----------------------------------------------------------------------------------
Smith Barney Solid Waste
Index 100 133 142 231 209 222 204 154 160 183 215
</TABLE>
- --------
(1) Assumes $100 invested on December 31, 1986 in Company common stock, the
S&P 500 index and the Smith Barney Solid Waste Index. Historical results
are not necessarily indicative of future performance.
25
<PAGE>
COMPARISON OF 5-YEAR CUMULATIVE RETURN
VS. S&P 500 AND SMITH BARNEY SOLID WASTE INDICES(1)
LOGO
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company $100 $ 96 $ 65 $ 65 $ 76 $ 85
- -------------------------------------------------------------------------------------
S&P 500 Index 100 108 118 120 165 203
- -------------------------------------------------------------------------------------
Smith Barney Solid Waste Index 100 92 69 72 82 97
</TABLE>
- --------
(1) Assumes $100 invested on December 31, 1991 in Company common stock, the
S&P 500 Index and the Smith Barney Solid Waste Index. Historical results
are not necessarily indicative of future performance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
In 1996, Mr. Rooney made a late filing of a report required by Section 16(a)
of the Securities Act of 1934, as amended, relating to his gift of shares of
the Company's common stock to a charitable foundation in a transaction exempt
from Section 16(b). In 1996, Mr. Buntrock, in his capacity as trustee of a
family trust, made a late filing of a report relating to the holding by such
trust of shares of the Company's common stock. Under current rules such trust
is no longer subject to Section 16(a) reporting requirements. Ownership of
such shares by the trust was reported on a timely basis in Mr. Buntrock's
individual filings.
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<PAGE>
CERTAIN TRANSACTIONS
When an option is exercised by an optionee under the Employee Plans or WTI's
stock option plans at a time when the fair market value of the underlying
stock exceeds the option exercise price, the difference is treated as ordinary
income to the optionee for income tax purposes and the company which issued
the options is entitled to a deduction equal to such amount. To facilitate an
optionee's purchase of stock upon exercise of such options, the Company and
WTI have each adopted a policy of making available interest-free loans, in an
amount up to the equivalent of all applicable tax withholding requirements, to
optionees whose exercise of options results in ordinary income to them in
excess of $10,000. All such loans normally are required to be repaid not later
than April 15 in the year following the year in which such loans were made,
unless otherwise extended. The largest aggregate amounts of such loans from
the Company and WTI in excess of $60,000 pursuant to such policy which were
outstanding to the directors and executive officers of the Company since
January 1, 1996 were as follows: Herbert A. Getz--$67,227; Mr. Koenig--
$73,875. Of such loans $37,824 and $44,315, respectively, remained outstanding
at March 15, 1997.
The Company and WTI also each makes available to optionees interest-free
loans for a period not to exceed 15 days to facilitate the exercise of options
and the sale of the underlying stock. The largest aggregate amounts of such
loans from the Company and WTI in excess of $60,000 which were outstanding to
the directors and executive officers of the Company since January 1, 1996 were
as follows: Mr. Getz--$232,480; Mr. Holsten $161,251; Mr. Koenig $196,865.
Such loans have been repaid and are not outstanding as of March 15, 1997.
In June 1996, in connection with his election as the Company's Chief
Executive Officer, the Company entered into an amended and restated employment
agreement with Phillip B. Rooney. The agreement replaced an agreement
originally entered into between the Company and Mr. Rooney in 1986. Under the
agreement Mr. Rooney would be paid a minimum annual salary of $1,250,000 as
President and Chief Executive Officer of the Company. Mr. Rooney also was
eligible to receive annual bonuses and all benefits generally available to
executives of the Company. The Company also agreed to provide Mr. Rooney with
a split-dollar life insurance arrangement with a death benefit of
approximately $10 million. The term of Mr. Rooney's employment under the
agreement continued through June 6, 2001 and would have been automatically
extended on each anniversary date for a period of five years from such
anniversary date unless either party gave written notice of termination prior
to the anniversary date. Upon the death or permanent disability of Mr. Rooney,
the Company would have paid annually $2,500,000 for the balance of the term of
the agreement. If the Company breached or terminated the agreement or reduced
the nature and scope of Mr. Rooney's authority and duties, it would have
continued to pay him for five years unless the termination was for cause, in
which case its obligations under the agreement would have ceased. In the event
of a change in control of the Company, Mr. Rooney was entitled to elect to
terminate the agreement and receive a lump sum payment of three times his
average annual compensation (including bonuses) over the immediately preceding
five years, which amount would be increased should an excise tax be imposed on
him because of the payment. Were a change in control of the Company to have
occurred on December 31, 1996, and if Mr. Rooney's employment with the Company
were terminated as provided in the employment agreement, it is estimated that
Mr. Rooney would have been eligible to receive approximately $4,235,800
(assuming no increase for any excise tax). During the term of the agreement
and for a period of three years thereafter, Mr. Rooney agreed not to compete
with the Company or its subsidiaries. In connection with Mr. Rooney's
resignation as President and Chief Executive Officer on February 17, 1997, the
Company gave notice of termination of such agreement. As a result of such
notice, the agreement will terminate on February 17, 2002, unless earlier
terminated pursuant to the agreement. During the remainder of the term of the
agreement, Mr. Rooney will receive cash compensation in an annual amount of
$2,500,000 in lieu of all salary, bonuses, incentive or other
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performance-based compensation, and Mr. Rooney and his family will continue to
participate in all welfare benefit plans generally available to employees and
executives of the Company, and the split-dollar life insurance arrangement
will continue. The Compensation and Stock Option Committee accelerated the
vesting of all unvested stock options held by Mr. Rooney.
In August 1996, the Company entered into employment agreements with James E.
Koenig, Executive Vice President of the Company, and Herbert A. Getz, Senior
Vice President and General Counsel of the Company (the "Executives"). The
agreements provide that Mr. Koenig will be paid a minimum annual salary of
$600,000 while Mr. Getz will be paid a minimum annual salary of $450,000. Each
of the Executives also is eligible to receive annual bonuses and all benefits
generally available to executives of the Company. The term of the Executive's
employment under each of the agreements continues until August 14, 1999, and
is automatically extended on each anniversary date for a period of three years
from such anniversary date unless the Company gives notice of termination, in
which case the term is automatically extended and expires three years from the
date of such notice. Upon the death or permanent disability of the Executive,
the Company will pay annually the Executive's then current base salary for
thirty-six months. If the Company terminates the agreement or reduces the
nature and scope of the Executive's duties or relocates the primary employment
location of the Executive, it will continue to pay him his then current base
salary and his prorated annual bonus and long term bonus for three years
unless the termination was for cause, in which case its obligations under the
agreement cease. In the event of a change of control of the Company, the
Executive may elect to terminate the agreement and receive a lump sum payment
of three times his average annual compensation (including bonuses) over the
immediately preceding five years, which amount will be increased should an
excise tax be imposed on him because of the payment. Were a change in control
to have occurred on December 31, 1996, and if each Executive's employment with
the Company were terminated as provided in the employment agreements, it is
estimated that Messrs. Koenig and Getz would have been eligible to receive
approximately $1,889,300 and $1,201,100, respectively (assuming no increase
for any excise tax). During the term of the agreements and for a period of one
year thereafter, each Executive has agreed not to compete with the Company or
its subsidiaries. Concurrently with the execution of the employment
agreements, the Company granted to Mr. Koenig 45,000 shares of its common
stock and to Mr. Getz 35,000 shares of its common stock, subject in each case
to a restricted stock agreement. Under the terms of the restricted stock
agreements, the Executive cannot sell, assign, pledge or otherwise transfer
such shares until the expiration of the period of the covenant not to compete
contained in the employment agreement or his death or permanent disability.
Except as provided below, if the Executive voluntarily terminates his
employment prior to the tenth anniversary of the grant of such shares, all
shares shall be forfeited. If such termination occurs after such tenth
anniversary, such shares shall be vested, but remain subject to such
restrictions. Vesting accelerates upon termination by the Company of the
Executive's employment other than for cause, upon his retirement on or after
reaching age 60, if the Company reduces the nature or scope of his authority
and duties or his compensation or changes the location of his employment, or
upon his death or permanent disability. Dividends upon such shares are deemed
to be reinvested in additional shares and subject to the same restrictions.
In March 1997, the Company's Board of Directors approved an employment
security agreement with John D. Sanford, the Company's Senior Vice President
and Chief Financial Officer. The term of the agreement will continue until
March 11, 1999, and will be automatically extended on each anniversary date
for a period of two years from such anniversary date unless the Company gives
notice of termination, in which case the term will expire two years from such
date. If the Company terminates Mr. Sanford's employment, or reduces the
nature and scope of Mr. Sanford's duties or relocates the primary employment
location of Mr. Sanford, it will continue to pay him his then current base
salary for two years and his prorated annual bonus for the year of such
termination, reduction or relocation, unless the termination was for cause, in
which case its obligations under the agreement will cease. In addition, the
Company will request the Compensation Committee to accelerate all of Mr.
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Sanford's unvested stock options. During the term of the agreement and for a
period of one year thereafter, Mr. Sanford will agree not to compete with the
Company or its subsidiaries. The Compensation Committee also approved granting
to Mr. Sanford 28,800 restricted shares of its common stock under the 1997
Equity Incentive Plan, subject to approval by the stockholders of the Company
of the 1997 Equity Incentive Plan. Under the terms of the Restricted Stock
Award Agreement to be entered into in connection with this grant, and except
as provided below, Mr. Sanford will not be able to sell, assign, pledge or
otherwise transfer such shares until no earlier than ten years from the date
of the grant. If Mr. Sanford voluntarily terminates his employment before the
tenth anniversary of the date of the grant, or if he should be terminated by
the Company for cause, all shares will be forfeited. Vesting of all such
shares will accelerate upon a change in control of the Company, Mr. Sanford's
retirement after age 62, or his death or disability. If Mr. Sanford's
employment is terminated without cause, the vesting of such shares will be
accelerated at 2.5% of the grant for every three months of completed service
after the date of the grant. Release of vested shares will occur upon
satisfaction of the obligation not to compete under Mr. Sanford's employment
security agreement. Dividends upon such shares will be deemed to be reinvested
in additional shares and subject to the same restrictions.
In connection with his transfer in 1995 from CWM, where he was President, to
the Company, the Company entered into an employment agreement with D. P. Payne
under which Mr. Payne will be paid a minimum annual salary of $400,000. Mr.
Payne also is eligible to receive annual bonuses and all benefits generally
available to executives of the Company. The term of Mr. Payne's employment
under the agreement continues through December 31, 1999. Upon the death or
permanent disability of Mr. Payne, the Company will pay his then current
salary (including bonuses accrued as of the date of termination) for the
balance of the calendar year in which such death or disability occurs but in
no event for less than 180 days. If the Company terminates Mr. Payne's
employment, it will continue to pay him an amount equal to his base salary
until the end of the term of the agreement plus any unpaid but fully accrued
annual bonus for the prior calendar year payable under the Annual Plan, unless
the termination was for cause, in which case its obligations under the
agreement cease. During the term of the agreement and for two years after the
termination of the agreement, Mr. Payne has agreed not to compete with the
Company or its subsidiaries. In March 1997, the Compensation Committee
approved granting to Mr. Payne 34,500 restricted shares of its common stock
under the 1997 Equity Incentive Plan, subject to approval by the stockholders
of the Company of the 1997 Equity Incentive Plan. The terms of Mr. Payne's
Restricted Stock Award Agreement will be substantially similar to those of Mr.
Sanford.
PROPOSAL TO CHANGE THE COMPANY'S NAME (PROXY ITEM NO. 2)
The Board of Directors has unanimously approved and recommended the adoption
by the stockholders of the following amendment to the Restated Certificate of
Incorporation, which would change the Company's name from "WMX Technologies,
Inc." to "Waste Management, Inc.":
"Article First of the Company's Restated Certificate of Incorporation, as
amended to date, is hereby amended to read as follows:
FIRST: The name of the corporation is Waste Management, Inc."
The reasons for the Board's approval and recommendation to the stockholders
are as follows:
In 1993, the Company changed its name from "Waste Management, Inc." to "WMX
Technologies, Inc." to reflect the fact that the Company's business had
expanded to provide a wide variety of environmental and other services that
were not fully encompassed within the name "Waste Management, Inc." The new
name was intended to more accurately reflect the broader spectrum and
increasingly more technological nature of the environmental services the
Company provided worldwide through its family of affiliated companies, to
enable the Company's various operating units
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to become publicly identified as part of a single, larger, technology-driven
organization, and to build upon the Company's widely recognized New York Stock
Exchange trading symbol, "WMX." In the past two years, the Company has
refocused its resources solely on providing waste management services to its
most important geographic markets and profitable customer segments. It has
divested, and continues to divest, assets and businesses that are non-core or
non-integrated. In addition, the "Waste Management" name is recognized
globally and is synonymous with the Company's industry leadership. The Board
of Directors believes that returning the Company's name to "Waste Management,
Inc." will publicly reinforce the Company's renewed focus on the comprehensive
waste management services it offers and will enable the Company to leverage
its brand identity with customers.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT.
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO
PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS (PROXY ITEM NO. 3)
The Board of Directors has unanimously approved and recommends to the
stockholders of the Company that they consider and approve a proposal to amend
the Restated Certificate of Incorporation to eliminate the division of the
Board of Directors into three classes, with one class elected each year for a
three-year term. Under the proposal, the entire Board of Directors would be
elected annually as the terms of Directors expire. Specifically, the Board of
Directors recommends that Article Fifth of the Restated Certificate of
Incorporation be amended to read as follows:
"FIFTH: The number of directors constituting the Board of Directors shall
be that number, not less than three nor more than fifteen, as shall be
fixed by the by-laws of the corporation.
"Each director appointed to fill a vacancy or elected prior to the 1998
annual meeting of the stockholders shall hold office for the term of years
for which that director was appointed or elected, and each director
appointed or elected at or after the 1998 annual meeting of the
stockholders shall hold office until the next annual meeting of
stockholders.
"Each director shall serve until the annual meeting of stockholders for
the year in which his or her term expires and until his or her successor is
duly elected and qualified, subject, however, to his or her prior death,
retirement, resignation or removal for cause. Should a vacancy occur or be
created, whether arising through death, retirement, resignation or removal
of a director for cause, or through an increase in the number of directors,
such vacancy shall be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director."
In addition, the Board of Directors recommends that Article Sixth of the
Restated Certificate of Incorporation be amended to remove the requirement
that future changes to Article Fifth require the approval of the holders of
shares representing at least 80% of the outstanding shares of common stock.
In 1985, the stockholders of the Company approved an amendment to the
Restated Certificate of Incorporation which divided the Board of Directors
into three classes, with approximately one-third of the Directors elected each
year to staggered three-year terms. Approximately 78% of the Company's
stockholders voting on this amendment voted in favor of it. A classified Board
helps to ensure that a majority of the Board at any given time has prior
experience serving as directors of the Company. This enhances the likelihood
of stability and continuity in the leadership and policies of the Company
while preserving the ability of the Company's stockholders to make changes in
the Board's membership. This also provides the Company and its stockholders
with advantages in the context of a proposal to acquire the Company, by
ensuring that the Company and its stockholders are represented by an
experienced and knowledgeable Board, which is structured in such a manner as
to discourage tactics that the Board believes are disruptive and inequitable.
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The Board of Directors believes that the advantages of a classified Board
continue to exist. However, the Board of Directors recognizes that a
significant number of the Company's stockholders voted to phase out the
classified Board at the annual meeting in 1996, and that many stockholders now
perceive the annual election of all directors as an appropriate means of
enabling them to express their views on the performance of the Board and
thereby increase the Board's accountability to the stockholders. Despite the
advantages of a classified Board, the Board believes that the stockholders of
the Company should have an opportunity to decide this issue.
Under Delaware law, an amendment to the Restated Certificate of
Incorporation must be declared advisable by the Board of Directors before it
is submitted to a vote of the stockholders. Accordingly, the Board of
Directors has passed the necessary resolution declaring the advisability of
the amendment to provide for the annual election of all directors and formally
recommending an affirmative vote.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO APPROVE THE WMX TECHNOLOGIES, INC.
1997 EQUITY INCENTIVE PLAN (PROXY ITEM NO. 4)
The Board of Directors has adopted and recommends that the stockholders
approve the 1997 Equity Incentive Plan, a copy of which is attached to this
Proxy Statement as Exhibit A. The purpose of the 1997 Equity Incentive Plan is
to benefit the Company and its subsidiaries and affiliated companies by
enabling the Company to offer to certain present and future executives, key
personnel and consultants stock-based incentives and other equity interests in
the Company, thereby giving them a stake in the growth and prosperity of the
Company and encouraging the continuance of their services with the Company or
subsidiaries or affiliated companies.
The 1997 Equity Incentive Plan is intended to replace the Company's 1992
Stock Option Plan, which does not have a sufficient number of shares available
to make stock option grants to participating employees in 1997. The Company
has continuously maintained an employee stock option plan and made periodic
grants to key employees thereunder since 1971. The Board of Directors believes
that the existence of these stock option plans has been of substantial benefit
to the Company by allowing the Company to reward its key employees in a manner
that closely aligns the interests of management with the interests of the
Company's stockholders.
In addition to incentive and nonqualified stock options, the 1997 Equity
Incentive Plan will make it possible to grant awards of restricted stock
(subject to time-based or performance-based vesting), stock appreciation
rights (either freestanding or in tandem with stock options), performance
shares and performance units. Payment of stock appreciation rights and
performance units or performance shares may be made in the form of shares or
cash, as determined by the Compensation and Stock Option Committee of the
Board of Directors.
The 1997 Equity Incentive Plan will be administered by the Compensation and
Stock Option Committee, which may make awards encompassing a total of not more
than 23,000,000 shares of the Company's common stock, representing
approximately 4.8% of the outstanding shares of common stock of the Company at
February 1, 1997. Such shares may be either authorized and unissued shares or
shares held in or acquired for the treasury of the Company. Up to an aggregate
of 2,300,000 shares may be issued with respect to awards of restricted stock
and up to an aggregate of 2,300,000 shares may be issued with respect to
performance shares and/or performance units. If shares are not issued when an
award is exercised or paid because, for example, the exercise price of an
option is paid for by having shares withheld or a performance award is paid in
cash, or if an option lapses or expires or is forfeited, terminated or
canceled unexercised as to any shares, or if a stock appreciation right or
restricted stock award is made in the form of cash, then such shares will
again be available for the
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purpose of new awards under the 1997 Equity Incentive Plan. If there is any
change in the capitalization of the Company, such as a stock split or
dividend, or a merger, consolidation, or reorganization with another company,
or any other relevant change in the capitalization of the Company, the
Compensation and Stock Option Committee may make an appropriate adjustment in
the number and class of shares available for awards and the number and class
of and/or price of shares subject to outstanding awards, to prevent dilution
or enlargement of rights.
Awards under the 1997 Equity Incentive Plan may be made to employees of the
Company and its subsidiaries of which the Company is the direct or indirect
beneficial owner of not less than 20% of all issued and outstanding equity
interests, and to consultants. The maximum number of shares (including
options) that may be granted in a single fiscal year to an individual is
500,000, and the maximum aggregate cash payout with respect to awards granted
in a single fiscal year which may be made to an individual is $4,500,000.
Subject to stockholder approval, the 1997 Equity Incentive Plan will be
effective as of January 1, 1997. No awards may be made under the 1997 Equity
Incentive Plan on or after December 31, 2006.
The Compensation and Stock Option Committee will have the discretion to
specify the extent to which awards expire in the event of voluntary or
involuntary termination of employment or in the event of violation of any duty
not to compete or not to disclose confidential Company information. The
Compensation and Stock Option Committee also will have the discretion to make
stock options and other awards transferable (for example, to family members).
The Compensation and Stock Option Committee may require or permit a
participant to defer receipt of the payment of cash or delivery of shares that
would otherwise be due upon exercise of an option or the satisfaction of any
restrictions or performance requirements.
The exercise price of stock options granted under the 1997 Equity Incentive
Plan is determined by the Compensation and Stock Option Committee, but it may
not be less than the fair market value of the stock on the date the option is
granted, which is defined as the average of the closing sales prices of the
Company's common stock on the New York Stock Exchange Composite Tape on each
of the five trading days immediately preceding the date the option is granted,
unless the Compensation and Stock Option Committee otherwise determines . The
Compensation and Stock Option Committee does not have the authority to reduce
the exercise price of any option after the date of grant or to permit the
surrender and cancellation of an option and to grant a replacement option at a
lower exercise price without obtaining stockholder approval. The full exercise
price must be paid at the time of exercise either in cash, by tendering
previously acquired shares, by withholding shares, or by a combination of the
above. The Compensation and Stock Option Committee may also allow cashless
exercises. In connection with the exercise of options, the Compensation and
Stock Option Committee may make loans to optionees in its discretion, subject
to certain terms and conditions not inconsistent with the 1997 Equity
Incentive Plan. Such loans shall bear interest rates, as determined by the
Compensation and Stock Option Committee, which may be below then current
market rates or may be made without interest. No such loan may exceed the fair
market value of the shares covered by the option, or portion thereof,
exercised by the optionee. No loan shall have an initial term exceeding two
years, but such loans may be renewable at the discretion of the Compensation
and Stock Option Committee. Such loans shall be secured by a pledge of shares
of the optionee having a fair market value at least equal to 150% of the
principal amount of the loan.
Options granted under the 1997 Equity Incentive Plan shall expire at such
time as the Compensation and Stock Option Committee shall determine, but not
later than the tenth anniversary of the date of grant unless otherwise
designated by the Compensation and Stock Option Committee at the time of the
grant. Options granted under the 1997 Equity Incentive Plan shall be
exercisable at such times and be subject to such restrictions and conditions
as the Compensation and Stock Option Committee shall approve, which need not
be the same for each grant or for each participant. The Compensation and Stock
Option Committee may impose such restrictions on shares acquired upon the
exercise of an option as it deems advisable.
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The federal income tax consequences of the issuance and exercise of options
under the 1997 Equity Incentive Plan depend on the nature of the options
granted. Under the applicable provisions of the Internal Revenue Code, no tax
will be payable by the recipient of a non-qualified option at the time of
grant. Upon exercise of a non-qualified option, the excess of the fair market
value of the shares with respect to which the option is exercised over the
total option price of such shares will be treated for federal tax purposes as
ordinary income. Any profit or loss realized on the sale or exchange of any
share actually received will be treated as a capital gain or loss. The Company
will be entitled to deduct the amount, if any, by which the fair market value
on the date of exercise of the shares with respect to which the option was
exercised exceeds the exercise price. With respect to an incentive stock
option ("ISO"), generally, no taxable gain or loss will be recognized when the
option is exercised (if the appreciation rights election is not made). ISOs
exercised more than three months after termination of employment will be taxed
in the same manner as non-qualified options described above. Generally, upon
exercise of an ISO, the difference between the fair market value and the
exercise price will be an item of tax preference for purposes of the
alternative minimum tax.
If the shares acquired upon the exercise of an ISO are held for at least one
year, any gain or loss realized upon their sale will be treated as long-term
capital gain or loss. The Company will not be entitled to a deduction. If the
shares are not held for the one-year period, ordinary income will be
recognized in an amount equal to the difference between the amount realized on
the sale and the price paid for the shares to the extent the exercise price
exceeded the grant price. Remaining gain, if any, would be capital gain. The
Company will be entitled to a deduction equal to the amount of any ordinary
income so recognized. If the shares are not held for the one-year period and
the amount realized upon sale is less than the grant price, such difference
will be a capital loss.
The Compensation and Stock Option Committee may grant stock appreciation
rights at any time it determines, and has complete discretion in determining
the number of stock appreciation rights to be granted to each participant and
in determining the terms and conditions pertaining to the stock appreciation
rights, subject to the provisions of the 1997 Equity Incentive Plan.
Grants of restricted stock may be made by the Compensation and Stock Option
Committee, subject to the terms and provisions of the 1997 Equity Incentive
Plan, at any time in such amounts as the Compensation and Stock Option
Committee shall determine. Each such grant shall be subject to a period of
restriction (which shall not be less than three years for time-based
restrictions), and may be subject to other restrictions, including but not
limited to restrictions based on the achievement of specific performance goals
and time-based restrictions on vesting. Voting rights and rights to receive
dividends or other distributions may be determined by the Compensation and
Stock Option Committee.
Grants of performance units and performance shares may be granted in such
amounts and upon such terms and at such times as shall be determined by the
Compensation and Stock Option Committee, subject to the terms of the 1997
Equity Incentive Plan.
Under the 1997 Equity Incentive Plan, upon a change in control of the
Company, options and stock appreciation rights shall become immediately
exercisable, and shall remain exercisable throughout their entire term, any
period of restriction and other restrictions on restricted stock shall lapse,
and the maximum payout opportunities attainable under all outstanding awards
of performance units or performance shares shall be deemed to have been fully
earned for the entire performance period as of the effective date of the
change in control, and the vesting of such awards shall be accelerated as of
the effective date of the change in control.
The Board of Directors of the Company may amend or terminate the 1997 Equity
Incentive Plan in whole or in part at any time, subject to any requirement of
stockholder approval imposed by any applicable law, rule or regulation. No
amendment, modification or termination of the 1997 Equity Incentive Plan shall
adversely affect in any material way any award previously granted under the
plan, without the written consent of the holder of the award.
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On March 19, 1997, the closing price of the Company's common stock on The
New York Stock Exchange Composite Tape, as reported in The Wall Street Journal
(Midwest edition) was $31.375. It is not possible to determine the amount and
type of awards that will be made under the 1997 Equity Incentive Plan, or to
state the amount and type of awards which would have been made in 1996 had the
1997 Equity Incentive Plan been in effect, because such determinations are
within the discretion of the Compensation and Stock Option Committee, based on
such factors as they deem pertinent in selecting participants under the 1997
Equity Incentive Plan and establishing awards. However, in March, 1997 the
Compensation Committee approved granting 28,800 shares of restricted stock to
Mr. Sanford, 34,500 shares of restricted stock to Mr. Payne and 263,100 shares
of restricted stock to a total of 12 other employees, all under the 1997
Equity Incentive Plan, subject to stockholder approval of the 1997 Equity
Incentive Plan. Information on certain grants during 1996 under the 1992
Company Plan is set forth on page 13. A total of approximately 1,400 employees
received grants of options to acquire a total of approximately 4,103,500
shares of stock under the 1992 Company Plan in 1996. It is anticipated that
approximately 1,500 employees will be eligible to receive awards under the
1997 Equity Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS (PROXY ITEM NO. 5)
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed the firm of Arthur Andersen LLP as independent auditors for the
Company for 1997, subject to ratification by the stockholders. If the
stockholders do not ratify the selection of Arthur Andersen LLP, the Board of
Directors will reconsider the selection of independent auditors.
Arthur Andersen LLP has served as the Company's independent auditors since
1969. Representatives of Arthur Andersen LLP will be present at the 1997
annual meeting of stockholders, will have the opportunity to make a statement
if they desire to do so, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
STOCKHOLDER PROPOSAL
The Company has been notified that a stockholder of the Company intends to
present for consideration and action at the annual meeting the following
proposal. The Board of Directors unanimously recommends that stockholders vote
AGAINST such proposal for the reasons set forth below.
STOCKHOLDER PROPOSAL REGARDING DIRECTOR INDEPENDENCE (PROXY ITEM NO. 6)
The International Brotherhood of Teamsters General Fund, 25 Louisiana
Avenue, N.W., Washington, D.C. 20001, beneficial owner of 80 shares of the
Company's common stock, has given notice of its intention to introduce the
following resolution at the annual meeting:
"RESOLVED, The shareholders of WMX Technologies, Inc. (the "Company")
urge the Company's Board of Directors to take the steps necessary to amend
the Company's By-Laws, effective after the 1997 annual meeting, to provide
that the Board of Directors shall consist of a majority of independent
directors. For these purposes, the board should follow the Council of
Institutional Investors definition of independence to mean a director who:
. has not been employed by the Company or an affiliate in an executive
capacity;
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. was not, and is not a member of a corporation or firm that is one of the
Company's paid advisers or consultants;
. is not employed by a customer, supplier or provider of professional
services to the Company;
. has no personal services contract with the Company
. is not employed by a foundation or university that receives grants or
endowments from the Company;
. is not a relative of the management of the Company;
. is not an officer of a company on which the Company's Chairman or Chief
Executive Officer is also a board member."
SUPPORTING STATEMENT OF PROPONENT
"The purpose of this proposal is to incorporate within the Board of
Directors a basic standard of independence that we believe will permit
clear and objective decision making in the best long-term interests of
shareholders.
"On the surface, WMX appears to agree, asserting that "a majority of the
Directors should be persons who neither have served in an executive
capacity with the Company during the preceding five years nor have any
other significant relationship with the Company."
"However, WMX's definition of a "significant relationship" suffers two
important problems. First, a director would not be considered independent,
according to WMX, if the director has (a) a personal services contract with
the Company AND (b) serves as attorney, banker, etc. AND (c) is a customer
or supplier. While the conjunction of these three qualifications may have
been inadvertent, there is a second problem: WMX policy asserts that the
customer/supplier relationship must involve at least 1% of revenues.
"This problematic definition allows WMX to assert that its board features
an independent majority. Yet according to the definition of the Council of
Institutional Investors only three of the company's twelve directors are
independent. The following are not:
.Dean L. Buntrock and Phillip B. Rooney, employees of the Company and
directors;
.Donald F. Flynn, Jerry E. Dempsey and Peter H. Huizenga, former employees
and directors;
. Howard H. Baker, Jr. and Peer Pedersen, associates of law firms that
provide legal services for the Company;
. Dr. Pastora San Juan Cafferty and Dr. James B. Edwards, employees of
universities that may receive grants from the Company.
"By adoption of a stricter definition of independence, we believe that WMX
can more faithfully construct a board who can apply stern rigor to its
oversight responsibilities.
"We urge you to vote YES on this proposal."
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
In February 1997, the Board's independent Nominating Committee established a
goal of recommending additional independent Directors this year and retained
the services of an internationally recognized executive recruiting firm to
provide assistance in identifying qualified
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candidates. On March 12, 1997, the Company announced the election of one new
independent director and the nomination of another. The Board believes that
these facts alone make the proposal unnecessary.
However, the proponent's supporting statement also makes a number of
assertions regarding the proper test for Director independence, which the
Board believes are mistaken or incorrect.
. According to the proponent's supporting statement, any of three
different types of relationships between a Director and the Company
should serve to disqualify him or her from being viewed as independent
of management. This is, in fact, what the Company's Board Practices
Guidelines (the "Guidelines") already provide. In this regard, the
Guidelines clearly state the Board's position that a majority of the
Directors should be persons who have neither served in an executive
capacity with the Company during the preceding five years nor have any
other significant relationship with the Company, except for ownership of
Company securities and their entitlement to compensation for service on
the Board. More than half the Board currently is independent of
management under this standard.
. The proponent's supporting statement also misstates the test for
Director independence adopted by the Council of Institutional Investors
("CII"). Both the CII and the Company's Guidelines accept a non-employee
Director as being independent notwithstanding that a customer-supplier
relationship exists between the Director's firm and the Company, so long
as the amount involved is very small (1% of the annual revenue of either
the Company or the Director's firm). The Board believes that
insignificant commercial relationships cannot reasonably be viewed as
impacting Director independence. Moreover, adoption of an independence
standard that precludes even minimal commercial relationships could
adversely affect the Company's ability to attract the best candidates to
the Board.
. There are many possible tests for Director independence. In its report
on Director Professionalism published in November 1996, for example, The
Blue Ribbon Commission of the National Association of Corporate
Directors noted at least eight (including the CII approach), but did not
endorse any one of them in particular. The New York Stock Exchange
(where the Company's common stock is listed) has its own definition of
independence, which allows Directors to serve on a company's audit and
compensation committees if they are employed by firms providing services
to the Company unless, in the opinion of the Board, the relationship
would interfere with the exercise of independent business judgment. The
Company's Guidelines are stricter in this regard, and the Board
continues to view them as setting forth an appropriately rigorous
standard.
The stockholders of the Company rejected a virtually identical proposal in
1991. For the reasons stated above, the Board of Directors believes that the
current proposal is redundant and potentially harmful to the Company, and
should also be rejected.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
VOTING OF SHARES HELD IN CERTAIN PLANS
If you are a participant in the WMX Technologies, Inc. 1988 Employee Stock
Ownership Plan, you are entitled to direct the trustees of the plan to vote
the shares credited to your individual account in accordance with your
instructions. This may be accomplished by marking and returning the
instruction form accompanying the mailing and relating to the shares in the
plan credited to your account. If you do not return such form, your shares
held in the plan will not be voted. If you are also a direct owner of shares
(acquired other than through this plan), you will receive a separate mailing
containing a proxy card relating to such shares.
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If you are a participant in the WMX Technologies Dividend Reinvestment and
Stock Purchase Plan, the proxy card provided to you covers the shares held for
you by the plan and any shares held directly by you. If you do not return such
proxy card, your shares held in this plan (as well as any shares owned by you
directly) will not be voted for you. You are, therefore, urged to return the
proxy card promptly, duly signed and dated.
FINANCIAL STATEMENTS
The Company has enclosed its Annual Report to Stockholders for the year
ended December 31, 1996 with this Proxy Statement. Stockholders are referred
to the report for financial and other information about the Company, but such
report is not incorporated in this Proxy Statement and is not a part of the
proxy soliciting material.
PROPOSALS BY STOCKHOLDERS
Under the proxy solicitation rules of the Securities and Exchange Commission
(the "Proxy Rules"), any proposals by stockholders intended to be presented at
the 1998 annual meeting must be received by the Company no later than November
28, 1997 in order to be considered by the Board of Directors for inclusion in
the Company's 1997 Proxy Statement. In order for a stockholder to nominate a
candidate for director or bring an item of business before the annual meeting,
under the Company's by-laws timely notice of the nomination or the item of
business must be received by the Company in advance of the meeting. Such
notices must be received between January 9, 1998 and February 7, 1998 (but if
the annual meeting is called for a date that is not within 30 days before or
after May 9, 1998, notice by the stockholder must be received not later than
the tenth day following the day on which notice of the date of the annual
meeting was mailed or public announcement of such date was made, whichever
occurs first). The stockholder filing notice of a nomination must provide in
the notice to the Company all information relating to the nominee that would
be required to be disclosed in solicitations of proxies for election of
directors under the Proxy rules and the nominee's written consent to being
named. A stockholder wishing to bring an item of business before an annual
meeting must provide in the notice to the Company a brief description of the
item and the reasons for conducting such business at the annual meeting. In
either case, the notice to the Company must also include certain information
about the stockholder making the nomination or bringing such business before
the meeting, including name and address, class and number of shares of the
Company's capital stock owned by the stockholder as of the record date, a
description of all arrangements or understandings between such stockholder and
any other person in connection with the nomination or proposal of such
business, including their names, a representation that such stockholder
intends to appear in person or by proxy at the annual meeting, and in the case
of a nomination, any other information relating to such stockholder as would
be required to be disclosed in a proxy statement under the Proxy Rules. These
requirements are separate from and in addition to the requirements a
stockholder must meet to have a proposal considered for inclusion in the
Company's 1998 Proxy Statement.
In each case, the notice must be given to the Secretary of the Company,
whose address is 3003 Butterfield Road, Oak Brook, Illinois 60521. Any
stockholder desiring a copy of the Company's by-laws will be furnished one
without charge upon written request to the Secretary.
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OTHER MATTERS
You are again urged to attend the annual meeting. Proxies will be solicited
by the Board of Directors through use of the mails. Proxies may also be
solicited by directors, officers and a small number of other employees of the
Company personally or by mail, telephone or otherwise, but such persons will
not be compensated for such services. Brokerage firms, banks, fiduciaries,
voting trustees or other nominees will be requested to forward the soliciting
material to the beneficial owners of stock held of record by them, and the
Company has hired Morrow & Co., Inc. to coordinate the solicitation of proxies
by and through such holders for a fee of approximately $6,500 plus expenses.
The entire cost of the Board of Directors' solicitation will be borne by the
Company.
The Board of Directors does not intend to present, and does not have any
reason to believe that others will present, any item of business at the annual
meeting other than those specifically set forth in the notice of the meeting.
However, if other matters are presented for a vote, the proxies will be voted
as to such matters in accordance with the judgment of the persons acting under
the proxies.
By Order of the Board of Directors,
/s/ Herbert A. Getz
Herbert A. Getz
Senior Vice President and Secretary
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EXHIBIT A
WMX TECHNOLOGIES, INC.
1997 EQUITY INCENTIVE PLAN
ARTICLE 1.
ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. WMX TECHNOLOGIES, INC., a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the WMX Technologies, Inc. 1997
Equity Incentive Plan (hereinafter referred to as the "Plan"), as set forth in
this document.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of January 1, 1997 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of this Plan is to benefit the Company
and its subsidiaries and affiliated companies by enabling the Company to offer
to certain present and future executives, key personnel and consultants stock
based incentives and other equity interests in the Company, thereby giving
them a stake in the growth and prosperity of the Company and encouraging the
continuance of their services with the Company or subsidiaries or affiliated
companies.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date and
shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 15 hereof, until
all Shares subject to it shall have been purchased or acquired according to
the Plan's provisions. However, in no event may an Award be granted under the
Plan on or after December 31, 2006.
ARTICLE 2.
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
"AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares or Performance Units.
"AWARD AGREEMENT" means a writing provided by the Company to each
Participant setting forth the terms and provisions applicable to Awards
granted under this Plan. The Participant's acceptance of the terms of the
Award Agreement shall be evidenced by his or her continued employment without
written objection before any exercise or payment of the Award. If the
Participant objects in writing, the grant of the Award shall be revoked.
"BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the Company.
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"CAUSE" shall mean, with respect to termination of a Participant's
employment or consulting arrangement, the occurrence of any one or more of the
following, as determined by the Committee, in the exercise of good faith and
reasonable judgment:
(i) In the case where there is no employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award, or where there is such an
agreement but the agreement does not define "cause" (or similar words) or a
"cause" termination would not be permitted under such agreement at that
time because other conditions were not satisfied, the termination of an
employment or consulting arrangement is due to the willful and continued
failure or refusal by the Participant to substantially perform assigned
duties (other than any such failure resulting from the Participant's
Disability), the Participant's dishonesty or theft, the Participant's
violation of any obligations or duties under any employee agreement, or the
Participant's gross negligence or willful misconduct; or
(ii) In the case where there is an employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award that defines "cause" (or
similar words) and a "cause" termination would be permitted under such
agreement at that time, the termination of an employment or consulting
arrangement is or would be deemed to be for "cause" (or similar words) as
defined in such agreement.
No act or failure to act on a Participant's part shall be considered willful
unless done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company.
"CHANGE OF CONTROL" of the Company shall mean:
(a) The Company is merged or consolidated or reorganized into or with
another corporation or other legal person (an "Acquiror") and as a result
of such merger, consolidation or reorganization less than 75% of the
outstanding voting securities or other capital interests of the surviving,
resulting or acquiring corporation or other legal person are owned in the
aggregate by the stockholders of the Company, directly or indirectly,
immediately prior to such merger, consolidation or reorganization, other
than by the Acquiror or any corporation or other legal person controlling,
controlled by or under common control with the Acquiror;
(b) The Company sells all or substantially all of its business and/or
assets to an Acquiror, of which less than 75% of the outstanding voting
securities or other capital interests are owned in the aggregate by the
stockholders of the Company, directly or indirectly, immediately prior to
such sale, other than by any corporation or other legal person controlling,
controlled by or under common control with the Acquiror;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to the
Exchange Act, disclosing that any person or group (as the terms "person"
and "group" are used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act and the rules and regulations promulgated thereunder) has
become the beneficial owner (as the term "beneficial" owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of 20% or more of the issued and outstanding shares of voting
securities of the Company; or
(d) During any period of two consecutive years, individuals who at the
beginning of any such period constitute the directors of the Company cease
for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of
each new director of the Company was approved by a vote of at least two-
thirds of such directors of the Company then still in office who were
directors of the Company at the beginning of any such period.
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"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation thereto.
"COMMITTEE" means the Committee as specified in Article 3 herein appointed
by the Board to administer the Plan with respect to grants of Awards.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means WMX Technologies, Inc., a Delaware corporation, as well as
any successor to such entity as provided in Article 17 herein.
"DIRECTOR" means any individual who is a member of the Board of Directors of
the Company.
"DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan. If no long term disability
plan is in place with respect to a Participant, then with respect to that
Participant, Disability shall mean: for the first 24 months of disability,
that the Participant is unable to perform his or her job; thereafter, that the
Participant is unable to perform any and every duty of any gainful occupation
for which the Participant is reasonably suited by training, education or
experience.
"EFFECTIVE DATE" shall have the meaning ascribed to such term in Section 1.1
hereof.
"EMPLOYEE" means any employee of the Company or any Subsidiary.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
"FAIR MARKET VALUE" shall (i) for purposes of setting any Option Price,
unless otherwise required by any applicable provision of the Code or any
regulations issued thereunder, or unless the Committee otherwise determines,
mean as of the date of the Award, the average of the closing sales prices of
the Common Stock on the New York Stock Exchange Composite Tape (as reported in
The Wall Street Journal, Midwest Edition) on each of the five trading dates
immediately preceding such date; and (ii) for purposes of the valuation of any
Shares delivered in payment of the Option Price upon the exercise of an
Option, for purposes of the valuation of any Shares withheld in payment of the
Option Price or to pay taxes due on an Award, or for purposes of the exercise
of any SAR or conversion of a Performance Unit, mean the average of the high
and low sales prices of the Common Stock on the New York Stock Exchange
Composite Tape (as reported in The Wall Street Journal, Midwest Edition) on
the date of exercise (or if the date of exercise is not a trading day, on the
trading day next preceding the date of exercise).
"FREESTANDING SAR" means a stock appreciation right that is granted
independently of any Options, as described in Article 7 herein.
"GOOD REASON" shall mean, with respect to the termination of a Participant's
employment or consulting arrangement,
(i) In the case where there is no employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award, or where there is such an
agreement but the agreement does not define "good reason" (or similar
words) or a "good reason" termination would not be permitted under such
agreement at that time because other conditions were not satisfied, a
voluntary termination of an employment or consulting arrangement due to
"good reason" as the Committee, in its sole discretion, decides to treat as
"Good Reason" termination; or
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(ii) In the case where there is an employment, change in control or
similar agreement in effect between the Participant and the Company or a
Subsidiary at the time of the grant of the Award that defines "good reason"
(or similar words) and a "good reason" termination would be permitted under
such agreement at that time, the termination of an employment or consulting
arrangement is or would be deemed to be for "good reason" (or similar
words) as defined in such agreement.
"INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares granted
under Article 6 herein and which is designated as an Incentive Stock Option
and which is intended to meet the requirements of Code Section 422.
"INSIDER" shall mean an individual who is, on the relevant date, an officer,
director or more than ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
"NAMED EXECUTIVE OFFICER" means a Participant who is one of the group of
covered employees as defined in the regulations promulgated under Code Section
162(m), or any successor statute.
"NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares
granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
"OPTION" means an Incentive Stock Option or a Nonqualified Stock Option, as
described in Article 6 herein.
"OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
"PARTICIPANT" means an Employee or a consultant who has outstanding an Award
granted under the Plan.
"PERFORMANCE-BASED EXCEPTION" means the exception for performance-based
compensation from the tax deductibility limitations of Code Section 162(m).
"PERFORMANCE PERIOD" means the time period during which performance goals
must be achieved with respect to an Award, as determined by the Committee.
"PERFORMANCE SHARE" means an Award granted to a Participant, as described in
Article 9 herein.
"PERFORMANCE UNIT" means an Award granted to a Participant, as described in
Article 9 herein.
"PERIOD OF RESTRICTION" means the period during which the transfer of Shares
of Restricted Stock is limited in some way, which period shall not be shorter
than three years (based on the passage of time) or one year (based on the
achievement of performance goals), and the Shares are subject to a substantial
risk of forfeiture, as provided in Article 8 herein.
"PERSON" shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
group as defined in Section 13(d) thereof.
"RESTRICTED STOCK" means an Award granted to a Participant pursuant to
Article 8 herein.
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"RETIREMENT" means the Participant's termination of employment with the
Company or its Subsidiaries on or after the date on which the Participant
becomes eligible to receive normal or early retirement benefits under the WMX
Technologies, Inc. Pension Plan, or such successor plan as may be implemented
in the future. If the Participant is not a participant in the Pension Plan,
then retirement may occur on or after the date the Participant has achieved
the minimum age or combination of age and service with the Company and its
Subsidiaries that would be required to receive an immediate annuity from the
Pension Plan if he or she were a participant. Notwithstanding the foregoing,
the Committee may, in its sole discretion, determine that a Participant has
met the criteria for a Retirement termination from the Company.
"SHARES" means shares of Common Stock of the Company.
"STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
"SUBSIDIARY" means any corporation, partnership, joint venture, affiliate,
or other entity in which the Company is the direct or indirect beneficial
owner of not less than 20% of all issued and outstanding equity interests.
"TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when
a Share is purchased under the Option, the Tandem SAR shall similarly be
forfeited).
ARTICLE 3.
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation and
Stock Option Committee of the Board, or by any other Committee appointed by
the Board. If and to the extent that no Committee exists that has the
authority to administer the Plan, the functions of the Committee shall be
exercised by the full Board.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees and
consultants who shall participate in the Plan; determine the sizes and types
of Awards; determine the terms and conditions of Awards in a manner consistent
with the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; and (subject to the provisions of Article 15
herein) amend the terms and conditions of any outstanding Award to the extent
such terms and conditions are within the discretion of the Committee as
provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of
the Plan. As permitted by law, the Committee may delegate the authority
granted to it herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all
persons, including the Company, its stockholders, Employees, Participants, and
their estates and beneficiaries.
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ARTICLE 4.
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 SHARES AVAILABLE FOR AWARDS. The aggregate number of Shares which may be
issued or used for reference purposes under this Plan or with respect to which
Awards may be granted shall not exceed 23,000,000 Shares (subject to
adjustment as provided in Section 4.3), which may be either authorized and
unissued Shares or Shares held in or acquired for the treasury of the Company.
Of the aggregate number of Shares, up to all of such Shares may be issued with
respect to Incentive Stock Option Awards, up to an aggregate of 10% of the
authorized Shares under the Plan may be issued with respect to Awards of
Restricted Stock, and up to an aggregate of 10% of the authorized Shares under
the Plan may be issued with respect to Awards of Performance and/or
Performance Shares Upon:
(a) a payout of a Freestanding SAR, Tandem SAR, or Restricted Stock award
in the form of cash;
(b) a cancellation, termination, expiration, forfeiture, or lapse for any
reason (with the exception of the termination of a Tandem SAR upon exercise
of the related Options, or the termination of a related Option upon
exercise of the corresponding Tandem SAR) of any Award; or
(c) payment of an Option Price and/or payment of any taxes arising upon
exercise of an Option or payout of any Award with previously acquired
Shares or by withholding Shares which otherwise would be acquired on
exercise or issued upon such payout,
then the number of Shares underlying any such Award which were not issued as a
result of any of the foregoing actions shall again be available for the
purposes of Awards under the Plan.
4.2 INDIVIDUAL PARTICIPANT LIMITATIONS. Unless and until the Committee
determines that an Award to a Named Executive Officer shall not be designed to
comply with the Performance-Based Exception, the following rules shall apply
to grants of such Awards under the Plan:
(a) Subject to adjustment as provided in Section 4.3 herein, the maximum
aggregate number of Shares (including Options, SARs, Restricted Stock,
Performance Units and Performance Shares to be paid out in Shares) that may
be granted in any one fiscal year to a Participant shall be 500,000.
(b) The maximum aggregate cash payout (including Performance Units and
Performance Shares paid out in cash) with respect to Awards granted in any
one fiscal year which may be made to any Participant shall be $4,500,000.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares available for
Awards, the number and class of and/or price of Shares subject to outstanding
Awards granted under the Plan and the number of Shares set forth in Sections
4.1 and 4.2, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of Shares subject to any Award
shall always be a whole number.
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ARTICLE 5.
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include all
officers and other employees of the Company and its Subsidiaries, and key
consultants to the Company and its Subsidiaries, as determined by the
Committee, including Employees who are members of the Board and Employees who
reside in countries other than the United States of America.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees and
consultants, those to whom Awards shall be granted and shall determine the
nature and amount of each Award.
ARTICLE 6.
STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to one or more Participants in such number, and upon
such terms, and at any time and from time to time as shall be determined by
the Committee. The Committee may grant Nonqualified Stock Options or Incentive
Stock Options. The Committee shall have complete discretion in determining the
number of Options granted to each Participant (subject to Article 4 herein).
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as
the Committee shall determine. The Award Agreement with respect to the Option
also shall specify whether the Option is intended to be an ISO within the
meaning of Code Section 422, or an NQSO whose grant is intended not to fall
under the provisions of Code Section 422.
6.3 OPTION PRICE. The Committee shall designate the Option Price for each
grant of an Option under this Plan which Option Price shall be at least equal
to one hundred percent (100%) of the Fair Market Value of a Share on the date
the Option is granted, and which Option Price may not be subsequently changed
by the Committee except pursuant to Section 4.3 hereof or to the extent
provided in the Award Agreement. Notwithstanding the foregoing, the Committee
shall not have the authority to reduce the Option Price of any Option after
the time of grant, or permit the surrender and cancellation of an Option and
grant a replacement Option at a lower Option Price, without obtaining
stockholder approval of any such action.
6.4 DURATION OF OPTIONS. Each Option granted to an Employee shall expire at
such time as the Committee shall determine at the time of grant; provided,
however, that unless otherwise designated by the Committee at the time of
grant, no Option shall be exercisable later than the tenth (10th) anniversary
date of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions
as the Committee shall in each instance approve, which need not be the same
for each grant or for each Participant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Option Price upon exercise of
any Option shall be payable to the Company in full either:
(a) in cash or its equivalent,
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(b) by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price,
(c) by withholding Shares which otherwise would be acquired on exercise
having an aggregate Fair Market Value at the time of exercise equal to the
total Option Price, or
(d) by a combination of (a), (b), and (c).
The Committee also may allow cashless exercises as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law. As soon as practicable
after receipt of a written notification of exercise and full payment, the
Company shall deliver to the Participant, in the Participant's name, Share
certificates in an appropriate amount based upon the number of Shares
purchased under the Option(s).
In connection with the exercise of options granted under the Plan, the
Company may make loans to the Participants as the Committee, in its
discretion, may determine. Such loans shall be subject to the following terms
and conditions and such other terms and conditions as the Committee shall
determine not inconsistent with the Plan. Such loans shall bear interest at
such rates as the Committee shall determine from time to time, which rates may
be below then current market rates or may be made without interest. In no
event may any such loan exceed the Fair Market Value, at the date of exercise,
of the shares covered by the Option, or portion thereof, exercised by the
Optionee. No loan shall have an initial term exceeding two years, but any such
loan may be renewable at the discretion of the Committee. When a loan shall
have been made, Shares having a fair market value at least equal to 150
percent of the principal amount of the loan shall be pledged by the
Participant to the Company as security for payment of the unpaid balance of
the loan.
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.8 TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT. Each Option Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment with the Company and/or its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among
all Options issued pursuant to the Plan, and may reflect distinctions based on
the reasons for termination of employment, including, but not limited to,
termination of employment for Cause or Good Reason, or reasons relating to the
breach or threatened breach of restrictive covenants. Subject to Article 14,
in the event that a Participant's Option Award Agreement does not set forth
such termination provisions, the following termination provisions shall apply:
(a) In the event a Participant's employment or consulting arrangement
with the Company and/or its Subsidiaries is terminated for any reason other
than death, Disability or Retirement, all Options held by the Participant
shall expire and all rights to purchase Shares thereunder shall terminate
immediately; provided, however, that notwithstanding the foregoing, all
Options to which the Participant has a vested right immediately prior to
such termination shall be exercisable for the lesser of (i) 30 days
following the date of termination or (ii) the expiration date of the
Option.
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(b) In the event a Participant's employment or consulting arrangement
with the Company and/or its Subsidiaries is terminated due to death or
Disability, all Options shall immediately become fully vested on the date
of termination.
(c) Subject to Article 14, in the event of termination of the
Participant's employment or consulting arrangement due to death or
Disability, all Options in which the Participant has a vested right upon
termination shall be exercisable until the expiration date of the Option.
(d) Subject to Article 14, in the event of termination of the
Participant's employment or consulting arrangement due to Retirement, all
Options in which the Participant has a vested right upon termination shall
be exercisable for the lesser of (i) three years following the date of
termination or (ii) the expiration date of the Option.
6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
ISOs granted to a Participant under the Plan shall be exercisable during
his or her lifetime only by such Participant.
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant.
ARTICLE 7.
STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs may
be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR. The Committee shall have
complete discretion in determining the number of SARs granted to each
Participant (subject to Article 4 herein) and, consistent with the provisions
of the Plan, in determining the terms and conditions pertaining to such SARs.
The Committee shall designate, at the time of grant, the grant price of a
Freestanding SAR which grant price shall at least equal the Fair Market Value
of a Share on the date of grant of the SAR. The grant price of Tandem SARs
shall equal the Option Price of the related Option. Grant prices of SARs shall
not subsequently be changed by the Committee except pursuant to Section 4.3
hereof.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of this Plan to the contrary,
with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem
SAR will expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem
SAR may be exercised only when the Fair Market Value of the Shares subject to
the ISO exceeds the Option Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
A-9
<PAGE>
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
unless otherwise designated by the Committee, such term shall not exceed ten
(l0) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The excess of the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 TERMINATION OF EMPLOYMENT OR CONSULTING AGREEMENT. Each SAR Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the SAR following termination of the Participant's
employment or consulting arrangement with the Company and/or its Subsidiaries.
Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement entered into with each Participant,
need not be uniform among all SARs issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of employment,
including, but not limited to, termination of employment for Cause or Good
Reason, or reasons relating to the breach or threatened breach of restrictive
covenants. Subject to Article 14, in the event that a Participant's SAR Award
Agreement does not set forth such termination provisions, the following
termination provisions shall apply:
(a) In the event a Participant's employment or consulting arrangement
with the Company and/or its Subsidiaries is terminated for any reason other
than death, Disability or Retirement, all SARs held by the Participant
shall expire and all rights thereunder shall terminate immediately;
provided, however, that notwithstanding the foregoing, all SARs to which
the Participant has a vested right immediately prior to such termination
shall be exercisable for the lesser of (i) 30 days following the date of
termination or (ii) the expiration date of the SAR.
(b) In the event a Participant's employment or consulting arrangement
with the Company and/or its Subsidiaries is terminated due to death or
Disability, all SARs shall immediately become fully vested on the date of
termination.
(c) Subject to Article 14, in the event of termination of the
Participant's employment or consulting arrangement due to death or
Disability, all SARs in which the Participant has a vested right upon
termination shall be exercisable until the expiration date of the SAR.
(d) Subject to Article 14, in the event of termination of the
Participant's employment or consulting arrangement due to Retirement, all
SARs in which the Participant has a vested right upon termination shall be
exercisable for the lesser of (i) three years following the date of
termination or (ii) the expiration date of the SAR.
7.8 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime
only by such Participant.
A-10
<PAGE>
ARTICLE 8.
RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, voluntarily or
involuntarily, until the end of the applicable Period of Restriction
established by the Committee and specified in the Restricted Stock Award
Agreement, or upon earlier satisfaction of any other conditions, as specified
by the Committee in its sole discretion and set forth in the Restricted Stock
Agreement. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be available during his or her lifetime only
to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 10 herein, the Committee may
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price
for each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, Subsidiary-wide, divisional, and/or
individual), time-based restrictions on vesting which may or may not be
following the attainment of the performance goals, and/or restrictions under
applicable Federal or state securities laws. The Company shall retain the
certificates representing Shares of Restricted Stock in the Company's
possession until such time as all conditions and/or restrictions applicable to
such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee at the time
of grant, Participants to whom Shares of Restricted Stock have been granted
hereunder may exercise full voting rights with respect to those Shares during
the Period of Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by the
Committee at the time of grant, Participants holding Shares of Restricted
Stock granted hereunder shall be credited with regular cash dividends paid
with respect to the underlying Shares while they are so held during the Period
of Restriction. The Committee may apply any restrictions to the dividends that
the Committee deems appropriate. Without limiting the generality of the
preceding sentence, if the grant or vesting of Shares of Restricted Stock
granted to a Named Executive Officer is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Shares of Restricted Stock, such that the dividends and/or the
Shares of Restricted Stock maintain eligibility for the Performance-Based
Exception. In the event that any dividend constitutes a derivative security or
an equity security pursuant to the rules under Section 16 of the Exchange Act,
such dividend shall be subject to a vesting period equal to the remaining
vesting period of the Shares of Restricted Stock with respect to which the
dividend is paid.
8.7 TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT. Each Restricted
Stock Award Agreement shall set forth the extent to which the Participant
shall have the right to receive unvested Shares of Restricted Stock following
termination of the Participant's employment with the
A-11
<PAGE>
Company and/or its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of employment, including, but not limited
to, termination of employment for Cause or Good Reason, or reasons relating to
the breach or threatened breach of restrictive covenants; provided, however
that, except in the cases of terminations connected with a Change of Control
and terminations by reason of death or Disability, the vesting of Shares of
Restricted Stock which qualify for the Performance-Based Exception and which
are held by Named Executive Officers shall not occur prior to the time they
otherwise would have, but for the employment termination. Subject to Article
14, in the event that a Participant's Restricted Stock Award Agreement does
not set forth such termination provisions, the following termination
provisions shall apply:
(a) In the event a Participant's employment or consulting arrangement
with the Company and/or its Subsidiaries is terminated for any reason other
than death or Disability, all Shares of Restricted Stock which are unvested
at the date of termination shall be forfeited to the Company.
(b) Unless the Award qualifies for the Performance-Based Exception, in
the event a Participant's employment or consulting arrangement with the
Company and/or its Subsidiaries is terminated due to death or Disability,
all Shares of Restricted Stock of such participant shall immediately become
fully vested on the date of termination and the restrictions shall lapse.
ARTICLE 9.
PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value
of a Share on the date of grant. The Committee shall set performance goals in
its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be
paid out to the Participant. For purposes of this Article 9, the time period
during which the performance goals must be met shall be called a Performance
Period.
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan,
after the applicable Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive payout on the number and value of
Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved, as established by the
Committee.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Except as
provided below, payment of earned Performance Units/Shares shall be made in a
single lump sum as soon as reasonably practicable following the close of the
applicable Performance Period. Subject to the terms of this Plan, the
Committee, in its sole discretion, may pay earned Performance Units/Shares in
the form of cash or in Shares (or in a combination thereof) which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares
may be granted subject to any restrictions deemed appropriate by the
Committee.
A-12
<PAGE>
At the time of grant or shortly thereafter, the Committee, at its discretion
and in accordance with terms designated by the Committee, may provide for a
voluntary and/or mandatory deferral of all or any part of an otherwise earned
Performance Unit/Share Award.
At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares which
have been earned, but not yet distributed to Participants (such dividends
shall be subject to the same accrual, forfeiture, and payout restrictions as
apply to dividends earned with respect to Shares of Restricted Stock, as set
forth in Section 8.6 herein). In addition, Participants may, at the discretion
of the Committee, be entitled to exercise their voting rights with respect to
such Shares.
9.5 TERMINATION OF EMPLOYMENT OR CONSULTING ARRANGEMENT. Subject to Article
14, in the event a Participant's employment or consulting arrangement with the
Company and/or its Subsidiaries is terminated during a Performance Period for
any reason other than death, Disability or Retirement, all Performance
Units/Shares shall be forfeited by the Participant to the Company.
Subject to Article 14, in the event a Participant's employment or consulting
arrangement with the Company and/or its Subsidiaries is terminated during a
Performance Period due to death, Disability or Retirement, the Participant
shall receive a prorated payout of the Performance Units/Shares, unless the
Committee determines otherwise. The prorated payout shall be determined by the
Committee, shall be based upon the length of time that the Participant held
the Performance Units/Shares during the Performance Period, and shall further
be adjusted based on the achievement of the preestablished performance goals.
Subject to Article 14, unless the Committee determines otherwise in the event
of a termination due to death, Disability or Retirement payment of earned
Performance Units/Shares shall be made at the same time as payments are made
to Participants who did not terminate employment during the applicable
Performance Period.
9.6 NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Further, except as otherwise
provided in a Participant's Award Agreement, a Participant's rights under the
Plan shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
ARTICLE L0.
PERFORMANCE MEASURES
Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers which are
designed to qualify for the Performance-Based Exception, the performance goals
to be used for purposes of such grants shall be established by the Committee
in writing and stated in terms of the attainment of specified levels of or
percentage changes in any one or more of the following measurements: revenue,
primary or fully-diluted earnings per Share, pretax income, cash flow from
operations, total cash flow, return on equity, return on capital, return on
assets, net operating profits after taxes, economic value added, total
stockholder return or return on sales, or any individual performance objective
which is measured solely in terms of quantitative targets related to the
Company or the Company's business, or any combination thereof. In addition,
such performance goals may be based in whole or in part upon the performance
of the Company, a Subsidiary, division and/or other operational unit, under
one or more of such measures.
A-13
<PAGE>
The degree of payout and/or vesting of such Awards designed to qualify for
the Performance-Based Exception shall be determined based upon the written
certification of the Committee as to the extent to which the performance goals
and any other material terms and conditions precedent to such payment and/or
vesting have been satisfied. The Committee shall have the discretion to adjust
the determinations of the degree of attainment of the preestablished
performance goals; provided, however, that the performance goals applicable to
Awards which are designed to qualify for the Performance-Based Exception, and
which are held by Named Executive Officers, may not be adjusted so as to
increase the payment under the Award (the Committee shall retain the
discretion to adjust such performance goals upward, or to otherwise reduce the
amount of the payment and/or vesting of the Award relative to the
preestablished performance goals).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m) and, thus, which use performance measures other than those
specified above.
ARTICLE 11.
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke
all prior designations by the same Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the Participant in
writing with the Secretary of the Company during the Participant's lifetime.
In the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
ARTICLE 12.
DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due
to such Participant upon the exercise of any Option or by virtue of the lapse
or waiver of restrictions with respect to Restricted Stock, or the
satisfaction of any requirements or goals with respect to Performance
Units/Shares. If any such deferral election is required or permitted, the
Committee shall, in its sole discretion, establish rules and procedures for
such payment deferrals.
ARTICLE 13.
RIGHTS OF EMPLOYEES AND CONSULTANTS
13.1 EMPLOYMENT OR CONSULTING ARRANGEMENT. Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or consulting arrangement at any time, nor confer
upon any Participant any right to continue in the employ of or consulting
arrangement with the Company or any Subsidiary.
For purposes of this Plan, temporary absence from employment because of
illness, vacation, approved leaves of absence, and transfers of employment
among the Company and its Subsidiaries, shall not be considered to terminate
employment or to interrupt continuous employment. Temporary cessation of the
provision of consulting services because of illness, vacation or any other
reason approved in advance by the Company shall not be considered a
termination of the consulting arrangement or an interruption of the continuity
thereof. Conversion of a Participant's employment relationship to a consulting
arrangement shall not result in termination of previously granted Awards.
A-14
<PAGE>
13.2 PARTICIPATION. No Employee or consultant shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.
ARTICLE 14.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations of any
governing governmental agencies or national securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any Period of Restriction and other restrictions imposed on
Restricted Shares shall lapse; and
(c) Unless otherwise specified in a Participant's Award Agreement at time
of grant, the maximum payout opportunities attainable under all outstanding
Awards of Performance Units and Performance Shares shall be deemed to have
been fully earned for the entire Performance Period(s) as of the effective
date of the Change of Control. The vesting of all such Awards shall be
accelerated as of the effective date of the Change of Control, and in full
settlement of such Awards, there shall be paid out in cash to Participants
within thirty (30) days following the effective date of the Change of
Control the maximum of payout opportunities associated with such
outstanding Awards.
ARTICLE 15.
AMENDMENT, MODIFICATION, AND TERMINATION
15.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any time and
from time to time, alter, amend, suspend or terminate the Plan in whole or in
part, subject to any requirement of stockholder approval imposed by applicable
law, rule or regulation.
15.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
ARTICLE 16.
WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy Federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards granted
hereunder, Participants may elect, subject to the approval of the Committee,
to satisfy the withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax is to
be determined equal to the minimum statutory total tax which would be imposed
on the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
A-15
<PAGE>
ARTICLE 17.
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect merger,
consolidation, purchase of all or substantially all of the business and/or
assets of the Company or otherwise.
ARTICLE 18.
LEGAL CONSTRUCTION
18.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
18.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
18.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
18.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
or its successors under the Exchange Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
Committee.
18.5 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
A-16
<PAGE>
- -
PROXY PROXY
LOGO
WMX TECHNOLOGIES, INC.
ANNUAL MEETING, MAY 9, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Dean L. Buntrock, Peter H. Huizenga and Peer Pedersen, each with power of
substitution, are hereby authorized to vote all shares of common stock of WMX
Technologies, Inc. which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of WMX Technologies,
Inc., to be held on Friday, May 9, 1997, and at any adjournment thereof, as
designated below, and in their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting.
A MAJORITY (OR IF ONLY ONE, THEN THAT ONE) OF THE ABOVE PERSONS OR THEIR
SUBSTITUTES WHO SHALL BE PRESENT AND ACTING AT THE MEETING SHALL HAVE THE
POWERS CONFERRED HEREBY.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
WMX TECHNOLOGIES, INC. PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING
DARK INK ONLY. 0
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSALS 1, 2, 3, 4 AND 5
1.ELECTION OF CLASS III DIRECTORS--
Nominees: Dean L. Buntrock, Robert S. Miller, Paul M. Montrone, Peer Pedersen
For
0
Withheld
0
For
All
(Except
Nominee(s)
written
below)
0
------------------------------------------------------------------------------
2. Proposal to amend the Company's Restated Certificate of Incorporation to
change the name of the Company from "WMX Technologies, Inc." to "Waste
Management, Inc."
For
0
Against
0
Abstain
0
3. Proposal to amend the Company's Restated Certificate of Incorporation to
provide for annual election of Directors.
For
0
Against
0
Abstain
0
For
0
4. Proposal to approve the WMX Technologies, Inc. 1997 Equity Incentive Plan.
For
0
Against
0
Abstain
0
5. Ratification of appointment of Arthur Andersen LLP as independent auditors
for 1997.
For
0
Against
0
Abstain
0
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 6.
6. Stockholder Proposal regarding Director independence.
For
0
Against
0
Abstain
0
7. In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
Dated: _____________________________________________________________ , 1997
Signature(s)____________________________________________________________________
- --------------------------------------------------------------------------------
SIGNATURE OF STOCKHOLDER(S)--PLEASE SIGN NAME EXACTLY AS IMPRINTED (DO NOT
PRINT). PLEASE INDICATE ANY CHANGE OF ADDRESS. NOTE: EXECUTORS, ADMINISTRATORS,
TRUSTEES AND OTHERS SIGNING IN A REPRESENTATIVE CAPACITY SHOULD INDICATE THE
CAPACITY IN WHICH THEY SIGN. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD
SIGN.
<PAGE>
LOGO
- --------------------------------------------------------------------------------
LOGO
3003 Butterfield Road
Phone 708.572.8800
Oak Brook, IL 60521
1988 EMPLOYEE STOCK OWNERSHIP PLAN
March 28, 1997
Dear Plan Participant:
As a participant in the WMX Technologies, Inc. 1988 Employee Stock Ownership
Plan, you may direct the trustees of the Plan to vote in accordance with your
instructions the shares of common stock of WMX Technologies, Inc. credited to
your individual account. Enclosed for your information in this regard is a copy
of the Notice of the Annual Meeting of Stockholders scheduled for May 9, 1997
and the Proxy Statement relating to that meeting together with a voting
instruction form.
The voting instruction form should be returned in the enclosed pre-addressed,
postage prepaid envelope to Harris Trust and Savings Bank. Instructions to vote
shares credited to all participants' accounts will be tabulated and the results
of the total tabulation forwarded to the trustees. The trustees, in turn, will
vote accordingly at the Annual Meeting. If your voting instruction form does
not indicate a preference or your instruction form is not received by Harris
Trust and Savings Bank by May 7, 1997, your shares will not be voted.
Your vote is important, and your cooperation is appreciated.
Sincerely,
Trustees of the 1988 Employee
Stock Ownership Plan
<PAGE>
- -
- -
VOTING INSTRUCTION FORM VOTING INSTRUCTION FORM
LOGO
WMX TECHNOLOGIES, INC.
1988 EMPLOYEE STOCK OWNERSHIP PLAN
ANNUAL MEETING, MAY 9, 1997
The undersigned hereby instructs the trustees of the WMX Technologies, Inc.
1988 Employee Stock Ownership Plan to vote, by proxy or in person, at the
Annual Meeting of Stockholders of WMX Technologies, Inc. to be held on Friday,
May 9, 1997, and at any adjournments thereof, the shares of common stock of WMX
Technologies, Inc. allocated to the undersigned's account in such Plan on March
19, 1997, as designated below, and in their discretion, the trustees are
authorized to vote upon such other business as may properly come before the
meeting.
IF THIS VOTING INSTRUCTION FORM, REQUESTED BY THE TRUSTEES WITH RESPECT TO A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY, IS PROPERLY
EXECUTED AND RECEIVED BY HARRIS TRUST & SAVINGS BANK ON OR BEFORE MAY 7, 1997,
THE SHARES ALLOCATED TO THE UNDERSIGNED'S ACCOUNT IN THE WMX TECHNOLOGIES, INC.
1988 EMPLOYEE STOCK OWNERSHIP PLAN ON MARCH 19, 1997 WILL BE VOTED IN THE
MANNER INSTRUCTED HEREIN. IF NO INSTRUCTION IS MADE OR THIS FORM IS NOT
RECEIVED BY HARRIS TRUST & SAVINGS BANK ON OR BEFORE MAY 7, 1997, THE SHARES
WILL NOT BE VOTED.
PLEASE MARK, SIGN, DATE AND MAIL THIS FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
WMX TECHNOLOGIES, INC.
PLEASE MARK VOTE IN OVAL
IN THE FOLLOWING MANNER
USING DARK INK ONLY.
0
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSALS 1, 2, 3, 4 AND 5
1.ELECTION OF CLASS III DIRECTORS--
Nominees: Dean L. Buntrock, Robert S. Miller, Paul M. Montrone, Peer Pedersen
For
0
Withheld
0
For
All
(Except
Nominee(s)
written
below)
0
------------------------------------------------------------------------------
2. Proposal to amend the Company's Restated Certificate of Incorporation to
change the name of the Company from "WMX Technologies, Inc." to "Waste
Management, Inc."
For
0
Against
0
Abstain
0
3. Proposal to amend the Company's Restated Certificate of Incorporation to
provide for annual election of Directors.
For
0
Against
0
Abstain
0
4. Proposal to approve the WMX Technologies, Inc. 1997 Equity Incentive Plan.
For
0
Against
0
Abstain
0
5. Ratification of appointment of Arthur Andersen LLP as independent auditors
for 1997.
For
0
Against
0
Abstain
0
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 6.
6. Stockholder Proposal regarding Director independence.
For
0
Against
0
Abstain
0
7. In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
Dated: _____________________________________________________________ , 1997
Signature(s)____________________________________________________________________
- --------------------------------------------------------------------------------
SIGNATURE OF STOCKHOLDER(S)--PLEASE SIGN NAME EXACTLY AS IMPRINTED (DO NOT
PRINT). PLEASE INDICATE ANY CHANGE OF ADDRESS. NOTE: YOU MAY REVOKE YOUR IN-
STRUCTION TO VOTE SHARES ALLOCATED TO YOUR ACCOUNT AT ANY TIME PRIOR TO THE
STOCKHOLDERS' MEETING.
