<PAGE> 1
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
WASTE CONNECTIONS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $0.01 par value
(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> 2
NOTICE AND PROXY STATEMENT
WASTE CONNECTIONS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
Dear Stockholder of WASTE CONNECTIONS, INC.:
You are invited to attend the annual meeting of stockholders of WASTE
CONNECTIONS, INC. to be held on Wednesday, May 24, 2000, at 9:00 A.M., Pacific
Time. The meeting will be held at the Hyatt Regency, 1209 L Street, Sacramento,
CA 95814 for the following purposes:
1. To elect two Class II directors to each serve for a term of three years;
2. To approve an amendment to our 1997 Stock Option Plan to increase the
number of shares reserved for issuance under the plan to 3,500,000
shares of common stock;
3. To ratify the appointment of Ernst & Young LLP as our independent
accountants for the year 2000; and
4. To consider such other business as may properly come before the annual
meeting or any adjournment of the annual meeting.
Only stockholders of record at the close of business on March 27, 2000, are
entitled to receive notice of and to vote at the annual meeting or any
adjournment of the annual meeting.
Waste Connections' Annual Report for the year 1999 is enclosed for your
convenience.
Stockholders of record may vote their proxies by signing, dating and
returning the enclosed proxy card. If your shares are held in the name of a bank
or broker, you may be able to vote by telephone or on the Internet. Please
follow the instructions on the form you receive from your bank or broker. The
method by which you decide to vote will not limit your right to vote at the
annual meeting. If you later decide to attend the annual meeting in person, you
may vote your shares even if you have submitted a proxy in writing, by telephone
or on the Internet.
By Order of the Board of Directors,
DARRELL W. CHAMBLISS
Secretary
March 31, 2000
Your vote is important. Whether or not you plan to attend the annual
meeting, please sign and date the enclosed proxy or follow any telephone or
internet procedures established by your bank or broker.
<PAGE> 3
WASTE CONNECTIONS, INC.
620 COOLIDGE DRIVE, SUITE 350
FOLSOM, CALIFORNIA 95630
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2000
The Board of Directors of WASTE CONNECTIONS, INC., a Delaware corporation,
is furnishing this proxy statement and the accompanying proxy card to solicit
proxies from holders of our common stock for the annual meeting of stockholders
to be held on Wednesday, May 24, 2000, for the purposes described in the Notice
of Annual Meeting. We will bear the costs of soliciting proxies from our
stockholders. In addition to soliciting proxies by mail, our directors, officers
and employees, without receiving additional compensation, may solicit proxies by
telephone, by telegram or in person. We will arrange for brokerage firms and
other custodians, nominees and fiduciaries to forward solicitation materials to
the beneficial owners of common stock these brokerage firms, custodians,
nominees and fiduciaries hold of record, and we will reimburse them for
reasonable out-of-pocket expenses incurred in forwarding these materials. We are
first mailing this proxy statement to our stockholders on or about April 10,
2000.
VOTING AT THE MEETING
The record date for determining stockholders entitled to notice of and to
vote at the annual meeting was the close of business on March 27, 2000. On that
date 21,417,440 shares of common stock were outstanding, all of which are
entitled to vote, on all matters that properly come before the annual meeting.
Each stockholder has one vote for each share of common stock held.
Each proxy that we receive prior to the annual meeting will, unless
revoked, be voted in accordance with the instructions we are given for that
proxy. If no instruction is given, the shares will be voted FOR the election of
our nominees for director listed in this proxy statement and FOR ratification of
the appointment of Ernst & Young LLP. A stockholder who has given a proxy in
writing may revoke it at any time before it is voted at the annual meeting in
any of three ways:
- by delivering a written notice of revocation to the Secretary of Waste
Connections;
- by delivering a duly executed proxy bearing a later date to the Secretary
of Waste Connections; or
- by attending the meeting and voting in person.
A quorum of stockholders is necessary to take action at the annual meeting.
A majority of the outstanding shares of common stock, represented in person or
by proxy, will constitute a quorum. We will use an automated system administered
by our transfer agent to tabulate the votes at the annual meeting. Under certain
circumstances, a broker or other nominee may have discretionary authority to
vote certain shares of common stock if the broker or nominee has not received
instructions from the beneficial owner or other person entitled to vote. We will
treat directions to withhold authority, abstentions and broker non-votes (which
occur when a broker or other nominee holding shares for a beneficial owner does
not vote on a particular proposal because the broker or other nominee does not
have discretionary voting power for that item and has not received instructions
from the beneficial owner) as present and entitled to vote for purposes of
determining whether a quorum is present at the annual meeting.
Accordingly, directions to withhold authority, abstentions and broker
non-votes will have no effect on the election of directors or on the voting on a
matter that requires the affirmative vote of a certain percentage of the votes
cast or shares voting on a matter, but will be the equivalent of a "no" vote on
a matter that requires the affirmative vote of a certain percentage of the votes
entitled to be cast on a matter.
1
<PAGE> 4
No minimum number of votes is required to elect our nominee as a director.
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy at the annual meeting is required to approve the
proposed amendment to our 1997 Stock Option Plan and to ratify the appointment
of Ernst & Young LLP as independent accountants for the year 2000.
PRINCIPAL STOCKHOLDERS
The following table shows the amount of Waste Connections' common stock
beneficially owned, as of March 27, 2000, by: (i) each person or entity that we
know owns more than 5% of our common stock; (ii) the "named executive officers"
identified in "Executive Compensation" and each director of Waste Connections;
and (iii) all current directors, nominees and executive officers of Waste
Connections as a group.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER(1) NUMBER PERCENTAGE
--------------------------- --------- ----------
<S> <C> <C>
James Ogilvie Stewart, Jr.(2)............................... 2,541,380 11.9%
Murrey Trust UTA August 5, 1993, as amended(2).............. 1,949,997 9.1%
Eugene P. Polk(2)(4)........................................ 1,293,952 6.0%
Ronald J. Mittelstaedt(2)(3)................................ 1,080,287 5.0%
Eugene V. Dupreau(2)(5)..................................... 350,482 1.6%
Irmgard R. Wilcox(2)(6)..................................... 146,609 0.7%
Michael W. Harlan(2)(7)..................................... 40,000 0.2%
William Razzouk(2)(8)....................................... 35,000 0.2%
Steven F. Bouck(2)(9)....................................... 188,251 0.9%
Michael R. Foos(2)(10)...................................... 124,763 0.6%
Darrell W. Chambliss(2)(11)................................. 109,167 0.5%
Eric J. Moser(2)(12)........................................ 98,453 0.5%
David M. Hall(2)(13)........................................ 45,433 0.2%
All executive officers and directors as a group (13
persons).................................................. 2,218,445 10.4%
</TABLE>
- ---------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In general, a person who has voting
power and/or investment power with respect to securities is treated as the
beneficial owner of those securities. Shares of common stock subject to
options and/or warrants currently exercisable or exercisable within 60 days
count as outstanding for computing the percentage beneficially owned by the
person holding such options. Except as otherwise indicated by footnote, we
believe that the persons named in this table have sole voting and
investment power with respect to the shares of common stock shown.
(2) The address of James Ogilvie Stewart, Jr. is 5309 El Paso Drive, El Paso,
Texas 79905. The address of the Murrey Trust is c/o US Bank, 5580 Pacific
Highway, Suite A, Fife, Washington 98424. The address of Messrs.
Mittelstaedt, Bouck, Chambliss, Foos, Moser and Hall is 620 Coolidge Drive,
Suite 350, Folsom, California 95630. The address of Eugene P. Polk is P.O.
Box 1151, Prescott, Arizona 86302. The address of Eugene V. Dupreau is
Madera Disposal Systems, Inc., 21739 Road 19, Chowchilla, California 93610.
The address of Irmgard R. Wilcox is 4622 70 Avenue East, Fife, Washington
98731. The address of Michael W. Harlan is 1300 Post Oak Boulevard, Suite
1220, Houston, Texas 77056. The address of William J. Razzouk is 5915 River
Oaks Road, Memphis, Tennessee 38120.
(3) Includes 33,334 shares purchasable under currently exercisable options.
Also includes 1,046,953 shares held by the Mittelstaedt Family Trust dated
6/18/97, of which Mr. Mittelstaedt is the Trustee.
(4) Includes 1,123,238 shares beneficially owned through 34 trusts for which
Eugene Polk serves as a trustee, and 170,714 shares held by the Polk
Investment Partnership 93-1, for which Eugene Polk serves as a Manager.
(5) Includes 66,667 shares purchasable under immediately exercisable warrants
and 13,334 shares purchasable under immediately exercisable options.
(6) Includes 1,667 shares purchasable under currently exercisable options.
(7) Includes 5,000 shares purchasable under immediately exercisable warrants
and 35,000 shares purchasable under immediately exercisable options.
(8) Includes 24,000 shares purchasable under immediately exercisable options.
2
<PAGE> 5
(9) Includes 10,000 shares owned by each of Mr. Bouck's two minor sons and
70,532 shares purchasable under currently exercisable options.
(10) Includes 46,667 shares purchasable under currently exercisable options.
(11) Includes 63,333 shares purchasable under currently exercisable options.
(12) Includes 53,333 shares purchasable under currently exercisable options.
(13) Includes 38,333 shares purchasable under currently exercisable options.
PROPOSAL I -- ELECTION OF DIRECTORS
Our Board of Directors is currently composed of five directors and is
divided into three classes. One class is elected each year for a three-year
term. At the annual meeting, Messrs. Harlan and Razzouk will be nominated to
serve in Class II until the annual meeting of stockholders to be held in 2003
and until successors have been duly elected and qualified. Proxies will be
voted, unless otherwise indicated, for the election of Messrs. Harlan and
Razzouk for director. Proxies will be voted in a discretionary manner if Messrs.
Harlan or Razzouk is unable to serve. Messrs. Harlan and Razzouk currently serve
as directors of the Company.
Certain information about Messrs. Harlan and Razzouk and the directors
serving in Class I and Class III, whose terms expire in future years, is set
forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND AGE SINCE
------------------- --- --------
<S> <C> <C>
NOMINEES FOR CLASS II DIRECTOR FOR TERM EXPIRING IN 2003
Michael W. Harlan is Senior Vice President, Chief Financial 39 1998
Officer and a director of U.S. Concrete, Inc., a company
focussed on acquiring businesses in the ready-mix concrete
industry. From November 1997 to January 30, 1998, Mr.
Harlan served as a consultant to Waste Connections on
various financial matters. From March 1997 to August 1998,
Mr. Harlan was Vice President and Chief Financial Officer
of Apple Orthodontix, Inc., a publicly traded company that
provides practice management services to orthodontic
practices in the U.S. and Canada. From April 1991 to
December 1996, Mr. Harlan held various positions in the
finance and acquisition departments of USA Waste Services,
Inc. (including Sanifill, Inc., which was acquired by USA
Waste Services, Inc.), including serving as Treasurer and
Assistant Secretary beginning in September 1993. From May
1982 to April 1991, Mr. Harlan held various positions in
the tax and corporate financial consulting services
division of Arthur Andersen LLP, where he was a Manager
since July 1986.
William J. Razzouk has been Chairman and Chief Executive 52 1998
Officer of PlanetRx, an e-commerce company focused on
healthcare and sales of prescription and over-the-counter
medicines, health and beauty products and medical supplies
since September 1998. From April 1998 until September
1998, Mr. Razzouk owned a management consulting business
and an investment company that focused on identifying
strategic acquisitions. From September 1997 until April
1998, he was also the President, Chief Operating Officer
and a director of Storage USA, Inc., a publicly traded
real estate investment trust that owns and operates more
than 350 mini storage warehouses. He served as the
President and Chief Operating Officer of America Online
from February 1996 to June 1996. From 1983 to 1996, Mr.
Razzouk held various management positions at Federal
Express Corporation, most recently as Executive Vice
President, World Wide Customer Operations, with full
worldwide profit and loss responsibility. Mr. Razzouk
previously held management positions at ROLM Corporation,
Philips Electronics and Xerox Corporation. He is a member
of the Board of Directors of Fritz Companies, Inc. and
previously was a director of Sanifill, Inc., Cordis Corp.
and La Quinta Motor Inns.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND AGE SINCE
------------------- --- --------
<S> <C> <C>
CLASS I DIRECTOR CONTINUING IN OFFICE -- TERM EXPIRING IN
2002
Eugene V. Dupreau has been Vice President -- Western 52 1998
division and a director of Waste Connections since
February 23, 1998. Mr. Dupreau served as President and a
director of Madera Disposal Systems, Inc. beginning in
1981 and 1985, respectively, and held both positions until
Waste Connections acquired Madera in 1998. He serves as a
director of several civic and charitable organizations in
Madera County.
CLASS III DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING IN
2001
Ronald J. Mittelstaedt has been President, Chief Executive 36 1997
Officer and a director of Waste Connections since the
company was formed, and was elected Chairman in January
1998. He also served as a consultant to Waste Connections
in August and September 1997. Mr. Mittelstaedt has more
than 12 years of experience in the solid waste industry.
He served as a consultant to United Waste Systems, Inc.,
with the title of Executive Vice President, from January
1997 to August 1997, where he was responsible for
corporate development for all states west of Colorado. As
Regional Vice President of USA Waste Services, Inc.
(including Sanifill, Inc., which was acquired by USA Waste
Services, Inc.) from November 1993 to January 1997, he was
responsible for all operations in 16 states and Canada.
Mr. Mittelstaedt held various positions at Browning-
Ferris Industries, Inc. from August 1987 to November 1993,
most recently as Division Vice President in northern
California, overseeing the San Jose market. Previously he
was the District Manager responsible for BFI's operations
in Sacramento and the surrounding areas.
Irmgard R. Wilcox has been Vice 56 1999
President -- Finance -- Northern Washington Division of
Waste Connections since January 19, 1999. Ms. Wilcox
served as Chief Financial Officer, Secretary and Treasurer
of the Murrey Companies from 1982 until they merged with
Waste Connections in 1999. Ms. Wilcox joined the Murrey
Companies in 1975. Ms. Wilcox also serves as a director of
Fife Commercial Bank, a privately held bank.
</TABLE>
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
Our Board of Directors held ten meetings during 1999. The Board of
Directors has an Executive Committee, an Audit Committee and a Compensation
Committee. The Board as a whole operates as a committee to nominate directors,
although under his Employment Agreement Mr. Mittelstaedt may currently recommend
two nominees to the Board. Each director, other than Mr. Razzouk attended at
least 75% of the meetings of the Board of Directors and the committees on which
he or she served in 1999.
The Executive Committee, whose Chairman is Mr. Mittelstaedt and whose other
current members are Mr. Harlan and Mr. Razzouk, met 17 times in 1999. The
Executive Committee is authorized to exercise all of the powers and authority of
the Board of Directors in managing Waste Connections' business and affairs,
other than to authorize matters required by Delaware law to be approved by the
stockholders and other than adopting, amending or repealing any By-Law. Between
meetings of the board, the Executive Committee approves all acquisitions by
Waste Connections for stock and for cash or other consideration of $1 million or
more.
The Audit Committee, whose chairman is Mr. Harlan and whose other current
members are Mr. Razzouk and Mr. Mittelstaedt, met three times in 1999. The
committee's duties are to review our internal controls and the objectivity of
our financial reporting, and to meet with appropriate financial personnel and
our independent certified public accountants in connection with these reviews.
The audit committee also reviews the professional services provided by our
independent certified public accountants and reviews such other matters
concerning our accounting principles and financial and operating policies,
controls and practices, our public financial reporting policies and practices,
and the results of our annual audit as it may find appropriate or as may be
brought to its attention.
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<PAGE> 7
The Compensation Committee, whose chairman is Mr. Razzouk and whose other
current member is Mr. Harlan, met four times in 1999. This committee is
responsible for establishing Waste Connections' executive officer compensation
policies and for administration of such policies. The Compensation Committee
studies, recommends and implements the amount, terms and conditions of payment
of any and all forms of compensation for our directors, executive officers,
employees, consultants and agents; approves and administers any loan to,
guarantee of any obligation of, or other financial assistance to any officer or
other employee; and approves the grant of options, warrants and other forms of
equity incentives to officers, directors, employees, agents and consultants. See
"Executive Compensation -- Compensation Committee Report on Executive
Compensation."
The Board of Directors, acting as a nominating committee, will consider
candidates for director recommended by stockholders. A stockholder who wishes to
submit a candidate for consideration at the annual meeting of stockholders
scheduled to be held on May 23, 2001, must notify the Secretary of Waste
Connections in writing no earlier than February 23, 2001, nor later than March
24, 2001. The stockholder's written notice must include information about each
proposed nominee, including name, age, business address, residence address,
principal occupation, shares beneficially owned and any other information
required in proxy solicitations. The notice must also include the nominating
stockholder's name and address and the number of shares of our common stock
beneficially owned by the stockholder. The written notice must be accompanied by
the executed consent of each nominee to serve as a director if elected. These
procedures are prerequisites under Waste Connections' Amended and Restated
By-laws to a stockholder nominating a candidate at the meeting.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of Waste Connections do not
currently receive any compensation for attending meetings of the Board of
Directors. Each independent director receives a fee of $1,500 for attending each
Board meeting and each committee meeting (unless held on the same day as the
full Board meeting), in addition to reimbursement of reasonable expenses.
Each independent director who has not been an employee of Waste Connections
at any time during the 12 months preceding his initial election and appointment
to the Board is granted an option to purchase 15,000 shares of our common stock
at the time of his or her initial election or appointment. Waste Connections
granted to each of Messrs. Harlan and Razzouk options to purchase 15,000 shares
of common stock at $3.00 per share, which became exercisable on October 1, 1998.
Waste Connections grants each independent director, on February 1 of each
year during which such person serves on the Board, an option to purchase 7,500
shares of our common stock. All such options have an exercise price equal to the
fair market value of the common stock on the grant date, vest in full on the
grant date, and expire upon the earlier to occur of ten years after the grant
date or one year after the director ceases to be a member of the Board.
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<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
Waste Connections was incorporated in September 1997. The following table
contains information about the annual and long-term compensation earned in 1997,
1998 and 1999 by the Chief Executive Officer, Ronald J. Mittelstaedt, and the
other executive officers who were paid or earned more than $100,000. The persons
named in the table are sometimes referred to herein as the "named executive
officers." No officer other than Mr. Mittelstaedt was paid or earned more than
$100,000 in 1997. The Chief Executive Officer has been compensated in accordance
with the terms of his Employment Agreement described below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
SHARES
UNDERLYING
ANNUAL COMPENSATION OPTIONS/
------------------------------ RESTRICTED WARRANTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER STOCK GRANTED(2) COMPENSATION
--------------------------- ---- -------- -------- ------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Mittelstaedt.............. 1997 $ 39,903(1) $ 25,000(1) -- -- 200,000 $10,000(3)
President, Chief Executive 1998 175,577 100,000 10,254 -- -- --
Officer and Chairman 1999 209,692 125,000 5,170 -- 100,000 --
Steven F. Bouck..................... 1998 92,887 115,008 -- -- 250,000 --
Executive Vice President 1999 132,693 46,000 -- -- 90,000 --
and Chief Financial Officer
Darrell W. Chambliss................ 1998 89,972 89,322 -- -- -- --
Executive Vice President -- 1999 109,846 55,300 -- -- 65,000 --
Operations and Secretary
Michael R. Foos..................... 1998 89,809 71,788 -- -- -- --
Chief Accounting Officer 1999 109,846 40,000 -- -- 65,000 --
and Vice President -- Finance
Eric J. Moser....................... 1998 74,115 45,563 -- -- -- --
Vice President -- Corporate 1999 95,385 35,000 -- -- 65,000 --
Controller, Treasurer
David M. Hall....................... 1998 30,769 -- -- -- 50,000 61,718(4)
Vice President -- Business 1999 82,400 75,000 -- -- 35,000 --
Development
</TABLE>
- ---------------
(1) Mr. Mittelstaedt's salary and bonus figures for 1997 reflect employment from
October 1, 1997 through December 31, 1997. His bonus figure for 1997
reflects the portion earned during 1997; such bonus was paid in 1998.
(2) See "Option and Warrant Grants" below.
(3) Consists of consulting fees for services rendered prior to Waste
Connections' organization.
(4) Consists of a signing bonus earned by Mr. Hall in 1998 and paid in 1999.
6
<PAGE> 9
STOCK OPTIONS AND WARRANTS
OPTION AND WARRANT GRANTS. The following table contains information
concerning the grant of options and warrants to purchase shares of our common
stock during 1999 to the named executive officers.
1999 OPTION AND WARRANT GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SHARES OPTIONS AND STOCK PRICE
UNDERLYING WARRANTS APPRECIATION FOR
OPTIONS AND GRANTED TO EXERCISE OPTION/WARRANT TERM(3)
NAME OF WARRANTS EMPLOYEES PRICE -----------------------
BENEFICIAL OWNER GRANTED(1) IN 1999 PER SHARE(2) EXPIRATION DATE 5% 10%
---------------- ----------- ----------- ------------ ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald J. Mittelstaedt.... 100,000 9.6% $17.94 January 19, 2009 $1,128,080 $2,858,776
Steven F. Bouck........... 50,000 4.8% 17.94 January 19, 2009 564,040 1,429,388
40,000 3.8% 11.75 December 6, 2009 295,580 749,059
Darrell W. Chambliss...... 40,000 3.8% 17.94 January 19, 2009 451,232 1,143,510
25,000 2.4% 11.75 December 6, 2009 184,738 468,162
Michael R. Foos........... 40,000 3.8% 17.94 January 19, 2009 451,232 1,143,510
25,000 2.4% 11.75 December 6, 2009 184,738 468,162
Eric J. Moser............. 40,000 3.8% 17.94 January 19, 2009 451,232 1,143,510
25,000 2.4% 11.75 December 6, 2009 184,738 468,162
David M. Hall............. 15,000 1.4% 17.94 January 19, 2009 169,212 428,816
20,000 1.9% 11.75 December 6, 2009 147,790 374,529
</TABLE>
- ---------------
(1) All options vest over a three year period commencing on the date of grant.
(2) The options were granted at fair market value as determined by the Board of
Directors on the date of grant.
(3) Amounts reported in these columns represent amounts that the named executive
officer could realize on exercise of options and the warrant immediately
before they expire, assuming that our common stock appreciates at 5% or 10%
annually. These amounts do not take into account taxes and expenses that may
be payable on such exercise. The amount actually realized will depend on the
price of our common stock when the options are exercised, which may be
before the term expires. The Securities and Exchange Commission requires the
table to reflect 5% and 10% annualized rates of stock price appreciation. We
do not project those rates and our common stock may not appreciate at those
rates.
7
<PAGE> 10
OPTION AND WARRANT VALUES. The following table shows information about the
named executive officers' exercises of options and warrants during 1999 and the
value of their unexercised options and warrants outstanding as of December 31,
1999.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION AND WARRANT VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AND IN-THE-MONEY OPTIONS AND
WARRANTS AT WARRANTS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
NAME OF ACQUIRED VALUE --------------------------- ---------------------------
BENEFICIAL OWNER ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald J. Mittelstaedt...... 122,577 $3,185,890 33,333 133,333 $387,913 $387,913
Steven F. Bouck............. 31,549 391,309 58,865 156,667 411,719 609,998
Darrell W. Chambliss........ 50,001 1,005,645 49,999 115,000 453,535 520,727
Michael R. Foos............. 33,334 765,015 66,666 115,000 519,161 520,727
Eric J. Moser............... 20,000 459,000 53,333 76,667 440,999 113,126
David M. Hall............... -- -- 33,333 51,667 -- 53,750
</TABLE>
- ---------------
(1) Based on the closing price of our common stock of $14.4375 on The Nasdaq
Stock Market(R) -- National Market on December 31, 1999, less the per share
exercise price.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of the named executive
officers. Each agreement has a three-year term, except Mr. Mittelstaedt's
agreement, which has a five year term. Each of these agreements automatically
renews for additional successive one-year terms unless terminated earlier upon
written notice of either the named executive officer or Waste Connections or
extended further by the Board. The employment agreements with Messrs.
Mittelstaedt, Chambliss and Foos were entered into on October 1, 1997. The
employment agreements with Messrs. Bouck and Hall were entered into on February
1, 1998 and July 8, 1998, respectively. Waste Connections or the named executive
officer may terminate the agreement with or without cause at any time. If we
terminate the agreement without cause (as defined in the agreement) or if the
named executive officer terminates the agreement for good reason (as defined in
the agreement), we are required to make certain severance payments, and all of
the named executive officer's unvested options, warrants and rights relating to
our common stock will immediately vest. A change of control of Waste Connections
(as defined in the agreement) is generally treated as a termination of the named
executive officer without cause.
The base salaries and maximum performance bonuses in the percentage of
annual base salary for the named executive officers for the year 2000 is set
forth below:
<TABLE>
<CAPTION>
ANNUAL BASE SALARY MAXIMUM BONUS
------------------ -------------
<S> <C> <C>
Ronald J. Mittelstaedt................................ $245,000 100%
Steven F. Bouck....................................... 135,000 35%
Darrell W. Chambliss.................................. 127,000 50%
Michael R. Foos....................................... 127,500 35%
Eric J. Moser......................................... 115,000 35%
David M. Hall......................................... 88,000 100%
</TABLE>
Under Mr. Mittelstaedt's employment agreement, Waste Connections sold Mr.
Mittelstaedt 617,500 shares of our common stock for $0.01 per share and 357,143
shares of our Series A Preferred Stock for $1,000,000. Mr. Mittelstaedt may
recommend nominees for election to the Board of Directors. If the Board has five
or fewer members, Mr. Mittelstaedt may recommend two nominees, and if it
consists of more than five members, he may recommend three nominees.
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee in 1999 was Messrs. Harlan and Razzouk. No
executive officer of Waste Connections served as a director or member of the
Compensation Committee of another entity, one of whose executive officers served
as a director or member of the Compensation Committee of Waste Connections.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation to our stockholders.
COMPENSATION PROCEDURES AND POLICIES. The Compensation Committee determines
the compensation of all of the executive officers, including the named executive
officers. All decisions by the Compensation Committee relating to the
compensation of executive officers including decisions relating to stock
options, are reviewed and approved by the full Board of Directors.
Our executive compensation philosophy and specific compensation plans tie a
significant portion of executive compensation to our success in meeting
specified targets of growth in revenues and earnings before interest, taxes,
depreciation and amortization ("EBITDA") as well as budgeted earnings per share
annually. Our compensation objectives include attracting and retaining the best
possible executive talent, motivating executive officers to achieve our
performance objectives, rewarding individual performance and contributions, and
linking executive and stockholder interests through equity based plans.
Our executive compensation consists of three key components: base salary,
performance bonuses and stock options, each of which is intended to complement
the others and, taken together, satisfy our compensation objectives. The
Compensation Committee's policies with respect to each of the three components,
including the bases for the compensation awarded to Ronald J. Mittelstaedt, as
the Company's Chief Executive Officer, are discussed below.
The Compensation Committee considered the effect of the limitations on the
deductibility of executive compensation in excess of $1 million under Section
162(m) of the Internal Revenue Code on the Company's compensation policies and
practices and did not make any changes in such policies and practices for 1999.
The Company did not pay any non-deductible executive compensation in 1999.
BASE SALARY. In the early part of each fiscal year, the Compensation
Committee reviews the base salary of the Company's Chief Executive Officer, the
recommendation of the Chief Executive Officer with regard to the base salary of
the other executive officers of the Company and approves, with any modifications
it deems appropriate, annual base salaries for each of the executive officers.
Recommended base salaries of the executive officers are based upon the base
salary ranges recommended annually by the Chief Executive Officer of the
Company. National survey data available regarding salaries of those persons
holding comparable positions at comparably sized solid waste service companies
is reviewed by the Compensation Committee to establish base salary ranges. The
base salary range is based upon a fair market base salary that is at the low end
of the range for comparable companies. The base salaries paid in 1999 to each of
the executive officers, including the Chief Executive Officer, were within the
recommended ranges.
ANNUAL PERFORMANCE BONUS. The Compensation Committee also considers the
payment of cash performance bonuses as part of its compensation program. Annual
cash bonuses reflect a policy of requiring a certain level of financial and
operational performance, generally measured in growth in revenues through
acquisitions and on achieving target levels of EBITDA and earnings per share,
for the prior fiscal year before any cash bonuses are earned by executive
officers. In general, the Compensation Committee has tied maximum potential
bonus compensation to base salary at levels that make us competitive in the
comparably sized solid waste services companies.
STOCK OPTIONS. The Company's executive officers are also entitled to
participate in the 1997 Stock Option Plan. The Compensation Committee believes
that it is to Waste Connections' advantage to increase the interest of the
executives in our welfare, as such employees share the primary responsibility
for our
9
<PAGE> 12
management and growth. In addition, the Compensation Committee believes that,
because new option grants are set at fair market value, such grants have the
effect of increasing the executive's price targets for our common stock.
Moreover, our stock option plan provides a significant non-cash form of
compensation, which is intended to benefit Waste Connections and its
stockholders by enabling us to continue to attract and to retain qualified
personnel without having a negative impact on our cash flow. The Compensation
Committee generally sets option grant levels at ranges that exceed those of
comparably sized solid waste companies.
CHIEF EXECUTIVE'S COMPENSATION FOR 1999. Mr. Mittelstaedt's base salary and
performance bonus for 1999 were negotiated when he joined us in 1997. His
Employment Agreement called for an increase in his base salary from $170,000 per
year to $250,000 per year effective October 1, 1998. Consistent with the
philosophy expressed above, Mr. Mittelstaedt recommended, and the Compensation
Committee agreed, that his salary be increased only to $200,000 per year
effective October 1, 1998, and his Employment Agreement was amended accordingly.
This base salary level remained in effect until September 30, 1999 and was
increased on October 1, 1999 to $245,000 per year. Mr. Mittelstaedt's
performance bonus for 1999 was based on Waste Connections achieving specified
levels of growth in revenues through acquisitions and in achieving a specified
level of EBITDA. These levels were achieved in 1999 and Mr. Mittelstaedt would
have been entitled to receive a bonus of $245,000 for 1999, payable in 2000. Mr.
Mittelstaedt, however, agreed to forego payment of $120,000 of such bonus,
provided that his employment agreement is amended so that severance payments
made to him would be based on the bonus he was entitled to receive, rather than
the amount actually paid. We agreed to this change. On January 19, 1999, Waste
Connections granted Mr. Mittelstaedt non-qualified options to purchase 100,000
shares of Waste Connections common stock at a price of $17.9375 per share. These
options vest ratably on an annual basis over three years from the date of grant
and expire on January 19, 2009.
This report is submitted on behalf of the Compensation Committee.
William J. Razzouk, Chairman
Michael W. Harlan
CERTAIN TRANSACTIONS
PURCHASE OF INTERNATIONAL ENVIRONMENTAL INDUSTRIES, INC. ("IEII"). On
August 11, 1999, Waste Connections purchased all of the outstanding stock of
IEII from J.O. Stewart. The aggregate purchase price was approximately $138.7
million, consisting of $30.3 million in cash, 2,541,380 shares of Waste
Connections common stock valued at $65.9 million and $42.5 million of debt
assumed.
MERGERS WITH THE MURREY COMPANIES. Donald J. Hawkins was President, Chief
Executive Officer and a 5% shareholder of the Murrey Companies and Irmgard R.
Wilcox was Chief Financial Officer, Treasurer, Secretary and a 5% shareholder of
the Murrey Companies until Waste Connections merged with those companies in
January 1999. For their shares of the Murrey Companies' common stock, Mr.
Hawkins and Ms. Wilcox each received 144,442 shares of Waste Connections common
stock. Until April 30, 2000, Mr. Hawkins will serve as Vice
President -- Operations -- Northern Washington division. Mr. Hawkins has
informed Waste Connections that he is resigning from the Company effective April
30, 2000. Ms. Wilcox serves as Vice President -- Finance -- Northern Washington
division, and is a member of our Board of Directors. Pursuant to their
Employment Agreements, each of Mr. Hawkins and Ms. Wilcox was paid a $2,000,000
signing bonus.
10
<PAGE> 13
COMMON STOCK PRICE PERFORMANCE GRAPH
The following common stock price performance graph compares the change in
cumulative total stockholder returns on our common stock for 1999, with the
cumulative total return of the NASDAQ Composite Index and an index of peer group
issues ("Peer Group Index") over the same period, assuming the investment of
$100 on May 22, 1998, and the reinvestment of dividends. The Peer Group Index
includes Allied Waste Industries, Inc., Casella Waste Systems, Inc., Republic
Services, Inc., Waste Industries, Inc. and Waste Management, Inc.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
INDEX WCNX NASDAQ
----- ---- ------
<S> <C> <C> <C>
5/22/1998 100.00 100.00 100.00
12/31/1998 94.80 128.70 121.50
12/31/1999 49.20 101.10 225.40
</TABLE>
PROPOSAL 2 -- AMENDMENT TO 1997 STOCK OPTION PLAN
GENERAL
We are asking our stockholders to approve an amendment to our 1997 Stock
Option Plan that increases the number of shares of common stock authorized for
issuance pursuant to that plan. A copy of the 1997 Stock Option Plan is attached
to this Proxy Statement as Annex A. Currently, up to 12% of the shares of our
common stock outstanding at any given time may be issued under the plan. Our
Board of Directors has amended the 1997 Stock Option Plan to allow for the grant
of options to acquire up to 3,500,000 shares of common stock and directed that
such an amendment be submitted to the stockholders for their approval. Since
inception of the 1997 Stock Option Plan on October 1, 1997, and through March
27, 2000, options to purchase 2,022,726 shares of common stock have been granted
(net of cancellations), 423,063 shares have been issued on exercise of options
and 2,568,032 shares are reserved for issuance on exercise of currently
outstanding options.
11
<PAGE> 14
Our Board believes that our continued success depends upon our ability to
attract and retain highly competent persons as employees, consultants and
directors. We believe that one of the best ways to attain this objective is to
give such persons the opportunity to acquire an ownership interest by purchasing
shares of our common stock through the exercise of options granted under the
1997 Stock Option Plan. Presently, we have 545,306 options available to be
granted under the 1997 Stock Option Plan. We believe it is necessary to
authorize the issuance of up to 931,968 additional options at prices reflecting
current market conditions in order to attract and retain employees. This will
give Waste Connections a total pool of options available for issuance of
1,477,274 shares.
In addition to increasing the number of shares reserved for issuance under
the Plan the proposed amendment restores to the Plan a provision that the total
number of shares covered by the Plan, the number of shares covered by each
option, and the exercise price per share under each option will be
proportionately adjusted if a stock or other non-cash dividend,
recapitalization, reorganization, reclassification, stock split or reverse stock
split, liquidating dividend, combination or exchange of shares, merger or
consolidation, offering of shares at a price substantially below fair market
value or similar capital adjustment occurs. This amendment is necessary because
this provision was deleted when the Plan was amended in 1999 to tie the maximum
number of options that currently may be granted under the Plan to a percentage
of the outstanding shares, which resulted in automatic adjustments on the
occurrence of the events described.
Approval of the amendment, which will be submitted at the Annual Meeting in
the form of the following resolution, requires the affirmative vote of a
majority of the shares of common stock represented in person or by proxy at the
Annual Meeting.
"RESOLVED, that the first sentence of Section 3 of the 1997 Stock Option
Plan is amended and restated in its entirety to provide as follows:
Subject to adjustment as provided in section 6 for changes in Stock, the
Stock that may be sold pursuant to Options shall not exceed in the aggregate
3,500,000 shares.
RESOLVED further, that Section 6(a) of the 1997 Stock Option Plan is hereby
added as follows:
(a) If any change in the Stock subject to the Plan or subject to any
Option occurs (through stock dividend, dividend in property other than
cash, recapitalization, reorganization, reclassification, stock split or
reverse stock split, liquidating dividend, combination or exchange of
shares, merger or consolidation, any direct or indirect offering of Stock
at a price substantially below fair market value, or any similar change
affecting the Stock), the Board will appropriately adjust the class(es) and
maximum number of shares subject to the Plan and the class(es) and number
of shares and price per share of Stock subject to the outstanding Options.
SUMMARY OF 1997 STOCK OPTION PLAN
The 1997 Stock Option Plan is intended to give employees, consultants and
directors additional incentives by increasing their proprietary interests.
Employees, consultants and directors are eligible to participate in the Plan. As
of March 27, 2000, approximately 1,900 employees and five directors were
eligible to participate in the Plan.
The Plan is administered by the Compensation Committee. That committee
determines the employees, consultants and directors to whom options are granted,
the type, size, and term of the options, the grant date, the exercise price, the
expiration date, the vesting schedule and other terms and conditions of the
options.
The Plan permits the grant of incentive stock options (sometimes called
"ISOs") as defined in Section 422 of the Code, and nonqualified stock options.
Only employees may receive ISOs. The aggregate fair market value, as of the
grant date, of the common stock subject to ISOs that become exercisable by any
employee in any calendar year may not exceed $100,000. Options generally become
exercisable in installments according to a vesting schedule in the option
agreement. No option may be granted after September 30, 2007. No option will be
exercisable more than 10 years after the grant date (or five years in the case
of ISOs granted to an optionee who owns more than 10% of the combined voting
power of all classes of our outstanding capital
12
<PAGE> 15
stock). The exercise price of ISOs granted under the Plan must at least equal
the fair market value of a share of common stock on the grant date (or 110% of
such fair market value, in the case of an ISO granted to an optionee who owns
more than 10% of the combined voting power of all classes of our outstanding
capital stock).
If an optionee with outstanding options retires or becomes disabled and
does not die within the three months after retirement or disability, he or she
may exercise his or her options, but only during the period ending (subject to
the discretion of the Compensation Committee) on the earlier of six months after
retirement or disability, or the expiration date in the option agreement. If an
optionee with outstanding options dies while an employee, consultant or director
or within three months after termination due to disability or retirement, the
optionee's estate may exercise the optionee's options, but only during the
period ending on the earlier of one year after the optionee's death, or the
expiration date in the option agreement. Options not exercised within the
periods specified above will terminate, and the shares of common stock subject
to the options will become available for issuance under the Plan. If an
optionee's engagement as an employee, consultant or director ends because of a
reason other than the optionee's death, retirement or disability, his or her
options terminate on the date such engagement terminates, subject to the
discretion of the Compensation Committee, and the shares of common stock subject
to the options become available for issuance under the Plan. Each option
agreement may include our right to repurchase, when the optionee's engagement
terminates, any shares of our common stock the optionee acquired on exercise of
options.
The Board of Directors may amend the Plan at any time, but no amendment may
alter or impair rights and obligations under any option granted before such
amendment unless the optionee consents in writing, and the Board will seek the
consent of our stockholders to any amendment to the extent required by law.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
Incentive Stock Options
The following federal income tax rules generally apply to holders of ISOs
and to Waste Connections under current law:
(a) The optionee does not realize any taxable income when granted or
exercising an ISO, and we do not receive a tax deduction.
(b) If the optionee holds the shares acquired on exercise of an ISO
for at least two years after the date the ISO is granted and one year after
the optionee exercises the ISO, the difference between the amount the
optionee realizes when he or she later sells the shares and the price the
optionee paid to exercise the ISO is generally treated as capital gain or
loss to the optionee.
(c) If the optionee sells the shares before both of those periods have
elapsed (a "disqualifying disposition"), the optionee in most cases
recognizes as ordinary income in the year of the sale the lesser of his or
her actual gain on the sale, or the excess of the fair market value of the
shares on the exercise date over the exercise price. We generally may
deduct the same amount.
(d) If the optionee makes a disqualifying disposition, he or she
recognizes as capital gain the excess of the amount received on such sale
over the sum of the exercise price plus the amount of ordinary income the
optionee recognized on the sale.
(e) The amount by which the fair market value of the common stock the
optionee acquires on exercise of the ISO exceeds the exercise price may be
taxable to the optionee under the "alternative minimum tax" provisions of
the Code.
13
<PAGE> 16
Nonqualified Stock Options
The following federal income tax rules generally apply to holders of
nonqualified stock options and to Waste Connections under current law:
(a) The optionee does not realize any taxable income when granted a
nonqualified option, and we do not receive a tax deduction.
(b) When the optionee exercises a nonqualified option, he or she
recognizes ordinary income equal to the excess of the fair market value on
the exercise date of the shares of common stock purchased on exercise of
the option over the exercise price. We may deduct the same amount.
BOARD RECOMMENDATION
The Board of Directors recommends a vote FOR approval of the amendment to
the 1997 Stock Option Plan.
PROPOSAL 3 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors has
reappointed Ernst & Young LLP as independent accountants to audit the
consolidated financial statements of Waste Connections for the year 2000. The
Board of Directors recommends a vote in favor of ratification of the
appointment. If the stockholders should fail to ratify the appointment of the
independent accountants, the Board of Directors would reconsider the
appointment.
It is expected that representatives of Ernst & Young LLP will be present at
the annual meeting, will have an opportunity to make a statement if they desire
to do so and will be available to answer appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
Based soley upon a review of reports on Forms 3, 4 and 5 and any amendments
thereto furnished to the Company pursuant to Section 16 of the Securities
Exchange Act of 1934, as amended, and written representations from the executive
officers and directors that no other reports were required, we believe that no
executive officers or directors were late in filing such reports during 1999.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
To be considered for inclusion in next year's proxy materials, stockholder
proposals to be presented at the Company's 2001 Annual Meeting must be in
writing and be received by Waste Connections no later than December 24, 2000.
14
<PAGE> 17
OTHER BUSINESS
The Board of Directors does not know of any business to be brought before
the annual meeting other than the matters described in the Notice of Annual
Meeting. However, if any other matters are properly presented for action, it is
the intention of each person named in the accompanying proxy to vote the proxy
in accordance with his judgment on such matters.
By Order of the Board of Directors,
DARRELL W. CHAMBLISS
Secretary
March 31, 2000
A COPY OF THE COMPANY'S 1999 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WILL BE FURNISHED TO STOCKHOLDERS FREE OF CHARGE UPON
WRITTEN REQUEST TO THE OFFICE OF THE VICE PRESIDENT -- FINANCE OF THE COMPANY.
15
<PAGE> 18
ANNEX A
WASTE CONNECTIONS, INC.
AMENDED AND RESTATED
1997 STOCK OPTION PLAN
1. PURPOSE.
The purpose of the Plan is to provide a means for the Company and any
Subsidiary, through the grant of Incentive Stock Options and Nonqualified Stock
Options to selected Employees, Consultants and Directors, to attract and retain
persons of ability as Employees, Consultants and Directors, and to motivate such
persons to exert their best efforts on behalf of the Company and any Subsidiary.
2. DEFINITIONS.
(a) "BOARD" means the Company's Board of Directors.
(b) "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
(c) "COMMITTEE" means a committee appointed by the Board in accordance with
section 4(b) of the Plan.
(d) "COMPANY" means Waste Connections, Inc., a Delaware corporation.
(e) "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Subsidiary to render consulting services and who is compensated for
such services; provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE, CONSULTANT OR DIRECTOR" means the
employment or relationship as a Consultant or Director is not interrupted or
terminated. The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Consultant or Director shall be considered interrupted in
the case of (i) any leave of absence approved by the Board, including sick
leave, military leave or any other personal leave, or (ii) transfers between
locations of the Company or between the Company and a Subsidiary or their
successors.
(g) "DIRECTOR" means a member of the Company's Board.
(h) "DISABILITY" means permanent and total disability within the meaning of
section 422(c)(6) of the Code.
(i) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Subsidiary of the Company. Neither service as a Consultant
or a Director nor receipt of a director's fee from the Company shall be
sufficient to constitute "employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(k) "INCENTIVE STOCK OPTIONS" means Options that are intended to qualify as
incentive stock options within the meaning of section 422 of the Code.
(l) "NON-EMPLOYEE DIRECTOR" means a Director who satisfies the requirements
established from time to time by the Securities and Exchange Commission for
non-employee directors under Rule 16b-3.
(m) "NONQUALIFIED STOCK OPTIONS" means Options that are not intended to
qualify as Incentive Stock Options.
(n) "OFFICER" means a person who is an officer of the Company or a
Subsidiary within the meaning of section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.
A-1
<PAGE> 19
(o) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.
(p) "OPTIONEE" means an Employee, Consultant or Director who holds an
outstanding Option.
(q) "OPTIONS" means, collectively, Incentive Stock Options and Nonqualified
Stock Options.
(r) "OUTSIDE DIRECTOR" means a member of the Board who satisfies the
requirements established from time to time for outside directors under section
162(m) of the Code.
(s) "PLAN" means this Waste Connections, Inc. Amended and Restated 1997
Stock Option Plan.
(t) "RULE 16b-3" means Rule 16b-3 under the Exchange Act or any successor
to Rule 16b-3, as amended from time to time and as in effect when discretion is
being exercised with respect to the Plan.
(u) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(v) "STOCK" means the Common Stock of the Company.
(w) "SUBSIDIARY" means any corporation that at the time an Option is
granted under the Plan qualifies as a subsidiary of the Company under the
definition of "subsidiary corporation" contained in section 424(f) of the Code,
or any similar provision hereafter enacted.
(x) "TEN PERCENT SHAREHOLDER" means an individual who, at the time of an
Option grant, owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company.
3. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in section 6 for changes in Stock, the
Stock that may be sold pursuant to Options shall not exceed in the aggregate 12%
of the number of shares of Stock outstanding at any given time. That number of
shares shall be reserved for Options (subject to adjustment as provided in
section 6). If any Option for any reason terminates, expires or is cancelled
without having been exercised in full, the Stock not purchased under such Option
shall revert to and again become available for issuance under the Plan.
4. ADMINISTRATION.
(a) The Plan shall be administered by the Board or, at the election of the
Board, by a Committee, as provided in subsection (b). Subject to the Plan, the
Board shall:
(i) determine and designate from time to time those Employees,
Consultants and Directors to whom Options are to be granted, and whether
the Options granted will be Incentive Stock Options or Nonqualified Stock
Options;
(ii) authorize the granting of Incentive Stock Options, Nonqualified
Stock Options or combinations thereof;
(iii) determine the number of shares subject to each Option and the
Exercise Price of each Option;
(iv) determine the time or times when and the manner in which each
Option shall be exercisable and the duration of the exercise period;
(v) construe and interpret the Plan and the Options, and establish,
amend and revoke rules and regulations for the Plan's administration, and
correct any defect, omission or inconsistency in the Plan or any Option
Agreement in a manner and to the extent it deems necessary or expedient to
make the Plan fully effective; and
(vi) make such other determinations as it may be authorized to make in
the Plan and as it may deem necessary and desirable for the purposes of the
Plan.
Notwithstanding the foregoing, however, (1) no Option shall be granted after the
expiration of ten years from the effective date of the Plan specified in section
9 below, (2) the aggregate fair market value (determined as
A-2
<PAGE> 20
of the date the Option is granted) of the Stock subject to Options that become
exercisable for the first time by any Employee during any calendar year under
all Incentive Stock Options of the Company and its Subsidiaries shall not exceed
$100,000, and (3) no person who is not an Employee of the Company or a
Subsidiary shall be entitled to receive Incentive Stock Options under the Plan.
(b) The Board may delegate administration of the Plan to a Committee of the
Board. The Committee shall consist of not less than three members appointed by
the Board. Subject to the foregoing, the Board may from time to time increase
the size of the Committee and appoint additional members, remove members (with
or without cause) and appoint new members in substitution therefor, or fill
vacancies, however caused. If the Board delegates administration of the Plan to
a Committee, the Committee shall have the powers theretofore possessed by the
Board with respect to the administration of the Plan (and references in this
Plan to the Board shall apply to the Committee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.
(c) Notwithstanding anything in this section 4 to the contrary, beginning
at such time as the Company first registers a class of equity securities under
section 12 of the Exchange Act, all decisions to grant Options shall be made by
the Board or by a Committee comprised solely of two or more Directors, each of
whom is both a Non-Employee Director and an Outside Director, or shall be made
in another manner that satisfies the requirements of Section 16b-3, so that
transactions between the Company and any Officer or Director relating to such
Options may be exempt from section 16(b) of the Exchange Act.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted shall be evidenced by an Option Agreement in
substantially the form attached hereto as Annex A or Annex B or such other form
as may be approved by the Board. Each Option Agreement shall include the
following terms and conditions and such other terms and conditions as the Board
may deem appropriate:
(a) OPTION TERM. Each Option Agreement shall specify the term for which the
Option thereunder is granted and shall provide that such Option shall expire at
the end of such term. The Board may extend such term; provided that, in the case
of an Incentive Stock Option, such extension shall not in any way disqualify the
Option as an Incentive Stock Option. The term of any Option, including any such
extensions, shall not exceed ten years from the date of grant; provided that, in
the case of an Incentive Stock Option granted to a Ten Percent Shareholder, such
term, including extensions, shall not exceed five years from the date of grant.
(b) EXERCISE PRICE. Each Option Agreement shall specify the exercise price
per share, as determined by the Board at the time the Option is granted;
provided that the exercise price of an Incentive Stock Option shall be not less
than the fair market value, or if granted to a Ten Percent Shareholder, 110
percent of the fair market value, of one share of Stock on the date the Option
is granted, as such fair market value is determined by the Board.
(c) VESTING. Each Option Agreement shall specify when it is exercisable.
The total number of shares of Stock subject to an Option may, but need not, be
allotted in periodic installments (which may, but need not be, equal). An Option
Agreement may provide that from time to time during each of such installment
periods, the Option may become exercisable ("vest") with respect to some or all
of the shares allotted to that period, and may be exercised with respect to some
or all of the shares allotted to such period or any prior period as to which the
Option shall have become vested but shall not have been fully exercised. An
Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria)
as the Board deems appropriate.
(d) PAYMENT OF PURCHASE PRICE ON EXERCISE. Each Option Agreement shall
provide that the purchase price of the shares as to which such Option may be
exercised shall be paid to the Company at the time of exercise either (i) in
cash, or (ii) in the absolute discretion of the Board (which discretion may be
exercised in a particular case without regard to any other case or cases), at
the time of the grant or thereafter, (A) by the withholding of shares of Stock
issuable on exercise of the Option or the delivery to the Company of other
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<PAGE> 21
Stock owned by the Optionee, provided in either case that the Optionee has owned
shares of Stock equal in number to the shares so withheld for a period
sufficient to avoid a charge to the Company's reported earnings, (B) according
to a deferred payment or other arrangement (which may include, without limiting
the generality of the foregoing, the use of Stock) with the person to whom the
Option is granted or to whom the Option is transferred pursuant to section 5(e),
or (C) in any other form of legal consideration that may be acceptable to the
Board.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate necessary to avoid
the treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement, or if less, the maximum rate permitted by law.
(e) NONTRANSFERABILITY. An Option shall not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of by the Optionee during his or her
lifetime, whether by operation of law or otherwise, other than by will or the
laws of descent and distribution applicable to the Optionee, and shall not be
made subject to execution, attachment or similar process; provided that the
Board may in its discretion at the time of approval of the grant of an Option or
thereafter permit an Optionee to transfer an Option to a trust or other entity
established by the Optionee for estate planning purposes, and may permit further
transferability or impose conditions or limitations on any permitted
transferability. Otherwise, during the lifetime of an Optionee, an Option shall
be exercisable only by such Optionee.
(f) CONDITIONS ON EXERCISE OF OPTIONS AND ISSUANCE OF SHARES.
(i) SECURITIES LAW COMPLIANCE. The Plan, the grant and exercise of
Options thereunder and the obligation of the Company to sell and deliver
shares on exercise of Options shall be subject to all applicable Federal
and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required, in the opinion of the
Board. Shares shall not be issued on exercise of an Option until (1) the
listing of such shares on any stock exchange on which the Stock may then be
listed and compliance with all requirements of such exchange, and (2) the
completion of any registration or qualification of such shares under any
Federal or state law, including without limitation the Securities Act and
the Exchange Act, or any rule or regulation of any government body which
the Company determines in its sole discretion to be necessary or advisable.
(ii) INVESTMENT REPRESENTATION. The Company may require any Optionee,
or any person to whom an Option is transferred, as a condition of
exercising such Option, to (1) give written assurances satisfactory to the
Company as to the Optionee's knowledge and experience in financial and
business matters or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the Stock
subject to the Option for such person's own account and not with any
present intention of selling or otherwise distributing the Stock. The
foregoing requirements, and any assurances given pursuant to such
requirements, shall not apply if (A) the issuance of the Stock on the
exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act, or (B) counsel for the
Company determines as to any particular requirement that such requirement
need not be met in the circumstances under the then applicable securities
laws. The Company may, with the advice of its counsel, place such legends
on stock certificates issued under the Plan as the Company deems necessary
or appropriate to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Stock.
(g) EXERCISE AFTER DEATH OF OPTIONEE. If an Optionee dies (i) while an
Employee, Consultant or Director, or (ii) within three months after termination
of the Optionee's Continuous Status as an Employee, Consultant or Director
because of his or her Disability or retirement, his or her Options may be
exercised (to the extent that the Optionee was entitled to do so on the date of
death or termination) by the Optionee's estate or by a person who shall have
acquired the right to exercise the Options by bequest or inheritance, but only
within the period ending on the earlier of (1) one year after the Optionee's
death (or such shorter or longer
A-4
<PAGE> 22
period specified in the Option Agreement, which period shall not be less than
six months), or (2) the expiration date specified in the Option Agreement. If,
after the Optionee's death, the Optionee's estate or the person who acquired the
right to exercise the Optionee's Options does not exercise the Options within
the time specified herein, the Options shall terminate and the shares covered by
such Options shall revert to and again become available for issuance under the
Plan.
(h) EXERCISE AFTER TERMINATION OF OPTIONEE'S CONTINUOUS STATUS AS AN
EMPLOYEE, CONSULTANT OR DIRECTOR AS A RESULT OF DISABILITY OR RETIREMENT. If an
Optionee's Continuous Status as an Employee, Consultant or Director terminates
as a result of the Optionee's Disability or retirement, and the Optionee does
not die within the following three months, the Optionee may exercise his or her
Options (to the extent that the Optionee was entitled to exercise them on the
date of termination), but only within the period ending on the earlier of (i)
six months after such termination (or such longer period specified in the Option
Agreement), or (ii) the expiration of the term set forth in the Option
Agreement. If, after termination, the Optionee does not exercise his or her
Options within the time specified herein, the Options shall terminate, and the
shares covered by such Options shall revert to and again become available for
issuance under the Plan.
(i) NO EXERCISE AFTER TERMINATION OF OPTIONEE'S CONTINUOUS STATUS AS AN
EMPLOYEE, CONSULTANT OR DIRECTOR OTHER THAN AS A RESULT OF DEATH, DISABILITY OR
RETIREMENT. If an Optionee's Continuous Status as an Employee, Consultant or
Director terminates other than as a result of the Optionee's death, Disability
or retirement, all right of the Optionee to exercise his or her Options shall
terminate on the date of termination of such Continuous Status as an Employee,
Consultant or Director. The Options shall terminate on such termination date,
and the shares covered by such Options shall revert to and again become
available for issuance under the Plan.
(j) EXCEPTIONS. Notwithstanding subsections (h), (i) and (j), the Board
shall have the authority to extend the expiration date of any outstanding Option
in circumstances in which it deems such action to be appropriate, provided that
no such extension shall extend the term of an Option beyond the expiration date
of the term of such Option as set forth in the Option Agreement.
(k) INCENTIVE STOCK OPTIONS. Each Option Agreement that provides for the
grant of an Incentive Stock Option shall contain such terms and conditions as
the Board determines to be necessary or desirable to qualify such Option as an
Incentive Stock Option within the meaning of section 422 of the Code.
(l) COMPANY'S REPURCHASE RIGHT. Each Option Agreement may, but is not
required to, include provisions whereby the Company shall have the right to
repurchase any and all shares acquired by an Optionee on exercise of any Option
granted under the Plan, at such price and on such other terms and conditions as
the Board may approve and as may be set forth in the Option Agreement. Such
right shall be exercisable by the Company after termination of an Optionee's
Continuous Status as an Employee, Consultant or Director, whenever such
termination may occur and whether such termination is voluntary or involuntary,
with cause or without cause, without regard to the reason therefor, if any.
6. ADJUSTMENTS ON CHANGES IN STOCK.
In the event of (a) a merger or consolidation in which the Company is not
the surviving corporation, or (b) a reverse merger in which the Company is the
surviving corporation but the shares of the Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then to the extent
permitted by applicable law: (i) any surviving corporation shall assume any
Options outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, or (ii) any Options outstanding under the Plan shall
continue in full force and effect. If any surviving corporation refuses to
assume or continue such Options, or to substitute similar options for those
outstanding under the Plan, then such Options shall be terminated if not
exercised prior to the merger or reverse merger. If the Company dissolves or is
liquidated, any Options outstanding under the Plan shall terminate if not
exercised prior to such event.
A-5
<PAGE> 23
7. AMENDMENT OF THE PLAN.
(a) The Board may from time to time amend or modify the Plan for any
reason; provided that the Company will seek shareholder approval for any change
if and to the extent required by applicable law, regulation or rule.
(b) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the Code and the regulations
promulgated thereunder relating to Incentive Stock Options or to cause the Plan
or Incentive Stock Options to comply therewith.
(c) Rights and obligations under any Option granted before amendment of the
Plan shall not be altered or impaired by any amendment, unless the Optionee
consents in writing.
8. TERMINATION OR SUSPENSION OF THE PLAN.
The Board may suspend or terminate the Plan at any time for any reason.
Unless sooner terminated, the Plan shall terminate on the day prior to the tenth
anniversary of the earlier of the date the Plan is adopted by the Board or the
date the Plan is approved by the Company's shareholders. No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.
Rights and obligations under any Option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the written consent of the Optionee.
9. EFFECTIVE DATE OF THE PLAN.
The effective date of the Plan shall be determined by the Board, subject to
approval by the shareholders of the Company holding not less than a majority of
the shares present and voting at an annual or special meeting or by written
consent. Notwithstanding the foregoing, if the Plan is approved by the Board
prior to such meeting or the giving of such consent, Options may be granted by
the Board as provided herein subject to such subsequent shareholder approval.
10. WITHHOLDING TAXES.
Whenever the Company proposes or is required to issue or transfer shares of
Stock under the Plan, the Company shall have the right to require the grantee to
remit to the Company an amount sufficient to satisfy any Federal, state or local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Alternatively, the Company may issue or transfer
such shares net of the number of shares sufficient to satisfy the withholding
tax requirements. For withholding tax purposes, the shares of Stock shall be
valued on the date the withholding obligation is incurred.
11. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. No Optionee, as such, shall have any rights
as a shareholder of the Company.
(b) NO RIGHTS TO CONTINUED EMPLOYMENT OR ENGAGEMENT. The Plan and any
Options granted under the Plan shall not confer on any Optionee any right with
respect to continuation of employment by the Company or any Subsidiary or
engagement as a Consultant or Director, nor shall they interfere in any way with
the right of the Company or any Subsidiary that employs or engages an Optionee
to terminate the Optionee's employment or engagement at any time.
(c) COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT. Beginning at such time
as the Company first registers a class of equity securities under section 12 of
the Exchange Act, the Company intends that the Plan shall comply in all respects
with Rule 16b-3. If after such time any provision of this Plan is found not to
be in compliance with Rule 16b-3, that provision shall be deemed to have been
amended or deleted as and to the extent necessary to comply with Rule 16b-3, and
the remaining provisions of the Plan shall continue in full force and effect
without change. All transactions under the Plan after such time shall be
executed in accordance with the requirements of section 16 of the Exchange Act
and the applicable regulations promulgated thereunder.
A-6
<PAGE> 24
WASTE CONNECTIONS, INC.
620 COOLIDGE DRIVE, SUITE 350
FOLSOM, CALIFORNIA 95630
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 24, 2000
The undersigned holder of Common Stock of Waste Connections, Inc.
("WCI") acknowledges receipt of WCI's Proxy Statement dated March 31, 2000, and
Annual Report to Stockholders for 1999. The undersigned revokes all prior
proxies and appoints Ronald J. Mittelstaedt and Steven F. Bouck, and each of
them, individually and with full powers of substitution and resubstitution,
proxies for the undersigned to vote all shares of WCI Common Stock that the
undersigned would be entitled to vote at the Annual Meeting of Stockholders to
be held on Wednesday, May 24, 2000 at 9:00 A.M., Pacific Time, at the Hyatt
Regency, 1209 L Street, Sacramento, CA 95814, and any adjournment thereof, as
designated on the reverse side of this Proxy Card.
THIS PROXY WILL BE VOTED ACCORDING TO THE SPECIFICATIONS YOU MAKE BELOW. IF YOU
DO NOT SPECIFY BELOW BUT YOU DO SIGN AND DATE THIS PROXY CARD, THIS PROXY WILL
BE VOTED FOR THE PROPOSALS REFERRED TO IN (1) AND (2) BELOW, AND IN THE
DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO ANY OTHER MATTERS THAT PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 25
(CONTINUED FROM FACE OF CARD)
/x/ Please mark your votes as in this example.
THE WCI BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE IN PROPOSAL 1.
1. ELECTION OF DIRECTORS. Election of the following nominees as directors:
Mr. Michael W. Harlan
/ / FOR / / WITHHOLD AUTHORITY
Mr. William J. Razzouk
/ / FOR / / WITHHOLD AUTHORITY
THE WCI BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
2. OPTION PLAN PROPOSAL. To approve an amendment to WCI's 1997 Stock
Option Plan to increase the number of shares reserved for issuance under
that plan to 3,500,000.
/ / FOR / / AGAINST / / ABSTAIN
THE WCI BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
3. Ratification of Appointment of Ernst & Young LLP as independent
accountants.
/ / FOR / / AGAINST / / ABSTAIN
4. OTHER BUSINESS. To transact such other matters as may properly come
before the special meeting or any adjournments thereof.
/ / AUTHORIZED / / NOT AUTHORIZED
If you plan to attend the Annual Meeting of Stockholders, please mark the
following box and promptly return this Proxy Card. / /
DATED:____________________________, 2000
________________________________________
SIGNATURE OF STOCKHOLDER
________________________________________
TITLE, IF ANY
________________________________________
SIGNATURE OF STOCKHOLDER IF HELD
JOINTLY
________________________________________
TITLE, IF ANY
<PAGE> 26
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR ON THIS PROXY CARD. IF YOU HOLD
SHARES JOINTLY, EACH STOCKHOLDER SHOULD SIGN. IF YOU SIGN AS AN ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL TITLE.
IF THE SIGNER IS A CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME BY THE
PRESIDENT OR AN AUTHORIZED OFFICER. IF THE SIGNER IS A PARTNERSHIP, PLEASE SIGN
THE FULL PARTNERSHIP NAME BY AN AUTHORIZED PERSON. PLEASE MARK, SIGN, DATE AND
MAIL THIS PROXY CARD PROMPTLY, USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
