<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BROWNING-FERRIS INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[BFI LOGO]
BROWNING-FERRIS INDUSTRIES, INC.
P.O. BOX 3151
HOUSTON, TEXAS 77253
January 22, 1996
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders of
Browning-Ferris Industries, Inc. on March 6, 1996, 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.
/s/ WILLIAM D. RUCKELSHAUS
William D. Ruckelshaus
Chairman of the Board
of Directors
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Holders of Common Stock:
Notice is hereby given that the Annual Meeting of Stockholders of
Browning-Ferris Industries, Inc., a Delaware corporation (the "Company"), will
be held on March 6, 1996, 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 four 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 1996 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 8,
1996, 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,
/s/ GERALD K. BURGER
Gerald K. Burger
Vice President and Secretary
Houston, Texas
January 22, 1996
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE AT
YOUR EARLIEST CONVENIENCE.
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MARCH 6, 1996
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 6, 1996, 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
22, 1996. 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 four 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 1996 fiscal year.
The persons named as proxies on the accompanying form of proxy, William D.
Ruckelshaus, Chairman of the Board of Directors of the Company, and Gerald K.
Burger, Vice President and Secretary of the Company, were selected by the
Directors and Corporate Governance 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 8, 1996, 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 212,470,761 shares of
Common Stock of which 199,236,056 shares are entitled to vote, and the holders
of a majority of the 199,236,056 total shares, whether present in person or
represented by proxy, will constitute a quorum for the transaction of business
at the Meeting. No other voting securities of the Company were outstanding at
the close of business on the record date.
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<PAGE> 5
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 Stockholders for the fiscal year ended
September 30, 1995 has been or is being furnished to all stockholders entitled
to vote at the Meeting. The Annual Report to Stockholders does not constitute a
part of the proxy soliciting material.
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<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of January 12, 1996, 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:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-----------------------------------------------
SOLE OPTIONS
VOTING AND EXERCISABLE OTHER PERCENT
INVESTMENT WITHIN 60 BENEFICIAL OF
NAME POWER(1) DAYS OWNERSHIP CLASS
- --------------------------------------- -------------- -------------- ------------- ----------
<S> <C> <C> <C> <C>
William D. Ruckelshaus................. 53,907 1,035,646 1,787(2) *
Bruce E. Ranck......................... 93,360 458,150 4,316(2) *
Norman A. Myers........................ 318,592 261,250 4,092(2) *
Louis A. Waters........................ 43,081 209,550 3,942(2) *
Rufus Wallingford...................... 10,800 21,250 1,416(2) *
William T. Butler...................... 3,173 31,875 -0- *
C. Jackson Grayson, Jr................. 45,873 1,875 -0- *
Gerald Grinstein....................... 687 31,875 1,000(3) *
Ulrich Otto(4)......................... -0- 37,500 4,815,075(5) 2.2%
Harry J. Phillips, Sr.................. 481,930(6) 277,050 6,562(2)(7) *
Joseph L. Roberts, Jr.................. 673 31,875 -0- *
Marc J. Shapiro........................ 3,673 3,125 -0- *
Robert M. Teeter....................... 2,673 31,875 -0- *
Marina v.N. Whitman.................... 1,673 24,375 -0- *
Peter S. Willmott...................... 6,673 31,875 -0- *
All Executive Officers, Nominees for
Director and Directors as a Group
(19 persons)......................... 1,114,851 2,811,966 4,846,142 4.0%
</TABLE>
- ------------
* 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.
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<PAGE> 7
(4) Mr. Otto has shared voting power and shared investment power with respect
to 50% of the outstanding share capital of Otto
Entsorgungsdienstleistungen 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 292,334 shares held by a limited partnership of which Mr.
Phillips is sole general partner.
(7) Includes 877 shares held by spouse in which Mr. Phillips claims an
indirect ownership.
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 voting shares of the Company's Common Stock:
<TABLE>
<CAPTION>
SHARES
NAME OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
------------------------------------ --------------- ----------
<S> <C> <C>
INVESCO Capital 11,809,405(2) 5.9%
Management, Inc.(1)
</TABLE>
- ------------
(1) The information is based on the Form 13F dated September 30, 1995, 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 6,482,955 shares, representing a 3.3% voting
authority of the outstanding shares of BFI Common Stock.
4
<PAGE> 8
ELECTION OF DIRECTORS
NOMINEES
Four 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. Gerald
Grinstein, Norman A. Myers, Bruce E. Ranck and William D. Ruckelshaus are being
nominated to serve until the Company's 1999 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 four 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 12, 1996,
with respect to the nominees and the directors who are currently serving terms
expiring in 1997 or 1998:
<TABLE>
<CAPTION>
SERVED
AS A EXPIRATION
POSITIONS AND OFFICES DIRECTOR OF PRESENT
NAME WITH THE COMPANY SINCE AGE TERM
- --------------------------- ------------------------------------------ --------------- ---- -----------
<S> <C> <C> <C> <C>
*William D. Ruckelshaus.... Chairman of the Board and Director(1) 1987 63 1996
*Bruce E. Ranck............ President, Chief Executive Officer and 1990 47 1996
Director(1)
*Norman A. Myers........... Vice Chairman, Chief Marketing Officer and 1978 60 1996
Director(1)
Louis A. Waters............ Chairman and President of BFI 1969 57 1997
International, Inc. and Director(1)(2)
William T. Butler.......... Director(2)(4) 1990 63 1998
C. Jackson Grayson, Jr..... Director(3)(5) 1979 72 1998
*Gerald Grinstein.......... Director(4)(6) 1990 63 1996
Ulrich Otto................ Director 1994 46 1998
Harry J. Phillips, Sr...... Director(1)(2) 1970 65 1997
Joseph L. Roberts, Jr...... Director(3) 1991 60 1998
Marc J. Shapiro............ Director(2) 1994 48 1997
Robert M. Teeter........... Director(3)(6) 1989 56 1997
Marina v.N. Whitman........ Director(4)(5) 1992 60 1998
Peter S. Willmott.......... Director(5)(6) 1991 58 1997
</TABLE>
- ------------
(1) Member of the Executive Committee
(2) Member of the Finance Committee
(3) Member of the Corporate Responsibility Committee
(4) Member of the Compensation Committee
(5) Member of the Audit Committee
(6) Member of the Directors and Corporate Governance Committee
* Indicates nominees for director for a three-year term expiring in 1999 and
until their respective successors have been duly elected and qualified.
5
<PAGE> 9
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. As of October 1, 1995, he
resigned as the Company's Chief Executive Officer but retained his Chairman of
the Board position. Mr. Ruckelshaus also serves as a director of Cummins Engine
Company, Monsanto Company, Nordstrom, Inc. and Weyerhaeuser Company. He also
serves as a director or trustee of several educational and charitable
organizations.
Mr. Ranck was elected President and Chief Executive Officer in October
1995, having served as President and Chief Operating Officer of the Company
since November 1991 and as Executive Vice President (Solid Waste
Operations-North America) from October 1989 until November 1991. Mr. Ranck has
served 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 as a director or trustee of several educational and
charitable organizations.
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 Chancellor of Baylor College of Medicine in Houston,
Texas, which he previously served as President and Chief Executive Officer from
1979 until January 1996. He is a director of C.R. Bard, Inc. 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 Infomart, a
privately-held corporation.
Mr. Grinstein resigned in December 1995 as Chairman and Chief Executive
Officer and a director of Burlington Northern Santa Fe Corporation (formerly
Burlington Northern Inc.) and Burlington Northern Railroad Company; positions he
had held since 1989. He also previously served as the President of these
companies from 1989 until 1991. Mr. Grinstein currently serves as a director of
Delta Air Lines, Inc., Seafirst Corporation, Sundstrand Corporation and
Transport Holdings, Inc. Mr. Grinstein serves as a director or trustee of
several business, educational and charitable organizations.
6
<PAGE> 10
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 also 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 of the Company from September
1980 until September 1988 when he was elected Chairman of the Executive
Committee. Mr. Phillips is a director of RFS Hotel Investors, Inc. and the
National Commerce Bancorporation, Memphis, Tennessee, and is 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. Mr. Shapiro also serves as a director of
Weingarten Realty Investors, Santa Fe Energy Resources and Burlington Northern
Santa Fe Corporation, 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, Durakon
Industries, Inc. and Optical Imagine Systems, 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 The 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 the
Board 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, Corporate
Responsibility, Directors and Corporate Governance and Finance Committees are
reflected in the preceding table. During fiscal 1995, the Pension Benefit
Committee was dissolved and its responsibilities were delegated to the Finance
Committee.
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,
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<PAGE> 11
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 of Directors, 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 Corporate Responsibility Committee was formed in fiscal 1995 and its
responsibilities include the surveying, monitoring and guiding of the Company's
role in the fulfillment of its social responsibilities toward its stockholders,
employees and the general public in the conduct of its normal business
activities.
The Directors and Corporate Governance Committee (formerly titled the
Nominating Committee) is empowered to recommend to the 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 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 Directors and Corporate Governance
Committee will review stockholders' suggestions of nominees for director that
are submitted in writing to the 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 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; oversees and
reviews the finances of the Company as necessary or advisable to supplement
those activities of the Executive Committee and the Audit Committee; and
oversees the administration and results of operations of the Company's
retirement and other benefit plans.
During the last fiscal year, the Executive Committee held seven meetings
and took numerous actions by unanimous written consent in lieu of meetings; the
Audit Committee held three meetings; the Compensation Committee held two
meetings and took numerous actions by unanimous written consent in lieu of
meetings; the Corporate Responsibility Committee held one meeting; the Directors
8
<PAGE> 12
and Corporate Governance Committee held two meetings; the Finance Committee held
four meetings; and the Board of Directors held five meetings. No meetings of the
former Pension Benefit Committee were held during fiscal 1995. 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 1995, 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 directors. 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 the Corporate Responsibility Committee and the Directors
and Corporate Governance 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.
9
<PAGE> 13
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 report on executive
compensation. This Committee report documents the components of the Company's
executive officer compensation program and describes the basis on which fiscal
1995 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 composed
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:
o Provide a competitive total compensation package that enables the
Company to attract and retain key executives.
o 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.
o Provide variable compensation opportunities that are directly linked
with the performance goals 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 1996 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 goals 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 compiled from proxy statements of other corporations which is
provided by the Company's human resources staff, outside compensation
consultants and other sources. The target levels set forth in the Company's
incentive plans are
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<PAGE> 14
linked 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 Committee obtains information on a large number of companies
through published national executive compensation surveys and focuses primarily
on companies with revenues comparable to the Company and certain 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. 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, his or her salary relative to the competitive market, the salary
increase budget for the Company and recommendation of the Company's 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 1995, only one executive officer received an adjustment to his
base salary. The increase was made to bring the executive officer's salary in
line with the salaries of the other executive officers. This executive officer's
prior salary increases were based on annual cost-of-living adjustments.
ANNUAL INCENTIVE COMPENSATION -- The Company's officers are eligible to
participate in an annual incentive plan with awards based primarily on the
attainment by the Company 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.
The target award for the officers is weighted for financial and individual/team
performance depending on the ability of the officer to impact the Company's
overall financial results. Financial performance is heavily weighted for
executive officers. Messrs. Ruckelshaus', Ranck's and Myers' incentive
objectives for fiscal 1995 were based 100% on the Company's financial
performance, although Mr. Ruckelshaus' employment agreement provided for an
annual cash incentive bonus of not less than 25% of his base salary.
In addition to the Company's overall financial performance, each of the
other executive officers' fiscal 1995 annual incentive plan was designed to
recognize their respective contributions toward the achievement of specific
individual/team performance objectives which support the Company's initiatives
to achieve its goal of becoming a superior corporation. For these executive
officers, the individual/team objectives represent between 10% and 50% of their
incentive awards. At the beginning of the fiscal year, each executive officer,
except for the executive officers whose
11
<PAGE> 15
performance measures are based solely on the financial performance of the
Company, prepares a work plan outlining his individual/team objectives. These
work plans contain specific criteria and define the levels of performance
necessary for the officer to achieve or exceed the objectives. This work plan
becomes the basis by which the officer's performance is measured at the end of
the fiscal year. During the year, important and vital projects not previously
foreseen will emerge and where appropriate, objectives are added or reduced.
However, no objectives are modified simply due to non-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 is 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 1995, the Company's earnings per share were
$1.93, representing a 30% increase over fiscal 1994 and surpassing the Company's
target of $1.80. The Company also reached its 5.6% return on assets threshold
for fiscal incentive payouts. As a result, both the financial and
individual/team components of the target awards were computed at the 200% of
target level and approved by the Committee for payment to executive officers.
The Committee approved the distribution of a percentage of each executive
officer's fiscal 1995 annual award in the form of restricted Common Stock of the
Company with a premium of 25% additional shares to further emphasize the
desirability of executive ownership of the Company's Common Stock. The
percentage of incentive compensation paid in the form of restricted Common Stock
of the Company is based on the executive officer's personal election under the
Company's Convertible Incentive Award Plan. For fiscal 1995, the executive
officers could elect to convert up to 50% of their annual incentive award into
restricted stock, and for fiscal 1996 the maximum percentage has been increased
to 100%. The Committee is now evaluating a new longer-term incentive
compensation plan that could replace the existing annual incentive plan.
STOCK INCENTIVE PLAN -- The Committee strongly believes that by providing
those persons who have substantial responsibility for the management and
profitable growth of the Company with an opportunity to increase their ownership
of Company stock, the best interest of the Company's stockholders and executives
will be closely aligned. Therefore, the Committee has authorized two types of
stock-based awards. As noted above, for fiscal 1995, executives could elect to
receive shares of restricted Common Stock of the Company in payment of a portion
of their 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. Executives are also 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 each executive's
salary level, position and compensation mix, as compared to companies
12
<PAGE> 16
of similar size and complexity, as reflected in the same executive surveys noted
above. The 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 1995 to executive officers generally
fell within the Committee's competitive range. Options granted in fiscal 1995
have a term 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 under 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 the Company's
Common Stock by its executive officers. The guidelines suggest that by the end
of calendar year 1998 each executive officer hold a minimum of three times base
salary in the Company's Common Stock.
Eligible shares include stock held as a stockholder of record, in a
brokerage accounts, 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 increase stock ownership over an
extended time.
DISCUSSION OF 1995 COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
In considering the compensation for the Chairman and Chief Executive
Officer for fiscal 1995, 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' fiscal 1995 compensation:
o Base salary of $850,000 remained unchanged from 1994.
o Based on the financial performance of the Company for fiscal 1995, the
Committee approved the computed annual incentive award of $850,000 which
was deferred at the election of Mr. Ruckelshaus (see "Deferral
Agreement"). This represents an incentive award equal to 200% of the
target established for Mr. Ruckelshaus at the beginning of the fiscal
year. The
13
<PAGE> 17
Company's earnings per share performance in fiscal 1995 of $1.93,
exceeded the earnings per share performance goal.
o In view of Mr. Ruckelshaus' total options granted previously, no
additional stock options were granted in fiscal 1995.
o Effective October 1, 1995, Mr. Ruckelshaus, who remains in his position
as the Company's Chairman of the Board, resigned as the Company's Chief
Executive Officer. As a result of his change in services, Mr.
Ruckelshaus' employment agreement was amended to provide for a
reduction in base salary to $750,000 during fiscal 1996, $375,000
during fiscal 1997, and then to $250,000 until termination of the
agreement. Mr. Ruckelshaus is no longer entitled to participate in any
incentive compensation plan instituted by the Company. The agreement
allows for Mr. Ruckelshaus to participate in the Company's stock option
program, whereby the number and timing of any stock option grants will
be determined in the sole discretion of the Committee.
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
comparable corporations. The Committee believes that any amounts paid under the
annual incentive plan are appropriately related to corporate and individual/team
performance, yielding awards that are directly linked to the annual financial
and operational results of the Company. The Committee also believes that the
Company's stock-based programs encourage participants to perform 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
14
<PAGE> 18
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
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, 1990 and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
DOW JONES
POLLUTION
MEASUREMENT PERIOD S&P 500 IN- CONTROL IN-
(FISCAL YEAR COVERED) BFI DEX DEX
<S> <C> <C> <C>
1990 100 100 100
1991 65 131 104
1992 82 146 102
1993 82 165 90
1994 115 171 94
1995 113 221 95
</TABLE>
15
<PAGE> 19
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, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
SECURITIES
UNDERLYING
Restricted STOCK
OTHER ANNUAL Stock OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2)(3) COMPENSATION(5) Awards(8) (SHARES) COMPENSATION(9)
- ------------------------------- ---- -------- --------- --------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
William D. Ruckelshaus 1995 $850,000 $850,000 $15,938(6)(7) $ -0- -0- $ 4,620
Chairman of the Board and 1994 850,000 414,355 1,494(7) 106,721 -0- 4,620
Chief Executive Officer 1993 828,000 297,500 1,807(7) -0- 20,000 4,497
Bruce E. Ranck 1995 500,000 500,000 8,483(6) -0- 55,000 4,620
President and 1994 485,000 243,758 -0- 62,830 55,000 4,620
Chief Operating Officer 1993 425,500 190,000 -0- -0- 50,000 4,497
Norman A. Myers 1995 475,000 237,500 -0- 297,445 50,000 2,976
Vice Chairman and 1994 475,000 231,565 -0- 59,601 50,000 2,976
Chief Marketing Officer 1993 467,000 177,650 -0- -0- 45,000 4,497
Louis A. Waters 1995 426,000 232,500 7,722(6) 291,090 44,400 182,088(10)
Chairman and President of 1994 365,115 172,171 -0- 23,056 44,400 176,998(10)
BFI International, Inc. 1993 348,900 148,952 -0- -0- 145,000 179,723(10)
Rufus Wallingford 1995 350,000 140,000 8,640(6) 175,305 25,000 4,620
Senior Vice President and 1994 262,500(1) 118,206 (4) -0- 26,353 30,000 -0-
General Counsel 1993 -0- -0- -0- -0- -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of nine months of base salary for Mr. Wallingford, who was elected
Senior Vice President and General Counsel effective January 1, 1994; he was
not employed by the Company prior to that time.
(2) The bonus amount for fiscal 1995 includes the cash portion paid to or
deferred by the officer (Messrs. Ruckelshaus and Ranck deferred 100% and
50%, respectively, of their cash awards); the remaining portion of the
incentive compensation awards for Messrs. Myers, Waters and Wallingford was
paid in restricted shares of the Company's Common Stock (see note (8) below
for details regarding the terms of the restricted shares), the amount of
shares being determined by the officer's personal election under the
Company's Convertible Annual Incentive Award Plan that allows the officer
to receive up to 50% of his fiscal 1995 annual incentive award in
restricted shares. Messrs. Myers, Waters and Wallingford each elected to
receive 50% of their fiscal 1995 incentive compensation award in restricted
shares.
(3) 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
16
<PAGE> 20
the Company's Common Stock (see note (8) below for details regarding the
terms of the restricted shares).
(4) Consists of a guaranteed first year incentive award of 50% of base salary,
less the 10% that was paid in restricted shares (see note (8) below for
details regarding the terms of the restricted shares).
(5) The named executive officers did not receive any perquisites nor other
personal benefits in which the aggregate amount of such compensation
exceeded $50,000 or 10% of the total of his annual salary and bonus.
(6) Consists of income and the tax gross-up associated with spousal attendance
at a Board of Directors' meeting.
(7) For Mr. Ruckelshaus, also includes the above-market interest rate on his
deferred compensation that exceeds 120% of the applicable federal long-term
rate, which for fiscal 1995 was $5,608. See "Deferral Agreement"
hereinafter for a discussion of Mr. Ruckelshaus' Deferral Agreement.
(8) 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. On December 5, 1995, Messrs. Myers,
Waters and Wallingford were granted a total of 24,640 restricted shares of
the Company's Common Stock based upon the percentages elected by the
officers under the Company's Convertible Annual Incentive Award Plan for
fiscal 1995, 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 issued is based on the fair
market value of the Company's Common Stock on the date of grant. The number
and value, respectively, of the aggregate restricted share holdings as of
September 30, 1995 for each named executive officer were as follows:
Ruckelshaus: 3,805 shares, $115,577; Ranck: 2,240 shares, $68,040; Myers:
11,720 shares, $355,995; Waters: 10,240 shares, $311,040; and Wallingford:
6,600 shares, $200,475.
(9) Consists of the amount of the Company's match for each named executive
officer under the BFI Employee Stock Ownership and Savings Plan.
(10) Includes $177,468, $172,378 and $175,226 in retirement pay for fiscal years
1995, 1994 and 1993, 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' employment agreement.
17
<PAGE> 21
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
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
- ------------------------------------------------------------------------------------ ----------------
(a) (b) (c) (d) (e) (f)
NUMBER OF PERCENTAGE
SECURITIES OF TOTAL GRANT DATE
UNDERLYING OPTIONS PRESENT VALUE
OPTIONS GRANTED TO EXERCISE BASED ON
GRANTED EMPLOYEES IN PRICE EXPIRATION BLACK-SCHOLES
NAME (SHARES)(1) FISCAL 1995 (PER SHARE) DATE MODEL(2)
- ---------------------------- ---------- ------------ ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
William D. Ruckelshaus...... -0- N/A N/A N/A N/A
Bruce E. Ranck.............. 55,000 3.1% $ 28.00 12/05/2004 $564,300
Norman A. Myers............. 50,000 2.8% 28.00 12/05/2004 513,000
Louis A. Waters............. 44,400 2.5% 28.00 12/05/2004 455,544
Rufus Wallingford........... 25,000 1.4% 28.00 12/05/2004 256,500
</TABLE>
- ------------
(1) All options were granted on December 6, 1994 under the Company's 1993 Stock
Incentive Plan. Twenty-five percent of such options became exercisable on
December 6, 1995 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 $10.26 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 .208 based on the prior two years of quarter-end closing stock
prices of BFI Common Stock, (b) a risk-free rate of return of 7.84%, which
approximates the 10-year Treasury bond rate, (c) BFI Common Stock dividend
yield of 2.57%, and (d) an eight year period from time of grant until
exercise.
18
<PAGE> 22
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, 1995 for
each of the named executive officers:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND SEPTEMBER 30, 1995 OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
SEPTEMBER 30, 1995 IN-THE-MONEY OPTIONS AT
SHARES (SHARES) SEPTEMBER 30, 1995(1.
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William D. Ruckelshaus..... 57,767 $591,160 1,030,646 10,000 $ 3,808,900 $ 58,200
Bruce E. Ranck............. -0- -0- 418,150 121,250 3,273,300 504,200
Norman A. Myers............ 20,200 464,752 225,000 110,000 1,023,200 457,100
Louis A. Waters............ 67,500 776,263 151,100 150,200 737,400 711,500
Rufus Wallingford.......... -0- -0- 7,500 47,500 35,600 172,600
</TABLE>
- ------------
(1) Computed based upon the difference between aggregate fair market value and
aggregate exercise price.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Effective October 1, 1995, William D. Ruckelshaus, who remains in his
position as the Company's Chairman of the Board, resigned as the Company's Chief
Executive Officer. As a result of his change in services, Mr. Ruckelshaus'
employment agreement was amended to provide for a reduction in base salary to
$750,000 during fiscal 1996, $375,000 during fiscal 1997, and then to $250,000
until the agreement is terminated by Mr. Ruckelshaus or the Company. Mr.
Ruckelshaus is no longer entitled to participate in any incentive compensation
plan instituted by the Company. The agreement allows for Mr. Ruckelshaus to
participate in the Company's stock option program, whereby the number and timing
of any stock option grants will be determined in the sole discretion of the
Compensation Committee. Beginning October 1, 1997, Mr. Ruckelshaus will also
receive monthly supplemental retirement payments based upon the conversion of
amounts that he was eligible to receive, pursuant to provisions of his prior
employment agreement, into an annuity.
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 $600,000 and $508,000, respectively.
The employment agreements for Messrs. Ranck and Myers include provisions
governing part-time status, termination and change of control. If the Company
should terminate an agreement other
19
<PAGE> 23
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. Ranck and Myers were
terminated without cause during 1996 or if the employee terminated the agreement
because of a breach by the Company, his annual compensation on part-time status
would be approximately $684,900 and $670,700, respectively, subject to an annual
cost-of-living adjustment. As a part-time status employee, he 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 plans.
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 1996 and the election to take the change of
control payment were made by Messrs. Ranck and Myers, they would receive
approximately $2,262,500 and $2,531,300, 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 that provides for a
continuously renewing five-year term until terminated by either the Company or
the employee. On March 1, 1995, Mr. Waters' employment agreement was amended to
increase his base salary to $465,000 in order to bring his salary in line with
the salaries of the other executive officers. Mr. Waters' prior employment
agreement provided salary increases based solely on annual cost-of-living
adjustments. Mr. Waters' agreement also has a change of control payment
provision. If a change of control were to occur during 1996 and the election to
take the change of control payment were made, Mr. Waters would receive
approximately $1,964,800. After twenty years of service, Mr. Waters began to
receive a monthly retirement benefit on February 1, 1989 pursuant to a
Company-funded trust of which Mr. Waters is the beneficiary. His current monthly
retirement benefit payment is approximately $14,900. Upon actual retirement from
the Company, Mr. Waters' employment agreement provides that the current
retirement benefit payment will be replaced by a monthly benefit that is
estimated at age 65 to be $11,400. This retirement benefit will be in addition
to those payable from the BFI Retirement Plan and the BFI Benefit Restoration
Plan (see "Retirement and Restoration Plans"). His employment agreement also
provides that his retirement benefits will increase annually based upon 75% of
the percentage increase in the Consumer Price Index.
20
<PAGE> 24
Rufus Wallingford 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. Wallingford. The agreement provides for the payment of a
minimum annual base salary (currently $364,000) 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 1996 and he
elected to take the change in control payment, he would receive approximately
$1,463,400. 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
seven 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 five
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, $76,000; Mr.
Ranck, $400,000; Mr. Myers, $378,000; Mr. Waters, $379,000; and Mr. Wallingford,
$46,000. See discussion under "Employment and Severance Agreements" for
information concerning additional retirement benefits for Mr. Waters.
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 may be paid directly to such participant by the Company,
depending on whether
21
<PAGE> 25
they are also a participant of either of the BFI Benefit Restoration Plan or the
BFI Cash Balance 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 under the Company's prior retirement plan but
for the benefit limitations imposed by Section 415 and the pay limitation
imposed by Section 401(A)(17) of the Internal Revenue Code. The purpose of the
BFI Cash Balance Restoration Plan is to pay all participants in the plan the
retirement benefit otherwise payable to them but for the benefit limitation
imposed by Section 401(A)(17) of the Internal Revenue Code.
DEFERRAL AGREEMENT
William D. Ruckelshaus, the Chairman of the Board 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 1995 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
Entsorgungsdienstleistungen 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.
Mr. Otto was elected to the Board of Directors of the Company in March 1994.
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 1995, the Company, primarily through its ownership interest in
Otto Waste Services, has engaged in various transactions with the OHI Group. In
fiscal 1995, the OHI Group leased containers and equipment and provided certain
administrative services to Otto Waste Services. Charges for these services were
approximately $5.0 million during fiscal 1995. The Company, including Otto Waste
Services, also purchased or entered into capital leases for approximately $29.3
million of containers from the OHI Group during fiscal 1995. 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.
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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 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 former managing partner of the
firm, is the brother-in-law of Bruce E. Ranck, BFI's current President, Chief
Executive Officer and a director. During fiscal 1995, Wasserman/Katz provided
management consulting services to the Company and was paid $202,258 for such
services, in addition to reimbursement for expenses. On October 1, 1995, Mr.
Wasserman joined the Company as its Vice President, Organizational Development.
His current base salary is $250,000, and he participates in the Company's annual
incentive plan and other benefit programs.
WILLIAM E. RANCK
William E. Ranck, the brother of Bruce E. Ranck, BFI's President, Chief
Executive Officer and a director, was an employee of a subsidiary of the
Company. For fiscal 1995, William Ranck's total compensation was $69,291 which
included incentive compensation and other benefits in line with those received
by the other employees of the subsidiary.
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, 1996. 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, 1996, 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.
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<PAGE> 27
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
1997 ANNUAL MEETING
Any stockholder who wishes to submit a proposal to be presented at the 1997
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, 1996 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,
/s/ GERALD K. BURGER
Gerald K. Burger
Vice President and Secretary
Houston, Texas
January 22, 1996.
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<PAGE> 28
PROXY
BROWNING-FERRIS INDUSTRIES, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- MARCH 6, 1996
The undersigned stockholder of record on January 8, 1996, of
Browning-Ferris Industries, Inc., a Delaware corporation (the "Company"), hereby
appoints WILLIAM D. RUCKELSHAUS and GERALD K. BURGER, either one or both of
them, proxies of the undersigned, with full power of substitution, to vote, as
designated below, at the annual meeting of stockholders of the Company to be
held on March 6, 1996, at 2:00 p.m., Houston Time, in the Grand Ballroom,
Marriott Westside, 13210 Katy 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 four nominees to serve as directors for
three-year terms and until their successors are duly elected and qualified:
Gerald Grinstein Bruce E. Ranck
Norman A. Myers William D. Ruckelshaus
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SEE REVERSE
SIDE
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<PAGE> 29
/X/ PLEASE MARK YOUR
VOTES AS IN THIS | 9934
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 1996 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 1996 fiscal year.
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
