BROWNING-FERRIS INDUSTRIES, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - MARCH 2, 1994
P The undersigned stockholder of record on January 7, 1994,
of Browning-Ferris Industries, Inc., a Delaware corporation
R (the "Company"), hereby appoints WILLIAM D. RUCKELSHAUS
and GERALD K. BURGER, either one or both of them, proxies of
O the undersigned, with full power of substitution, to vote, as
designated below, at the annual meeting of stockholders of the
X Company to be held on March 2, 1994, at 2:00 p.m., Houston
Time, in the Grand Ballroom, Marriott Westside, 13210 Katy
Y Freeway, Houston, Texas, and at any adjournment thereof, the
number of votes which the undersigned would be entitled to
cast if personally present:
To elect the following five nominees to serve as
directors for three-year terms and until their successors are
duly elected and qualified:
Harry J. Phillips, Sr. Louis A. Waters
Robert M. Teeter Peter S. Willmott
Marc J. Shapiro
SEE REVERSE
SIDE
Please mark your
X votes as in this example
- ---
This Proxy is solicited on behalf of the Board of Directors
and will be voted. If no direction is made, this Proxy will be
voted FOR all of the Board of Directors' nominees and FOR proposals
(2), (3) and (4).
The Board of Directors recommends a vote FOR proposals 1, 2, 3 and 4.
FOR WITHHELD
1. Election of
Directors
(see reverse) ---- ----
For, except vote withheld from the
following nominee(s):
- ---------------------------------
FOR AGAINST ABSTAIN
2. Proposal to
approve the appoint-
ment of Arthur Andersen ---- ---- ----
& Co. by the Board
of Directors as aud-
itors for the Com-
pany's 1994 fiscal
year,
FOR AGAINST ABSTAIN
3. Proposal to
approve the
adoption of ---- ---- ----
the Company's
1993 Stock
Incentive Plan,
FOR AGAINST ABSTAIN
4. Proposal to approve
the adoption of the ---- ---- ----
Company's 1993 Non-
Employee Director
Stock Plan,
all as more particularly described in the Proxy Statement relating to
such meeting, receipt of which is hereby acknowledged.
Please sign your name here exactly as
it appears hereon. Joint owners must
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title
as it appears hereon. If a corporation,
please sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
------------------------------------
------------------------------------
Signature(s) Date
[LOGO]
BROWNING-FERRIS INDUSTRIES, INC.
-----------------------------------------------------------------
Notice of 1994 Annual Meeting
and
Proxy Statement
-----------------------------------------------------------------
Important
Please sign and date your proxy and promptly return it
in the enclosed envelope.
[Logo]
Browning-Ferris Industries, Inc.
P.O. Box 3151
Houston, Texas 77253
January 27, 1994
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1994 Annual Meeting of
Stockholders of Browning-Ferris Industries, Inc. on March 2, 1994,
at 2:00 p.m., Houston Time, in the Grand Ballroom, Marriott
Westside, 13210 Katy Freeway, Houston, Texas.
Whether or not you plan to be present, please sign and return your
proxy as soon as possible, so that your vote will be recorded; a
self-addressed envelope is provided.
William D. Ruckelshaus
Chairman and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Holders of Common Stock:
Notice is given hereby that the Annual Meeting of Stockholders of
Browning-Ferris Industries, Inc., a Delaware corporation (the
"Company" or "BFI"), will be held on March 2, 1994, at 2:00 p.m.,
Houston Time, in the Grand Ballroom, Marriott Westside, 13210 Katy
Freeway, Houston, Texas for the following purposes:
(1) To elect five nominees to serve as directors for three-year
terms and until their successors are duly elected and
qualified.
(2) To consider and vote upon a proposal to approve the selection
by the Board of Directors of Arthur Andersen & Co. as auditors
for the Company's 1994 fiscal year.
(3) To consider and vote upon the approval of the Company's 1993
Stock Incentive Plan.
(4) To consider and vote upon the approval of the Company's 1993
Non-Employee Director Stock Plan.
(5) To consider and act upon such other matters as may properly
come before the meeting or any adjournment thereof.
The Board of Directors has determined that only those persons who
were holders of record of Common Stock of the Company at the close
of business on January 7, 1994, the record date, will be entitled
to notice of, and to vote at, the meeting and any adjournment
thereof.
By Order of the
Board of Directors,
Gerald K. Burger
Vice President and Secretary
Houston, Texas
January 27, 1994
Please date, sign and return the enclosed Proxy in the accompanying
envelope at your earliest convenience.
PROXY STATEMENT
Introduction
This Proxy Statement and the enclosed form of proxy will be first
sent or given to stockholders on or about January 27, 1994, in
connection with a solicitation of proxies by the Board of Directors
of Browning-Ferris Industries, Inc., a Delaware corporation (the
"Company" or "BFI"), to be used at the Annual Meeting of
Stockholders of the Company to be held on March 2, 1994, at 2:00
p.m., Houston Time, in the Grand Ballroom, Marriott Westside, 13210
Katy Freeway, Houston, Texas and at any adjournment thereof (the
"Meeting"), for the purposes set forth in the foregoing Notice of
Annual Meeting of Stockholders. The Company's principal executive
offices are located at 757 N. Eldridge, Houston, Texas 77079.
All shares represented by valid proxies received in time for the
Meeting, and not revoked, will be voted. Unless the stockholder
otherwise specifies therein, such shares will be voted by the
persons named as proxy holders:
FOR the election as directors of the Company of those five
nominees for director for three-year terms, as listed under
the caption "Election of Directors" herein;
FOR the approval of the selection by the Board of Directors of
Arthur Andersen & Co. as auditors for the Company's 1994
fiscal year.
FOR the approval of the Company's 1993 Stock Incentive Plan.
FOR the approval of the Company's 1993 Non-Employee Director Stock
Plan.
The persons named as proxies in the enclosed form of proxy, William
D. Ruckelshaus, Chairman and Chief Executive Officer of the
Company, and Gerald K. Burger, Vice President and Secretary of the
Company, were selected by the Nominating Committee of the Board of
Directors of the Company.
The form of proxy enclosed is for use at the Meeting if a stock-
holder is unable to attend or does not desire to vote in person.
Any stockholder giving a proxy has the right to revoke it at any
time before the proxy is exercised, including by executing another
proxy and delivering it to the Company's election judge at the
Meeting or by voting in person at the Meeting.
Record Date and Voting at the Meeting
The holders of record on January 7, 1994, the record date, of
Common Stock, $.16-2/3 par value (the "Common Stock"), of the
Company will be entitled to one vote per share on each matter
submitted to the Meeting. At the close of business on the record
date, there were outstanding 174,459,248 shares of Common Stock.
No other voting securities of the Company were outstanding at the
close of business on the record date. The holders of a majority of
the total shares issued and outstanding, whether present in person
or represented by proxy, will constitute a quorum for the
transaction of business at the Meeting.
The affirmative vote of a majority of the total shares represented
in person or by proxy and entitled to vote at the Meeting is re-
quired for (a) the election of directors, (b) approval of the ap-
pointment of independent auditors, (c) the approval of the
1993 Stock Incentive Plan, (d) the approval of the 1993
Non-Employee Director Stock Plan, and (e) the approval of such
other matters as may properly come before the Meeting or any
adjournment thereof.
In accordance with Delaware law, a shareholder entitled to vote for
the election of directors can withhold authority to vote for all
nominees for directors or can withhold authority to vote for
certain nominees for directors. Abstentions from the proposals to
approve the appointment of auditors, the approval of the 1993 Stock
Incentive Plan or the approval of the 1993 Non-Employee Director
Stock Plan are treated as votes against the particular proposal.
Broker non-votes on the proposals on the election of directors, the
appointment of auditors, to approve the 1993 Stock Incentive Plan
or to approve the 1993 Non-Employee Director Stock Plan are treated
as shares as to which voting power has been withheld by the beneficial
holders of those shares and, therefore, as shares not entitled to
vote on the proposal as to which there is the broker non-vote.
Annual Report
The Company's Annual Report to Stockholders for the fiscal year
ended September 30, 1993 has been or is being furnished to stockholders
of record on January 7, 1994. The Annual Report to Stockholders does
not constitute a part of the proxy soliciting material.
Security Ownership of Management
As of January 21, 1994, the Company had no "parent," as that term
is defined in regulations promulgated under the Securities Exchange
Act of 1934, as amended, and none of its officers or directors
beneficially owned any equity securities of any of the Company's
subsidiaries, other than director's qualifying shares.
The following table sets forth, as of January 21, 1994, the amount
of the Company's Common Stock beneficially owned by each of its
directors and nominees for directors, each executive officer named
in the Summary Compensation Table, and all directors, nominees for director
and executive officers as a group, based upon information obtained from
such persons:
Amount and Nature of Beneficial Ownership
-----------------------------------------
Sole Voting Options
Name of and Exercisable Other Percent
Individual Investment Within 60 Beneficial of
or Group Power Days Ownership Class
- -----------------------------------------------------------
William D.
Ruckelshaus 25,500 1,050,000 1,264 (1) *
Bruce E.
Ranck 80,440 212,060 3,691 (1) *
Norman A.
Myers 310,122 176,450 3,718 (1) *
Louis A.
Waters 5,780 103,750 3,339 (1) *
Richard
Goodyear 2,500 23,750 -0- *
William T.
Butler 2,500 30,000 -0- *
C. Jackson
Grayson, Jr. 15,200 45,000 -0- *
Gerald
Grinstein -0- 30,000 1,000 (2) *
Harry J.
Phillips, Sr. 382,820 304,450 5,246 (1) *
Joseph L.
Roberts, Jr. -0- 30,000 -0- *
Marc J.
Shapiro 2,000 -0- -0- *
Robert M.
Teeter 2,000 30,000 -0- *
Marina v.N.
Whitman 1,000 7,500 -0- *
Peter S.
Willmott 6,000 30,000 -0- *
All Executive
Officers,
Nominees for Director
and Directors
as a Group
(19 persons) 848,847 2,225,770 24,603 1.7%
----
- -------------------
*Less than one percent.
(1) Represents shares allocated to the employee through his
participation in the Company's Employee Stock Ownership
and Savings Plan, according to the latest statement for
said plan. Such shares held in the Employee Stock
Ownership and Savings Plan can be voted by each employee,
and each employee has investment authority over the shares
of Company Common Stock held in his account in such plan,
except for Company Common Stock acquired with Company
matching contributions. In the case of a tender offer,
the trustee shall tender or not tender Company Common Stock
as directed by each participant.
(2) Shares held jointly with spouse.
Security Ownership of Certain Beneficial Owners
According to the following institutions' respective Form 13F
filings with the Securities and Exchange Commission for the period
ended September 30, 1993, the following institutions were known by
the Company to beneficially own more than five percent of the
outstanding shares of Common Stock of the Company:
Name and Amount and
Address of Nature of Percent
Title of Beneficial Beneficial of
Class Owner Ownership Class
- -----------------------------------------------------------
BFI Common Stock INVESCO CAPITAL 15,316,272(1) 8.8%
MANAGEMENT, INC.
1315 Peachtree
Street, N.E.
Atlanta, GA 30309
BFI Common Stock SANFORD C. 10,295,947(2) 5.9%
BERNSTEIN &
CO., INC.
One State Street
Plaza
New York, NY
10004
(1) Represents sole or shared investment discretion over BFI
Common Stock held by IVESCO Capital Management, Inc., a
holding company for investment advisory subsidiaries. These
affiliated investment advisory subsidiaries reported a
combined sole and shared voting power of 8,868,197 shares of
BFI Common Stock, representing a 5.1% voting authority of the
outstanding shares of BFI Common Stock.
(2) Represents sole or shared investment discretion over BFI
Common Stock. Entity has less than five percent of voting
authority of the outstanding BFI Common Stock.
ELECTION OF DIRECTORS
Nominees
The membership of the Company's Board of Directors is classified
into staggered three-year terms. Four persons, Harry J. Phillips, Sr.,
Robert M. Teeter, Louis A. Waters and Peter S. Willmott, are current
directors whose terms would otherwise expire and are being nominated
to serve for three-year terms and until their respective successors
have been duly elected and qualified. Marc J. Shapiro is a new nominee
for director. Pursuant to the Company's By-laws, the Company's
Board of Directors has set its size at fourteen members. The
directors and nominees for directors whose terms will continue
after the date of the Meeting total thirteen. Since the Company's
Nominating Committee only nominated the persons listed in this proxy
statement prior to its completion, the proxies being solicited
cannot be voted for more than five nominees; however, pursuant
to the Company's By-laws, the Board of Directors can fill
director vacancies.
It is the intention of the persons named in the enclosed form of
proxy to vote such proxy for the election of the five nominees
named in the proxy for a three-year term, unless otherwise directed
by the stockholder. Management does not contemplate that any of
the nominees will become unavailable, but if for any reason that
should occur before the Meeting, it is expected either (a) that the
persons named in the proxy will vote for another nominee or
nominees to be selected by the Board of Directors, or (b) that
the number of directors will be reduced accordingly.
The following table contains certain information as of January 18,
1994, with respect to the persons who have been nominated to serve
a three-year term as directors and for the Company's other
directors who are currently serving terms expiring in 1995 or 1996:
Positions Served
and Offices as a Expiration
with the Director of Present
Name Company Since Age Term
- ---------------- ------------------ -------- ----- ----------
William D. Chairman, Chief 1987 61 1996
Ruckelshaus Executive Officer
and Director(1)
Bruce E. Ranck President, Chief 1990 45 1996
Operating Officer
and Director(1)
Norman A. Myers Vice Chairman, Chief 1978 58 1996
Marketing Officer
and Director(1)
*Louis A. Waters Chairman of BFI 1969 55 1994
and International, Inc.
and Director(1)(2)
William T. Director(2)(4) 1990 61 1995
Butler
C. Jackson Director(3)(5) 1979 70 1995
Grayson, Jr.
Gerald Grinstein Director(4)(6) 1990 61 1996
*Harry J. Director(1)(2) 1970 64 1994
Phillips, Sr.
Joseph L. Director (3) 1991 58 1995
Roberts, Jr.
*Marc J. Nominee for Director N/A 46 N/A
Shapiro
*Robert M. Director(3)(6) 1989 54 1994
Teeter
Marina v.N. Director(4)(5) 1992 58 1995
Whitman
*Peter S. Director(5)(6) 1991 56 1994
Willmott
__________________
(1) Member of the Executive Committee
(2) Member of the Finance Committee
(3) Member of the Pension Benefit Committee
(4) Member of the Compensation Committee
(5) Member of the Audit Committee
(6) Member of the Nominating Committee
* Indicates current nominees for director for a three-year term
expiring in 1997 and until their respective successors have
been elected and shall qualify.
Background of Nominees for Director and Other Directors
Mr. Ruckelshaus was elected a director in June 1987 and Chairman of
the Board and Chief Executive Officer in October 1988. Since
August 1985, he has served as an attorney of counsel to the law
firm of Perkins Coie, but his active involvement with the firm
ceased when he joined the Company in October 1988. He served as
President of William D. Ruckelshaus Associates, an environmental
consulting firm, from August 1985 to September 1988. Mr.
Ruckelshaus was the first Administrator of the United States
Environmental Protection Agency and served again as its
Administrator from May 1983 to January 1985. Mr. Ruckelshaus also
serves as a director of Cummins Engine Company, Monsanto Company,
Nordstrom, Inc., Texas Commerce Bancshares, Inc. and Weyerhaeuser
Company. He also serves as a director or trustee of several educa-
tional and charitable organizations.
Mr. Ranck became President and Chief Operating Officer of the
Company in November 1991, having served as Executive Vice President
(Solid Waste Operations-North America) of the Company since October
1989 and a director since March 1990. Prior to that time, he
served the Company as a Regional Vice President in one of the
Company's regions for a period in excess of five years. He also
serves as a director of Junior Achievement of Southeast Texas, Inc.
Mr. Myers was elected a Vice President of the Company in December
1970, became an Executive Vice President in July 1976, a director
in February 1978, Chief Marketing Officer in March 1981 and Vice
Chairman of the Board in December 1982. Mr. Myers is a director of
My Friends, a foundation for children in crisis.
Mr. Waters, Chairman and President of BFI International, Inc. and
Chairman of the Finance Committee, served as Chairman of the
Executive Committee from September 1980 until September 1988.
He served as Chairman of the Board from August 1969 to
September 1980. Mr. Waters serves as a director or trustee of
several business, educational and charitable organizations.
Dr. Butler serves as President and Chief Executive Officer of
Baylor College of Medicine in Houston, Texas, a position he has
held since 1979. He is a director of C.R. Bard, Inc., First City
Bancorporation of Texas and Lyondell Petrochemical Company. Dr.
Butler is the Past Chairman of the Association of
American Medical Colleges and serves as a director, officer and/or
member of several professional and civic organizations.
Mr. Grayson is the founder and Chairman of the Board of American
Productivity and Quality Center, a privately funded educational and
research center located in Houston, Texas, a position he has held
with the Center since its formation in 1975. Mr. Grayson also
serves as a director of Harris Corporation, Whitman Corporation,
ORYX Energy, Infomart and First City Bancorporation of Texas.
Mr. Grinstein has served as Chairman and Chief Executive Officer
and a director of Burlington Northern Inc. and Burlington Northern
Railroad Company since February 1989. He also served as the
President of these companies from February 1989 until July 1991.
He served as Vice Chairman of Burlington Northern Inc. from April
1987 until December 1988. Mr. Grinstein served as Chairman of the
Board of Western Air Lines, Inc. from 1983 to 1984, President and
Chief Operating Officer from 1984 to 1985, Chief Executive Officer
from 1985 to 1986 and from 1986 to 1987, he was Chairman and Chief
Executive Officer. For a period in excess of five years ending in
1987, he was a partner in the Seattle, Washington law firm of
Preston Thorgrimson Ellis & Holman. Mr. Grinstein also serves as
a director of Delta Air Lines, Inc., Seafirst Corporation and
Sundstrand Corporation.
Mr. Phillips, Chairman of the Executive Committee, was Chairman of
the Board and Chief Executive Officer from September 1980 until
he resigned from those positions in September 1988. Mr. Phillips
is a director of National Commerce Bancorporation, Memphis,
Tennessee and a director or trustee of several other
business and charitable organizations.
Dr. Roberts is Senior Pastor of the Ebenezer Baptist Church in
Atlanta, Georgia. He also serves as a member of the Board of
Southerners for Economic Justice and other civic organizations.
Mr. Shapiro is Chairman, President and Chief Executive Officer of
Texas Commerce Bancshares, Inc. and its principal
subsidiary, Texas Commerce Bank National Association. He also
serves as an Executive Officer of Chemical Banking corporation. In
1987, he became Chief Executive Officer of Texas Commerce Bank
National Association, and in 1989, he became Chief Executive
Officer of Texas Commerce Bancshares, Inc. He also serves as a
director of the Banker's Roundtable, Weingarten Realty Investors
and Santa Fe Energy Resources, Inc. and as a director or trustee of
several business, educational and charitable organizations.
Mr. Teeter is President of Coldwater Corporation, a strategic
planning and public affairs consulting firm. From 1979 to 1987, he
served as President of Market Opinion Research. He is also a
director of United Parcel Service, Detroit and Canada Tunnel
Corporation and Durakon Industries, Inc., and a director or trustee
of several business, educational and charitable organizations.
Dr. Whitman has served as as Distinguished Visiting Professor of
Business Administration and Public Policy at the University of
Michigan since September 1992. Previously, she spent thirteen years
General Motors Corporation, six years as Vice President and Chief
Economist and seven years as Vice President and Group Executive,
Public Affairs Staffs. She currently serves as a director of
Procter & Gamble Company, Chemical Banking Corporation and UNOCAL
Corporation, and is a member, director or trustee of several
educational and professional organizations.
Mr. Willmott was Chairman, President and Chief Executive
Officer of Carson Pirie Scott & Co., Chicago, Illinois, from 1983
to 1989, and since 1989, he has served as Chairman and Chief
Executive Officer of Willmott Services, Inc., Chicago, Illinois.
He serves as Chairman of MacFrugal's Bargains and Close-Outs, Inc.
and is a director of Federal Express Corporation, International
Multifoods Corporation, Maytag Corporation, Morgan Keegan & Co.
and Zenith Electronics Corporation, as well as being a director
of various nonpublic corporations and educational or charitable
organizations.
The members of the Company's Executive, Audit, Compensation,
Finance, Nominating and Pension Benefit Committees are reflected in
the preceding table. The Executive Committee may exercise all the
powers of the Board of Directors between meetings of the Board of
Directors, except as delegated by the By-laws of the Company or the
Board of Directors to another standing or special committee, or as
reserved by the Board of Directors, but the Executive Committee
does not have the power to elect or remove officers, approve a
merger of the Company, recommend a sale of substantially all the
Company's assets, recommend a dissolution of the Company, amend the
Company's By-laws or Restated Certificate of Incorporation, declare
dividends on the Company's outstanding securities, or, except as
expressly authorized by the Board, issue any of the Company's
Common Stock or Preferred Stock.
The Audit Committee recommends the selection of and confers with
the Company's independent accountants regarding the scope and
adequacy of annual audits; reviews reports from the independent
accountants; and meets with such independent accountants and with
the Company's internal auditors and financial personnel to review
the adequacy of the Company's accounting principles, financial
controls and policies.
The Compensation Committee reviews the Company's compensation
philosophy and programs, and exercises authority with respect to
the payment of direct salaries and incentive compensation to
directors and officers; loans to or guarantees of obligations of
such persons and some employee loans; and the administration of the
stock incentive plans of the Company.
The Finance Committee oversees the long-term financial planning,
capital requirements and other financial needs of the Company;
explores sources and alternatives for meeting such requirements and
needs; makes recommendations to the Board of Directors or the
Executive Committee regarding authorizing the borrowing of funds or
the issuance of debt or equity securities; and oversees and reviews
the finances of the Company as necessary or advisable to supplement
those activities of the Executive Committee and the Audit
Committee.
The Nominating Committee is empowered to recommend to the whole
Board of Directors nominees for election as directors and persons
to fill director vacancies and newly created directorships; recruit
potential director candidates; recommend changes to the whole Board
of Directors concerning the responsibilities and composition of the
Board of Directors and its committees; select the membership of the
proxy committee charged with voting solicited proxies at
stockholder meetings; and review proxy comments received from
stockholders relating to the Board of Directors. In addition, the
Nominating Committee will review stockholders' suggestions of
nominees for director that are submitted in writing to the
Nominating Committee, at the address of the Company's principal
executive offices, not less than 90 days in advance of the date the
Company's proxy statement was released to stockholders in
connection with the previous year's annual meeting of stockholders.
The Pension Benefit Committee oversees the administration and
results of operation of the pension plans maintained by the Company
and its subsidiaries, including the Company's Employee Stock
Ownership and Savings Plan; confers with and receives reports from
the actuary and investment managers of the Company's Retirement
Plan; provides oversight of the pension plans maintained by the
Company's subsidiaries; and reviews and makes recommendations to
the Company concerning all material proposed changes to any of such
pension plans.
During the last fiscal year, the Executive Committee held eight
meetings and took numerous actions by unanimous written consent in
lieu of meetings, the Audit Committee held four meetings, the
Compensation Committee held three meetings and took numerous
actions by unanimous written consent in lieu of meetings, the
Finance Committee held two meetings, the Pension Benefit Committee
held one meeting, the Nominating Committee held four meetings and
the Board of Directors held six meetings. No incumbent director
attended fewer than 75 percent of the aggregate number of board
meetings and meetings of committees on which he or she served.
COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of Browning-
Ferris Industries, Inc. (the "Committee") is pleased to present its
1993 report on executive compensation. This Committee report
documents the components of the Company's executive officer
compensation programs and describes the basis on which 1993
compensation determinations were made by the Committee with respect
to the executive officers of the Company, including the executive
officers that are named in the compensation tables. The Committee
meets regularly and is comprised entirely of non-employee directors.
Compensation Philosophy and Overall Objectives of Executive
Compensation Programs --
It is the philosophy of the Company to ensure that executive
compensation be directly linked to continuous improvements in
corporate financial performance and increases in shareholder value.
The following objectives, which were previously adopted by the
Committee, serve as the guiding principles for all compensation
decisions:
- Provide a competitive total compensation package that
enables the Company to attract and retain key executives.
- Integrate all pay programs with the Company's annual and
long-term business objectives and strategy, and focus
executive behavior on the fulfillment of those
objectives.
- Provide variable compensation opportunities that are
directly linked with the performance of the Company and
that align executive remuneration with the interests of
shareholders.
The Committee believes that the Company's current executive
compensation program has been designed and is administered in a
manner consistent with these objectives. The program for fiscal
1994 has also been designed so that the compensation paid to the
named executives meets the requirements to be deductible under the
Internal Revenue Code's $1 million compensation limit.
Compensation Program Components --
The Committee regularly reviews the Company's compensation program
to ensure that pay levels and incentive opportunities are
competitive and reflect the performance of the Company. This
entails a reevaluation of both the total compensation levels and
the individual components, as weighted relative to one another, of
the compensation program for executive officers including base
salary, annual incentives and stock option awards. In determining
competitive levels, the Committee obtains and utilizes information
such as executive compensation surveys and comparative analyses of
compensation data in proxy statements provided by the Company's
human resources staff, outside compensation consultants and other
sources. The Company's incentive plans are designed to link
directly to financial performance measures; therefore, the actual
value of an executive's compensation package will vary based on the
performance of the Company. The particular elements of the
compensation program for executive officers are further explained
below.
Base Salary -- It is the objective of the Committee to
establish base salary levels for the Company's executive officers
that are generally comparable to similar executive positions in
companies of similar size and complexity as the Company. The
Company obtains information on such other companies through
published national executive compensation surveys. The Company
focuses primarily on revenue size in those surveys and additional
factors, such as asset size, number of employees and service
industry classifications. The survey data includes a substantial
number of companies beyond those reflected in the Dow Jones
Pollution Control Index used in the performance graph, which
includes only five companies. Actual salaries are based on individual
performance contributions relative to a competitive salary range,
for each position, that the Committee considers to be reasonable
and necessary. The competitive range generally includes the 50th
percentile (median) through the 75th percentile of the market data.
However, other factors, including background, experience and scope of
accountability, can influence the determination of the appropriate
salary level for an executive officer. The Committee approves all
salary changes for the Company's officers, and bases individual salary
changes on a combination of factors such as the performance of the
executive, salary level relative to the competitive market, the salary
increase budget for the Company and recommendation of the Company's
Chairman and Chief Executive Officer. In this regard, all named
executives have employment agreements (see "Employment and
Consulting Agreements"). Under these agreements, the Committee
has the sole discretion for determining any increase in base salary;
however, pursuant to the agreements, base salaries may not be decreased.
In addition to those executive officers granted increases during fiscal
1993 which averaged 3.9%, three executive officers received promotional
increases to reflect significant expansion of their respective
responsibilities. Included in the promotional increases granted,
the Committee established a new base salary for Mr. Ranck during
fiscal 1993, as recommended by the Company's Chairman and Chief
Executive Officer, in recognition of the responsibilities he
accepted as President and Chief Operating Officer one and one-half
years earlier.
Annual Incentive Compensation -- The Company's officers are
eligible to participate in an annual incentive compensation plan
with awards based primarily on the attainment of certain earnings
per share goals, subject to a return on assets threshold. The
objective of this plan is to deliver competitive levels of
compensation for the attainment of financial objectives and
operating results that the Committee believes are primary
determinants of share price over time. In particular, the plan
aims to focus corporate behavior on consistent and steady earnings
growth as measured by return on assets and earnings per share. In
addition, with the exception of Messrs. Ruckelshaus and Ranck whose
incentive objectives are based 100% on financial performance, each of
the executive officers has specific individual performance
objectives which include both qualitative and quantitative criteria
focused on the priorities within their areas of
functional accountability. These objectives support the Company's
overall business strategies and have been determined to be drivers
of corporate performance. Individual objectives represent no
more than 25% of the incentive award for executive officers and are
specific to strategic direction and management of Company growth,
stakeholder matters and subsidiary financial performance.
Targeted awards for executive officers of the Company under the
plan represent the 50th percentile of the targeted awards reported
for the executive positions of companies of similar
size and complexity as the Company, as obtained from the same
executive compensation surveys noted above. In determining these
targeted levels, the comparison was based on an analysis of total
cash compensation paid as well as the reported target award levels
as a percentage of base salary. Actual awards are
proportionately decreased or increased on the basis of the
Company's and executive's performance, with the maximum award
available being two times the target incentive. All financial
goals and performance measures are established by the Committee at
the beginning of the fiscal year. For fiscal 1993, a nineteen
percent growth in earnings over fiscal 1992 was established as the
performance level required for payout of target incentive awards.
Actual fiscal 1993 performance resulted in 70% of the target
incentive attributable to financial performance being approved by
the Committee for payment to executive officers. Under Mr. Ruckelshaus'
employment agreement, he is nevertheless guaranteed an annual incentive
award of 25% of base salary, or one-half of his target annual
incentive opportunity, which the Committee determined to be reasonable
and necessary to attract and retain him as Chairman and Chief
Executive Officer. For fiscal 1993, the amount of Mr. Ruckelshaus'
actual incentive award, based on the Company's financial performance,
exceeded the guaranteed portion.
Stock Option Program -- The Committee strongly believes that
by providing those persons who have substantial responsibility for
the management and growth of the Company with an opportunity to
increase their ownership of Company stock, the best interests of
shareholders and executives will be closely aligned. Therefore,
executives are eligible to receive stock options generally on an
annual basis, giving them the right to purchase shares of Common
Stock of the Company at a specified price in the future. As with
other components of executive compensation, the Committee
establishes a competitive range of annualized long-term incentive
award values based on the executive's pay level, position and
compensation mix, as compared to companies of similar size and
complexity, as reflected in the same executive compensation surveys
noted above. The Committee's competitive range does not exceed the
50th percentile of the survey data. The annualized award range is
then converted to actual numbers of stock options with the value of
such options estimated by using the Black-Scholes option valuation
model. This option valuation model is based upon assumptions related
to stock price volatility, interest rates and dividend yield. The actual
number of options granted relative to the range is based upon the
executive's contributions and performance. Additionally, from time to time,
special circumstances (i.e., significant changes in position or
responsibilities, etc.) may be considered in making an option award, and
there have been instances, in prior year grants, of exceptions to the normal
range, where the Committee deemed it to be appropriate. Options granted
in fiscal 1993 to executive officers generally fell within the
Committee's competitive range. While a past front-loaded grant of
stock options was considered during the fiscal 1993 grant of stock
options to the Company's Chairman and Chief Executive Officer,
generally, past stock option grants are not considered when determining
the number of stock options to grant in a given year. As further
described below, Mr. Ruckelshaus' option award for fiscal 1993 was
based on factors other than normal award practices. In the case of
Mr. Waters, the level of his option award in 1993 was made pursuant
to his employment agreement; this agreement has since been modified
to follow the normal grant practices which the Committee has adopted.
Options granted in fiscal 1993 have terms of ten years, become
exercisable, subject to certain exceptions, in one-fourth annual
increments beginning one year after the date of grant, and have an
option price equal to 100% of the fair market value of the Company's
Common Stock on the date of grant. No stock options granted from the
current plans have been repriced, nor will the Committee consider option
repricing in the future.
Discussion of 1993 Compensation for the Chairman and Chief
Executive Officer
In considering the compensation for the Chairman and Chief
Executive Officer for fiscal 1993, the Committee has reviewed his
existing compensation arrangements and both Company and individual
performance. The 1988 employment agreement between the Company and
Mr. Ruckelshaus was structured to provide him with a fully
competitive base salary and annual incentive opportunity and a
front-loaded grant of stock options. The Committee has made the
following determinations regarding Mr. Ruckelshaus' compensation:
- Base salary remained unchanged through fiscal 1992
from the base salary authorized in 1988. During
fiscal 1993, Mr. Ruckelshaus' base salary was adjusted from
$806,000 to $850,000 based on the Committee's positive
assessment of his performance and contributions
as Chairman and Chief Executive Officer, which
included the Company's fiscal 1993 increases in net income
before special charge of 22% and in earnings per share
before special charge of 13%. This places his salary
slightly above the 75th percentile of the survey data
which the Committee has determined to be appropriate
and reasonable.
- Based on the financial performance of the Company for
fiscal 1993, the Committee approved the computed annual
incentive award of $297,500. This represents an
incentive award equal to 70% of the target established
for Mr. Ruckelshaus at the beginning of the fiscal year.
The Company's earnings per share performance in fiscal
1993 was equal to 70% of the goal that had been
established for earnings per share performance. Of the
$297,500 annual award, $212,500 (or 25% of base salary)
was the guaranteed portion pursuant to Mr. Ruckelshaus'
employment agreement.
- Stock options for 20,000 shares of the Company's Common
Stock were awarded during fiscal 1993 primarily in view
of Mr. Ruckelshaus' voluntary waiver of his fiscal 1992
guaranteed annual incentive award of 25% of base salary
and to align his interests with those of the
shareholders. The estimated value of these 20,000
options, based on the Black-Scholes option valuation
methodology, was approximately equivalent to his
guaranteed award. No other stock option grants were
awarded to Mr. Ruckelshaus during fiscal 1993.
As indicated in the discussion above, the Company's executive
compensation program is based primarily on improved financial
performance and returns to shareholders. For fiscal 1993, the
Committee's decisions took into consideration the fact that financial
performance, as measured by earnings per share, was above that
achieved for fiscal 1992, however, not yet at the level of expected
full performance.
Summary -- After its review of all existing components, the
Committee continues to believe that the total compensation program
for executives of the Company is competitive with the compensation
programs provided by other corporations with which the Company
compares. The Committee believes that any amounts paid under the
annual incentive plan will be appropriately related to corporate
and individual performances, yielding awards that are directly
linked to the annual financial and operational results of the
Company. The Committee also believes that the stock option program
provides opportunities to participants that are consistent with the
returns that are generated on the behalf of the shareholders.
Finally, the Committee is actively engaged in identifying and
designing alternative stock-based incentive programs, including
minimum ownership and retention guidelines, to enhance executive
stock ownership and further reinforce and align the executive's
long-term interests with those of the Company's shareholders.
Compensation Committee
of the Board of Directors*
Gerald Grinstein, Chairman
Robert M. Teeter
Marina v.N. Whitman
* Mr. Robert M. Teeter resigned from the Compensation
Committee on September 17, 1993, and Dr. William T. Butler
was appointed to the Compensation Committee on
December 7, 1993. Dr. Butler did not participate in any
discussions regarding executive compensation for the Company's
named executives for fiscal 1993.
Executive Compensation
The following table sets forth information with respect to the
Chief Executive Officer and the four most highly compensated
executive officers of the Company as to whom the total annual
salary and bonus for the fiscal year ended September 30, 1993,
exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- -----------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Securities
Other Underlying All
Name and Annual Stock Other
Principal Compen- Options Compen-
Position Year Salary Bonus sation (Shares) sation(2)
(2)(3)
- ----------- ---- -------- -------- -------- -------- -----------
William D. 1993 $828,000 $297,500 $1,807(2) 20,000 $ 4,497
Ruckelshaus, 1992 806,000 -0- (1) -0- 80,000 4,364
Chairman of 1991 806,000 -0- (1) -0-
Board and
Chief
Executive
Officer
Bruce E. 1993 425,500 190,000 -0- 50,000 4,497
Ranck, 1992 371,000 -0- -0- 210,000 4,364
President 1991 371,000 -0- 29,000
and Chief
Operating
Officer
Norman A. 1993 467,000 177,650 -0- 45,000 4,497
Myers 1992 459,000 -0- -0- 45,000 5,269
Vice 1991 448,800 -0- 15,000
Chairman
and Chief
Marketing
Officer
Louis A. 1993 348,900 148,952 -0- 145,000 179,723(5)
Waters(4) 1992 341,500 -0- -0- 67,500 168,938(5)
Chairman 1991 N/A N/A N/A
of BFI
International,
Inc.
Richard 1993 303,000 82,000 32,174(8) 20,000 -0-
Goodyear 1992 112,500(6) 150,000(7) 88,656(8) 75,000 -0-
Senior 1991 N/A N/A N/A N/A
Vice
President
and
General
Counsel
(1) Mr. Ruckelshaus waived receipt of his guaranteed incentive
compensation for fiscal years 1991 and 1992.
(2) Pursuant to the transitional provisions set forth in the proxy
rules, amounts of Other Annual Compensation and All Other
Compensation are excluded for the Company's 1991 fiscal year.
For fiscal years 1992 and 1993, the All Other Compensation
column includes the amount of the Company's match for each
executive officer under the BFI Employee Stock Ownership Plan,
except for Mr. Goodyear who did not participate in the Plan
during fiscal years 1992 and 1993. The Other Annual Compensation
amount for Mr. Ruckelshaus for fiscal 1993 represents the
above-market interest rate on his deferred compensation that
exceeds 120% of the applicable federal long-term rate.
See "Deferral Agreement" hereafter for a discussion of
Mr. Ruckelshaus' Deferral Agreement.
(3) Excludes perquisites and other personal benefits, unless the
aggregate amount of such compensation is the lesser of either
$50,000 or 10% of the total of annual salary and bonus reported
for the named executive officer.
(4) Mr. Waters was not an executive officer during fiscal year 1991.
(5) Includes $161,880 and $175,226 in retirement pay for fiscal
years 1992 and 1993 earned for 20 years of service with the
Company prior to his current position as Chairman of BFI
International, Inc. Mr. Waters, as beneficiary, receives trust
payments paid in accordance with a trust agreement. See
"Employment and Consulting Agreements" herein for a discussion
of Mr. Waters' employment agreement.
(6) Consists of four and one-half months of base salary for
Mr. Goodyear, who was elected Senior Vice President and General
Counsel effective May 11, 1992; he was not employed by the
Company prior to that time.
(7) Consists of a reporting bonus and a guaranteed incentive
compensation payment to Mr. Goodyear pursuant to his employment
agreement.
(8) These payments for moving expenses and tax gross-ups with respect
to such expenses were made in connection with Mr. Goodyear's
relocation to Houston, Texas. See "Certain Transactions - Housing
Relocation". The amounts paid in connection with the Company's
purchase and subsequent sale of Mr. Goodyear's home in Bellaire,
California, have not been included in the Summary Compensation
Table, because those amounts are not considered by the Company to
be compensation to Mr. Goodyear under applicable Internal Revenue
Service regulations.
Performance Graph
The following performance graph compares the performance of the
Company's Common Stock to the S & P 500 Index and to the Dow Jones
Pollution Control Index (which includes the Company, Chambers
Development Co., Inc. (Class A), Ogden Corp., Rollins
Environmental Services, Inc. and WMX Technologies, Inc.) for the
Company's last five fiscal years. The graph assumes that the value
of the investment in the Company's Common Stock and each index was
$100 at September 30, 1988 and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
200 ________________________________________________
180 ________________________________________________
160 ________________________________________________
140 ________________________________________________
120 ________________________________________________
100 ________________________________________________
80 ________________________________________________
60 ________________________________________________
40 ________________________________________________
20 ________________________________________________
0 ________________________________________________
1988 1989 1990 1991 1992 1993
FISCAL YEAR ENDED SEPTEMBER 30
- - - BFI
- - - S&P 500 Index
- - - Dow Jones Pollution Control Index
September 30,
----------------------------------
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
BFI 100 153 116 76 95 95
S & P 500 Index 100 133 121 158 175 197
Dow Jones Pollution 100 148 139 146 141 125
Control Index
(Textual description of performance graph for EDGAR transmission --
the chart compares the performance of BFI Common Stock over a
five-year period to the S & P 500 Index and the Dow Jones Pollution
Control Index, as reflected in the numerical data under the chart,
with 100 representing the invested value in BFI Common Stock and the
two indices at September 30, 1988).
Director Compensation
In fiscal 1993, non-employee members of the Board of Directors were
paid an annual retainer fee of $20,000, and this amount has
been increased to $30,000 ($20,000 to be paid in cash and $10,000
to be paid in Company Common Stock, assuming stockholder approval
of the 1993 Non-Employee Director Stock Plan) for fiscal 1994, and are also
compensated in varying annual amounts for participation on committees.
Employee-directors of the Company do not receive any additional
compensation from the Company for their service as a director.
All members of the Executive Committee are employee-directors.
Members of the Audit Committee receive $8,000 (Chairman receives $12,000);
Compensation Committee members receive $6,000 (Chairman receives
$9,000); the non-employee member of the Finance Committee receives
$6,000 (Chairman is an employee-director); and Nominating and
Pension Benefit Committee members receive $4,000 (Chairman of each
committee receives $6,000). In addition, non-employee directors
are paid attendance fees of $1,000 for each meeting of the Board of
Directors and $500 for committee meetings.
Mr. Teeter is the President of Coldwater Corporation, a strategic
planning and public affairs consulting firm. He is a director of
BFI and served on the Compensation Committee of BFI's Board of
Directors until September 17, 1993, when he resigned as a member of
the Compensation Committee. Since 1989, Coldwater Corporation has
advised the Company with respect to strategic planning, policy
development, public opinion analysis and public affairs, under an
annual consulting agreement, at a fee of $50,000 per year. The
Company considers the terms of the consulting agreement to be
reasonable and to contain terms substantially similar to those the
Company would have effected with an unrelated party. The Company
believes that the existence of the consulting agreement did not
affect Mr. Teeter's independence as a member of the Compensation
Committee during his service on that committee.
As part of its corporate charitable giving program, the Company
makes cash contributions directly to various charitable
organizations, including organizations with which certain directors
are affiliated. The Company does not consider these contributions
to be compensation to the directors who are affiliated with such
organizations. The Company's charitable giving program does not
include any "director legacy" donations.
Employment and Consulting Agreements
William D. Ruckelshaus, Chairman of the Board and Chief Executive
Officer of the Company, has an Employment Agreement with the
Company, which has a continuously renewing five-year term until he
reaches age 65, and continuing year to year thereafter until
terminated by the Company or Mr. Ruckelshaus. The agreement
provides for (i) the payment of a minimum annual base salary,
currently in the amount of $850,000; (ii) an annual cash incentive
bonus of not less than 25% of base salary, payable on a date
elected by Mr. Ruckelshaus and such additional cash bonus as the
Compensation Committee may determine; and (iii) participation in
all Company benefit plans and programs. Mr. Ruckelshaus also has
the right to elect part-time status, after attaining the age of 62,
for periods decreasing from four years through age 65 to one year
at age 68.
Bruce E. Ranck and Norman A. Myers are each parties to employment
agreements with the Company, which have continuously renewing five-
year terms until age 65, and continuing year to year thereafter
until terminated by the Company or the employee, and which provide
for the payment of minimum annual base salaries and for partic-
ipation by the employee in all Company benefit plans and programs.
The current annual salary for Messrs. Ranck and Myers is $480,000
and $475,000, respectively.
The employment agreements include provisions governing part-time
status, termination and change of control. If the Company should
terminate an agreement other than for cause (as defined in the
agreements), or the Company breaches the agreement, or the
employee is not elected and serving in his current capacity for the
Company, or the employee's duties or responsibilities are
materially changed or diminished (without his consent) from his
current duties, the agreement may be terminated by either party on
a date up to five years after notice of termination is given.
During that ensuing period, the employee would continue his employ-
ment on a part-time basis and be available to consult with the
Company. Generally, the employee's compensation while on part-time
status would be 75 percent of the average of the employee's
compensation (including salary and bonus) for the two highest of
the three years prior to the employee going on part-time status.
In the event that Messrs. Ruckelshaus, Ranck and Myers were termi-
nated without cause during 1994 or if the employee terminated the
agreement because of a breach by the Company, the annual
compensation on part-time status would be approximately $728,400,
$380,200 and $415,400, respectively, subject to an annual cost-of-
living adjustment. A part-time status employee would continue to
participate in the Company's benefit plans and programs. The
agreement with each employee also provides that he may elect part-
time status upon attaining the age of 62, at reduced annual
compensation, subject to an annual cost-of-living adjustment, but
without any participation in the Company's incentive compensation
plan.
In the event of a change of control of the Company, the employee
may elect to receive a lump sum payment equal to three times the
employee's average annualized base compensation includable in gross
income over the five taxable years preceding the tax year in which
the change of control occurs. If a change of control were to occur
during 1994 and the election to take the change of control payment
were made by Messrs. Ruckelshaus, Ranck and Myers, they would
receive approximately $2,599,100, $1,942,500 and $2,092,300,
respectively. The election by the employee to take the change of
control payment would be in lieu of other benefits and rights under
such employee's agreement, except, generally, amounts payable under
pension, insurance and similar plans, reimbursement for legal and other
advisory expenses and certain stock option and indemnification
rights.
Louis A. Waters has an employment agreement with a continuously
renewing five-year term until terminated by either the Company or
the employee, and provides for a current base salary of $369,990,
subject to an annual cost-of-living adjustment. The agreement also
has a change of control payment provision. If a change of control
were to occur during 1994 and the election to take the change of
control payment were made, Mr. Waters would receive approximately
$2,538,300. After twenty years of services, Mr. Waters began to
receive a monthly retirement benefit on February 1, 1989, which
will be reduced in the future by any payments that Mr. Waters
receives pursuant to the Company's retirement plan. His current
monthly retirement benefit payment is approximately $14,365. This
retirement benefit payment is provided by a trust at a bank, of
which Mr. Waters is the beneficiary. The Company provides annual
funding ($154,889 in fiscal 1993) in an amount actuarially deter-
mined to provide Mr. Waters' retirement benefit. For fiscal 1993,
the Company made an accrual of $252,000 for Mr. Waters' future
retirement benefits. The trust agreement also has change of
control provisions which, if a change of control occurs, requires
the trustee to make an immediate distribution of the trust assets,
which would reduce any remaining obligations of the Company to
provide such benefits to Mr. Waters.
Richard Goodyear has an employment agreement with the Company,
which has a term ending January 15, 1997. On December 31, 1993,
Mr. Goodyear stepped down as the Company's Senior Vice President
and General Counsel, and he began inactive status effective
January 15, 1994. His compensation while on inactive status, as
fixed by his employment agreement, is $229,500 annually and he continues
to participate in the Company's benefit programs.
Harry J. Phillips, Sr., in accordance with his employment agreement
that provides for the election of part-time employment status after
reaching age 62, elected part-time status on February 1, 1992. He was
a full-time employee of the Company prior to February 1, 1992. His
part-time status will continue until he reaches age 65 and will
continue thereafter for a renewing one year term until notice of
termination is given by either him or the Company. His current
base salary, as provided under his employment agreement, is
$200,000 and is to compensate him for his services rendered as a part-time
status employee of the Company. The agreement also has a change of
control payment provision. If a change of control were to occur
during 1994 and the election to take the change of control payment
were made, Mr. Phillips would receive approximately $4,153,500.
Pursuant to the Company's retirement plan and the Company's Benefit
Restoration Plan, Mr. Phillips is receiving monthly retirement benefit
payments of approximately $20,600.
Stock Option Plans
The Company currently maintains three plans (the "Plans"), pursuant
to which options to purchase shares of the Company's Common Stock
are outstanding or available for future grants. Two additional
plans are being submitted for stockholder approval at this Annual
Meeting of Stockholders. The purpose of the Plans is to advance
the best interests of the Company by providing those persons who
have substantial responsibility for the management and growth of
the Company with additional incentive by increasing their
proprietary interest in the success of the Company. Except for
options on Common Stock granted to members of the Compensation
Committee of the Board of Directors (the "Compensation Committee")
that were granted by the Executive Committee of the Board of
Directors prior to January 21, 1991 and options to be granted
pursuant to a formula under the 1993 Non-Employee Director Stock
Plan being submitted for stockholder approval, all options on
Common Stock are granted by the Compensation Committee.
The following table shows, as to the Chief Executive Officer and
the four most highly compensated executive officers of the Company,
information about option grants in the last fiscal year. The
Company does not grant any Stock Appreciation Rights.
OPTION GRANTS IN LAST FISCAL YEAR
Grant
Individual Grants Date Value
- ------------------------------------------------------------- ----------
(a) (b) (c) (d) (e) (f)
Grant
Percentage Date
Number of of Total Present
Securities Options Value
Underlying Granted to Based on
Options Employees Exercise Black-
Granted in Fiscal Price Expiration Scholes
Name (Shares) 1993 (Per Share) Date Model(2)
- ----------- ---------- ---------- ----------- ---------- ----------
William D. 20,000(1) 1.1% $24.81 11/30/2002 $ 196,000
Ruckelshaus
Bruce E. 50,000(1) 2.7% 24.81 11/30/2002 490,000
Ranck
Norman A. 45,000(1) 2.5% 24.81 11/30/2002 441,000
Myers
Louis A. 145,000(1) 7.9% 24.81 11/30/2002 1,421,000
Waters
Richard 20,000(1) 1.1% 24.81 11/30/2002 196,000
Goodyear
_____________________
(1) Stock options granted on December 1, 1992 under the Company's 1990
Stock Option Plan. Twenty-five percent of option became fully
exercisable on December 1, 1993 and, subject to certain acceleration
provisions, 25% per year thereafter on a cumulative basis.
(2) Based upon the Black-Scholes option valuation model, which estimates
the present dollar value of BFI Common Stock to be $9.80 per option
share. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the
value realized will be at or near the value estimated by the
Black-Scholes model. The assumptions underlying the Black-Scholes
model include (a) an expected volatility of .368 based on the prior
three years of month-end closing stock prices of BFI Common Stock,
(b) a risk-free rate of return of 5.88%, which approximates the
10-year Treasury bond rate, (c) BFI Common Stock dividend yield of
2.74%, and (d) a ten year period from time of grant until exercise.
The following table shows aggregate option exercises in the last
fiscal year and fiscal year-end option values for the Chief
Executive Officer and the four most highly compensated executive
officers. The Company does not grant any Stock Appreciation
Rights.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND SEPTEMBER 30, 1993 OPTION VALUES
(a) (b) (c) (d) (e)
Number of Securities
Underlying
Unexercised Value of
Options at Unexercised In-the-
September 30, 1993 Money Options at
(Shares) September 30, 1993(1)
_________________________________________
Shares
Acquired
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized cisable cisable cisable cisable
- ----------- -------- -------- --------- ------- -------- -----------
William D. -0- $ -0- 1,045,000 100,000 $ -0- $ 485,600
Ruckelshaus
Bruce E. -0- -0- 199,560 260,000 393,100 1,274,700
Ranck
Norman A. -0- -0- 165,200 90,000 251,600 273,200
Myers
Louis A. -0- -0- 67,500 212,500 -0- 409,700
Waters
Richard -0- -0- 18,750 76,250 54,000 162,000
Goodyear
(1) Computed based upon the difference between aggregate fair market
value and aggregate exercise price.
Retirement Plans
The Company has a defined-benefit retirement plan (the "Plan"),
covering all United States employees of the Company, except certain
employees subject to collective bargaining agreements and certain
other employees covered by other plans not made a part of the Plan.
The following table shows the estimated annual benefits payable
upon retirement to persons in specified salary and bonus levels and
years of credited service classifications, including any amounts
payable pursuant to the Plan and the BFI Benefit Restoration Plan
described below:
Assumed
Final Five-
Year
Average
Salary and
Bonus Years of Credited Service (1)
- ---------------------------------------------------------------------
10 15 20 25 30 35
-------- --------- -------- --------- ---------- --------
$ 150,000 $ 18,797 $ 28,194 $ 37,593 $ 46,991 $ 56,389 $ 65,787
200,000 25,939 38,909 51,878 64,848 77,817 90,787
300,000 40,225 60,337 80,450 100,562 120,674 140,787
500,000 68,797 103,194 137,593 171,991 206,389 240,787
700,000 97,368 146,052 194,735 243,419 292,103 340,787
900,000 125,939 188,909 251,878 314,848 377,817 440,787
1,200,000 168,797 253,194 337,593 421,991 506,389 590,787
__________________
(1) The benefit levels in the table above reflect the reduction of
60 percent of the Primary Social Security Benefit, as provided
in the Plan. The benefits illustrated in the table above assume
a Primary Social Security Benefit of $1,279.60 per month, based
upon the law in effect on January 1, 1994 and assume normal
retirement in 2002 at age 65.
The remuneration covered by the Plan consists of the salaries and
bonuses paid to Plan participants, including salaries and bonuses
set forth in columns (c) and (d) of the Summary Compensation Table.
Messrs. Ruckelshaus, Ranck, Myers, Waters and Goodyear,
respectively, have 4, 22, 25, 22, and 1 years of credited service
under the Plan. The Plan provides for (i) past service credit for
most eligible employees who were employed by the Company or one of
its subsidiaries when the Plan became effective in April 1976, (ii)
normal retirement at age 65 with an early retirement option at age
55 for eligible employees, (iii) a vested benefit after five years
of vesting service, (iv) retirement income of approximately 50
percent of final average earnings after 35 years of credited
service and (v) spouse and disability benefits. All officers and
employee-directors of the Company are covered by the Plan.
Currently, the Internal Revenue Code limits the pension from the
Plan to $115,641 and limits the pay used to calculate pensions to
$235,840; these amounts are indexed annually to the changes in
Social Security benefits. If the pension to any person would be
limited by Section 415 of the Internal Revenue Code, such amounts
otherwise payable to the Plan participant pursuant to the Plan
would be paid directly to such participant by the Company in full,
pursuant to the provisions of the BFI Benefit Restoration Plan.
The purpose of the BFI Benefit Restoration Plan is to pay all
participants in the Plan the full retirement benefit otherwise
payable to them but for the benefit limitations imposed by Section
415 of the Internal Revenue Code.
Deferral Agreement
William D. Ruckelshaus, Chairman of the Board and Chief Executive
Officer of the Company, entered into a Deferral Agreement with the
Company on December 28, 1988. The Deferral Agreement for Mr.
Ruckelshaus provides for the deferred payout of a portion of his
salary and incentive compensation, as elected periodically in
advance by Mr. Ruckelshaus. The Company established a bookkeeping
account (the "Account") evidencing the amount of the Company's
obligation to Mr. Ruckelshaus under the Deferral Agreement. The
Account is credited with long-term market rates of interest. Each
deferred payout from the Account will be made at the date selected
by Mr. Ruckelshaus at the time he elected each deferral. See
"Employment and Consulting Agreements" and "Incentive Compensation"
for further information concerning Mr. Ruckelshaus' compensation
arrangements with the Company. All amounts deferred for Mr.
Ruckelshaus for fiscal 1993 have been reflected in the Summary
Compensation Table.
Certain Transactions
Housing Relocation
- ------------------
During fiscal 1992, the Company's Board of Directors elected
Richard Goodyear as Senior Vice President and General counsel of
the Company. The Company reimbursed Mr. Goodyear for expenses
associated with his relocation to Houston, Texas in the amount of
$88,656 in fiscal 1992 and $32,174 in fiscal 1993. During fiscal
1992, the Company purchased Mr. Goodyear's home in Bellaire,
California at its appraised value of $2,850,000. After applying
the proceeds received from the sale of Mr. Goodyear's home, the
Company paid $1,420,035 to the management relocation company as
payment for its carrying costs of mortgage, taxes and insurance,
loss on sale and selling expenses, including real estate
commissions, which the Company does not consider to be compensation
to Mr. Goodyear under applicable Internal Revenue Service
regulations. The Company considers this financial arrangement for
the sale of his prior residence to be usual and customary and
appropriate to encourage him to accept employment as a member of
the Company's senior management. See "Employment and Consulting
Agreements" for a discussion of the terms of Mr. Goodyear's
employment agreement with the Company. Effective January 15, 1994,
Mr. Goodyear has gone on inactive employment status.
Harry J. Phillips, Jr.
- ----------------------
Harry J. Phillips, Jr. resigned as an officer and director on June
26, 1989, and pursuant to the terms of his employment agreement, he
elected part-time employment status, which continues for a five
year term. His current base salary is $359,000, which is subject
to an annual cost-of-living adjustment, and he participates in all
of the Company's benefit plans for five years. He is the son of
Harry J. Phillips, Sr., a director of the Company.
Louis A. Waters
- ---------------
See discussion under "Employment and Consulting Agreements" for
information concerning the trust established and funded by the
Company in order to provide the retirement benefits that Mr. Waters
is entitled to receive pursuant to the terms of his prior
employment agreement with the Company.
Wasserman/Katz
- --------------
Wasserman/Katz is a management consulting firm located in Ellicott
City and Potomac, Maryland. Craig W. Wasserman, Ph.D., the
managing partner of the firm, is the brother-in-law of Bruce E.
Ranck, BFI's President, Chief Operating Officer and a director.
During fiscal 1993, Wasserman/Katz provided management consulting
services to the Company, and was paid $175,000 for such services,
in addition to reimbursement for expenses. Such services will
continue in fiscal 1994. The Company believes that these services
have been provided on terms substantially similar to those the
Company would have effected with an unrelated party.
Litigation
On October 4, 1991, a lawsuit styled Browning-Ferris Industries,
Inc., Derivatively by Sally M. Yeager, and on her own behalf and on
behalf of all others similarly situated, v. William D. Ruckelshaus
et al. was filed in the United States District Court for the
Eastern District of Pennsylvania. The defendants include certain
former and current directors and/or officers of the Company, including
certain nominees for director. The suit was transferred by the court
to the United States District Court for the Southern District of Texas.
The suit is a purported derivative action brought by Sally M. Yeager,
as a shareholder of the Company. The plaintiff seeks to have the action
certified as a class action with plaintiff as the class representative.
The complaint seeks damages against the individual defendants, but does
not seek damages against the Company. The complaint also seeks
various injunctive relief with respect to the Company's corporate
suffrage process, including declaring the Company's proxy materials
from 1987 to 1991 to be false and misleading and to declare the
election of directors from 1987 to 1991 to be null and void.
Another purported class action, with generally similar allegations,
was also filed in the United States District Court for the Southern
District of Texas. On October 25, 1991, a derivative lawsuit
styled Susan E. Cohen, Trustee for Robert Cohen, et al. v. William
D. Ruckelshaus et al. was filed in the United States District Court
for the Southern District of Texas. The lawsuit alleges various
breaches of fiduciary duty, waste of corporate assets and unjust
enrichment. The litigation purports to be a derivative action on
behalf of the Company against the individual defendants and does
not seek any damages from the Company. These cases were
consolidated as the case of In Re Browning-Ferris Industries, Inc.
Stockholder Derivative Litigation, in the United States District
Court for the Southern District of Texas. On March 3, 1993, the
court granted the defendants' motion to dismiss the stockholder
derivative litigation. The court ruled that the complaint did not
allege facts that, if proven, would establish a claim under federal
law, and because the federal court's jurisdiction of the state law
claims was dependent on the maintenance of the federal law claims,
the court dismissed the litigation. On April 1, 1993, the
plaintiffs filed a notice of appeal to the Fifth Circuit Court of
Appeals.
PROPOSAL TO APPROVE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen & Co. as
independent auditors of the Company and its subsidiaries for the
fiscal year ending September 30, 1994. This appointment was made
subject to the approval of the Company's stockholders. Accordingly,
the following resolution will be offered at the Meeting:
"RESOLVED, that the appointment by the Board of Directors of
Browning-Ferris Industries, Inc. of Arthur Andersen & Co. as
the auditors of the Company and its subsidiary companies for
the fiscal year ending September 30, 1994, is hereby
approved."
Arthur Andersen & Co. has been serving the Company in this capacity
for the past twenty-one years and has advised the Company that it
will have in attendance at the Meeting a representative who will be
afforded an opportunity to make a statement, if such representative
desires to do so, and will respond to appropriate questions
presented at the Meeting.
PROPOSAL RESPECTING 1993 STOCK INCENTIVE PLAN
AND PROPOSAL RESPECTING 1993 NON-EMPLOYEE DIRECTOR STOCK PLAN
Upon the recommendation of the Compensation Committee of the Board
of Directors (the "Compensation Committee"), the Board of Directors
adopted, and is submitting for stockholder approval, the 1993 Stock
Incentive Plan (the "1993 Plan") and the 1993 Non-Employee Director
Stock Plan (the "Director Stock Plan"). Complete copies of both
plans are attached hereto as Annex A. The following description of
these plans is qualified in its entirety by reference to Annex A,
which is hereby incorporated herein by reference as if fully set
forth herein.
Under the 1993 Plan, options to purchase up to an aggregate of
7,000,000 shares of Common Stock (including stock awards and
restricted stock grants) may be granted to certain
executives, key employees, employee-directors and consultants of
the Company and its subsidiary corporations, but no more than
500,000 shares of the total 7,000,000 shares of Common Stock may be
awarded as stock awards and restricted stock grants. Under the
Director Stock Plan, the total amount of Common Stock with respect
to which Options and Common Stock paid in lieu of non-employee-
directors' annual retainer shall not exceed 250,000 shares. Only
non-employee directors of the Company are eligible to participate
in the Director Stock Plan. In the event an option expires or is
terminated or cancelled, the shares of Common Stock allocable to
the unexercised portion of such option may again be subject to an
option under either plan.
The purpose of the plans is to benefit the Company and its
subsidiary corporations through the maintenance and development of
its management and non-employee directors by offering to such
individuals an opportunity to become owners of the Common Stock of
the Company and is intended to advance the best interests of the
Company by increasing their proprietary interest in the success of
the Company and its subsidiary corporations. There are seven non-
employee directors eligible to participate in the Director Stock
Plan, and there are approximately 850 employees eligible
to participate in the 1993 Plan.
Subject to stockholder approval of each plan, at January 21, 1994,
1,514,200 Options had been granted under the 1993 Plan, and no stock
awards or restricted stock had been awarded under the 1993 Plan.
No Options or Common Stock paid in lieu of non-employee - directors'
annual retainers has been awarded under the Director Stock Plan.
If stockholders approve the Director Stock Plan, the first grants
of stock options and stock in lieu of the annual retainer fee will
be made on the day following the Annual Meeting. The maximum
number of shares of Common Stock which may be covered by options
granted to any one person under the 1993 Plan is 300,000 shares.
An aggregate maximum of thirty percent of the shares covered by the
1993 Plan may be granted in options to employee-directors as a
group.
The 1993 Plan and the granting of options thereunder will be
administered by the Compensation Committee. The Compensation
Committee has the power to determine which persons shall receive
options under the 1993 Plan and the number of shares of Common
Stock to be issued to each participant pursuant to stock awards and
restricted stock grants. No Options, stock awards or restricted
stock will be granted under the 1993 Plan, nor will any Options
be granted or Common Stock paid in lieu of
non-employee directors' annual retainers under the
Director Stock Plan subsequent to December 6, 2003. The Director
Stock Plan is designed to be a formula plan and will be
administered by the Board of Directors. An option to purchase
5,000 shares of Common Stock shall be granted to each new non-
employee director the day following the Annual Meeting at which
such director is first elected or appointed to the Board as a
director. Thereafter, each eligible non-employee director shall
receive annual option grants the day following the Annual Meeting
to purchase 2,500 shares of Common Stock. In addition, after
stockholder approval, the Director Stock Plan provides that
each non-employee director shall be issued each year, on the day
following the Annual Meeting, shares of Common Stock, in payment
of one-third of such director's annual retainer fee for his or her
service as a director of the Company (i.e., currently, the one-third
is $10,000, with the aggregate retainer fee being $30,000). The number
of shares shall be determined based on fair market value. Such Common
Stock paid in lieu of the annual director retainer's fee is restricted for
three years and is subject to forfeiture upon certain events during
the three-year restricted period. Assuming shareholder approval
of the Director Stock Plan, an aggregate of 22,500 options to
purchase shares of Common Stock shall be granted on the day
following the Annual Meeting.
The terms and conditions applicable to each option granted under
the 1993 Plan will be, subject to the Plan, determined by the
Compensation Committee at the time of grant of each option, and may
vary with each option granted. Under the Director Stock Plan,
options are granted for a term of ten years and become exercisable
beginning one year after date of grant in annual increments of 25%.
Under both plans, no stock option can be exercised earlier than
six months from the date of grant.
In general, an option granted under the 1993 Plan will terminate
the earlier of the date of expiration or thirty days after severance
of the optionee's relationship with the Company as an employee,
affiliate or director.
Special rules apply if an optionee dies or if an optionee is
retired in good standing from the employ of the Company or a subsidiary
by reason of age or disability.
An option granted under the Director Stock Plan will terminate on
the earlier of the date of expiration or one year after the date of
ceasing to serve as a director. Special rules also apply if an
optionee dies or if the optionee has ceased to serve as a director
on or after attaining the age of sixty-two years.
Adjustments will be made under the 1993 Plan and the Director Stock
Plan in the number of shares of Common Stock which are issuable
upon exercise of options and in the price per share thereof to
protect the holders of options against dilution in the event of any
subdivision or consolidation of Common Stock or any other capital
adjustment, the payment of a stock dividend, or other increase or
decrease in shares of Common Stock effected without receipt of
consideration by the Company. Adjustments will also be made as
necessary in the event of mergers, consolidations and sales of
substantially all the assets of the Company. In the event of a
sale or merger or consolidation in which the Company is not the
surviving corporation or if the Company sells substantially all of
its assets and is liquidated, however, the Compensation Committee
of the Company may cancel such options under the 1993 Plan as of
the effective date of merger, consolidation or sale and
liquidation, provided that notice of such cancellation is given,
and the holder of an option under the 1993 Plan and the Director
Stock Plan shall have the right to exercise any non-qualified option
held for at least six months (and any incentive option held for at
least one year) in full during the period preceding
the effective date of such merger, consolidation or sale and
liquidation.
The price of a share of Common Stock purchasable upon exercise of
an option granted under the 1993 Plan and the Director Stock Plan
may not be less than the fair market value of a share of Common
Stock on the date such option is granted. Under both plans, the
option price may be paid either in cash or (unless the option
provides otherwise and subject to certain restrictions) by
tendering Common Stock having a value equal to the option price.
No Options may be repriced under either the 1993 Plan or the
Director Stock Plan.
Options granted under the 1993 Plan and Director Stock Plan will
not be transferable by the optionee other than by will or under the
laws of descent and distribution and will be exercisable only by
him or his legal guardian or representative during his lifetime.
No option, however, may be exercised more than ten years after the
date of grant under the 1993 Plan or the Director Stock Plan.
The Board of Directors has the power to amend, terminate or suspend
the 1993 Plan or the Director Stock Plan; provided, however, that
to the extent required to qualify the plan under Rule 16b-3 of the
Securities Exchange Act of 1934, the Board may not materially
increase the aggregate number of shares of Common Stock which may
be issued under either plan, materially modify the requirements as
to eligibility for participation in either plan or materially
increase the benefits accruing to participants under either plan,
without stockholder approval, and provided further that with respect to
the Director Stock Plan, the Board may not amend the plan more than
once every six months that would change the amount, price or timing
of the initial and annual grant or the Common Stock issued in lieu of
the annual retainer fee, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement
Income Security Act or the rules and regulations promulgated thereunder.
The table below shows the Options that have been granted to date to
each of the following persons or groups under the 1993 Plan. No
Options have been granted under the Director Stock Plan.
New Plan Benefits Under the 1993 Plan(1)
Name and Dollar Number
Position Value Units
- ---------------------- -------- ---------
William D. (2) -0-
Ruckelshaus, Chairman,
Chief Executive
Officer and Director
Bruce E. Ranck, (2) 55,000
President, Chief
Operating Officer and
Director
Norman A. Myers, Vice (2) 50,000
Chairman, Chief
Marketing Officer and
Director
Louis A. Waters, (2) 44,400
Chairman of BFI
International, Inc.
and Director
Richard Goodyear, (2) 20,000
Senior Vice President
and General Counsel(3)
Executive Officer (2) 248,400
Group
Non-Executive Director (2) 44,400
Group
Non-Executive Officer (2) 71,100
Employee Group
All Employees as a (2) 1,514,200
Group
_________________
(1) Additional Options under the 1993 Plan can be granted to the
named executive officers, but no more than 300,000 Options can
be granted to any participant under the 1993 Plan.
(2) All Options granted under the 1993 Plan as of December 7, 1993,
have been granted at the exercise price of $25.44 per share.
The actual value, if any, a person may realize will depend on
the excess of the stock price over the exercise price on the
date the option is exercised. The closing price of BFI Common
Stock on January 21, 1994, as reported in The Wall Street Journal,
was $29-3/8.
(3) Inactive employment status, effective January 15, 1994.
While the 1993 Plan provides for the issuance of both incentive stock
options and non-qualified options, no incentive stock options have been
granted under the 1993 Plan. Incentive stock options may only
be granted to employees of the Company and its subsidiary
corporations, whereas non-qualified options may be granted to
employees, directors and consultants of the Company and its
subsidiary corporations. The two types of options are subject to
differing federal income tax treatment.
TAX STATUS
Incentive Stock Options
The grant of incentive stock options to an employee does not result in any
income tax consequences. The exercise of an incentive stock option does
not result in any income tax consequences to the employee if the incentive
stock option is exercised by the employee during his employment with the
Company or a subsidiary, or within a specified period after termination
of employment due to death or retirement for age or disability under then
established rules of the Company. However, the excess of the fair market
value of the shares of stock as the date of exercise over the option price
is a tax preference item for purposes of determining an employee's
alternative minimum tax. An employee who sells shares acquired pursuant
to the exercise of an incentive stock option after the expiration of (i)
two years from the date of grant of the incentive stock option, and
(ii) one year after the transfer of the shares to him (the "Waiting
Period") will generally recognize long term capital gain or loss on the
sale.
An employee who disposes of his incentive stock option shares prior to the
expiration of the Waiting Period (an "Early Disposition") generally will
recognize ordinary income in the year of sale in an amount equal to the
excess, if any, of (a) the lesser of (i) the fair market value of the shares
as of the date of exercise or (ii) the amount realized on the sale, over
(b) the option price. Any additional amount realized on an Early
Disposition should be treated as capital gain to the employee, short or
long term, depending on the employee's holding period for the shares. If
the shares are sold for less than the option price, the employee will not
recognize any ordinary income but will recognize a capital loss, short or
long term, depending on the holding period.
The Company will not be entitled to a deduction as a result of the grant of
incentive stock option, the exercise of an incentive stock option, or the
sale of incentive stock option shares after the Waiting Period. If an
employee disposes of his incentive stock option shares in an Early
Disposition, the Company will be entitled to deduct the amount of
ordinary income recognized by the employee.
Non-Qualifed Stock Options
The grant of non-qualified sotck options under the 1993 Plan and Director
Stock Plan will not result in the recognition of any taxable income by the
participants. A participant will recognize income on the date of exercise
of the non-qualified stock option equal to the difference between (i)
the fair market value on that date of the shares acquired, and (ii) the
exercise price. The tax basis of these shares for purposes of a
subsequent sale includes the option price paid and the ordinary income
reported on exercise of the option. The income reportable on exercise
of the option by an employee is subject to federal and state income and
employment tax withholding.
Generally, the Company will be entitled to a deduction in the amount
reportable as income by the participant on the exercise of a non-
qualified stock option.
Stock Awards
Stock awards involve the issuance of shares of stock, without other payment,
as additional compensation for services to the Company. The receipient will
recognize taxable income equal to the fair market value of the shares on the
date of the award, which becomes the tax basis in a subsequent sale.
Generally, the Company will be entitled to a corresponding deduction in
an amount equal to the income recognized by the recipient.
Restricted Stock Grants and Stock Issued in Lieu of Director's Annual
Retainer
Restricted stock granted under the 1993 Plan and stock issued in lieu of the
director's annual retainer for service as a member of the Company's Board
of Directors under the Director Stock Plan (the "Restricted Stock Grants")
generally will not be taxed to the recipient, nor deductible by the
Company, at the time of grant. Restricted Stock Grants involve the
issuance of stock to a participant subject to specified restrictions
as to sale or transferability of the stock and/or subject to a
substantial risk of forfeiture. On the date the restrictions lapse,
and the stock becomes transferable or not subject to a substantial
risk of forfeiture, whichever is applicable, the recipient recognizes
ordinary income equal to the excess of the fair market value of
the stock on that date over the purchase price paid for the stock, if
any. The participant's tax basis for the stock includes the amount paid
for the stock, if any, and the ordinary income recognized. The Company is
entitled to a corresponding tax deduction for the amount of ordinary
income recognized by the participant.
Compensation Deduction Limitation
In the 1993 Omnibus Budget Reconciliation Act ("OBRA"), Congress limited
to $1 million per year the tax deduction available to public companies for
certain compensation paid to designated executive officers. OBRA provides
an exception from this limitation for certain "performance based"
compensation, if various requirements are satisfied. The 1993 Plan is
designed to satisfy this exception for stock options issued thereunder.
Thus, the Company anticipates being entitled to deduct an amount equal
to the taxable income reportable by an option recipient on exercise of a
non-qualified option or Early Disposition of shares of stock acquired by
exercise of an incentive stock option.
Additional requirements must be satisfied, including future shareholder
approval of specified performance based goals, if issuance of stock
awards and Restricted Stock Grants are to satisfy this exception. At
this time, however, the Company does not intend to grant a significant
number of stock awards or Restricted Stock Grants in the foreseeable
future. Thus, the Company does not anticipate that this deduction
limitation will have a material impact.
OTHER BENEFIT PLANS
See "Employment and Consulting Agreements"; "Stock Option Plans";
"Retirement Plans"; and "Deferral Agreement" for certain information
respecting the Company's other stock option plans and other remuneration
plans of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and
Forms 5 and amendments thereto furnished to the Company with
respect to its most recent fiscal year, and written representations
from reporting persons that no Form 5 was required, the Company
believes that all transactions by reporting persons were reported
on a timely basis.
OTHER MATTERS
Management of the Company does not intend to present any other
items of business and knows of no other items of business that are
likely to be brought before the Meeting, except those set forth in
the foregoing Notice of Annual Meeting of Stockholders. However, if
any other matters should properly come before the Meeting, the
persons named in the enclosed proxy will have discretionary
authority to vote such proxy in accordance with their best judgment
on such matters.
SHAREHOLDER PROPOSALS FOR
1995 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1995
annual meeting of stockholders must be received by the Company at
its principal executive offices (757 N. Eldridge, Houston, Texas
77079) by September 30, 1994 for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
COST OF SOLICITATION
This solicitation is made on behalf of the Board of Directors of
the Company. The cost of solicitation of proxies in the
accompanying form will be paid by the Company. The Company will
also, pursuant to regulations of the Securities and Exchange
Commission, make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy
materials to their principals and will reimburse them for their
reasonable expenses in so doing. In addition to solicitation by
use of the mails, certain directors, officers and employees of the
Company may solicit the return of proxies by telephone, telegram or
personal interviews. In addition, the Company has retained Morrow
& Co., Inc., New York, New York, to assist in the solicitation of
proxies and will pay approximately $10,000 in fees for the
solicitation of proxies to such firm, plus reimbursement of
expenses.
By Order of the
Board of Directors,
Gerald K. Burger
Vice President and Secretary
Houston, Texas
January 27, 1994.
ANNEX A
BROWNING-FERRIS INDUSTRIES, INC.
1993 Stock Incentive Plan
1. Purpose. The 1993 Stock Incentive Plan (the "Plan") is
to benefit Browning-Ferris Industries, Inc. (the "Company") and its
subsidiary corporations through the maintenance and development of
its management by offering certain executives, key employees
(including employee-directors) and consultants of the Company and
its subsidiaries (the "Participants") an opportunity to become
owners of the Common Stock, $.16-2/3 par value, of the Company and
is intended to advance the best interests of the Company by
providing such persons with additional incentive by increasing
their proprietary interest in the success of the Company and its
subsidiary corporations.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company or
by another committee designated to act by the Board of Directors
(the "Committee"), which Committee shall consist of not less than
two members who are outside directors as described in Section
162(m) of the Internal Revenue Code of 1986, as amended, and rules
and regulations issued thereunder. Meetings shall be held at such
times and places as shall be determined by the Committee. Except
to the extent permitted under Rule 16b-3 or any successor rule
under the Securities Exchange Act of 1934 ("Rule 16b-3"), no
director serving on the Committee shall be granted or awarded
equity securities or options of the Company pursuant to this Plan
or any other plan of the Company or any of its affiliates during
service as an administrator of a compensation or benefit plan of
the Company or any of its affiliates or during the one year prior
to such service. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote
of a majority of those members present at any meeting shall decide
any question brought before that meeting. In addition, the
Committee may take any action otherwise proper under the Plan by
the unanimous written consent of its members. No member of the
Committee shall be liable for any act or omission of any other
member of the Committee or for any act or omission on his own part,
including but not limited to the exercise of any power or
discretion given to him under the Plan, except those resulting from
his own gross negligence or willful misconduct. All questions of
interpretation and application of the Plan, or of options granted
hereunder (the "Options") and of stock awards and restricted stock
(which are defined in Paragraph 17 hereof) granted hereunder, shall
be subject to the determination, which shall be final and binding,
of a majority of the whole Committee.
3. Options, Stock Awards and Restricted Stock Grants. The
stock subject to the Options and other provisions of the Plan shall
be shares of the Company's Common Stock, $.16-2/3 par value (the
"Stock"). The total amount of the Stock with respect to which
Options, stock awards and restricted stock may be granted under
this Plan shall not exceed in the aggregate (7,000,000) shares,
but no more than 500,000 shares of Stock in the aggregate may be
awarded as stock awards and restricted stock grants; provided,
that the class and aggregate number of shares of
Stock which may be subject to Options, stock awards and restricted
stock granted hereunder shall be subject to adjustment in
accordance with the provisions of Paragraph 16 hereof. Such shares
of Stock may be treasury shares or authorized but unissued shares
of Stock. In the event that any outstanding Option for any reason
shall expire or is terminated or cancelled, the shares of Stock
allocable to the unexercised portion of such Option may again be
subject to an Option, stock award or restricted stock under the
Plan.
4. Authority to Grant Options. The Committee may grant from
time to time to such eligible individuals (the "Optionees") as set
forth in Paragraph 5 an Option or Options to buy a stated number of
shares of Stock under the terms and conditions of the Plan and the
stock option agreement. Options granted under the Plan may, in the
discretion of the Committee, be either incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-qualified stock options. Each stock
option agreement shall specifically state, for each Option granted
thereunder, whether the Option is an incentive stock option or a
non-qualified option, but any Option not designated by the
Committee as an incentive stock option shall be a non-qualified
stock option. In no event, however, shall both an incentive stock
option and a non-qualified stock option be granted together under
the Plan in such a manner that the exercise of one Option affects
the rights to exercise the other. No Options shall be granted
under the Plan subsequent to December 6, 2003. Except as provided
in Paragraph 6, all provisions of this Plan relating to options
apply to both incentive and non-qualified options. The total
amount of Stock with respect to which Options may be granted under
the Plan to employee-directors of the Company as a group shall not
exceed in the aggregate thirty (30) percent of the total number of
shares with respect to which Options may be granted pursuant to
Paragraph 3 of the Plan; provided, that the class and the aforesaid
maximum number of shares shall be subject to adjustments in
accordance with the provisions of Paragraph 16 hereof. The only
Options under the Plan which may be granted are those which either
(i) are granted after adoption of the Plan and are conditioned upon
approval of the Plan by the stockholders of the Company within
twelve months of such adoption or (ii) are granted after both
adoption of the Plan and approval thereof by the stockholders of
the Company within twelve months after the date of such adoption,
all as provided in Paragraph 21 hereof. The maximum number of
Options which may be granted to any one participant from this Plan
is 300,000; provided, that the class and the aforesaid maximum
number of shares shall be subject to adjustments in accordance
with the provisions of Paragraph 16 hereof.
5. Eligibility for Stock Options. Except as provided in
Paragraph 6(iv), the individuals who shall be eligible to receive
Options under the Plan shall be key employees (including employee-
directors) of the Company or of any subsidiary corporation and any
person who is a party to a written consulting agreement with the
Company or any of its subsidiary corporations, as determined by the
Committee. Non-employee directors are not eligible. For all
purposes of the Plan, the term "subsidiary corporation" shall mean
any corporation of which the Company is the "parent corporation" as
that term is defined in Section 424(e) of the Code.
6. Provisions Applicable to Incentive Stock Options. The
following provisions shall apply only to incentive stock options
granted under the Plan:
(i) No incentive stock option shall be granted to any
employee who, at the time such Option is granted, owns,
within the meaning of Section 422 of the Code, stock
possessing more than 10 percent of the total combined
voting power of all classes of Stock of the Company or
any of its subsidiaries, except that such an Option may
be granted to such an employee if at the time the
Option is granted the option price is at least 110
percent of the fair market value of the Stock
(determined in accordance with Paragraph 7) subject to
the Option, and the Option by its terms is not
exercisable after the expiration of five years from the
date the Option is granted;
(ii) To the extent that the aggregate fair market value of
stock with respect to which incentive stock options
(without regard to this subparagraph) are exercisable
for the first time by any individual during any
calendar year (under all plans of the Company and its
subsidiaries) exceeds $100,000, such Options shall
be treated as Options which are not incentive stock
options. This subparagraph shall be applied by taking
Options into account in the order in which they were
granted. If some but not all Options granted on any
one day are subject to this subparagraph, then such
Options shall be apportioned between incentive stock
option and non-qualified stock option treatment in
such manner as the Committee shall determine. For
purposes of this subparagraph, the fair market value
of any stock shall be determined, in accordance with
Paragraph 7, as of the date the Option with respect
to such Stock is granted.
(iii) No incentive stock option granted under the Plan shall
be exercisable any sooner than one year from the date
of grant.
(iv) Only employees (including employee-directors) of the
Company and its subsidiary corporations shall be
eligible to receive incentive stock options.
7. Option Price; Fair Market Value. The price at which
shares of Stock may be purchased pursuant to an Option shall be not
less than the fair market value of the shares of Stock on the date
the Option is granted, and the Committee in its discretion may
provide that the price at which shares may be so purchased shall be
more than such fair market value. For all purposes of this Plan,
the "fair market value" of the Stock shall be the mean of the
highest and lowest selling prices of the Stock as reported in The
Wall Street Journal for the last trading day before the date as of
which such fair market value is to be determined. No Option may be
repriced.
8. Duration of Options. Subject to Paragraph 6 (i), no
Option shall be exercisable after the expiration of ten years from
the date such Option is granted. An Option shall expire
immediately following the last day on which such Option is
exercisable pursuant to this Paragraph 8 or any decision of the
Committee made pursuant to Paragraph 9(b).
9. Amount Exercisable.
(a) Subject to Paragraph 6(iii), no Option shall be
exercisable earlier than six months from the date of grant.
(b) Subject to Paragraph 9(a), the Committee in its
discretion may provide that an Option shall be exercisable
throughout the term of the Option or during any lesser period of
time commencing on or after six months from the date of grant of
the Option and ending upon or before the expiration of the term.
Each Option may be exercised, so long as it is valid and
outstanding, from time to time in part or as a whole, subject
to any limitations with respect to the number of shares for
which the Option may be exercised at a particular time and to
such other conditions as the Committee in its discretion may
specify upon granting the Option.
10. Exercise of Options. Options shall be exercised by the
delivery of written notice to the Company setting forth the number
of shares of Stock with respect to which the Option is to be
exercised, together with cash, wire transfer, certified check, bank
draft or postal or express money order payable to the order of the
Company (the "Acceptable Funds") for an amount equal to the Option
price of such shares of Stock, or at the election of the Optionee,
by exchanging shares of Stock owned by the Optionee, so long as the
exchanged shares of Stock plus Acceptable Funds paid, if any, have
a total fair market value (determined in accordance with Paragraph
7, as of the date of exercise) equal to the purchase prices for
such shares to be acquired upon exercise of said Option, and
specifying the address to which the certificates for such shares
are to be mailed. Whenever an Option is exercised by exchanging
shares of Stock theretofore owned by the Optionee: (1) no shares of
Stock received upon exercise of that Option thereafter may be
exchanged to pay the Option price for additional shares of Stock
within the following six months; and (2) the Optionee shall deliver
to the Company certificates registered in the name of such Optionee
representing a number of shares of Stock legally and beneficially
owned by such Optionee, free of all liens, claims, and encumbrances
of every kind, accompanied by stock powers duly endorsed in blank
by the record holder of the shares represented by such
certificates, with signature guaranteed by a commercial bank or
trust company or by a brokerage firm having a membership on a
registered national stock exchange. Such notice may be delivered
in person to the Secretary of the Company, or may be sent by mail
to the Secretary of the Company, in which case delivery shall be
deemed made on the date such notice is received. As promptly as
practicable after receipt of such written notification and payment,
the Company shall deliver to the Optionee certificates for the
number of shares with respect to which such Option has been so
exercised, issued in the Optionee's name; provided, that such
delivery shall be deemed effected for all purposes when a stock
transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to the Optionee,
at the address specified pursuant to this Paragraph 10. The
delivery of certificates upon the exercise of Options may, in the
discretion of the Committee, be subject to any reasonable
conditions, including, but not limited to (a) payment to the
Company by the person exercising such Option of the amount,
determined by the Company, of any tax liability of the Company
(including but not limited to federal and state income and
employment taxes required to be withheld) resulting from such
exercise, or from a sale or other disposition of the stock issued
upon exercise of such Option (or a stock option granted under
another plan of the Company), if such sale or other disposition
might be a "disqualifying disposition" described in Section 422(a)
of the Code and (b) agreement by the person exercising such Option
to provide the Company with such information as the Company might
reasonably request pertaining to such exercise, sale or other
disposition. Except to the extent the election would impact
qualification under Rule 16b-3, the Optionee may elect to have the
Company accept or retain Stock as payment of an Optionee's tax
liability to the Company, as described in (a), above.
11. Transferability of Options. Options shall not be
transferable by the Optionee other than by will or under the laws
of descent and distribution, and shall be exercisable, during the
Optionee's lifetime, only by the Optionee or his legal guardian or
representative.
12. Termination of Employment of Optionee. Except as may be
otherwise expressly provided herein, Options shall terminate on
such date as shall be selected by the Committee in its discretion
and specified in the option agreement. If an Optionee is an
employee of the Company or of a subsidiary corporation at the time
an Option is granted, and, before the date of expiration of the
Option, an employment relationship with either the Company or a
subsidiary is severed, for any reason (except as otherwise provided
for herein), the Option shall terminate thirty days following
severance of the employment relationship. Whether authorized leave
of absence, or absence on military or government service, shall
constitute severance of an employment relationship with the Company
or a subsidiary corporation and the Optionee, shall be determined
by the Committee at the time thereof. If, before the date of
expiration of a non-qualified Option, the Optionee shall be retired
in good standing from the employ of the Company or a subsidiary for
reasons of age or disability under the then established rules of
the Company, the Option shall terminate on the earlier of such date
of expiration or one year after the date of such retirement. In
the event of such retirement, the Optionee shall have the right
prior to the termination of such Option to exercise the Option to
the extent to which he was entitled to exercise such Option
immediately prior to such retirement; however, in the event that
the Optionee has retired on or after attaining the age of sixty-two
(62) years, the Optionee shall be entitled to exercise all or any
part of such Option (without regard to any limitations imposed
pursuant to Paragraph 9(b) hereof, but subject to Paragraph 9(a)).
Upon the death of the Optionee, his executors, administrators, or
any person or persons to whom his Option may be transferred by will
or by the laws of descent and distribution, shall have the right,
at any time prior to the earlier of the date of expiration or one
year following the date of such death, to exercise the Option, in
whole or in part (without regard to any limitations imposed
pursuant to Paragraph 9(b) hereof, but subject to Paragraph 9(a)).
The Committee shall be permitted, in its discretion, to grant to
any employee an Option which is an incentive stock option or a
non-qualified stock option with a provision that the Option shall
continue in full force and effect as a non-qualified stock option
with no modification of the option price, if the person's status
with the Company or its subsidiary changes, but such person
continues as a director or consultant of the Company.
13. Requirements of Law. The Company shall not be required
to sell or issue any shares under any Option if the issuance of
such shares shall constitute a violation by the Optionee or the
Company of any provisions of any law or regulation of any
governmental authority.
14. No Rights as Stockholder. No Optionee shall have rights
as a Stockholder with respect to shares covered by any Option until
the date of issuance of a stock certificate for such shares; and,
except as otherwise provided in Paragraph 16 hereof, no adjustment
for dividends, or otherwise, shall be made if the record date
thereof is prior to the date of issuance of such certificate.
15. No Employment or Nomination Obligation. The granting of
any Option shall not impose upon the Company or any subsidiary any
obligation to continue to nominate an Optionee for election as a
director or to employ or continue to employ any Optionee; and the
right of the Company or any subsidiary to terminate the employment
of any employee shall not be diminished or affected by reason of
the fact that an Option has been granted to the employee.
16. Changes in the Company's Capital Structure. The
existence of outstanding Options shall not affect in any way the
right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure
or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of
the Stock outstanding, without receiving compensation therefor in
money, services or property, then (a) the number, class, and per
share price of shares of stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a manner as to
entitle an Optionee to receive upon exercise of an Option, for the
same aggregate cash consideration, an equivalent total number and
class of shares as he would have received had he exercised his
Option in full immediately prior to the event requiring the
adjustment; and (b) the number and class of shares then reserved
for issuance under the Plan shall be adjusted by substituting for
the total number and class of shares of Stock then reserved that
number and class of shares of stock that would have been received
by the owner of an equal number of outstanding shares of each class
of Stock as the result of the event requiring the adjustment.
After a merger of one or more corporations into the Company,
or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving
corporation, each holder of an outstanding Option shall, at no
additional cost, be entitled upon exercise of such Option to
receive (subject to any required action by stockholders) in lieu of
the number and class of shares as to which such Option would have
been so exercisable in the absence of such event, the number and
class of shares of stock or other securities to which such holder
would have been entitled pursuant to the terms of the agreement of
merger or consolidation if, immediately prior to such merger or
consolidation, such holder had been the holder of record of the
number and class of shares of Stock equal to the number and class
of shares as to which such Option shall be so exercised.
If the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the
surviving corporation, or if the Company sells or otherwise
disposes of substantially all its assets to another corporation and
is liquidated while unexercised Options remain outstanding under
the Plan, (i) subject to the provisions of clause (iii) below,
after the effective date of such merger, consolidation or sale and
liquidation, as the case may be, each holder of an outstanding
Option shall be entitled, upon exercise of such Option, to receive,
in lieu of shares of the Stock, shares of such stock or other
securities as the holders of shares of such class of Stock received
pursuant to the terms of the merger, consolidation or sale; (ii)
the Committee may waive any limitations imposed pursuant to
Paragraph 9(b) hereof so that all Options, from and after a date
prior to the effective date of such merger, consolidation, or sale
and liquidation, as the case may be, specified by the Committee,
shall be exercisable in full, subject to Paragraph 9(a) hereof; and
(iii) all outstanding Options may be canceled by the Committee as
of the effective date of any such merger, consolidation or sale and
liquidation provided that (x) notice of such cancellation shall be
given to each holder of an Option and (y) each holder of an Option
shall have the right to exercise such Option in full (without
regard to any limitations imposed pursuant to Paragraph 9(b)
hereof, but subject to Paragraph 9(a)) during a 30-day period
preceding the effective date of such merger, consolidation or sale
and liquidation.
Except as herein before expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number, class or price
of shares of Stock then subject to outstanding Options.
17. Stock Awards and Restricted Stock Grants. A stock award
consists of the issuance by the Company to a participant of shares
of Stock, without other payment therefor, in lieu of certain cash
compensation or as additional compensation for his services to the
Company. Restricted stock grants consist of shares of Stock which
are issued by the Company to a participant at a price which may be
below their fair market value or for no payment, but subject to
restrictions on their sale or other transfer by the Participant.
The issuance of Stock pursuant to stock awards and restricted stock
grants shall be subject to the following terms and conditions:
(i) Number of Shares. Subject to Section 3, the number of
shares to be issued by the Company to a participant
pursuant to a stock award or restricted stock grant
shall be determined by the Committee.
(ii) Sale Price. The Committee shall determine the prices,
if any, at which shares of restricted stock shall be
issued to a participant, which may vary from time to
time and among participants and which may be below the
fair market value of such shares of Stock at the date
of sale and which may be zero.
(iii) Restrictions. All shares of restricted stock issued
hereunder shall be subject to such restrictions as the
Committee may determine, including, without limitation
any or all of the following:
(a) a prohibition against the sale, transfer,
pledge or other encumbrance of the shares of
restricted stock, such prohibition to lapse
(i) at such time or times as the Committee
shall determine (whether in annual or more
frequent installments, at the time of the
death, disability or retirement of the holder
of such shares, or otherwise) or (ii)
upon written certification by the Committee
of the attainment of certain performance
measurements;
(b) a requirement that the holder of shares of
restricted stock forfeit, or (in the case of
shares sold to a participant) resell back to
the Company at his cost, all or a part of such
shares in the event of termination of the
holder's employment during any period in which
such shares are subject to restrictions;
(c) a prohibition against employment of the holder
of such restricted stock by any competitor of
the Company or its affiliates, or against such
holder's dissemination of any secret or
confidential information belonging to the
Company or a subsidiary of the Company;
(iv) No participant shall exercise the election permitted
by Section 83(b) of the Code without the express
written approval of the Committee. Any participant
making such election without such written approval
shall forfeit all shares of restricted stock granted
to him.
Shares of restricted stock shall be registered in the name of
the participant and deposited, together with a stock power endorsed
in blank, with the Company. Each such certificate shall bear a
legend in substantially the following form:
"The transferability of this certificate and the shares
of Common Stock represented by it are subject to the
terms and conditions (including conditions of forfeiture)
contained in the 1993 Stock Incentive Plan of the
Company, and an agreement entered into between the
registered owner and the Company. A copy of the Plan and
agreement is on file in the office of the Secretary of
the Company."
At the end of any time period during which the shares of
restricted stock are subject to forfeiture and restrictions on
transfer or upon the attainment of certain performance
measurements, such shares will be delivered free of all
restrictions to the participant or to the participant's legal
representative, beneficiary or heir.
Subject to the terms and conditions of the Plan, each
participant receiving restricted stock shall have all the rights of
a stockholder with respect to shares of stock during any period in
which such shares are subject to forfeiture and restrictions on
transfer, including without limitation, the right to vote such
shares. By accepting a stock award or a restricted stock grant, the
participant agrees to remit when due any federal and state income
and employment taxes required to be withheld. Dividends paid in
cash or property other than Stock with respect to shares of
restricted stock shall be paid to the participant currently or, at
the election of the participant, be reinvested by the participant
under the Company's Dividend Reinvestment Plan. Shares purchased
with reinvested dividends shall not be restricted.
18. Termination and Amendment of the Plan. The Board of
Directors of the Company may amend, terminate or suspend the Plan
at any time, in its sole and absolute discretion; provided,
however, that to the extent required to qualify the Plan under Rule
16b-3, no amendment that would (a) materially increase the number of
shares of Stock that may be issued under the Plan, (b) materially
modify the requirements as to eligibility for participation in the
Plan, or (c) otherwise materially increase the benefits accruing to
participants under the Plan shall be made without the approval of
the Company's stockholders.
19. Written Agreement. Each Option, or restricted stock
granted hereunder shall be embodied in a written
agreement, which shall be subject to the terms and conditions
prescribed above and shall be signed by the participant and by the
Chairman of the Board, the Vice Chairman, the President or any Vice
President of the Company for and in the name and on behalf of the
Company. Stock awards granted hereunder may be embodied in such a
written agreement. Such an option, stock award or restricted stock
agreement shall contain such other provisions as the Committee in its
discretion shall deem advisable.
20. Indemnification of Committee. The Company shall
indemnify each present and future member of the Committee against,
and each member of the Committee shall be entitled without further
act on his part to indemnity from the Company for, all expenses
(including the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself)
reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of
his being or having been a member of the Committee, whether or not
he continues to be such member of the Committee at the time of
incurring such expenses; provided, however, that such indemnity
shall not include any expenses incurred by any such member of the
Committee (a) in respect of matters as to which he shall be finally
adjudged in any such action, suit or proceeding to have been guilty
of gross negligence or willful misconduct in the performance of his
duty as such member of the Committee, or (b) in respect of any
matter in which any settlement is effected, to an amount in excess
of the amount approved by the Company on the advice of its legal
counsel; and provided further, that no right of indemnification
under the provisions set forth herein shall be available to or
enforceable by any such member of the Committee unless, within
sixty (60) days after institution of any such action, suit or
proceeding, he shall have offered the Company, in writing, the
opportunity to handle and defend same at its own expense. The
foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the
Committee and shall be in addition to all other rights to which
such member of the Committee may be entitled as a matter of law,
contract, or otherwise.
21. Adoption, Approval and Effective Date of Plan. The
Plan shall be considered adopted and shall become effective on the
date the Plan is approved by the Board of Directors of the Company;
provided, however, that the Plan and any grants of Options, stock
awards or restricted stock grants thereunder, shall be void, if the
stockholders of the Company shall not have approved adoption of the
Plan within twelve months after such effective date.
22. Governing Law. This Plan and all determinations made
and actions taken pursuant hereto shall be governed by the laws of
the State of Delaware, without reference to principles of conflict
of laws, and shall be construed accordingly.
23. Compliance with SEC Regulations. It is the Company's
intent that the Plan comply in all respects with Rule 16b-3, and
any successor rule pursuant thereto. If any provision of this
Plan is later found not to be in compliance with the Rule, the
provision shall be deemed null and void. All grants of Options and
Stock and all exercises of Options under this Plan shall be
executed in accordance with the requirements of Section 16 of the
Securities Exchange Act of 1934, as amended, and any regulations
promulgated thereunder.
BROWNING-FERRIS INDUSTRIES, INC.
1993 Non-Employee Director Stock Plan
1. Purpose. The 1993 Non-Employee Director Stock Plan (the
"Plan") is to benefit Browning-Ferris Industries, Inc. (the
"Company") and its subsidiary corporations by offering its non-
employee directors (the "Eligible Directors") an opportunity to
become owners of the Common Stock, $.16-2/3 par value, of the
Company (the "Stock") and is intended to advance the best interests
of the Company by increasing their proprietary interest in the
success of the Company and its subsidiary corporations.
2. Administration. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). Subject to the
terms of the Plan, the Board shall have the power to construe the
provisions of the Plan, or of options granted hereunder (the
"Options") or Stock issued hereunder, to determine all questions
arising thereunder, and to adopt and amend such rules and
regulations for administering the Plan as the Board deems
desirable.
3. Available Shares. The total amount of the Stock with
respect to which Options and Stock paid in lieu of directors'
annual retainer that may be granted under this Plan shall not
exceed in the aggregate 250,000 shares; provided, that the class
and aggregate number of shares of Stock which may be granted
hereunder shall be subject to adjustment in accordance with the
provisions of Paragraph 17 hereof. Such shares of Stock may be
treasury shares or authorized but unissued shares of Stock. In
the event that any outstanding Option for any reason shall expire
or is terminated or cancelled, the shares of Stock allocable to
the unexercised portion of such Option may again be subject to an
Option or Options under the Plan.
4. Authority to Grant Options and Stock. All Options
granted under the Plan shall be non-qualified stock options. No
Options shall be granted under the Plan subsequent to December 6,
2003. The only Options and Stock under the Plan which may be
granted are those which are granted after both adoption of the Plan
and approval thereof by the stockholders of the Company within
twelve months after the date of such adoption, all as provided in
Paragraph 21 hereof.
5. Eligibility for Stock Options and Stock. The individuals
who shall be eligible to receive Options under the Plan shall be
each Eligible Director of the Company.
6. Option Grant Size and Grant Dates.
Initial Grants - An Option to purchase 5,000 shares of
Stock (as adjusted pursuant to Paragraph 17) shall be granted to
each Eligible Director the day following the Annual Meeting at
which such Director is first elected or the day following the first
Annual Meeting after such Eligible Director is first elected or
appointed by the Board to be a Director, whichever is applicable (an
"Initial Grant"); provided, that if an Eligible Director who
previously received an Initial Grant terminates service as a
Director and is subsequently elected or appointed to the Board,
such Director shall not be eligible to receive a second Initial
Grant, but shall be eligible to receive only Annual Grants as provided
in this Paragraph 6, beginning with the Annual Meeting held during
the fiscal year immediately following the year in which such Director
was reelected or appointed.
Annual Grants - An Option to purchase 2,500 shares (as
adjusted pursuant to Paragraph 17) shall be granted each year, the
day following the Annual Meeting, to each director who is an
Eligible Director at such time (except as set forth above) and who
is not receiving an Initial Grant (each, an "Annual Grant").
If however, the General Counsel of the Company
determines, in his sole discretion, that the Company is in
possession of material, nonpublic information about the Company,
then the Initial and Annual Grant to the Eligible Directors shall
be suspended until the second trading day after public
dissemination of such information.
7. Option Price; Fair Market Value. The price at which
shares of Stock may be purchased by an Eligible Director pursuant
to an Option (the "Optionee") shall be the fair market value of the
shares of Stock on the date the Option is granted. For all
purposes of this Plan, the "fair market value" of the Stock shall
be the mean of the highest and lowest selling prices of the Stock
as reported in The Wall Street Journal for the last trading day
before the date as of which such fair market value is to be
determined. No Option may be repriced.
8. Duration of Options. The term of each Option hereunder
shall be ten years, and no Option shall be exercisable after the
expiration of ten years from the date such Option is granted. An
Option shall expire immediately following the last day on which
such Option is exercisable pursuant to this Paragraph 8.
9. Amount Exercisable.
(a) No Option shall be exercisable earlier than six
months from the date of grant.
(b) An Option becomes exercisable according to the
following schedule:
Period from Portion of Grant That
the Date the Becomes Exercisable
Option is Granted after Such Period
One year after grant 25%
Two years after grant 50%
Three years after grant 75%
Four years after grant 100%
10. Exercise of Options. Options shall be exercised by the
delivery of written notice to the Company setting forth the number
of shares of Stock with respect to which the Option is to be
exercised, together with cash, wire transfer, certified check, bank
draft or postal or express money order payable to the order of the
Company (the "Acceptable Funds") for an amount equal to the Option
price of such shares of Stock, or at the election of the Optionee,
by exchanging shares of Stock owned by the Optionee, so long as the
exchanged shares of Stock plus Acceptable Funds paid, if any, have
a total fair market value (determined in accordance with Paragraph
7, as of the date of exercise) equal to the purchase prices for
such shares to be acquired upon exercise of said Option, and
specifying the address to which the certificates for such shares
are to be mailed. Whenever an Option is exercised by exchanging
shares of Stock theretofore owned by the Optionee: (1) no shares of
Stock received upon exercise of that Option thereafter may be
exchanged to pay the Option price for additional shares of Stock
within the following six months; and (2) the Optionee shall deliver
to the Company certificates registered in the name of such Optionee
representing a number of shares of Stock legally and beneficially
owned by such Optionee, free of all liens, claims, and encumbrances
of every kind, accompanied by stock powers duly endorsed in blank
by the record holder of the shares represented by such
certificates, with signature guaranteed by a commercial bank or
trust company or by a brokerage firm having a membership on a
registered national stock exchange. Such notice may be delivered
in person to the Secretary of the Company, or may be sent by mail
to the Secretary of the Company, in which case delivery shall be
deemed made on the date such notice is received. As promptly as
practicable after receipt of such written notification and payment,
the Company shall deliver to the Optionee certificates for the
number of shares with respect to which such Option has been so
exercised, issued in the Optionee's name; provided, that such
delivery shall be deemed effected for all purposes when a stock
transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to the Optionee,
at the address specified pursuant to this Paragraph 10. The
delivery of certificates upon the exercise of Options is subject to
the condition that the person exercising such Option provide the
Company with such information as the Company might reasonably
request pertaining to such exercise, sale or other disposition.
11. Transferability of Options. Options shall not be
transferable by the Optionee other than by will or under the laws
of descent and distribution, and shall be exercisable, during the
Optionee's lifetime, only by the Optionee or his legal guardian or
representative.
12. Termination of Directorship of Optionee. If, before the
date of expiration of the Option, the Optionee shall cease to be a
director of the Company, the Option shall terminate on the earlier
of such date of expiration or one year after the date of ceasing to
serve as a director. In such event, the Optionee shall have the
right prior to the termination of such Option to exercise the
Option to the extent to which he was entitled to exercise such
Option immediately prior to ceasing to serve as a director;
however, in the event that the Optionee has ceased to serve as a
director on or after attaining the age of sixty-two (62) years, the
Optionee shall be entitled to exercise all or any part of such
Option (without regard to any limitations imposed pursuant to
Paragraph 9(b) hereof, but subject to Paragraph 9(a)). Upon the
death of the Optionee, his executors, administrators, or any person
or persons to whom his Option may be transferred by will or by the
laws of descent and distribution, shall have the right, at any time
prior to the earlier of the date of expiration or one year
following the date of such death, to exercise the Option, in whole
or in part (without regard to any limitations imposed pursuant to
Paragraph 9(b) hereof, but subject to Paragraph 9(a)).
13. Issuance of Shares in Lieu of Payment of Retainer Fee.
One-third of each Eligible Director's annual retainer fee for
service as a member of the Company's Board of Directors shall be
paid in Stock. Such shares shall be issued the day following each
Annual Meeting or the day following the first Annual Meeting after
such Eligible Director is first elected or appointed by the Board
to be a director, whichever is applicable. If, however, the
General Counsel of the Company determines, in his sole discretion,
that the Company is in possession of material, nonpublic
information about the Company, then such issuance shall be delayed
until the second trading day after public dissemination of such
information. The number of shares to be issued shall be that
number equal to one-third of the annual retainer for service as a
member of the Company's Board of Directors divided by the fair
market value of the Stock as determined pursuant to Paragraph 7
above. No fractional shares shall be issued, but the number of
shares shall be rounded up to the nearest whole share.
The Stock in lieu of retainer fee issued under this Paragraph
shall have a restriction period of three (3) years.
Notwithstanding any other provision of this Paragraph, such Stock
shall be subject to the following terms and conditions:
(a) Stock in lieu of retainer fee shall be represented by a
stock certificate registered in the name of the holder.
The holder shall have the right to enjoy all stockholder
rights during the restriction period (including the right
to vote the shares and the right to receive any cash
dividends) with the exception that:
(i) The holder may not sell, transfer, pledge or
assign the Stock during the restriction period;
(ii) The Company will retain custody of the certificate
for the Stock during the restriction period; and
(iii) A breach of the terms and conditions during the
restriction period shall cause a forfeiture of the
Stock.
(b) All restrictions shall lapse and the holder of such Stock
shall be entitled to the delivery of a stock certificate
or certificates upon the earliest of the following:
(i) Three (3) years from the date the applicable
shares are issued in the name of to such holder;
(ii) The date of the holder's death or disability;
(iii) The date the holder, after being nominated by the
Board, is not elected by the stockholders in an
election for the Board; or
(iv) The date on which the Board determines that the
holder will not be nominated for election to the
Board.
(c) Restricted stock shall be entirely forfeited in the event
that during a restriction period the holder:
(i) Resigns (other than by reason of disability) or is
removed for cause from the Board during his
elected term; or
(ii) Refuses to stand for an election to the Board
after having been nominated by the Board or
withdraws his name from consideration for
nomination.
For purposes of subsection (b) above, "disability" shall
mean long term disability as determined under rules and procedures
that apply under the Company's long term disability plan then in
effect. For purposes of subsection (c) above, a holder shall be
considered to have been removed for cause if and only if he is
dismissed on account of any act of (a) fraud or intentional
misrepresentation, or (b) embezzlement, misappropriation, or
conversion of assets or opportunities of the Company or any
subsidiary of the Company.
14. Requirements of Law. The Company shall not be required
to sell or issue any shares under any Option or as partial payment
for annual retainer fees if the issuance of such shares shall
constitute a violation by the Optionee or the Company of any
provisions of any law or regulation of any governmental authority.
15. No Rights as Stockholder. No Optionee shall have rights
as a Stockholder with respect to shares covered by any Option until
the date of issuance of a stock certificate for such shares; and,
except as otherwise provided in Paragraph 17 hereof, no adjustment
for dividends, or otherwise, shall be made if the record date
thereof is prior to the date of issuance of such certificate.
16. No Employment or Nomination Obligation. The granting of
any Option shall not impose upon the Company or its stockholders
any obligation to employ any Optionee or to continue to nominate
any Optionee for election as a director of the Company.
17. Changes in the Company's Capital Structure. The
existence of outstanding Options shall not affect in any way the
right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure
or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of
the Stock outstanding, without receiving compensation therefor in
money, services or property, then (a) the number, class, and per
share price of shares of Stock subject to outstanding Options
hereunder shall be appropriately adjusted in such a manner as to
entitle an Optionee to receive upon exercise of an Option, for the
same aggregate cash consideration, an equivalent total number and
class of shares as he would have received had he exercised his
Option in full immediately prior to the event requiring the
adjustment; and (b) the number and class of shares then reserved
for issuance under the Plan shall be adjusted by substituting for
the total number and class of shares of Stock then reserved that
number and class of shares of Stock that would have been received
by the owner of an equal number of outstanding shares of each class
of Stock as the result of the event requiring the adjustment.
After a merger of one or more corporations into the Company,
or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving
corporation, each holder of an outstanding Option shall, at no
additional cost, be entitled upon exercise of such Option to
receive (subject to any required action by stockholders) in lieu of
the number and class of shares as to which such Option would have
been so exercisable in the absence of such event, the number and
class of shares of stock or other securities to which such holder
would have been entitled pursuant to the terms of the agreement of
merger or consolidation if, immediately prior to such merger or
consolidation, such holder had been the holder of record of the
number and class of shares of Stock equal to the number and class
of shares as to which such Option shall be so exercised.
If the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the
surviving corporation, or if the Company sells or otherwise
disposes of substantially all its assets to another corporation and
is liquidated while unexercised Options remain outstanding under
the Plan, (i) after the effective date of such merger,
consolidation or sale and liquidation, as the case may be, each
holder of an outstanding Option shall be entitled, upon exercise of
such Option, to receive, in lieu of shares of the Stock, shares of
such stock or other securities as the holders of shares of such
class of Stock received pursuant to the terms of the merger,
consolidation or sale; and (ii) notwithstanding Paragraph 9(b)
hereof, but subject to Paragraph 9(a), all Options, from and after
the date of any agreement regarding such merger, consolidation, or
sale and liquidation, as the case may be, shall be exercisable in
full prior to the effective date of such merger, consolidation
or sale and liquidation.
Except as herein before expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number, class or price
of shares of Stock then subject to outstanding Options.
18. Termination and Amendment of Plan. The Board of
Directors of the Company may amend, terminate or suspend the Plan
at any time, in its sole and absolute discretion; provided,
however, to the extent required to qualify the Plan under Rule 16b-
3 promulgated under Section 16 of the Securities Exchange Act of
1934, as amended, no amendment shall be made more than once every
six months that would change the amount, price or timing of the
Initial and Annual Grants or the Stock issued in lieu of annual
retainer fee, other than to comport with changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act or the rules and regulations promulgated thereunder;
and provided, further, to the extent required to qualify the Plan
under Rule 16b-3, no amendment that would (a) materially increase
the number of shares of the Stock that may be issued under the
Plan, (b) materially modify the requirements as to eligibility for
participation in the Plan, or (c) otherwise materially increase the
benefits accruing to participants under the Plan, shall be made
without the approval of the Company's stockholders.
19. Written Agreement. Each Option granted hereunder or
Stock issued hereunder shall be embodied in a written agreement,
which shall be subject to the terms and conditions prescribed above
and shall be signed by the Eligible Director and by the Chairman of
the Board, the Vice Chairman, the President or any Vice President
of the Company for and in the name and on behalf of the Company.
20. Indemnification of Board. The Company shall indemnify
each present and future member of the Board against, and each
member of the Board shall be entitled without further act on his
part to indemnity from the Company for, all expenses (including the
amount of judgments and the amount of approved settlements made
with a view to the curtailment of costs of litigation, other than
amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his being or having been a
member of the Board, whether or not he continues to be such member
of the Board at the time of incurring such expenses; provided,
however, that such indemnity shall not include any expenses
incurred by any such member of the Board (a) in respect of matters
as to which he shall be finally adjudged in any such action, suit
or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as such member of the
Board, or (b) in respect of any matter in which any settlement is
effected, to an amount in excess of the amount approved by the
Company on the advice of its legal counsel; and provided further,
that no right of indemnification under the provisions set forth
herein shall be available to or enforceable by any such member of
the Board unless, within sixty (60) days after institution of any
such action, suit or proceeding, he shall have offered the Company,
in writing, the opportunity to handle and defend same at its own
expense. The foregoing right of indemnification shall inure to the
benefit of the heirs, executors or administrators of each such
member of the Board and shall be in addition to all other rights to
which such member of the Board may be entitled as a matter of law,
contract, or otherwise.
21. Adoption, Approval and Effective Date of Plan. The Plan
shall be considered adopted and shall become effective on the date
the Plan is approved by the stockholders of the Company.
22. Governing Law. This Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the
State of Delaware, without reference to principles of conflict of
laws, and shall be construed accordingly.
23. Compliance with SEC Regulations. It is the Company's
intent that the Plan comply in all respects with Rule 16b-3, and
any successor rule pursuant thereto. If any provision of this
Plan is later found not to be in compliance with the Rule, the
provision shall be deemed null and void. All grants of Options and
Stock and all exercises of Options under this Plan shall be
executed in accordance with the requirements of Section 16 of the
Securities Exchange Act of 1934, as amended, and any regulations
promulgated thereunder.
