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BROWNING-FERRIS INDUSTRIES, INC.
_________________________________________________________________________
Notice of 1995 Annual Meeting
and
Proxy Statement
___________________________________________________________________________
Important
Please sign and date your proxy and promptly return it
in the enclosed envelope.
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Browning-Ferris Industries, Inc.
P.O. Box 3151
Houston, Texas 77253
January 23, 1995
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Browning-Ferris Industries, Inc. on March 1, 1995, 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"), will be
held on March 1, 1995, 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 directors of the Company, each for a three-year term;
(2) To consider and vote upon a proposal to approve the selection of Arthur
Andersen LLP as auditors for the Company's 1995 fiscal year; and
(3) 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 6, 1995, 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 23, 1995
Please date, sign and return the enclosed Proxy in the accompanying envelope
at your earliest convenience.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MARCH 1, 1995
This Proxy Statement and the accompanying form of proxy are being furnished
to the stockholders of Browning-Ferris Industries, Inc., a Delaware
corporation (the "Company" or "BFI"), in connection with a solicitation of
proxies by the Board of Directors of the Company for use at the Annual
Meeting of Stockholders to be held on Wednesday, March 1, 1995, 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"). This Proxy
Statement and the accompanying form of proxy are being first sent or given
to stockholders on or about January 23, 1995. The Company's principal
executive offices are located at 757 N. Eldridge, Houston, Texas 77079.
All shares represented by a properly executed proxy in the accompanying
form 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; and
FOR the approval of the selection by the Board of Directors of
Arthur Andersen LLP as auditors for the Company's 1995 fiscal
year.
The persons named as proxies on the accompanying 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 accompanying form of proxy is for use at the Meeting if a stockholder
is unable to attend or does not desire to vote in person. A stockholder
who executes a proxy may revoke it at any time before the proxy is
exercised by giving written notice to the Secretary of the Company, by
delivering a later dated proxy or by voting in person at the Meeting.
Record Date and Voting at the Meeting
The holders of record on January 6, 1995, 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 for stockholder
approval. At the close of business on the record date, there were
outstanding 197,215,975 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 the holders of a majority of the shares of Common
Stock present or represented by proxy and entitled to vote at the Meeting
is required for (a) the election of directors, (b) approval of the
appointment of independent auditors and (c) approval of such other matters
as may properly come before the Meeting or any adjournment thereof.
A stockholder entitled to vote for the election of directors can withhold
authority to vote for all nominees for director or can withhold authority
to vote for certain nominees for director. Under Delaware law, abstentions
from the proposal to approve the appointment of auditors have the same
legal effect as a vote against the proposal. Broker non-votes on the
proposals to elect directors or approve the appointment of auditors are
treated as shares as to which voting power has been withheld by the
beneficial holders of those shares and, therefore, are not counted for
purposes of determining whether a majority has been achieved.
Annual Report
The Company's Annual Report to Shareholders for the fiscal year ended
September 30, 1994 has been or is being furnished to all stockholders
entitled to vote at the Meeting. The Annual Report to Shareholders
does not constitute a part of the proxy soliciting material.
Security Ownership of Management
The following table sets forth, as of January 13, 1995, the amount of
the Company's Common Stock beneficially owned by each of its directors
and nominees for director, each executive officer named in the Summary
Compensation Table, and all directors, nominees for director and
executive officers as a group:
Shares Beneficially Owned
-------------------------
Options
Sole Voting Exercisable Other
and Investment Within 60 Beneficial Percent
Name Power (1) Days Ownership of Class
- --------------------------------------------------------------------
William D.
Ruckelshaus 42,035 1,088,413 1,535 (2) *
Bruce E.
Ranck 93,360 418,150 4,018 (2) *
Norman A.
Myers 308,764 245,200 3,914 (2) *
Louis A.
Waters 33,691 151,100 3,657 (2) *
Jeffrey E.
Curtiss 16,205 53,750 390 (2) *
William T.
Butler 2,849 30,625 0 *
C. Jackson
Grayson, Jr. 60,549 625 0 *
Gerald
Grinstein 353 30,625 1,000 (3) *
Ulrich
Otto(4) 0 12,500 4,815,075 (5) 2.4%
Harry J.
Phillips, Sr. 382,820(6) 351,800 5,414 (2) *
Joseph L.
Roberts, Jr. 349 30,625 0 *
Marc J.
Shapiro 2,349 1,250 0 *
Robert M.
Teeter 2,349 30,625 0 *
Marina v.N.
Whitman 1,349 15,625 0 *
Peter S.
Willmott 6,349 30,625 0 *
All Executive
Officers,
Nominees for
Director and
Directors as
a Group
(19 persons) 967,361 2,747,078 4,842,992 4.2%
- ----------------------------
* Less than one percent.
(1) Includes restricted shares of the Company's Common Stock.
The holder has sole voting power and no investment power until
such restricted shares vest. After vesting, the holder has
sole investment and voting powers.
(2) 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 held in his account
in such plan, except for shares acquired with Company matching
contributions. In the case of a tender offer, the trustee
shall tender or not tender shares as directed by each
participant.
(3) Shares held jointly with spouse.
(4) Mr. Otto has shared voting power and shared investment power
with respect to 50% of the outstanding share capital of Otto
Entsorgungsdienstleistung GmbH, which is owned 50% by the
Company and 50% by Otto Holding International B.V. ("OHI").
Mr. Otto is President of OHI and Mr. Otto and members of his
family own indirectly 100% of OHI.
(5) Shares held by OHI.
(6) Includes 380,000 shares held by a limited partnership of
which Mr. Phillips is sole general partner.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information concerning each
person known by the Company to own beneficially more than five
percent of the outstanding shares of the Company's Common Stock:
Name of Shares
Beneficial Beneficially Percent of
Owner Owned Class
- ----------------------------------------------------------------------
INVESCO 12,633,781(2) 6.4%
Capital
Management,
Inc. (1)
(1) The information is based on the Form 13F dated September 30,
1994, filed with the Securities and Exchange Commission by
INVESCO Capital Management, Inc. ("INVESCO"). INVESCO's
address is 1315 Peachtree Street, N.E., Atlanta, Georgia 30309.
(2) Represents sole or shared investment discretion over shares
held by INVESCO, a holding company for investment advisory
subsidiaries. These affiliated investment advisory
subsidiaries reported a combined sole and shared voting power
of 7,120,206 shares, representing a 3.6% voting authority of
the outstanding shares of BFI Common Stock.
ELECTION OF DIRECTORS
Nominees
Five directors are to be elected at the Meeting. In accordance with
the Company's Restated Certificate of Incorporation, the Board of
Directors is divided into three classes, each of which serves for a
three-year term. William T. Butler, C. Jackson Grayson, Jr., Ulrich
Otto, Joseph L. Roberts, Jr. and Marina v.N. Whitman are being nominated
to serve until the Company's 1998 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified.
Each of the nominees for director currently serves as a director of the
Company.
Unless otherwise instructed, the persons named as proxies in the enclosed
form of proxy will vote in favor of the five nominees named in the proxy.
Although the Board of Directors does not contemplate that any of the
nominees will become unable to serve, if such a situation should occur
before the Meeting, it is expected either (a) that the persons named in
the proxy will vote for another nominee designated by the Board of
Directors, or (b) that the authorized number of directors will be reduced
accordingly.
The following table contains certain information as of January 13, 1995,
with respect to the nominees and the directors who are currently serving
terms expiring in 1996 or 1997:
Positions and Served As Expiration
Offices With a Director Of Present
Name the Company Since Age Term
- --------------------------------------------------------------------------
William D. Chairman, Chief 1987 62 1996
Ruckelshaus Executive Officer
and Director(1)
Bruce E. President, Chief 1990 46 1996
Ranck Operating Officer
and Director(1)
Norman A. Vice Chairman, 1978 59 1996
Myers Chief Marketing
Officer and
Director(1)
Louis A. Chairman and 1969 56 1997
Waters President
of BFI
International,
Inc. and
Director(1)(2)
*William T. Director(2)(4) 1990 62 1995
Butler
*C. Jackson Director(3)(5) 1979 71 1995
Grayson, Jr.
Gerald Director(4)(6) 1990 62 1996
Grinstein
*Ulrich Otto Director 1994 45 1995
Harry J. Director(1)(2) 1970 64 1997
Phillips, Sr.
*Joseph L. Director (3) 1991 59 1995
Roberts, Jr.
Marc J. Director (2) 1994 47 1997
Shapiro
Robert M. Director(3)(6) 1989 55 1997
Teeter
*Marina v.N. Director(4)(5) 1992 59 1995
Whitman
Peter S. Director(5)(6) 1991 57 1997
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 nominees for director for a three-year term expiring
in 1998 and until their respective successors have been duly
elected and qualified.
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 September 1988. Mr. Ruckelshaus
also serves as a director of Cummins Engine Company, Monsanto Company,
Nordstrom, Inc. and Weyerhaeuser Company and as an advisory director of
Texas Commerce Bank National Association. He also serves as a director or
trustee of several educational and charitable organizations.
Mr. Ranck became President and Chief Operating Officer in November 1991,
having served as Executive Vice President (Solid Waste Operations - North
America) of the Company since October 1989 and as a director since March
1990. Prior to that time, he served as a Regional Vice President in one
of the Company's regions. He also serves as a director of Furon Co. and
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 served as Chairman of the Board from August 1969 to September
1980 and served as Chairman of the Executive Committee from September 1980
until September 1988. He has served as Chairman of the Finance Committee
since September 1988, as Chairman of BFI International, Inc. since May
1991, and as President of BFI International, Inc. since March 1993. 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.
Dr. 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. He also serves as a director of
Harris Corporation, 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 1989. He also served as the President of these companies
from 1989 until 1991. Mr. Grinstein also serves as a director of Delta
Air Lines, Inc., Seafirst Corporation and Sundstrand Corporation. Mr.
Grinstein serves as a director or trustee of several business,
educational and charitable organizations.
Mr. Otto is Managing Director of Otto Entsorgungsdienstleistungen GmbH,
a German waste company which is fifty percent owned by the Company and
fifty percent owned by Otto Holding International B.V., which Mr. Otto
serves as President. Mr. Otto is Chairman of Gebr. Otto KG, a diversified
provider of environmental services and products to the waste industry and
a manufacturer of plastic waste containers and material handling products.
Mr. Phillips served as Chairman of the Board from September 1980 until
September 1988 when he was elected Chairman of the Executive Committee.
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 Bank National Association. He also serves as an Executive
Officer of Chemical Banking Corporation. He also serves as a trustee of
Weingarten Realty Investors, as a director of Santa Fe Energy Resources,
and as a director or trustee of several business, educational and
charitable organizations.
Mr. Teeter has served as President of Coldwater Corporation, a strategic
planning and public affairs consulting firm since 1988. 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 Professor of Business Administration and Public
Policy at the University of Michigan since 1992. Previously, she spent
thirteen years at 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, Alcoa Corporation and UNOCAL
Corporation, and is a member, director or trustee of several educational
and professional organizations.
Mr. Willmott has served as Chairman and Chief Executive Officer of
Willmott Services, Inc., Chicago, Illinois since 1989. 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 the 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
four meetings and took numerous actions by unanimous written consent in
lieu of meetings; the Finance Committee held two meetings; the Nominating
Committee held two meetings; and the Board of Directors held five meetings.
No meetings of the Pension Benefit Committee were held during fiscal 1994.
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.
Director Compensation
In fiscal 1994, non-employee members of the Board of Directors were paid
an annual retainer fee of $30,000, $20,000 of which was paid in cash and
$10,000 of which was paid in shares of the Company's restricted Common
Stock. In addition, non-employee directors may be 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
employees of the Company. 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 members of the Finance
Committee receive $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.
Under the Company's Non-Employee Director Stock Plan, each non-employee
director is granted a non-qualified option to purchase 5,000 shares of the
Company's Common Stock upon his or her initial election or appointment to
the Board of Directors. Thereafter, each non-employee director receives an
annual option grant for the purchase of 2,500 shares of the Company's
Common Stock.
The Company also has a Deferred Compensation Plan for its directors.
Participating directors may elect to defer all or a portion of their
director fees that are paid in cash in an unfunded interest bearing
account or in a BFI phantom stock account that earns dividend equivalents.
A director may elect to receive cash distributions from his or her account
either prior to or following termination of service.
Mr. Teeter is the President of Coldwater Corporation, a strategic planning
and public affairs consulting firm. 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.
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.
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 1994 report
on executive compensation. This Committee report documents the components
of the Company's executive officer compensation program and describes the
basis on which 1994 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 stockholder value.
The following objectives, which were previously adopted by the
Committee, serve as the guiding principles of 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 stockholders.
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
1995 also has been designed so that the compensation paid to the
executive officers of the Company meets the requirements to be
deductible by the Company for federal income tax purposes.
Compensation Program Components
The Committee regularly reviews the Company's compensation program
to ensure that salary levels and incentive opportunities are
competitive and reflect the performance of the Company. This
entails an annual 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 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 a large number of 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. 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 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 executive officers have
employment agreements (see "Employment and Severance 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. During fiscal
1994, all executive officers, except for one executive officer
whose base salary is subject to an annual cost-of-living
adjustment, received a grant of restricted Common Stock of the
Company in lieu of any base salary adjustment. The value of this
stock was equal to six percent of the executive officer's base
salary at time of grant. The restricted stock may not be sold,
transferred, pledged or assigned for a two-year period from the
date of grant. In addition, two executive officers received a
market-based salary adjustment to recognize expanded
responsibilities and increased proficiency, and to ensure
competitive salary treatment.
Annual Incentive Compensation -- The Company's officers are
eligible to participate in an annual incentive 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. Messrs. Ruckelshaus', Ranck's and
Myers' incentive objectives are based 100% on the Company's
financial performance, although Mr. Ruckelshaus' employment
agreement provides for an annual cash incentive of not less than
25% of his base salary. In addition to the Company's overall
financial performance, each of the other 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 20% 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 1994, a nineteen percent growth in
earnings over fiscal 1993 was established as the performance level
required for payout of target incentive awards. Actual fiscal 1994
performance resulted in 108.3% of the target incentive attributable
to financial performance being approved by the Committee for
payment to executive officers. The Committee elected to distribute
10% of each executive officer's fiscal 1994 annual award in the
form of restricted Common Stock of the Company with a premium of
25% additional shares to further emphasize executive ownership of
the Company's Common Stock.
Stock Incentive Plan -- 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
stockholders and executives will be closely aligned. Therefore,
executives are eligible for two types of stock-based awards. As
noted above, in fiscal 1994, executives were granted shares of
restricted Common Stock of the Company in lieu of both annual
salary adjustments and in payment of a portion of annual incentive
awards. Stock granted for this purpose is restricted for a two-
year period during which the shares are forfeitable and the
executive cannot sell, transfer, pledge or assign ownership.
Secondly, executives are eligible to receive stock options 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 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
appropriate. Options granted in fiscal 1994 to executive officers
generally fell within the Committee's competitive range. Options
granted in fiscal 1994 have terms of ten years, become exercisable,
subject to certain exceptions, in annual increments of 25%
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.
Executive Stock Ownership Guidelines
During fiscal 1994, the Committee established stock ownership
guidelines that are designed to encourage the accumulation and
retention of BFI Common Stock by Company executives. The
guidelines suggests that by the end of calendar year 1998 each
executive officer hold a minimum value of three times base salary
in the Company's Common Stock.
Eligible shares include stock held as a stockholder of record,
in a brokerage account, restricted shares, stock acquired through
the Company's Stock Ownership and Savings [401(k)] Plan, and any
deferred compensation in the form of phantom share units. A
variety of mechanisms have been developed to provide opportunities
for executives to enhance stock ownership over an extended period
of time.
Discussion of 1994 Compensation for the Chairman and Chief
Executive Officer
In considering the compensation for the Chairman and Chief
Executive Officer for fiscal 1994, 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 of $850,000 remained unchanged from 1993. In lieu
of any salary adjustment, Mr. Ruckelshaus was granted 1,755
shares of restricted Common Stock of the Company which
approximated six percent of his base salary. These shares are
restricted for two years from the date of grant.
- - Based on the financial performance of the Company for fiscal
1994, the Committee approved the computed annual incentive
award of $460,275, $414,355 of which was deferred at the election
of Mr. Ruckelshaus (see "Deferral Agreement") and the remainder of
which was paid in shares of restricted Common Stock of the Company
as noted below. This represents an incentive award equal to
approximately 108% of the target established for Mr. Ruckelshaus
at the beginning of the fiscal year. The Company's earnings per
share performance in fiscal 1994 of $1.52, before extraordinary
item, exceeded the earnings per share performance goal. The
Committee elected to distribute 10% of the fiscal 1994 annual award
in the form of restricted Common Stock of the Company with a
premium of 25% additional shares to further emphasize executive
ownership of the Company's stock. These shares are restricted for
two years from the date of grant.
- - In view of Mr. Ruckelshaus' total options granted previously,
no additional stock options were granted in fiscal 1994.
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-based
programs provide opportunities to participants that are consistent with
the returns that are generated on behalf of the stockholders.
Compensation Committee of the Board of Directors
Gerald Grinstein, Chairman
William T. Butler
Marina v.N. Whitman
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 Projects, Inc., 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, 1989 and that all dividends
were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
160 ____________________________________________________________
140 ____________________________________________________________
120 ____________________________________________________________
100 ____________________________________________________________
80 ____________________________________________________________
60 ____________________________________________________________
40 ____________________________________________________________
20 ____________________________________________________________
0 ____________________________________________________________
1989 1990 1991 1992 1993 1994
- - - BFI
- - - S&P 500 Index
- - - Dow Jones Pollution Control Index
September 30,
1989 1990 1991 1992 1993 1994
BFI 100 76 50 62 62 87
S & P 500 Index 100 91 119 132 149 155
Dow Jones Pollution
Control Index 100 93 97 95 84 87
Executive Compensation
The following table sets forth certain information with respect to the
compensation of the Chief Executive Officer and each of the Company's
four other most highly compensated executive officers (collectively,
the "named executive officers") for the fiscal year ended September 30,
1994:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
Securi-
ties
Other Under-
Annual Re- lying All
Name and Compen- stricted Stock Other
Principal sation Stock Options Compen-
Position Year Salary Bonus (1) (3)(4) Awards (5) (Shares) sation(3)
- --------- ---- ------ ---------- ------- ---------- -------- ----------
William D. 1994 $850,000 $414,355 $1,494 $106,721 0 $ 4,620
Ruckelshaus 1993 828,000 297,500 1,807 0 20,000 4,497
Chairman of 1992 806,000 0(2) 0 0 80,000 4,364
the Board
and Chief
Executive
Officer
Bruce E. 1994 485,000 243,758 0 62,830 55,000 4,620
Ranck 1993 425,500 190,000 0 0 50,000 4,497
President 1992 371,000 0 0 0 210,000 4,364
and Chief
Operating
Officer
Norman A. 1994 475,000 231,565 0 59,601 50,000 2,976
Myers Vice 1993 467,000 177,650 0 0 45,000 4,497
Chairman 1992 459,800 0 0 0 45,000 5,269
and Chief
Marketing
Officer
Louis A. 1994 365,115 172,171 0 23,056 44,400 176,998(9)
Waters 1993 348,900 148,952 0 0 145,000 179,723(9)
Chairman 1992 341,500 0 0 0 67,500 168,938(9)
and
President
of BFI
Inter-
national,
Inc.
Jeffrey E. 1994 281,250 118,206 0 33,926 25,000 3,003
Curtiss 1993 256,250 78,000 0 0 25,000 2,773
Senior 1992 187,500(6) 112,500(7) 160,988(8) 0 50,000 0
Vice
President
and Chief
Financial
Officer
(1) The bonus amount for fiscal 1994 reflects the cash portion paid to
or deferred by the officer; the remaining 10% of the officer's
incentive compensation award was paid in restricted shares of the
Company's Common Stock (see note (5) below for details regarding the
terms of the restricted shares).
(2) Mr. Ruckelshaus waived receipt of his guaranteed incentive
compensation for fiscal 1992.
(3) The Other Annual Compensation amount for Mr. Ruckelshaus for fiscal
years 1994 and 1993 represents the above-market interest rate on his
deferred compensation that exceeds 120% of the applicable federal
long-term rate. See "Deferral Agreement" hereinafter for a discussion
of Mr. Ruckelshaus' Deferral Agreement. The All Other Compensation
column includes the amount of the Company's match for each named
executive officer under the BFI Employee Stock Ownership and Savings
Plan.
(4) Includes perquisites and other personal benefits, unless the aggregate
amount of such compensation does not exceed either $50,000 or 10% of
the total of annual salary and bonus reported for the named executive
officer.
(5) On June 1, 1994, the Company's officers, except for Mr. Waters, were
granted a total of 9,660 restricted shares of the Company's Common
Stock based upon 6% of the officer's July 1, 1994 base salary, divided
by the average market value of the Company's Common Stock on the date
of grant. On December 6, 1994, the Company's officers, including Mr.
Waters, were granted a total of 10,680 restricted shares of the
Company's Common Stock based upon 10% of the officer's fiscal 1994
incentive compensation award with an additional 25% stock premium.
These shares are restricted for a two-year period, during which time
the officers cannot sell, transfer, pledge or assign them, but as the
registered holders of these shares, the officers can vote the shares
and receive any dividends. At the end of the two-year restricted
period, taxable income will be recognized in an amount equal to
the fair market value of the shares on that date. The value of
the restricted shares as reflected in the table is based on the
closing price of the Company's Common Stock on the dates of each
grant. The number and value, respectively, of the restricted shares
as of September 30, 1994 for each named executive officer were as
follows: Ruckelshaus: 3,805 shares, $120,809; Ranck: 2,240 shares,
$71,120; Myers: 2,125 shares, $67,469; Waters: 850 shares, $26,988;
and Curtiss: 1,205 shares, $38,259.
(6) Consists of nine months of base salary for Mr. Curtiss, who was
elected Senior Vice President and Chief Financial Officer
effective January 6, 1992; he was not employed by the Company
prior to that time.
(7) Consists of a reporting bonus of $60,000 and a guaranteed
incentive compensation payment of $52,500 to Mr. Curtiss pursuant
to his employment agreement.
(8) Includes payments to Mr. Curtiss for moving expenses and tax
gross-ups made in connection with his relocation to Houston, Texas
and relating to a loss-on-sale of a home, including tax gross-ups,
made in connection with the sale of his previous home in Dallas,
Texas.
(9) Includes $172,378, $175,226 and $161,880 in retirement pay for
fiscal years 1994, 1993 and 1992, respectively, earned for 20
years of service prior to his current position as Chairman and
President of BFI International, Inc. Mr. Waters, as beneficiary,
receives trust payments paid in accordance with a trust agreement.
See "Employment and Severance Agreements" herein for a discussion
of Mr. Waters' trust agreement.
Stock Options Granted in Last Fiscal Year
The following table sets forth certain information concerning stock
options granted to the named executive officers in the last fiscal
year:
OPTION GRANTS IN LAST FISCAL YEAR
Grant
Individual Grants Date Value
- ------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
Percentage
Number of of Total Grant Date
Securities Options Present
Underlying Granted to Value Based
Options Employees Exercise on Black-
Granted in Fiscal Price Expiration Scholes
Name (Shares)(1) 1994 (Per Share) Date Model (2)
- ----------- ----------- ----------- ----------- ---------- ------------
William D.
Ruckelshaus 0 N/A N/A N/A N/A
Bruce E.
Ranck 55,000 3.2% $25.44 12/06/2003 $454,300
Norman A.
Myers 50,000 2.9% 25.44 12/06/2003 413,000
Louis A.
Waters 44,400 2.6% 25.44 12/06/2003 366,800
Jeffrey E.
Curtiss 25,000 1.5% 25.44 12/06/2003 206,500
- ---------------------
(1) All options were granted on December 7, 1993 under the Company's
1993 Stock Incentive Plan. Twenty-five percent of such options
became exercisable on December 7, 1994 and, subject to certain
acceleration provisions, 25% will become exercisable each 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
$8.26 per option share, as adjusted for vesting schedule. 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 .306 based
on the prior three years of month-end closing stock prices
of BFI Common Stock, (b) a risk-free rate of return of 6.10%,
which approximates the 10-year Treasury bond rate, (c) BFI
Common Stock dividend yield of 2.87%, and (d) a ten-year period
from time of grant until exercise.
Stock Options Exercised in Last Fiscal Year
The following table sets forth the aggregate option exercises
during the last fiscal year and the value of outstanding options at
September 30, 1994 for each of the named executive officers:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND SEPTEMBER 30, 1994 OPTION VALUES
(a) (b) (c) (d) (e)
Number
of Securities
Underlying Unexer- Value of
cised Options at Unexercised In-The-
September 30, 1994 Money Options at
(Shares) September 30, 1994(1)
--------------------------------------------
Shares
Acquired
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized cisable cisable cisable cisable
- ----- -------- -------- ------- ------- -------- --------
William D.
Ruckelshaus 46,587 $663,981 1,083,413 15,000 $5,758,000 $ 107,000
Bruce E.
Ranck 30,160 528,641 391,900 92,500 3,458,700 624,900
Norman A.
Myers 0 0 221,450 83,750 1,424,700 565,600
Louis A.
Waters 0 0 171,250 153,150 1,592,300 1,064,000
Jeffrey E.
Curtiss 0 0 41,250 58,750 382,500 456,500
- -----------------------------
(1) Computed based upon the difference between aggregate fair market value
and aggregate exercise price.
Employment and Severance Agreements
William D. Ruckelshaus, Chairman of the Board and Chief Executive Officer of
the Company, has an employment agreement with the Company. Mr. Ruckelshaus'
agreement provides for a continuously renewing five-year term until he
reaches age 65, and continues year to year thereafter until terminated by
the Company or Mr. Ruckelshaus. The agreement also 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 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. Their agreements provide for continuously renewing five-
year terms until age 65, and continuing year to year thereafter until
terminated by the Company or the employee. The agreements also provide for
the payment of minimum annual base salaries and for participation by the
employee in all Company benefit plans and programs. The current annual
salary for Messrs. Ranck and Myers is $500,000 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 employment 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
terminated without cause during 1995 or if the employee terminated the
agreement because of a breach by the Company, the annual compensation on
part-time status would be approximately $900,300, $516,200 and $508,200,
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 1995 and the election to take
the change of control payment were made by Messrs. Ruckelshaus, Ranck and
Myers, they would receive approximately $3,011,800, $2,202,600 and
$2,168,100, 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 that provides for a
continuously renewing five-year term until terminated by either the
Company or the employee, and a current base salary of $373,515,
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 1995 and the election to take the change of
control payment were made, Mr. Waters would receive approximately
$1,650,800. After twenty years of service, 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 of which Mr. Waters
is the beneficiary. The Company provides annual funding ($161,774
in fiscal 1994) in an amount actuarially determined to provide Mr.
Waters' retirement benefits. For fiscal 1994, the Company made an
accrual of $252,000 for Mr. Waters' future retirement benefits. The
trust agreement also contains provisions which require the trustee
to make an immediate distribution of the trust assets if a change
of control occurs, which would reduce any remaining obligations of
the Company to provide such benefits to Mr. Waters.
Jeffrey E. Curtiss has an employment agreement with the Company,
which has a continuously renewing three-year term until age 65,
unless sooner terminated by the Company or Mr. Curtiss. The
agreement provides for the payment of a minimum annual base salary
(currently $300,000) and for participation by him in all Company
benefit plans and programs. The employment agreement includes
provisions governing inactive status, termination and change in
control. If the Company should terminate his agreement other than
for cause (as defined in the agreement), the termination would be
effective on the third anniversary of the date of notice of
termination (or, if sooner, when he reaches age 65), and he would
go on inactive status on the date of such notice. His compensation
while on inactive status would be 75% of the base salary that he
was earning prior to such notice and he would continue to
participate in the Company's benefit programs. In the event of a
change in control of the Company and if he has not been placed on
inactive status by the Company or terminated for cause, then he may
elect (within twelve months after the date of the change in
control) to receive a lump sum payment equal to three times his
base amount (as defined by federal tax law). If a change in
control were to occur during 1995 and he elected to take the change
in control payment, he would receive approximately $1,259,100.
Such lump sum payment would terminate all of his rights under the
agreement.
Retirement and Restoration Plans
In 1994, the Company amended and restated its defined-benefit
retirement plan (the "Plan"). The Plan covers all employees of the
Company located in the United States, except certain employees
subject to collective bargaining agreements and certain other
employees covered by other plans not made a part of the Plan.
Generally, the Plan provides that, on December 31 of each year,
account balances established for each eligible employee are
credited in an amount equal to 4.5% of the salary and bonus
received by such employee during the period beginning January 1 and
ending December 31 of that year. Currently, the balance in each
employee's account earns interest at a rate of 6% per year, subject
to adjustment by the Company's Benefits Administration Committee,
comprised of six officers of the Company. Any adjustment must be
made prior to January 1 of each year, however, interest earned on
account balances can not be reduced below 4% or increased above
12%. The normal retirement age under the Plan is 65 with an early
retirement option at age 55. Benefits under the Plan vest after
ten years of vesting service.
The estimated annual benefits payable at age 65 (as a single life
annuity) for each named executive officer are as follows: Mr.
Ruckelshaus, $84,000; Mr. Ranck, $464,000; Mr. Myers, $380,000; Mr.
Waters, $316,000; and Mr. Curtiss, $113,000.
Currently, the Internal Revenue Code limits the pension from the
Plan to $120,000 and limits the pay used to calculate pensions to
$150,000; these amounts are indexed annually to the changes in
Social Security benefits. If the pension to any person would be
limited by Sections 415 or 401(A)(17) 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 either of the BFI Benefit
Restoration Plan or the BFI Cash Balance Benefit Restoration Plan.
The purpose of such restoration plans is to pay all participants in
the plans the full retirement benefit otherwise payable to them but
for the benefit limitations imposed by Section 415 and the pay
limitation imposed by Section 401(A)(17) 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 elects each deferral. See
"Employment and Severance Agreements" for further information
concerning Mr. Ruckelshaus' compensation arrangements with the Company.
All amounts deferred for Mr. Ruckelshaus for fiscal 1994 have been
reflected in the Summary Compensation Table.
Certain Transactions
Ulrich Otto
In February 1994, the Company acquired from Otto Holding International
B.V. ("Otto Holding") 50% of the outstanding stock of Otto
Entsorgungsdienstleistung GmbH ("Otto Waste Services"), a company
engaged in the solid waste services business in Germany. Mr. Otto and
members of his family indirectly own 100% of Otto Holding. Mr. Otto,
a director of the Company, serves as Managing Director of Otto Waste
Services and as President of Otto Holding. The Company acquired its
interest in Otto Waste Services from Otto Holding for approximately
$400 million, consisting of 3,928,075 shares of the Company's Common
Stock valued at $117.4 million and the remainder in Deutsche Mark.
Mr. Otto was elected to the Board of Directors of the Company in
March 1994. The purchase price for the Company's 50% interest in Otto
Waste Services was the result of arm's-length negotiations and was
approved by the Company's Board of Directors.
The Company and Otto Holding are parties to a supply agreement
pursuant to which Otto Holding, its subsidiaries and affiliates
("OHI Group") have agreed to supply the Company with its
requirements for certain types of containers and to supply certain
other equipment. All purchases by the Company are subject to the
condition that the products supplied by the OHI Group satisfy
certain requirements including competitive pricing, quality,
specifications, freight costs and term of delivery.
In fiscal 1994, the Company, primarily through its ownership
interest in Otto Waste Services, has engaged in various
transactions with the OHI Group. The OHI Group leased containers
and equipment and provided certain administrative services to Otto
Waste Services. Charges for these services were approximately $3.5
million during fiscal 1994. The Company, including Otto Waste
Services, also purchased or entered into capital leases for
approximately $25.4 million of containers from the OHI Group during
fiscal 1994. The transactions between the Company, including Otto
Waste Services, and the OHI Group have been undertaken in the
ordinary course of business, are at prices that the Company
believes are competitive and on terms that are substantially
similar to those that would have been effected with an unrelated
party.
In July 1994, the Company provided Otto Waste Services a short-term
loan in the amount of approximately DM 27.2 million (approximately
U.S. $17.53 million when converted at January 3, 1995 rates of
exchange) for the purpose of acquisitions. In December 1994, the
Company provided Otto Waste Services an additional short-term loan
in the amount of approximately DM 18.2 million (approximately U.S.
$11.4 million when converted at January 3, 1995 rates of exchange)
for purposes of acquisitions. Both loans mature on March 31, 1995
and provide for a current rate of interest of 6.35%, payable at
maturity. The Company believes the terms of the loans are
substantially similar to terms the Company would have effected with
an unrelated third party.
Louis A. Waters
See discussion under "Employment and Severance 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.
Wassermann/Katz
Wassermann/Katz is a management consulting firm located in Ellicott
City and Potomac, Maryland. Craig W. Wassermann, 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 1994, Wassermann/Katz provided management consulting
services to the Company, and was paid $210,427 for such services,
in addition to reimbursement for expenses. Such services will
continue in fiscal 1995. The Company believes that these services
have been provided on terms substantially similar to those the
Company would have effected with an unrelated party.
PROPOSAL TO APPROVE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP as independent
auditors of the Company and its subsidiaries for the fiscal year ending
September 30, 1995. 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 LLP as the
auditors of the Company and its subsidiary companies for the
fiscal year ending September 30, 1995, is hereby approved."
Arthur Andersen LLP has been serving the Company in this capacity since
1973 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.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furnished to the Company during
its most recent fiscal year and Forms 5 furnished to the Company with
respect to its most recent fiscal year, 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.
STOCKHOLDER PROPOSALS FOR
1996 ANNUAL MEETING
Any stockholder who wishes to submit a proposal to be presented at the 1996
Annual Meeting of Stockholders must deliver such proposal to the Secretary
of the Company. The proposal must be received at the Company's executive
offices (757 N. Eldridge, Houston, Texas 77079) no later than September 25,
1995 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 23, 1995.
APPENDIX A
BROWNING-FERRIS INDUSTRIES, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - MARCH 1, 1995
P The undersigned stockholder of record on January 6, 1995,
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 1, 1995, 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:
William T. Butler Joseph L. Roberts, Jr.
C. Jackson Grayson, Jr. Marina v.N. Whitman
Ulrich Otto
SEE REVERSE
SIDE
X Please mark your 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 approval of Arthur
Andersen LLP as auditors for the Company's 1995 fiscal year.
The Board of Directors recommends a vote FOR proposals 1 and 2.
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 appointment of
Arthur Andersen LLP
as auditors for the
Company's 1995 fiscal
year.
FOR AGAINST ABSTAIN
3. In their discretion, ---- ---- ----
the proxies are
authorized to vote
on such other matters
as may properly come
before the meeting
or any adjournment
thereof.
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.
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Signature(s) Date
