<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. )
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Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
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<PAGE> 2
[BROWNING-FERRIS INDUSTRIES, INC. LOGO]
BROWNING-FERRIS INDUSTRIES, INC.
P.O. BOX 3151
HOUSTON, TEXAS 77253
January 26, 1999
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Browning-Ferris Industries, Inc. on March 3, 1999, at 2:00 p.m., Houston time,
in the Company's auditorium located on the 14th floor of the corporate office at
757 N. Eldridge, 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. Shareholders can also take advantage of new and convenient ways by
which to vote shares through the Internet or by telephone, eliminating the need
to mail back the proxy card. Details are outlined on the proxy card.
/s/ WILLIAM D. RUCKELSHAUS
William D. Ruckelshaus
Chairman of the Board of Directors
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Holders of Common Stock:
Notice is hereby given that the Annual Meeting of Shareholders of
Browning-Ferris Industries, Inc., a Delaware corporation (the "Company"), will
be held on March 3, 1999, at 2:00 p.m., Houston time, in the Company's
auditorium located on the 14th floor of the corporate office at 757 N. Eldridge,
Houston, Texas for the following purposes:
(1) To elect three directors of the Company, each for a three-year term;
and
(2) 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 5, 1999, 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/ EDWARD C. NORWOOD
Edward C. Norwood
Vice President and Secretary
Houston, Texas
January 26, 1999
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 3, 1999
This Proxy Statement and the accompanying form of proxy are being furnished
to the shareholders 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 Shareholders
to be held on Wednesday, March 3, 1999, at 2:00 p.m., Houston time, in the
Company's auditorium located on the 14th floor of the Company's principal
executive offices at 757 N. Eldridge, 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 shareholders on or about January 26, 1999.
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 shareholder 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 three nominees
for director for three-year terms, as listed under the caption "Election of
Directors" herein.
The persons named as proxies on the accompanying form of proxy, William D.
Ruckelshaus, Chairman of the Board of Directors of the Company, and Edward C.
Norwood, 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 shareholder
is unable to attend or does not desire to vote in person. A shareholder 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 5, 1999, 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 shareholder approval. At the close
of business on the record date, there were outstanding 159,761,122 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 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 and (b) approval of such other
matters as may properly come before the Meeting or any adjournment thereof. A
shareholder entitled to vote for the election of directors can withhold
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<PAGE> 5
authority to vote for all nominees for director or can withhold authority to
vote for certain nominees for director.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
September 30, 1998 has been or is being furnished to all shareholders 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 20, 1999, 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 VOTING AND OPTIONS OTHER PERCENT
INVESTMENT EXERCISABLE BENEFICIAL OF
NAME POWER(1) WITHIN 60 DAYS OWNERSHIP CLASS
- ---- --------------- -------------- ---------- -------
<S> <C> <C> <C> <C>
William D. Ruckelshaus................... 97,350 66,250 2,472(2) *
Bruce E. Ranck........................... 110,318 770,900 6,195(2) *
J. Gregory Muldoon....................... 23,900 172,500 3,977(2) *
Norman A. Myers.......................... 250,034 356,250 4,683(2) *
Jeffrey E. Curtiss....................... 47,835 139,125(3) 3,764(2)(4) *
Rufus Wallingford........................ 14,959 78,625 6,023(2) *
John W. Alden............................ -0- -0- -0- *
Gregory D. Brenneman..................... 624 3,125 -0- *
William T. Butler........................ 4,127 38,750 -0- *
Gerald Grinstein......................... 1,739 38,750 1,000(5) *
Robert J. Herbold........................ -0- -0- -0- *
Harry J. Phillips, Sr.................... 367,943(6) 402,100 7,419(2)(7) *
Joseph L. Roberts, Jr.................... 1,627 38,750 -0- *
Marc J. Shapiro.......................... 4,627 11,250 -0- *
Robert M. Teeter......................... 3,627(8) 38,750(8) -0- *
Marina v.N. Whitman...................... 3,627 38,750 -0- *
All Executive Officers, Nominees for
Director and Directors as a Group (20
persons)............................... 972,670 2,558,950 44,652 2.1%
</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.
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<PAGE> 6
(2) Represents shares allocated to the employee through participation in the
Company's Employee Stock Ownership and Savings Plan, according to the latest
statement for said plan. Such shares can be voted by each employee, and each
employee has investment authority over the shares held in the employee's
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) Excludes options to purchase 15,000 shares of Common Stock which were
transferred by Mr. Curtiss to family trusts for which he is not trustee and
disclaims beneficial ownership therein.
(4) Includes 2,000 shares held by spouse in which Mr. Curtiss claims an indirect
ownership.
(5) Shares held jointly with spouse.
(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.
(8) All shares held in a trust of which Mr. Teeter serves as the trustee, except
for 330 restricted shares which are owned directly by Mr. Teeter.
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>
Fidelity Management and Research Corporation................ 11,328,455(1) 7%
87 Devonshire Street
Boston, Massachusetts 02109-3605
Capital Research and Management Company..................... 16,132,500(2) 10%
333 South Hope Street
Los Angeles, California 90071-1447
</TABLE>
- ---------------
(1) Information is based on a Form 13F-E for September 30, 1998.
(2) Information is based on a Form 13-F for September 30, 1998.
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<PAGE> 7
ELECTION OF DIRECTORS
NOMINEES
Three 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, Bruce E. Ranck and William D. Ruckelshaus are being nominated to
serve until the Company's 2002 Annual Meeting of Shareholders and until their
respective successors have been duly elected and qualified. Each of the nominees
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 three nominees named above. 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 20, 1999,
with respect to the nominees and the directors who are currently serving terms
expiring in 1999, 2000 or 2001:
<TABLE>
<CAPTION>
EXPIRATION
OF
POSITIONS AND OFFICES SERVED AS A PRESENT
NAME WITH THE COMPANY DIRECTOR SINCE AGE TERM
---- ------------------------- -------------- --- ----------
<S> <C> <C> <C> <C>
*William D. Ruckelshaus........... Chairman of the Board and 1987 66 1999
Director(1)
*Bruce E. Ranck................... President, Chief 1990 50 1999
Executive
Officer and Director(1)
John W. Alden..................... Director(3)(8) 1998 57 2001
Gregory D. Brenneman.............. Director(2)(4)(6) 1997 37 2000
William T. Butler................. Director(1)(3) 1990 66 2001
*Gerald Grinstein................. Director(3)(5)(6) 1990 66 1999
Robert J. Herbold................. Director(4)(8) 1998 56 2001
Harry J. Phillips, Sr............. Director(1) 1970 68 2000
Joseph L. Roberts, Jr............. Director(2) 1991 63 2001
Marc J. Shapiro................... Director(4)(5)(7) 1994 51 2000
Robert M. Teeter.................. Director(2)(5)(6)(8) 1989 59 2000
Marina v.N. Whitman............... Director(3)(4) 1992 63 2001
</TABLE>
- ---------------
(1) Member of the Executive Committee
(2) Member of the Corporate Responsibility Committee
(3) Member of the Compensation Committee
(4) Member of the Audit Committee
(5) Member of the Directors and Corporate Governance Committee
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<PAGE> 8
(6) Member of the Strategic Industry Development Committee
(7) Advisory Member of the Strategic Industry Development Committee
(8) Member of the Marketing Committee
* Indicates nominees for director for a three-year term expiring in 2002 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. He stepped down as the
Company's Chief Executive Officer in October 1995, but remains as Chairman of
the Board. Mr. Ruckelshaus also serves as a director of Cummins Engine Company,
Monsanto Company, Nordstrom, Inc., Weyerhaeuser Company, Solutia Inc., Coinstar,
Inc. and Gargoyles Inc.
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. Prior to
that time, he served as a Regional Vice President in one of the Company's former
regions. He also serves as a director of Furon Company.
Mr. Alden serves as Vice Chairman of United Parcel Service (UPS), a
position he has held since November 1996. He previously held the office of
Senior Vice President of Business Development, a position he held from 1986. He
has served as a director of UPS since 1988. He joined UPS in 1965 and spent the
majority of his career in customer service and sales positions prior to being
named National Customer Development Manager in 1978. He is a director of Unistar
Air Cargo, the joint venture between UPS and Yamoto Transport of Japan to market
cargo services for the U.S. -- Japan trading lane.
Mr. Brenneman is currently President and Chief Operating Officer of
Continental Airlines, Inc., a position he has held since April 1995. He also
serves as a director of Continental Airlines, Inc. and as Vice Chairman of
Continental Micronesia and Continental Express. Mr. Brenneman also serves as a
director of J. Crew Group, Inc. Prior to his joining Continental Airlines, he
was a partner in Bain & Company, Inc., a consulting firm, where he specialized
in corporate turnarounds.
Dr. Butler serves as Chancellor of Baylor College of Medicine in Houston,
Texas, where he previously served as President and Chief Executive Officer from
1979 until January 1996. He is also the past Chairman of the Association of
American Medical Colleges. Dr. Butler also serves as a director of C.R. Bard,
Inc. and Chairman of the Board of Lyondell Chemical Company.
Mr. Grinstein currently serves as Chairman of the Board of Delta Air Lines.
He also serves as a director of Sundstrand Corporation, Imperial Holly
Corporation, PACCAR Inc., Vans, Inc. and The Pittston Company. Mr. Grinstein
served as Chairman, Chief Executive Officer, President and a director of
Burlington Northern Santa Fe Corporation and Burlington Northern Railroad
Company from 1989 until his retirement in December 1995.
6
<PAGE> 9
Mr. Herbold has served as Executive Vice President and Chief Operating
Officer of Microsoft Corporation since November 1994 and serves on its Executive
Committee. Prior to joining Microsoft, he served as Senior Vice President,
Advertising and Information Services, at The Procter & Gamble Company.
Mr. Phillips served as Chairman of the Board and Chief Executive Officer 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., Buckeye Technologies, Inc., Buckman Laboratories, Morgan Keegan
Inc. and the National Commerce Bancorporation, Memphis, Tennessee.
Dr. Roberts is Senior Pastor of the Ebenezer Baptist Church in Atlanta,
Georgia. He also serves as a member of various civic organizations.
Mr. Shapiro currently serves as Vice Chairman, Finance and Risk Management
of The Chase Manhattan Bank. Before assuming his current role in September 1997,
he was Chairman, President and Chief Executive Officer of Texas Commerce Bank
National Association, a subsidiary of The Chase Manhattan Corporation. He also
serves as a director of Weingarten Realty Investors, Santa Fe Energy Resources,
Inc. and Burlington Northern Santa Fe Corporation.
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, Bank of Ann Arbor, Durakon Industries, Inc. and Optical
Imaging Systems.
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, The
Chase Manhattan Corporation, Alcoa Corporation and Unocal Corporation.
COMMITTEES
The members of the Company's Executive, Audit, Compensation, Corporate
Responsibility, Directors and Corporate Governance, Marketing and Strategic
Industry Development 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 of Directors, issue any of the
Company's Common Stock or Preferred Stock.
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<PAGE> 10
The Audit Committee recommends to the Board of Directors the selection of
the Company's independent accountants; 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; the
administration of the stock incentive plans of the Company; and oversees the
administration and results of operations of the Company's retirement and other
benefit plans.
The Corporate Responsibility Committee's responsibilities include the
surveying, monitoring and guiding of the Company's role in the fulfillment of
its social responsibilities toward its shareholders, employees and the general
public in the conduct of its normal business activities.
The Directors and Corporate Governance 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 members of the proxy committee charged with voting solicited proxies
at shareholder meetings; and review proxy comments received from shareholders
relating to the Board of Directors. In addition, the Directors and Corporate
Governance Committee will consider shareholders' 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 shareholders in connection
with the previous year's annual meeting of shareholders.
The Marketing Committee was formed in September 1998 and the Committee's
responsibilities include surveying, monitoring and guiding the internal and
external growth opportunities and strategies to be pursued by the Company.
The Strategic Industry Development Committee was also formed in September
1998 and the Committee's responsibilities include evaluating, monitoring and
guiding the Company in relation to significant issues affecting the Company and
to assist the Company in the development of strategic responses thereto.
During the last fiscal year, the Executive Committee held one meeting; the
Audit Committee held five meetings; the Compensation Committee held four
meetings; the Corporate Responsibility Committee held one meeting; the Directors
and Corporate Governance Committee held five meetings; and the Board of
Directors held ten meetings. No incumbent director attended fewer than 75
percent of the aggregate number of board meetings and meetings of committees on
which he or she served.
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<PAGE> 11
DIRECTOR COMPENSATION
In fiscal 1998, 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 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.
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 director member of the Executive Committee receives $10,000
(Chairman is an employee-director); and the Corporate Responsibility Committee,
the Directors and Corporate Governance Committee, the Marketing Committee and
the Strategic Industry Development Committee members receive $4,000 (Chairman of
each committee receives $6,000). An advisory member of the Strategic Industry
Development Committee also receives $4,000. In addition, non-employee directors
are paid attendance fees of $1,000 for each meeting of the Board of Directors
and $500 for each committee meeting.
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 (i) an unfunded interest bearing account, (ii) a
BFI phantom stock account that earns dividend equivalents or (iii) other
investment options as offered in the Company's Employee Stock Ownership and
Savings Plan. A director may elect to receive cash distributions from his or her
account either prior to or following termination of service.
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 Company's Compensation Committee (the "Committee") is pleased to
present its annual report on executive compensation. This Committee report
describes the components of the Company's executive officer compensation program
and explains the basis on which fiscal year 1998 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 included in this Proxy Statement.
9
<PAGE> 12
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM
The Committee's overriding philosophy is to establish executive
compensation policies that are linked to the Company's mission and the sustained
creation of shareholder value. The Committee is responsible for approving the
design of, assessing the effectiveness of, and administering executive
compensation programs that support achievement of the Company's strategic
business objectives and core values. To ensure objectivity in the fulfillment of
its responsibilities, the Committee is composed entirely of independent,
non-employee directors who meet on a regular basis during the fiscal year.
The following objectives continue to serve as the guiding principles for
all compensation decisions:
- Align variable compensation opportunities with shareholder interests,
such that the executive compensation program is highly sensitive to
Company performance, defined in terms of shareholder value creation;
- Focus management on achieving financial and operating objectives that
have been demonstrated to be primary, sustainable drivers of shareholder
value over the long-term;
- Provide a competitive total compensation opportunity, commensurate with
performance, that enables the Company to attract and retain key
executives; and
- Integrate all corporate and field pay programs with the Company's annual
and long-term business objectives, thereby encouraging teamwork in
implementing an organization driven towards customer service and
satisfaction.
The Committee believes that the Company's current executive compensation
program has been designed and is administered in a manner consistent with these
objectives.
COMPENSATION PROGRAM COMPONENTS
The Committee regularly reviews the Company's compensation program to
ensure that salary levels and incentive opportunities are both strategically
motivating and competitive. This process entails an annual assessment of both
the total compensation levels and the individual pay components. In determining
competitive compensation, the Committee obtains information on a large number of
companies through published national executive compensation surveys and
comparative analyses of compensation data compiled from proxy statements. The
Committee focuses its analysis primarily on organizations with comparable
revenues, asset size, number of employees and service industry classifications.
The universe of companies used for competitive compensation comparisons is
broader than those companies which comprise the published industry index in the
Performance Graph included in this Proxy Statement, since the Company's
competitors for management talent extend beyond the Company's direct
competitors.
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. Actual officer salaries are approved by
10
<PAGE> 13
the Committee and are based on a combination of factors, including the
performance of the executive, his or her salary relative to the competitive
market, the salary increase budget for the Company, and the recommendation of
the Chief Executive Officer. Additional considerations may include the
background, experience, and scope of accountability of the executive. All named
executive officers have entered into employment agreements with the Company (see
"Employment and Severance Agreements"). Under these agreements, the Committee
has the sole discretion for determining any increase in base salary; however,
base salaries may not be decreased.
ANNUAL INCENTIVE COMPENSATION -- The objective of the Management Incentive
Plan is to deliver competitive levels of compensation for the attainment of
annual financial objectives and operating results that the Committee believes
are primary drivers of stock price performance over time. Target awards for the
Company's executive officers under the plan represent the 50th percentile of the
competitive market for executive positions at companies of similar size and
complexity. Actual awards are determined based primarily on the Company's and
executive's performance during the fiscal year, with the maximum award available
being two times the target incentive for executive officers. As for the prior
year, the Company's officers awards for fiscal 1998 were based primarily on
attainment of certain operating cash flow, return on gross assets and customer
satisfaction goals.
To attain the financial objectives for fiscal 1998, the Company was
required to improve its return on gross assets and generate increased cash flow,
which together were weighted 75% for each of the named executive officers.
Customer satisfaction required that the Company deliver consistent and
integrated service of the highest quality through the teamwork and cooperation
of a customer-driven organization, and was weighted 25% for each of the named
executive officers. In addition, all other executive officers were responsible
for achieving team and individual performance objectives that demonstrated
commitment to Company values and encouraged individual accountability. To ensure
alignment of the plan with shareholder interests, above-target incentive awards
could only be earned if superior financial results in excess of plan goals were
achieved.
During fiscal 1998, the Company remained focused on internal growth with
success measured by cash flow and return on gross assets. The measurement for
the return on gross assets represented the quotient of operating cash flow
divided by average gross assets. During fiscal 1998, the Company improved its
earnings per share and returns significantly by divesting of underperforming
operations, reducing costs and repurchasing shares. Although significant
progress was made in fiscal 1998, the Company did not reach its milestones. For
fiscal 1998, the financial results achieved by the Company in connection with
operating cash flow and return on gross assets targets made eligible an
attainment level of 65% for incentive awards as prescribed by the Management
Incentive Plan; however, it was determined by the Committee that the attainment
level should be reduced to 50% based upon the Company's overall performance for
the year.
For fiscal 1999, the Company has established both challenging and
achievable milestones. The Company's focus in fiscal 1999 will be to accelerate
the rate of growth and the cost reduction program. The Company's milestones for
fiscal 1999, which consist of targets for continued improvement to (i) revenue
growth, (ii) operating margins, (iii) return on gross assets and (iv) SG&A costs
as a percent of revenue, should continue to align the Company's performance
11
<PAGE> 14
objectives with the interests of its shareholders. In addition, incentive
compensation under the Management Incentive Plan will continue to link employees
to common goals and reward them only as shareholders and customers benefit from
improved performance by the Company.
For fiscal 1999, the Management Incentive Plan is evolving to meet the
Company's changing needs. These revisions to the Management Incentive Plan
include (i) an emphasis on earnings growth; (ii) improvement in the goal-setting
methodology and thereby the motivational impact of the plan; and (iii) focusing
the management component of the plan to implement actions that further the
development, communication and facilitation of the Company's goals.
To encourage executives to hold a significant ownership stake in the
Company, executives can elect to receive payment of up to 100% of their annual
incentive award in restricted Common Stock, with a premium of 25% additional
shares, under the Company's Convertible Annual Incentive Award Plan. 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.
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 shareholders and executives
will be closely aligned. During 1998, executives were 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. Options granted in fiscal 1998 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.
In determining stock option grants, the Committee establishes a competitive
range (with the midpoint of the competitive range approximating the 50th
percentile of the survey data) of annualized long-term award values based on
each executive's salary level, position, and compensation mix. The annualized
award range is then converted to actual numbers of stock options with the value
of stock options estimated using the Black-Scholes option valuation model. The
actual number of options granted is based upon each executive's contribution 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.
LONG-TERM INCENTIVE PLAN -- During fiscal year 1997, the Committee approved
the reallocation of approximately two-thirds of the executive officers' and
certain key executives' stock option participation over a four-year period into
an upfront grant of performance shares that vest and are convertible into shares
of the Company's Common Stock only when both of the following critical
performance measures are met:
- Significant improvement in operating cash flow after subtracting a charge
for the Company's cost of capital, which requires that the Company earns
an average annual return on gross
12
<PAGE> 15
assets over the five-year period beginning October 1, 1996 that meets
pre-established cumulative dollar amounts exceeding 13%; and
- Appreciation in the value of the Company's Common Stock over the same
five-year period.
The Long-Term Incentive Plan established provisions for partial vesting of
performance shares as performance measures are attained, while full vesting in
the performance shares occurs only when (i) the fair market value of the
Company's Common Stock reaches $50 per share and (ii) the Company achieves
substantially improved cash flow. No performance shares have vested under the
Long-Term Incentive Plan since the Company has not attained the performance
goals as prescribed under said plan.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
To further align the interests of executives with the Company's
shareholders in terms of both risk and reward, the Committee established stock
ownership guidelines that are designed to encourage the accumulation and
retention of a significant portion of the Company's Common Stock by its
executive officers. The guidelines suggest that by the end of calendar year
2000, each executive officer hold a minimum of three times base salary in the
Company's Common Stock. The Committee increased the stock ownership guidelines
for Bruce E. Ranck, President and Chief Executive Officer, from four to five
times base salary for his holdings of shares of the Company's Common Stock, and
also for J. Gregory Muldoon, Executive Vice President and Chief Operating
Officer, increasing his level from three to four times his base salary.
Eligible shares include stock held as a shareholder of record, in brokerage
accounts, restricted shares granted under the Convertible Incentive Award Plan,
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 1998 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Company's Guidelines on Corporate Governance Issues require an annual
evaluation of the Chief Executive Officer's ("CEO") performance. As part of this
process, the Committee is responsible for conducting an independent assessment
of the CEO's performance which includes soliciting feedback from the Company's
directors. Directors are requested to complete a written evaluation of the CEO's
performance based on a formal position description for the job of CEO, which
outlines responsibilities and key business objectives in each of the following
areas:
- Leadership
- Strategic Planning
- Financial Goals and Systems
- Financial Results
- Succession Planning
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<PAGE> 16
- Human Resources
- Communications with Shareholders
- External and Board Relations
In considering the compensation for the CEO for fiscal year 1998, the
Committee reviewed Mr. Ranck's existing compensation arrangements and both
Company and individual performance. The Committee has made the following
determinations regarding Mr. Ranck's fiscal year 1998 compensation:
- In September 1997, the Committee had established Mr. Ranck's salary at
$800,000. Since that date, there has been no change in his base salary.
- A stock option grant of 100,000 shares (at an option price equal to fair
market value on the date of grant) was made in December 1997.
- Although Mr. Ranck was eligible to receive a cash bonus award for fiscal
1998 as prescribed under the Management Incentive Plan, he declined to
accept his incentive compensation. However, the Committee approved to
issue Mr. Ranck 6,588 restricted shares that were equal to the amount of
restricted shares he would have received if he had not waived receipt of
the incentive compensation award (at the beginning of fiscal 1998, Mr.
Ranck had elected to receive 50% of any incentive compensation award in
restricted shares, which included an additional 25% share premium.) The
Committee believes that this will allow Mr. Ranck to continue his efforts
to reach the ownership attainment level as prescribed by the Company's
Stock Ownership Guidelines. In September 1998, the Committee increased
the stock ownership guidelines for Mr. Ranck from four to five times base
salary for his holdings of shares of the Company's Common Stock.
The Committee will continue to use the results of the CEO evaluation
process as part of its deliberations when considering future adjustments to Mr.
Ranck's compensation.
CONCLUSION -- After completing its assessment of all compensation elements,
the Committee believes that the total compensation opportunity offered to
executives of the Company is appropriately competitive with the compensation
programs provided by other comparable corporations. The Committee also believes
that the Company's incentive plans will continue to encourage and reward
participants to perform consistent with the returns that are generated on behalf
of the Company's shareholders. The Committee will continue to monitor the
effectiveness of the Company's total compensation program to ensure that it
supports the strategic human resource needs and integrity of the Company.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Gerald Grinstein, Chairman
John W. Alden
William T. Butler
Marina v.N. Whitman
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<PAGE> 17
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/Waste
Management 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, 1993 and that all dividends were reinvested:
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
DOW JONES
POLLUTION
CONTROL/WASTE
MEASUREMENT PERIOD S&P 500 MANAGEMENT
(FISCAL YEAR COVERED) BFI INDEX INDEX
<S> <C> <C> <C>
1993 100 100 100
1994 141 104 104
1995 138 135 106
1996 116 162 112
1997 181 227 137
1998 147 248 138
</TABLE>
15
<PAGE> 18
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 for the fiscal year ended September
30, 1998 (collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
- ----------------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G) (I)
SECURITIES
UNDERLYING
RESTRICTED STOCK
OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) (SHARES) COMPENSATION(4)
--------------------------- ---- -------- -------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce E. Ranck 1998 $800,000 -0- -0- $194,300 100,000 $4,000
President and 1997 600,000 126,700 -0- 158,400 38,000 4,000
Chief Executive Officer 1996 600,000 -0- -0- -0- 250,000 3,750
J. Gregory Muldoon 1998 534,000 181,700 -0- -0- 31,000 4,000
Executive Vice President 1997 437,000 128,600 -0- 53,500 18,500 4,000
and Chief Operating 1996 365,800 -0- -0- -0- 176,000 3,750
Officer
Norman A. Myers 1998 534,000 129,800 -0- -0- 16,500 3,152
Executive Vice President and 1997 508,000 126,500 -0- 52,600 15,500 2,992
Chief Development Officer 1996 508,000 -0- -0- -0- 52,500 2,992
Jeffrey E. Curtiss 1998 383,000 93,100 -0- -0- 12,000 3,232
Senior Vice President 1997 364,000 -0- -0- 137,200 11,000 3,070
and Chief Financial Officer 1996 364,000 -0- -0- -0- 27,500 3,070
Rufus Wallingford 1998 383,000 46,600 -0- 58,100 12,000 4,000
Senior Vice President and 1997 364,000 54,900 -0- 68,500 11,000 4,000
General Counsel 1996 364,000 -0- -0- -0- 27,500 3,750
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) At the beginning of fiscal 1998, Mr. Ranck elected to receive 50% of any
incentive compensation award in restricted shares, which included an
additional 25% share premium. Mr. Ranck subsequently declined to accept his
incentive compensation award for fiscal 1998. However, he was granted 6,588
restricted shares by the Compensation Committee which was equal to the
amount of restricted shares he would have received if he had not waived
receipt of the incentive compensation award. The bonus amount (i) includes
for Mr. Muldoon 25% of the cash award that he elected to defer and (ii)
excludes for Mr. Wallingford 50% of his incentive compensation award that he
elected to receive in restricted shares (see note (3) below for details
regarding the terms of the restricted shares).
(2) The named executive officers did not receive any perquisites or 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.
(3) On December 1, 1998, Mr. Wallingford was granted 1,969 restricted shares of
the Company's Common Stock based upon the percentage elected by him under
the Company's Convertible
16
<PAGE> 19
Annual Incentive Award Plan for fiscal 1998, which included an additional
25% stock premium. The restricted shares issued to Messrs. Ranck (see note
(1) above) and Wallingford are restricted for a two-year period, during
which time the officer cannot sell, transfer, pledge or assign them, but as
the registered holders of these shares, the officer 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 to equal 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 which is the closing
price of the stock the trading day preceding date of grant. The number and
value, respectively, of the aggregate restricted share holdings as of
September 30, 1998 for each named executive officer were as follows: Ranck:
4,370 shares, $132,200; Muldoon: 1,475 shares, $44,600; Myers: 1,450 shares,
$43,900; Curtiss: 3,785 shares, $114,500; and Wallingford: 1,890 shares,
$57,200.
(4) Consists of the amount of the Company's match for each named executive
officer under the BFI Employee Stock Ownership and Savings Plan.
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>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ----------------------------------------------------------------------------------- -------------
(A) (B) (C) (D) (E) (F)
NUMBER OF PERCENTAGE GRANT DATE
SECURITIES OF TOTAL PRESENT
UNDERLYING OPTIONS VALUE BASED
OPTIONS GRANTED TO EXERCISE ON
GRANTED EMPLOYEES IN PRICE EXPIRATION BLACK-SCHOLES
NAME (SHARES)(1) FISCAL YEAR (PER SHARE) DATE MODEL(2)
---- ----------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Bruce E. Ranck.............. 100,000 5.1% $36.25 12/01/2007 $981,000
J. Gregory Muldoon.......... 31,000 1.6% 36.25 12/01/2007 304,100
Norman A. Myers............. 16,500 0.8% 36.25 12/01/2007 161,900
Jeffrey E. Curtiss.......... 12,000 0.6% 36.25 12/01/2007 117,700
Rufus Wallingford........... 12,000 0.6% 36.25 12/01/2007 117,700
</TABLE>
- ---------------
(1) All options were granted on December 2, 1997 and were granted under the
Company's 1993 Stock Incentive Plan, of which 2,700 shares were allocated as
incentive stock options. 25% of the above options become exercisable one
year after the date of grant 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 $9.81 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
17
<PAGE> 20
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 21.02% based on the prior two years of
quarter-end closing stock prices of BFI Common Stock, (b) a risk-free rate
of return of 5.86%, which approximates the 10-year Treasury bond rate, (c)
BFI Common Stock dividend yield of 1.88%, and (d) a six-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, 1998 for
each of the named executive officers:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND SEPTEMBER 30, 1998 OPTION VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
SEPTEMBER 30, 1998 IN-THE-MONEY OPTIONS AT
SHARES (SHARES) SEPTEMBER 30, 1998(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce E. Ranck........... -0- $ -0- 660,150 267,250 $3,630,600 $137,800
J. Gregory Muldoon....... 61,000 711,900 147,625 138,875 86,700 65,500
Norman A. Myers.......... -0- -0- 352,625 66,875 1,377,400 71,700
Jeffrey E. Curtiss....... -0- -0- 125,250 30,250 722,600 45,000
Rufus Wallingford........ -0- -0- 62,500 32,000 173,300 14,100
</TABLE>
- ---------------
(1) Computed based upon the difference between aggregate fair market value and
aggregate exercise price at September 30, 1998.
EMPLOYMENT AND SEVERANCE AGREEMENTS
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 $800,000 and $534,000, respectively.
The employment agreements for Messrs. Ranck and Myers include provisions
governing part-time status, termination and change in 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
18
<PAGE> 21
current duties, the agreement may be terminated by either party on a date 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 1999 or if the employee
terminated the agreement because of a breach by the Company, his annual
compensation on part-time status would be approximately $638,800 and $505,100,
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 in control of the Company, the employee may elect
(within twelve months after the date of the change of control) to receive a lump
sum payment equal to three times the employee's average annualized compensation
(including salary, bonus and compensation that has been deferred at the election
of the employee; however, excluding any stock premium received as deferred
compensation) over the five taxable years preceding the tax year in which the
change in control occurs. If a change in control were to occur during 1999 and
the election to take the change in control payment were made by Messrs. Ranck
and Myers, they would receive approximately $2,614,600 and $2,325,100,
respectively. The election by the employee to take the change in 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.
J. Gregory Muldoon, Jeffrey E. Curtiss and Rufus Wallingford each has an
employment agreement with the Company, which has a continuously renewing
three-year term until age 65, unless sooner terminated by the parties. The
agreements provide for the payment of a minimum annual base salary and for
participation by the officers in all Company benefit plans and programs. The
current annual salary for Messrs. Muldoon, Curtiss and Wallingford is $534,000,
$395,000 and $395,000, respectively. The employment agreements include
provisions governing inactive status, termination and change of control. If the
Company should terminate the agreements other than for cause (as defined in the
agreements), the termination would be effective on the third anniversary of the
date of notice of termination (or, if sooner, when the officer reaches age 65),
and the officer would go on inactive status on the date of such notice. The
officer's compensation while on inactive status would be 75% of the base salary
that the officer was earning prior to such notice and the officer would continue
to participate in the Company's benefit programs. In the event of a change of
control of the Company and if the officer has not been placed on inactive status
by the Company or terminated for cause, then he may elect (within sixty (60)
days after the date of the change of control) to receive a lump sum payment
equal to three times his average annualized compensation (including salary,
bonus and compensation that has been deferred at the election of the employee;
however, excluding any stock premium received as deferred compensation) over the
five taxable years preceding the tax year in which the change of control occurs.
If a change of control were to
19
<PAGE> 22
occur during 1999 and Messrs. Muldoon, Curtiss and Wallingford elected to take
the change of control payment, they would receive approximately $2,512,900,
$1,337,900 and $1,454,600, respectively. Such lump sum payments would terminate
all of the officers' rights under their agreements, except, generally, certain
indemnification rights and legal expenses.
RETIREMENT AND RESTORATION PLANS
The Company's defined-benefit retirement 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. Certain employees are also covered
by either the BFI Benefit Restoration Plan or the BFI Cash Balance Restoration
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 a percentage of the salary and bonus received by such employee during the
period beginning January 1 and ending December 31 of that year. Prior to June 1,
1998, the salary credit of participants under the Plan was equal to 4.5%;
however, during fiscal 1998, the Plan was amended to reduce the salary credit to
2% effective June 1, 1998. Currently, the balance in each employee's account
earns interest at a rate of 6% per year. The normal retirement age under the
Plan is 65 with an early retirement option at age 55 with ten years of vesting
service. 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. Ranck, $311,000; Mr.
Muldoon, $191,000; Mr. Myers, $327,000; Mr. Curtiss, $36,000; and Mr.
Wallingford, $24,000. The projected age 65 annual benefits are lower than those
calculated for the prior year proxy disclosure due to the reduction in pension
accruals effective June 1, 1998.
Currently, the Internal Revenue Code limits the pension from the Plan to
$130,000 and limits the annual pay used to calculate pensions to $160,000; these
amounts are indexed annually to the changes in Social Security benefits. If the
annual 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 he is 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 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 but for the benefit limitation imposed by Section 401(A)(17)
of the Internal Revenue Code.
20
<PAGE> 23
CERTAIN TRANSACTIONS
The Company stock option agreements allow the Company to purchase shares of
Company Common Stock that are received by officers and directors in connection
with the exercise of stock options. All such purchases are based on the closing
sales price of the Company's Common Stock on the last trading day preceding the
date of exercise. On December 3, 1998, the Company purchased 30,000 shares at
$30.1875 per share from Mr. Myers in connection with an exercise of a stock
option that was expiring on December 6, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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.
AUDITORS
Arthur Andersen LLP, independent public auditors for the Company for fiscal
1998 and the current fiscal year, has advised the Company that it will have in
attendance at the Meeting representatives who will have an opportunity to make a
statement, and will be available to respond to appropriate questions.
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 Shareholders. However, if any other matters should properly come
before the Meeting, the persons named in the enclosed proxy will have
discretionary authority to vote such proxy in accordance with their best
judgment on such matters.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any shareholder who wishes to submit a proposal considered for inclusion in
the Company's proxy materials relating to the 2000 Annual Meeting of
Shareholders 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 29, 1999. Any shareholder who
intends to present a proposal at the 2000 Annual Meeting of Shareholders without
inclusion of such proposal in the Company's proxy materials must deliver the
proposal to the Company no later than October 29, 1999. The Company reserves the
right to disregard or take other appropriate action with respect to any proposal
that does not comply with these and other applicable requirements.
21
<PAGE> 24
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/ EDWARD C. NORWOOD
Edward C. Norwood
Vice President and Secretary
Houston, Texas
January 26, 1999
22
<PAGE> 25
[BROWNING-FERRIS INDUSTRIES, INC. LOGO]
BROWNING-FERRIS INDUSTRIES, INC.
=======================================
NOTICE OF 1999 ANNUAL MEETING
AND
PROXY STATEMENT
=======================================
IMPORTANT
PLEASE SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED
[Recycled paper LOGO] ENVELOPE.
<PAGE> 26
PROXY
BROWNING-FERRIS INDUSTRIES, INC.
PROXY--ANNUAL MEETING OF SHAREHOLDERS--MARCH 3, 1999
The undersigned shareholder of record on January 5, 1999, of Browning-Ferris
Industries, Inc., a Delaware corporation (the "Company"), hereby appoints
WILLIAM D. RUCKELSHAUS and EDWARD C. NORWOOD, 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 shareholders of the Company to be
held on March 3, 1999, at 2:00 p.m., Houston time, in the Company's auditorium
located on the 14th floor of the corporate office at 757 N. Eldridge, Houston,
Texas 77079, and at any adjournment thereof, the number of votes which the
undersigned would be entitled to cast if personally present:
To elect the following three nominees to serve as directors for three-year terms
and until their successors are duly elected and qualified:
1. Gerald Grinstein
2. Bruce E. Ranck
3. William D. Ruckelshaus
-----------
SEE REVERSE
SIDE
-----------
o FOLD AND DETACH HERE o
<PAGE> 27
PLEASE MARK YOUR
[X] VOTES AS
IN THIS EXAMPLE.
This Proxy is solicited on behalf of the Board of Directors and will be
voted. If no direction is made, this Proxy will be voted "FOR" all of the
Board of Directors' nominees.
- --------------------------------------------------------------------------------
BFI's Board of Directors recommends a vote FOR all nominees.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of
Directors. [ ] [ ]
(see reverse)
For, except vote withheld from the following nominees:
- ------------------------------------------------------
2. 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 or more particularly described in the Proxy Statement relating to such
meeting, receipt of which is hereby acknowledged.
- --------------------------------------------------------------------------------
Please sign your name here exactly
as it appears hereon. Joint owners
must each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as it appears
hereon. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
-------------------------------------
-------------------------------------
Signature(s) Date
o FOLD AND DETACH HERE o
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK o EASY o IMMEDIATE o AVAILABLE 24 HOURS A DAY o 7 DAYS A WEEK
Your telephone or Internet vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed, and returned your proxy
card. To vote by phone or Internet, please follow these easy steps.
TO VOTE BY PHONE
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Call toll free 1-800-OK2-VOTE (1-800-852-8683) on a touch tone telephone.
Shareholders residing outside the United States, Canada and Puerto Rico should
call 1-201-324-0377.
Use the Control Number located in the box above, just below the perforation.
Enter the Control Number and pound signs (#) exactly as they appear.
Follow the recorded instructions.
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TO VOTE BY INTERNET
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Log onto http://www.vote-by-net.com
Follow the instructions on the screen.
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