[LOGO]
WASTE RECOVERY, INC.
309 South Pearl Expressway
Dallas, Texas 75201
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1996
---------------
To the Shareholders of WASTE RECOVERY, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Waste
Recovery, Inc. (the "Company"), a Texas corporation, will be held at the
Company's executive offices at 309 South Pearl Expressway, Dallas, Texas on
Monday, May 20, 1996, at 10:00 a.m., Dallas, Texas time, for the following
purposes:
1. To elect (a) three Class A Directors to serve for a term of three
years and (b) one Class C Director to serve for a term of two years,
and until their respective successors are elected and qualified;
2. To approve the selection of Price Waterhouse LLP as the independent
accountants of the Company to serve for the fiscal year ending
December 31, 1996; and
3. To transact such other business as properly may come before the
meeting or any adjournment thereof.
The close of business on April 9, 1996 has been fixed by the Board of
Directors as the record date for the Annual Meeting. Only shareholders of record
on that date will be entitled to notice of and to vote at the Annual Meeting or
any adjournment thereof, notwithstanding transfer of any stock on the books of
the Company after such record date. The stock transfer books will not be closed.
A complete list of the shareholders entitled to vote at the meeting will be open
to the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours for a period of 10 days prior to the meeting at
the corporate offices of the Company, 309 South Pearl Expressway, Dallas, Texas
75201.
A Proxy Statement, form of Proxy, and copy of the Annual Report on the
Company's operations during the fiscal year ended December 31, 1995, accompany
this notice.
It is important that your shares be represented at the Annual Meeting. If
you do not expect to attend in person, please sign and date the form of Proxy
and return it in the enclosed postage prepaid envelope. The form of Proxy is
enclosed in the mailing envelope in which this Proxy Statement is contained.
Shareholders who attend the Annual Meeting may revoke their proxies and vote in
person if they desire.
By Order of the Board of Directors
JOHN E. COCKRUM
Secretary
April 26, 1996
<PAGE>
[LOGO]
WASTE RECOVERY, INC.
309 South Pearl Expressway
Dallas, Texas 75201
PROXY STATEMENT
For the Annual Meeting of Shareholders
To be Held on May 20, 1996
SOLICITATION OF PROXIES
This Proxy Statement is furnished to shareholders of Waste Recovery, Inc.,
a Texas corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors to be voted at the Annual Meeting of
Shareholders of the Company to be held at the Company's executive offices at 309
South Pearl Expressway, Dallas, Texas 75201, on Monday, May 20, 1996, at 10:00
a.m., Dallas, Texas time, or at any adjournment thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. References
herein to the "Company" include its subsidiaries, unless the context otherwise
requires.
This Proxy Statement and form of Proxy are being mailed to shareholders on
or about April 26, 1996. If the enclosed form of Proxy is executed and returned,
it may nevertheless be revoked by the shareholder at any time by filing with the
Secretary of the Company a written revocation or a duly executed proxy bearing a
later date. A shareholder who attends the meeting in person may revoke his or
her proxy at that time and vote in person if so desired. All proxies duly
signed, dated, and returned will be voted as specified therein, but unless
otherwise specified, will be deemed to grant authority to vote:
(1) FOR the election of the four nominees listed under "Election of
Directors" as nominees of the Company for election as directors;
(2) FOR the approval of the selection of Price Waterhouse LLP as the
independent accountants of the Company to serve for the fiscal
year ending December 31, 1996; and
(3) At the discretion of the persons named in the enclosed form of
Proxy, on any other matter that may properly come before the
meeting or any adjournment thereof.
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of the Company. The Company is unaware of any additional matters not set forth
in the Notice of Annual Meeting of Shareholders that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting and presented for a vote of the shareholders, the
persons named in the Proxy will vote in accordance with their best judgment upon
such matters, unless otherwise restricted by law.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may also be solicited by personal
interview, facsimile transmission, and telephone by directors, officers and
employees of the Company, who will receive no special compensation for such
services. The Company will also supply brokers, nominees, or other custodians
with the numbers of Proxy forms, Proxy Statements, and Annual Reports they may
require for forwarding to beneficial owners, and the Company will reimburse such
persons for their reasonable expense in so doing.
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<PAGE>
OUTSTANDING CAPITAL STOCK AND STOCK OWNERSHIP OF
DIRECTORS, CERTAIN EXECUTIVE OFFICERS
AND PRINCIPAL SHAREHOLDERS
The record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting has been established by the Board of
Directors as the close of business on April 9, 1996. As of the record date, the
Company had issued and outstanding and entitled to vote at the Annual Meeting
10,955,070 shares of Common Stock, no par value per share ("Common Stock"). (For
a description of the voting rights of the Common Stock, see "Quorum and Voting"
herein.)
The following table sets forth information as of March 22, 1996, regarding
the beneficial ownership of the Company's Common Stock by each person or group
known by management of the Company to own more than five percent of the
outstanding shares of Common Stock of the Company, by each of the Company's
executive officers named in the Summary Compensation Table below, by each of the
Company's directors and nominees, and by all of its directors and executive
officers as a group.
<TABLE>
<CAPTION>
Shares of Common Stock Beneficially
Owned and Percentage of Outstanding
Shares as of March 22, 1996
Number Number
Directly Beneficially
Name Owned Percent Owned Percent
---- ----- ------- ----- -------
<S> <C> <C> <C> <C>
Crandall S. Connors<F1>*.............. 454,265 4.1% 2,683,270 24.5%
108 Forest Avenue
Locust Valley, New York 11560
Roger W. Cope<F2>*.................... 43,528 *** 43,528 ***
5663 East 9 Mile Road
Warren, Michigan 48091
Michael C. Dodge<F3>*................. 308,262 2.8% 326,262 3.0%
15660 North Dallas Parkway
Suite 400, L.B. 42
Dallas, Texas 75248
Thomas L. Earnshaw<F4>**+............. 139,505 1.3% 139,505 1.3%
John C. Kerr<F5>*..................... 257,259 2.3% 2,683,270 24.5%
16414 San Pedro
Suite 345
San Antonio, Texas 78232
Steven E. MacIntyre<F6>*.............. 245,650 2.2% 2,683,270 24.5%
425 Park Avenue
Floor 25
New York, New York 10022
Allan Shivers, Jr.<F7>*............... 426,124 3.8% 426,124 3.8%
221 West Sixth Street
Suite 1560
Austin, Texas 78701
Robert L. Thelen<F8>**+............... 137,598 1.3% 137,598 1.3%
W. David Walls<F9>*................... 37,321 *** 37,321 ***
1830 North 55th Street
Boulder, Colorado 80301
Kerr, Connors Group<F10>++............ - - 2,683,270 24.5%
108 Forest Avenue
Locust Valley, New York 11560
Directors and executive officers
as a group (11 persons)<F11><F12>...2,076,896 18.3% 3,793,608 34.6%
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<PAGE>
* Director
** Director and Nominee
+ Executive Officer
++ Shareholder
*** Less than 1%
<FN>
<F1> Columns 1 and 2 include 454,265 shares directly held and 2,500 shares of
Common Stock subject to options exercisable within sixty days, and columns
3 and 4 include 589,255 shares as to which Mr. Kerr has shared voting and
dispositive power. Mr. Connors is a member of a group (for purposes of
reference described herein as the "Kerr, Connors Group") that has filed a
Schedule 13D with the Securities and Exchange Commission, as last amended
by Amendment No. 3 dated August 9, 1995. Such Schedule 13D stated that the
reporting persons set forth therein, which include, among others, Messrs.
Connors, Kerr and MacIntyre, had reached an oral arrangement of unspecified
duration with respect to the voting and transfer of such stock. The share
amount set forth for Mr. Kerr in column 3 includes 1,637,250 shares of
Common Stock held by other members of the Kerr, Connors Group with respect
to which he disclaims beneficial ownership.
<F2> Includes 5,000 shares of Common Stock subject to options exercisable within
sixty days.
<F3> Columns 1 and 2 include 5,000 shares of Common Stock subject to options
exercisable within sixty days,and columns 3 and 4 include 18,000 shares of
Common Stock held by Mr. Dodge's daughter.
<F4> Includes 85,000 shares of Common Stock subject to options exercisable
within sixty days.
<F5> Columns 1 and 2 include 257,259 shares directly held, and columns 3 and 4
include 2,426,011 shares held by other members of the Kerr, Connors Group
as to which he disclaims beneficial ownership.
<F6> Columns 1 and 2 include 207,089 shares directly held, 2,500 shares of
Common Stock subject to options exercisable within sixty days and 36,061
shares of Common Stock issuable upon conversion of Debentures, and columns
3 and 4 include 2,437,620 shares held by other members of the Kerr, Connors
Group as to which he disclaims beneficial ownership.
<F7> Includes 205,000 shares of Common Stock subject to options exercisable
within sixty days.
<F8> Includes 98,098 shares held directly, 4,500 shares held of record by his
wife and as to which he shares voting power, and 35,000 shares of Common
Stock subject to options exercisable within sixty days.
<F9> Includes 5,000 shares of Common Stock subject to options exercisable within
sixty days.
<F10>Address is for Kerr, Connors & Co. and not of all of the members of such
group.
<F11>Includes 370,000 shares of Common Stock subject to options exercisable
within sixty days.
<F12>Outstanding shares for the purpose of calculating these percentages do not
include shares held by or for the account of the Company, and include
shares that can be acquired within sixty days by the exercise of stock
options or conversion of Debentures. Percentage is calculated by taking the
total number of shares of Common Stock directly owned or beneficially held,
as the case may be, by the individual or entity listed and dividing that
number by the sum of (i) the total number of shares of Common Stock
outstanding and (ii) the number of securities that such person has the
right to acquire within sixty days pursuant to options, warrants,
conversion privileges and other rights. Except as otherwise indicated in
this table, shares are directly owned, and unless indicated to the contrary
the owner has sole voting and investment power.
</FN>
</TABLE>
The address for each of Messrs. Earnshaw and Thelen is 309 South Pearl
Expressway, Dallas, Texas 75201.
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<PAGE>
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of the Company entitled to vote is necessary to constitute a
quorum at the meeting. If a quorum is not present or represented at the meeting,
the shareholders entitled to vote, present in person or represented by proxy,
have the power to adjourn the meeting, without notice other than announcement at
the meeting, until a quorum is present or represented. At any such adjourned
meeting at which a quorum is present or represented, any business may be
transacted that might have been transacted at the meeting as originally
notified. The affirmative vote of a plurality of the voting power represented at
the meeting and entitled to vote is required for the election of directors.
Cumulative voting is not permitted in the election of directors. A holder of
shares of Common Stock will be entitled to one vote per share of Common Stock as
to each matter properly brought before the meeting.
PROPOSALS OF SHAREHOLDERS
Any proposal by a shareholder to be presented at the Company's 1997 Annual
Meeting of Shareholders must be received by the Company at its executive offices
not later than January 1, 1997, in order to be considered for inclusion in the
Company's proxy material relating to the 1997 Annual Meeting. Any proper
proposal should be mailed or delivered to the attention of Corporate Secretary,
Waste Recovery, Inc., 309 South Pearl Expressway, Dallas, Texas 75201. Such
proposals must comply with the requirements of Regulation 14A of the Securities
Exchange Act of 1934.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board of Directors
is to be divided into three classes, approximately equal in number, with
staggered terms of three years. The three nominees designated by the Board of
Directors for election as Class A directors at the 1996 Annual Meeting each will
serve a three-year term if elected, and the nominee designated by the Board of
Directors for election as a Class C director at the 1996 Annual Meeting will
serve a two-year term if elected.
Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the nominees for the Board of Directors named
below. The nominees have indicated that they are able and willing to serve as
directors. If any (or all) such persons should be unable to serve, the persons
named in the enclosed proxy will vote the shares covered thereby for such
substitute nominee (or nominees) as the Board of Directors may select.
Shareholders may withhold authority to vote for any nominee by striking a line
through the name of such nominee in the space provided for such purpose on the
form of Proxy.
The directors will continue to serve until their respective successors are
duly elected and qualified.
NOMINEES FOR DIRECTORS
Class A Directors; Term expires in 1999
---------------------------------------
Mr. Thomas L. Earnshaw, age 41, was elected President and Chief Executive
Officer of the Company in March 1990. Mr. Earnshaw worked for Peat, Marwick,
Mitchell & Co., and in the retail business, before joining the Company when it
was founded in 1982. Mr. Earnshaw was elected Vice President - Operations in
1985 and Executive Vice President - Operations in 1987. Mr. Earnshaw has served
as director of the Company since 1990.
Mr. Robert L. Thelen, age 57, is one of the Company's original founders,
joining the Company in 1982. He was elected Vice President - Engineering of the
Company in 1989, and Executive Vice President - Engineering in 1991. He is
responsible for the design and improvement of plant equipment, plant
construction and technical assistance to customers. Mr. Thelen has served as a
director of the Company since 1990.
Mr. W. David Walls, age 52, spent twelve years in the investment banking
business, ten years of which were with Wood, Gundy, Inc. and two years with the
Company's original underwriters, Balis Zorn & Gerard, Inc. In September 1987, he
went into business as a private investor, and in August 1988 became Chairman of
Inside Communications, Inc., a publishing company. Mr. Walls has served as
director of the Company since 1986.
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<PAGE>
Class C Director; Term expires in 1998
--------------------------------------
Mr. John C. Kerr, age 48, has been a general partner in the investment
banking firm of Kerr, Connors & Co. for over five years. He is also a general
partner in Southwest Venture Partners III, a newly-formed venture capital
partnership in San Antonio, Texas. Mr. Kerr serves as Chairman of the Board of
Directors of the Texas Public Finance Authority, the bond issuing authority for
the State of Texas. Mr. Kerr was appointed to the Company's Board of Directors
in December 1995.
DIRECTORS CONTINUING IN OFFICE
Class B Directors; Term expires in 1997
---------------------------------------
Mr. Crandall S. Connors, age 48, has been a general partner in the
investment banking firm of Kerr, Connors & Co. since its formation in 1990.
Previously, he was a partner with the NYSE member firm of Shields & Co. since
1987, where he was president of its real estate subsidiary. From 1976 to 1986,
he was co- founder and CEO of Connors, Sternlieb & Co., specializing in real
estate and oil and gas syndications. Prior to such time, he had served since
1970 in various management positions with Citicorp N.A. Mr. Connors has served
as a director of the Company since 1994.
Mr. Michael C. Dodge, age 53, is an attorney in Dallas, Texas where he has
practiced law for more than fifteen years. In addition to practicing law, Mr.
Dodge is a director of Auto Wax Company, Inc., of Stirling Cooke North American
Holdings, Ltd., and of Stirling Cooke Texas, Inc. Mr. Dodge has served as a
director of the Company since 1983.
Mr. Steven E. MacIntyre, age 43, has been practicing investment banking
since 1981. He is Managing Director of D.H. Troob & Company, a licensed
broker/dealer, where he has been employed for six years. Prior to joining D.H.
Troob & Company, he was a partner with Rector Street Capital Partners, Inc.,
investment bankers, for approximately two years. Mr. MacIntyre has served as a
director of the Company since 1994.
Class C Directors; Term expires in 1998
---------------------------------------
Mr. Roger W. Cope, age 55, began serving as Vice President of Business
Development for Lamb Technicon Machining Systems in April 1996. He also serves
as a director of Gulf South Systems, Inc. From January 1993 through December
1995, Mr. Cope was President of Lone Star Casino Corporation of Las Vegas,
Nevada. Previously, he was Director - Strategic Planning for the Litton Applied
Technology Division of San Jose, California from April 1991 until December 1992.
Mr. Cope has served as a director of the Company since 1983.
Mr. Allan Shivers, Jr., age 50, was elected Chairman of the Board of
Directors of the Company in April 1990. He also served as Chairman of the Texas
State Chamber of Commerce in 1993, and for five years has been a partner or
officer of several agricultural, mineral leasing and real estate enterprises. He
is Chairman of the Seton Fund and Trustee for the Institute for Rehabilitation
and Research. In December 1995, Mr. Shivers was appointed Chairman of the Texas
Alcoholic Beverage Commission. Mr. Shivers has served as a director of the
Company since 1984.
MEETINGS AND COMMITTEES OF BOARD OF DIRECTORS
The Board of Directors held a total of six meetings in fiscal 1995. During
the time each director served as a director of the Company, he attended at least
75% of the aggregate of the total meetings held by the Board of Directors and
all of the meetings held by committees of the Board on which he served. The
Board of Directors has a Compensation Committee, the members of which are Roger
W. Cope, Michael C. Dodge and W. David Walls. The Board of Directors does not
have a nominating committee or a standing audit committee or committees
performing similar functions.
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<PAGE>
Compensation Committee. The Compensation Committee, which consists of
Messrs. Cope, Dodge and Walls, approves executive compensation arrangements and
oversees administration of the Company's stockbased employee benefit plans of
the Company, including determination of the grantees, grant amounts and purchase
or exercise prices, if any. The Compensation Committee met two times during
fiscal 1995.
PROPOSAL TWO
APPROVAL OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been appointed by the Board of Directors as the
independent auditors for the Company to examine and report on its financial
statements for 1996, which appointment will be submitted to the shareholders for
ratification at the Annual Meeting. Price Waterhouse LLP has served as the
Company's independent accountants since 1992. Representatives of Price
Waterhouse LLP are expected to be present at the Annual Meeting, with the
opportunity to make a statement if they desire to do so, and they are expected
to be available to respond to appropriate questions.
Approval of the selection of Price Waterhouse LLP as independent public
accountants for the Company for the 1996 fiscal year requires the affirmative
vote of a majority of the Common Stock present, in person or by proxy, at the
Annual Meeting.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THIS PROPOSAL.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Name Age Position with Company
- - - ---- --- ---------------------
Thomas L. Earnshaw 41 President and Chief Executive Officer and
Director
Robert L. Thelen 57 Executive Vice President - Engineering and
Director
Sharon K. Price 40 Vice President - Finance and Chief
Financial Officer
C. Ron McNutt 51 Vice President of Operations
Andrew J. Sabia 28 Vice President - Northeast Region
Information concerning the business experience of Messrs. Earnshaw and
Thelen is provided under the caption "Election of Directors" above. Set forth
below is information concerning the business experience of the other executive
officers of the Company.
Ms. Sharon K. Price joined the Company in December 1994 as Vice President -
Finance and Chief Financial Officer. Ms. Price most recently had been an Audit
Senior Manager with KPMG Peat Marwick LLP, which she joined in 1987.
Mr. C. Ron McNutt joined the Company in April 1996 as Vice President of
Operations. Mr. McNutt most recently had been Regional Vice President and
General Manager at The Newark Group, a paperboard manufacturing and recycling
company which he joined in 1980.
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<PAGE>
Mr. Andrew J. Sabia joined the Company after its acquisition of Domino
Salvage, Tire Division, Inc. in March 1995. Prior to that time Mr. Sabia had
been President of Domino Salvage, Tire Division, Inc. since 1988.
All executive officers are elected annually by the Board of Directors to
serve until the next annual meeting of the Board of Directors and until their
respective successors are chosen and qualified.
EXECUTIVE COMPENSATION
The following information summarizes annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1995, 1994 and 1993, of the Chief Executive Officer. No other executive
officer's total salary and bonus exceeded $100,000 for any of such fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Underlying All Other
Name and Bonus Options Compensation
Principal Position Year Salary($) ($)<F2> (#) ($)
- - - -------------------- ---- ----------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Thomas L. Earnshaw 1995 $ 100,000 $ -0- 100,000 $ - 0 -
President and Chief 1994 $ 81,250 $ -0- -0- $ 10,600<F3>
Executive Officer<F1> 1993 $ 75,000 $ -0- -0- $ 11,754<F4>
- - - ---------------
<FN>
<F1> In January 1996 the Company entered into an employment agreement with Mr.
Earnshaw pursuant to which Mr. Earnshaw receives an annual base salary of
$100,000. See "Executive Compensation and Other Matters--Employment
Agreement."
<F2> No executive officer received any perquisites or other personal benefits in
fiscal 1995, 1994 or 1993 that in the aggregate exceeded the lesser of
$50,000 or 10% of such executive officer's salary and bonus for such year.
<F3> Consists of approximately $3,100 attributable to the use of an automobile
and $7,500 of forgiven debt.
<F4> Consists of approximately $3,300 attributable to the use of an automobile
and $8,454 of forgiven debt.
</FN>
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted during
fiscal 1995 to the named executive officer:
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted To Exercise Annual Rates of Stock
Options Employees or Base Price Appreciation
Granted In Fiscal Price Expiration for Option Term<F3>
Name (#)<F1> Year ($/Sh)<F2> Date 5% ($) 10% ($)
---- -------- -------- --------- ---------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Earnshaw............. 100,000 36.4% $ .98 6/28/05 $113,717 $131,626
- - - ---------------
<FN>
<F1> The option was granted on June 28, 1995 and vests at the rate of 20% per
year on each of the first five anniversaries of the date of grant.
<F2> The exercise price of the option granted to Mr. Earnshaw is the fair market
value per share of the Company's Common Stock on the date of grant.
<F3> The amounts represent only certain assumed rates of appreciation. Actual
gains, if any, on stock option exercises and Company Common Stock holdings
cannot be predicted, and there can be no assurance that the gains set forth
in the table will be achieved.
</FN>
</TABLE>
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<PAGE>
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table shows information concerning the number and estimated
value of unexercised options held by the named executive officer at fiscal
year-end:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End(#) at Fiscal Year-End ($)<F1>
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas L. Earnshaw........................... 85,000 100,000 $16,800 $33,000
- - - ---------------
<FN>
<F1> Based on the average of the closing bid and asked price for the Company's
Common Stock of $1.31 on April 9, 1996.
</FN>
</TABLE>
EMPLOYMENT AGREEMENT
On January 17, 1996, the Company entered into an employment agreement with
Thomas L. Earnshaw, the Company's President and Chief Executive Officer.
The employment agreement with Mr. Earnshaw has a five-year term, expiring
on December 31, 2006, and may be extended by the parties thereafter on a
year-to-year basis. Under the agreement, Mr. Earnshaw is to receive a base
annual salary of $100,000, subject to increases in the discretion of the Board
of Directors of the Company, and is eligible to receive an annual incentive
bonus, based upon the Company's net cash flow, ranging from $25,000 to $100,000
per annum. The agreement with Mr. Earnshaw also provides for the payment of a
car allowance and the payment or reimbursement of certain expenses of Mr.
Earnshaw.
Under the agreement, Mr. Earnshaw agrees not to participate during the term
of the agreement and for a period of two years thereafter, within certain
specified geographical areas, in the collection, disposal and recycling of scrap
tires and the production and marketing of tire-derived fuel.
Compensation of Directors
-------------------------
At the April 1987 meeting of the Company's Board of Directors, the
directors voted to waive directors' fees until such time as the Company became
profitable. In 1992, the shareholders approved the 1992 Stock Plan for
Non-Employee Directors and awards under this plan began in 1993. These awards
are automatic so that such directors can qualify as "disinterested persons"
under Rule 16b-3 of the Securities Exchange Act of 1934 for the purpose of
administering applicable employee benefit plans of the Company. By the terms of
such plan, at the conclusion of each annual meeting of shareholders, each
elected or incumbent non-employee director receives a nonqualified stock option
to purchase 2,500 shares of Company Common Stock at the then fair market value,
but only if the Company's net income for the fiscal year just ended was improved
over the net income for the prior year. Also, in consideration for service on
the Board, in January each such director receives a grant of Common Stock equal
in value to $2,000, but only if in the prior fiscal year such director attended
at least two regular or special meetings of the Board, and 75% of all such
meetings held that year while he was a director. This plan terminates upon the
sooner to occur of January 31, 2000, or the January 31st next following after
options have been granted on five occasions. By resolution made at the March 23,
1994 meeting of the Board of Directors and effective thereafter, fees for
non-employee directors were resumed with $500 to be paid for each Board or
committee meeting. A one-time directors' fee was paid in August 1995 to each
non-employee director then in office. All directors' fees are contingent upon
the availability of net income and cash reserves as determined by the Board of
Directors.
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<PAGE>
The Company pays the Chairman of the Board of Directors a consulting fee of
$3,000 per month for his services as Chairman.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
As a company registered under Section 12 of the Securities Exchange Act of
1934, the executive officers, directors and beneficial owners of more than 10%
of the Company's Common Stock have reporting requirements pursuant to Section
16(a) of such Act. Based on information available to it, the Company believes
that no reporting delinquencies occurred with respect to fiscal year 1995.
COMPENSATION AND OTHER COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's 1995 fiscal year, the Company did not engage in any
transactions of the type required to be disclosed under this item.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the Company's 1995 fiscal year, the Company did not engage in any
transactions of the type required to be disclosed under this item.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers generally are
made by the threemember Compensation Committee of the Board. Each member of the
Compensation Committee is a non-employee director. All decisions by the
Compensation Committee relating to compensation of the Company's executive
officers are reviewed by the Board. Decisions with respect to awards under
certain of the Company's stock-based compensation plans are made solely by the
Compensation Committee, in order for such awards to satisfy Rule 16b-3 under the
Securities Exchange Act of 1934. Set forth below is a report prepared by Messrs.
Cope, Dodge and Walls in their capacity as the Compensation Committee addressing
the Company's compensation policies for fiscal year 1995 as they affected the
Company's executive officers, including the Company's Chief Executive Officer,
Mr. Earnshaw.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. Targeted levels of
total executive compensation are generally set at levels that the Compensation
Committee believes to be generally consistent with or at levels slightly below
others in the Company's industry, although actual compensation levels in any
particular year may be above or below those of the Company's competitors,
depending upon the Company's performance.
The Compensation Committee is mindful of grants or awards made to the
Company's executive officers under the Company's stock-based compensation plans.
In order to have sufficient cash flow to meet operational needs, and to reward
executives commensurate with the Company's success, the Company has emphasized
stock options as a form of compensation. The Compensation Committee endorses the
position that stock ownership by management and stock-based performance
compensation arrangements are beneficial in aligning management's and
shareholders' interests in the enhancement of shareholder value. Thus, the
Compensation Committee takes into account these stock-based elements in
designing the compensation packages of the Company's executive officers.
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<PAGE>
In 1993, Congress amended the Internal Revenue Code to add Section 162(m).
This section provides that publicly held companies may not deduct compensation
paid to certain executive officers in excess of $1 million annually, with
certain exemptions. Because of the relatively modest compensation level of the
Company's executive salary structure, this would not be an issue except for the
fact that stock options theoretically have no upper limit for appreciation. The
Company has examined its compensation policies in view of Section 162(m) and the
regulations adopted by the Internal Revenue Service to implement this section
and has determined that these provisions are not likely to affect the
deductibility of executive compensation for fiscal 1995. It is currently not
expected that any part of the Company's deduction for executive compensation
will be disallowed for fiscal 1996.
BASE SALARIES
Each executive officer's base salary is reviewed annually by the
Compensation Committee and is subject to adjustment on the basis of individual
and corporate performance. Base salaries are generally set at or somewhat below
competitive levels, with the result that the Company relies on annual and longer
term incentive compensation to attract and retain executive officers of
outstanding ability and to motivate them to perform to the full extent of their
abilities. The base salaries of the Company's executive officers are kept within
a fairly narrow range in an effort to keep the amount of total base salaries
under control and otherwise reflect the relatively comparable contributions made
by the Company's executive officers to the Company's overall performance. During
fiscal 1995 there were no increases in salary for executive officers, and no
executives received a bonus in fiscal 1995. Executive officers of the Company
are evaluated on the basis of both their individual performance, as well as the
Company's performance. The Chairman of the Board is evaluated on his leadership
of the Board, and is paid a consulting fee for his time spent on Company
business, which includes legislative and regulatory matters. Mr. Thelen is
evaluated for his engineering expertise and its application, as he is
responsible for equipment design and improvement, plant construction and
technical assistance to customers. The Chief Executive Officer's compensation is
generally based on factors related to his leadership of the Company, as well as
his specific accomplishments and the performance of the Company. See "--Fiscal
1995 Chief Executive Officer Compensation." As a cashless means of rewarding
both past and future performance, in 1995 Messrs. Earnshaw and Thelen were
granted stock options for 100,000 shares and 75,000 shares, respectively. This
performance-based compensation continues to be an important component of
executive compensation.
FISCAL 1995 CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Earnshaw's compensation for fiscal 1995 as Chairman and Chief Executive
Officer of the Company principally consisted of a base salary. Mr. Earnshaw's
base salary for fiscal 1995 was approved by the Compensation Committee. On
January 17, 1996, Mr. Earnshaw entered into an employment agreement that set his
base salary for fiscal 1996 at $100,000 (see "Executive Compensation and Other
Matters--Employment Agreement"). Mr. Earnshaw does not participate in the
Compensation Committee's decision regarding his compensation.
Submitted by the Compensation Committee
of the Board of Directors
ROGER W. COPE
MICHAEL C. DODGE
W. DAVID WALLS
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the annual cumulative total shareholder return
on an investment of $100 on January 1, 1991 in the Company's Common Stock, with
that of a like investment in the NASDAQ Market Index and an industry group
comprised of companies with the refuse systems standard industrial
classification (SIC) code number. The peer companies industry group includes
companies significantly larger than the Company with significantly different
purposes, such as Browning-Ferris and Waste Management, but was the closest
relevant peer group to that of the Company for which statistics could be
reasonably obtained. To the knowledge of the Company, there are no companies in
such industry group whose primary business is scrap tire recycling. Likewise,
NASDAQ was the closest broad market index for which statistics were available to
the Company. The Company was delisted from NASDAQ in 1990 for failing to meet
its capital and surplus requirements. The year-end values of each investment are
calculated by adding dividends, if any (and assuming reinvestment thereof), to
the difference between the Common Stock price at the beginning and end of the
measurement period, and dividing such sum by the price at the beginning of the
measurement period. The calculations used in plotting the graph are also set out
below.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
OF THE COMPANY, INDUSTRY GROUP AND NASDAQ MARKET INDEX
D
O
L
L
A
R
S
Company or Index 1991 1992 1993 1994 1995
- - - ---------------- ---- ---- ---- ---- ----
Waste Recovery, Inc. 60.50 89.08 23.53 28.57 81.51
Industry Index 104.59 98.72 71.81 67.59 80.62
Broad Market 128.38 129.64 155.50 163.26 211.77
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST OF ANY BENEFICIAL SHAREHOLDER OR SHAREHOLDER OF
RECORD, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1995 (INCLUDING THE EXHIBITS, FINANCIAL STATEMENTS, AND THE
SCHEDULES THERETO) REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934, MAY
BE OBTAINED, WITHOUT CHARGE, FROM JOHN E. COCKRUM, SECRETARY, 309 SOUTH PEARL
EXPRESSWAY, DALLAS, TEXAS 75201.
-11-
<PAGE>
OTHER MATTERS
At the date of this Proxy Statement, management was not aware that any
matters not referred to in this Proxy Statement would be presented for action at
the meeting. If any other matters should come before the meeting, the persons
named in the accompanying form of Proxy will have discretionary authority to
vote all proxies in accordance with their best judgment, unless otherwise
restricted by law.
By Order of the Board of Directors
JOHN E. COCKRUM
Secretary
Dated: April 26, 1996
-12-
<PAGE>
WASTE RECOVERY, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 20, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R
O
X
Y
The undersigned hereby (i) acknowledges receipt of the Notice of Annual
Meeting of Shareholders dated April 26, 1996 of WASTE RECOVERY, INC. (the
"Company") to be held on May 20, 1996 in the offices of the Company, and the
Proxy Statement in connection therewith, and (ii) appoints Thomas L. Earnshaw,
Sharon K. Price and John E. Cockrum, and each of them (acting together, or if
only one be present, then by that one alone), his attorneys and proxies, with
full power of substitution to each, to vote all shares of Common Stock of the
Company of the undersigned at said meeting and at any adjournment thereof, as
follows:
1. Election of Directors
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Thomas L. Earnshaw, Robert L. Thelen and
W. David Walls (Class A Directors);
John C. Kerr (Class C Director)
2. The proposal to ratify the selection of Price Waterhouse LLP as independent
auditors for the Company for the fiscal year ending December 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Instruction: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list above.) (Continued and
to be signed on reverse side)
<PAGE>
(continued from other side)
3. The proposal to ratify the selection of Price Waterhouse LLP as independent
auditors for the Company for the fiscal year ending December 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion on any other matter that may properly come before the
meeting or any adjournment thereof.
This proxy when properly executed will be voted as directed above. (If no
direction is made, this proxy will be voted FOR the nominees listed on item 1
and for the proposal set forth in item 2.)
IMPORTANT: You are encouraged to attend this meeting in person, but if you
cannot do so, please complete, date and sign this proxy and mail it promptly in
the enclosed return envelope.
DATED _____________________, 1996 ___________________________________
___________________________________
PLEASE SIGN HERE
Please date this proxy and sign your name exactly as it
appears hereon. Where there is more than one owner, each
should sign. When signing as an agent, attorney,
administrator, executor, guardian or trustee, please add
your title as such. If executed by a corporation, the proxy
should be signed by a duly authorized officer who should
indicate his title. Please date, sign and mail this proxy as
soon as possible. No postage is required if mailed in the
United States.
<PAGE>
