<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by the Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
WASTE RECOVERY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Consent Solicitation Statement,
if other than Registrant)
--------------------
Payment of Filing fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
--------------------
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
--------------------
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
WASTE RECOVERY, INC.
309 SOUTH PEARL EXPRESSWAY
DALLAS, TEXAS 75201
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 1998
---------------
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 Newark
Airport Marriott Hotel, Newark International Airport, Newark, New Jersey 07114
on Monday, May 18, 1998, at 10:00 a.m., Newark, New Jersey time, for the
following purposes:
1. To elect ten directors until the next Annual Meeting of
Shareholders and until their respective successors are elected and qualified;
2. To ratify the appointment by the Board of Directors of Grant
Thornton LLP as the Company's independent auditors to examine and report on the
Company's financial statements for 1997 and for 1998; and
3. To transact such other business as properly may come before the
meeting or any adjournment thereof.
The close of business on April 10, 1998 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, 1997, 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
DONALD R. PHILLIPS
SECRETARY
April 30, 1998
<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 18, 1998
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 Newark Airport Marriott Hotel,
Newark International Airport, Newark, New Jersey 07114, on Monday, May 18,
1998, at 10:00 a.m., Newark, New Jersey 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 30, 1998. 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 ten nominees listed under "Election of
Directors" as nominees of the Company for election as directors;
(2) FOR ratification of the appointment by the Board of Directors of
Grant Thornton LLP as the Company's independent auditors for 1997 and for
1998; 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.
-1-
<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 10, 1998. At March 31, 1998,
the Company had issued and outstanding and entitled to vote at the Annual
Meeting 17,494,323 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 31, 1998, 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 (5%) 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>
SHARES OF COMMON STOCK DIRECTLY AND BENEFICIALLY
OWNED AND PERCENTAGE OF OUTSTANDING
SHARES AS OF MARCH 31, 1998
--------------------------------------
NUMBER NUMBER
DIRECTLY BENEFICIALLY
NAME OWNED PERCENT OWNED PERCENT
---- -------- ------- ------------ -------
<S> <C> <C> <C> <C>
Stephen P. Adik* -0- 0% -0- 0%
c/o NIPSCO Industries
801 East 86th Avenue
Merrillville, Indiana 46410
Jay I. Anderson* 146,248 + 146,248 +
7 Penn Plaza
370 Seventh Avenue
Suite 618
New York, New York 10001
Martin Bernstein(1)* 291,646 1.7% 1,291,646 7.4%
7 Penn Plaza
370 Seventh Avenue
Suite 618
New York, New York 10001
David G. Greenstein*+ 429,158 2.5% 552,368 3.2%
Crandall S. Connors(2)* 434,750 2.5% 2,934,069 16.8%
108 Forest Avenue
Locust Valley, New York 11560
Michael C. Dodge(3)* 761,712 4.4% 779,712 4.5%
15660 North Dallas Parkway
Suite 400, L.B. 42
Dallas, Texas 75248
-2-
<PAGE>
Thomas L. Earnshaw(4)* 179,505 1.0% 179,505 1.0%
3650 Asbury Street
Dallas, Texas 75205
John C. Kerr(5)* 257,259 1.5% 2,904,069 16.6%
16414 San Pedro
Suite 345
San Antonio, Texas 78232
Steven E. MacIntyre(6)* 447,409 2.6% 2,904,069 16.6%
425 Park Avenue
Floor 25
New York, New York 10022
Robert L. Thelen(7)*+ 137,598 + 137,598 +
Riverside Caloric Company++ 1,100,000 6.3% 1,100,000 6.3%
c/o NIPSCO Development Company, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Kerr, Connors Group(8)++ - - 2,904,069 16.6%
108 Forest Avenue
Locust Valley, New York 11560
Directors and executive officers
as a group (10 persons)(9)(10) 4,185,285 23.9% 7,121,146 40.7%
</TABLE>
- ----------------
* Director and Nominee
+ Executive Officer
++ Shareholder
+ Less than 1%
(1) Columns 3 and 4 include an option to acquire 1,000,000 shares of Common
Stock exercisable within sixty days.
(2) Columns 1 and 2 include 434,750 shares directly held and 196,301 shares as
to which Mr. Connors has shared beneficial ownership, including 180,000
shares held by MacIntyre Connors General Partnership, of which Messrs.
MacIntyre and Connors are the sole partners, and 44,013 shares of Common
Stock subject to options exercisable within sixty days, and columns 3 and
4 include 2,229,005 shares as to which the Kerr Connors Group (as
described below) 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"), together with other individuals and entities
including Messrs. Kerr and MacIntyre, 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. Connors in column 3 includes 2,229,005 shares of Common
Stock held by other members of the Kerr, Connors Group with respect to
which he disclaims beneficial ownership.
(3) Columns 1 and 2 include 2,500 shares of Common Stock subject to options
exercisable within sixty days, and columns 3 and 4 include 18,000 shares
of Common Stock and warrants to acquire 300,000 shares of Common Stock
held by Mr. Dodge's daughters.
(5) Includes 125,000 shares of Common Stock subject to options exercisable
within sixty days.
(6) Columns 1 and 2 include 257,259 shares directly held, and columns 3 and 4
include 2,646,810 shares held by other members of the Kerr, Connors Group
as to which he disclaims beneficial ownership.
(6) Columns 1 and 2 include 267,409 shares directly held, 2,500 shares of
Common Stock subject to options exercisable within sixty days, 36,061
shares of Common Stock issuable upon conversion of Debentures and 180,000
shares held by MacIntyre Connors General Partnership, of which Messrs.
MacIntyre and Connors are the sole partners, and columns 3 and 4 include
2,456,660 shares held by other members of the Kerr, Connors Group with
respect to which he disclaims beneficial ownership.
(7) Includes 98,098 shares held directly, 4,500 shares held of record by Mr.
Thelen's wife and as to which he shares voting power, and 35,000 shares of
Common Stock subject to options exercisable within sixty days.
(8) Address is for Kerr, Connors & Co. and not of all of the members of such
group.
(9) Includes 1,209,013 shares of Common Stock subject to options exercisable
within sixty days.
-3-
<PAGE>
(10) 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, warrants and 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.
The address for each of Messrs. Greenstein and Thelen is 309 South Pearl
Expressway, Dallas, Texas 75201.
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 1999 Annual
Meeting of Shareholders must be received by the Company at its executive
offices not later than January 1, 1999, in order to be considered for inclusion
in the Company's proxy material relating to the 1999 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
Ten directors will be elected at the 1998 Annual Meeting. Each director
elected will serve until the next Annual Meeting of Shareholders and until his
successor has been elected and has qualified or until his earlier death,
resignation or removal from office. The eleven persons named below are
management's nominees. Each of the nominees is presently a director of the
Company and has served continuously as a director since the date of his first
election or appointment to the Board. Further information with respect to each
nominee is set forth below.
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.
-4-
<PAGE>
NOMINEES FOR DIRECTORS
Mr. Jay I. Anderson, age 41, has been Chief Financial Officer of The
Feil Organization, Inc., an investment holding company, since May 1980.
Prior to such time Mr. Anderson was a certified public accountant for
Deloitte Haskins & Sell. From December 1993 to July 1996 Mr. Anderson was a
director of Achiever Tire Recycling Corp., the general partner of Achiever
Tire Limited Partnership. In July 1996, Achiever Tire Limited Partnership
commenced an assignment for the benefit of its creditors. Mr. Anderson has
served as a director since May 1997.
Mr. Martin Bernstein, age 64, was elected Chairman of the Board of
Directors of the Company in February 1997. Mr. Bernstein is President, Chief
Executive Officer and a director of Ponderosa Fibres of America, Inc., in
which positions he has served since November 1980. In addition, Mr.
Bernstein is a director of Empire Insurance Company and All City Insurance
Company. From December 1993 to July 1996 Mr. Bernstein was a director of
Achiever Tire Recycling Corp., the general partner of Achiever Tire Limited
Partnership. In July 1996 Achiever Tire Limited Partnership commenced an
assignment for the benefit of its creditors. Mr. Bernstein was appointed to
the Board of Directors in December 1996.
Mr. David Greenstein, age 38, joined the Company in December 1996 as
Senior Vice President and as President of the Company's wholly-owned
subsidiary, New U.S. Tire Recycling Corp. In August 1997 Mr. Greenstein was
appointed President and Chief Executive Officer of the Company. Mr.
Greenstein most recently had been Executive Vice President of U.S. Tire
Recycling Corp., the general partner of U.S. Tire Recycling Partners, L.P.,
which he joined in April 1992.
Mr. Thomas L. Earnshaw, age 43, served as President and Chief Executive
Officer of the Company from March 1990 until August 1997. Mr. Earnshaw was
elected Vice Chairman of the Board on August 1, 1997. 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. Crandall S. Connors, age 50, 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 55, 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. Robert L. Thelen, age 59, 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. Steven E. MacIntyre, age 45, 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 eight 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.
Mr. Stephen P. Adik, age 55, has been Executive Vice President, Chief
Financial Officer and Treasurer of NIPSCO Industries, Inc. Since April 1994.
From February 1991 through December 1993, Mr. Adik served as Senior Vice
President, Chief Financial Officer and Treasurer of NIPSCO Industries, Inc.
Mr. Adik is also Senior Vice President and General Manager, Finance and
Accounting, of Northern Indiana Public Service Company, a subsidiary of
NIPSCO Industries, Inc., in which positions he has served since 1991. Mr.
Adik is an advisory director of Bank One (Merrillville, Indiana), Chicago
SouthShore and South Bend Railroad and TradeWinds Strategic Planning
Committee.
-5-
<PAGE>
Mr. Adik has served as a director since May 1997.
Mr. John C. Kerr, age 50, has been a general partner in the investment
banking firm of Kerr, Connors & Co. for over seven 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 has served as a director
of the Company since December 1995.
MEETINGS AND COMMITTEES OF BOARD OF DIRECTORS
The Board of Directors held a total of four meetings in fiscal 1997.
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 were Mr. W. David Walls, Roger W. Cope and Michael C. Dodge.
Messrs. Walls and Cope have resigned from the Board of Directors, and the
Board of Directors has appointed Mr. John C. Kerr to serve as a member of the
Compensation Committee. The Board of Directors does not have a nominating
committee or a standing audit committee or committees performing similar
functions.
COMPENSATION COMMITTEE. The Compensation Committee, which consists of
Messrs. Cope and Dodge, approves executive compensation arrangements and
oversees administration of the Company's stock-based employee benefit plans
of the Company, including determination of the grantees, grant amounts and
purchase or exercise prices, if any. The Compensation Committee met one time
during fiscal 1997.
PROPOSAL TWO
PROPOSAL TO RATIFY
APPOINTMENT OF INDEPENDENT AUDITORS
Grant Thornton 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 1997, which appointment will be submitted to the shareholders
for ratification at the Annual Meeting. Representatives of Grant Thornton
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.
The appointment of the independent auditors will be ratified if it
receives the affirmative vote of holders of a majority of the shares of the
Common Stock entitled to vote thereon and voting at the Annual Meeting.
Submission of the appointment of the auditors to the shareholders for
ratification is not required by law or the Company's Amended and Restated
Articles of Incorporation or Bylaws and ratification will not limit the
authority of the Board of Directors to appoint another accounting firm to
serve as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT AUDITORS FOR THE
COMPANY.
-6-
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
David G. Greenstein 38 President and Chief Executive Officer
Robert L. Thelen 59 Senior Vice President - Engineering and Director
Mark Hope 44 Senior Vice President of Marketing and
Environmental Affairs
</TABLE>
Information concerning the business experience of Messrs. Greenstein and
Thelen is provided under the caption "Election of Directors" above. Set
forth below is information concerning the business experience of the other
executive officer of the Company.
Mr. Mark Hope became Senior Vice President of Marketing and
Environmental Affairs in October 1996. From January 1990 until October 1996
Mr. Hope served the Company as Vice President-Northwest Region and from 1985
through December 1989 was the Company's Marketing and Governmental Affairs
Manager.
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, 1997, 1996 and 1995, of the Company's Chief Executive Officer.
No other executive officer's total salary and bonus exceeded $100,000 for any
of such fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------
---------------------------- SECURITIES
UNDERLYING ALL OTHER
NAME AND BONUS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(2) (#) ($)
- ---------------------- ---- --------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C>
David G. Greenstein(1) 1997 $125,000 $ -0- -0- $ -0-
Thomas L. Earnshaw(1) 1997 $150,000 $ -0- -0- $ -0-
President and Chief 1996 $100,000 $ -0- -0- $40,000(3)
Executive Officer(1) 1995 $100,000 $ -0- 100,000 $ -0-
</TABLE>
- -----------------
(1) Mr. Earnshaw served as President and Chief Executive Officer of the
Company for each of the 1995 and 1996 fiscal years and through July 1997.
Mr. Earnshaw presently serves as Vice Chairman of the Company's Board of
Directors. Mr. Greenstein served as President and Chief Executive Officer
of the Company from August 1997 and his salary and bonus have been
adjusted accordingly.
(2) No executive officer received any perquisites or other personal benefits
in fiscal 1997, 1996 or 1995 that in the aggregate exceeded the lesser of
$50,000 or 10% of such executive officer's salary and bonus for such year.
(3) Consists of a $40,000 loan made by the Company to Mr. Earnshaw to be
repaid from the proceeds under future bonuses from the Company.
-7-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted during fiscal 1997 to the named executive
officers.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table shows information concerning the number and
estimated value of unexercised options held by the named executive officers
at fiscal year-end:
<TABLE>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End (#) at Fiscal Year-end ($)(1)
Acquired on Value --------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David G. Greenstein -0- -0- -0- -0- $-0- $-0-
Thomas L. Earnshaw -0- -0- 125,000 60,000 $-0- $-0-
</TABLE>
- ---------------
(1) Based on the average of the closing bid and asked price for the Company's
Common Stock of $0.55 on December 31, 1997.
(2) Based on the average of the closing bid and asked price of the Company's
Common Stock on the exercise date, less the exercise price of the option.
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. 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.
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 all statements of beneficial ownership required to be filed
with the Securities and Exchange Commission for the fiscal year ended
December 31, 1997 have been timely filed.
COMPENSATION AND OTHER COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1997, the Compensation Committee initially consisted of Messrs. Cope,
Dodge and W. David Walls. Mr. Walls resigned as a director of the Company on
August 6, 1997, and Mr. Cope resigned as a director on January 14, 1998 and
was replaced on the Compensation Committee by Mr. Kerr. All three of the
members of the Compensation Committee were, and the two remaining members
are, non-employee directors of the Company and are not former officers of the
Company. During 1997, no executive officer of the Company served as a member
of the Board of Directors or on the compensation committee of a corporation
with respect to which one of its executive officers served on the
Compensation Committee or on the Board of Directors of the Company.
-8-
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers generally
are made by the three-member 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 an exemption provided under Rule 16b-3 under the Securities Exchange Act
of 1934. Set forth below is a report prepared by Messrs. Dodge and Kerr in
their capacity as the Compensation Committee addressing the Company's
compensation policies for fiscal year 1997 as they affected the Company's
executive officers, including each of the Company's Chief Executive Officers
serving during fiscal year 1997, Messrs. Earnshaw and Greenstein.
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.
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 1996. It is currently not expected that any part of
the Company's deduction for executive compensation will be disallowed for
fiscal 1997.
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. Mr. Earnshaw's compensation for his
service as Chief Executive Officer was increased at the Company's Board of
Directors meeting on February 3, 1997 from $100,000 to $150,000, with such
change effective January 1, 1997, and his Employment Agreement with the
Company was amended accordingly. During fiscal 1997 there were no other
increases in salary for executive officers, and no executives received a
bonus in fiscal 1997. In fiscal 1998 the Board of Directors approved an
increase in the base salary of David Greenstein, the Company's President and
Chief Executive Officer since August 1997, from $125,000 to $150,000 per
annum, and granted Mr. Greenstein a $25,000 bonus and an incentive stock
option to acquire 25,000 shares of Common Stock at the fair market per share
on the grant date.
-9-
<PAGE>
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. 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 1997 Chief Executive Officer
Compensation." 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. In February 1997 the
Chairman of the Board received a non-qualified stock option to acquire
1,000,000 shares of Common Stock with exercise prices ranging from a low of
$2.50 per share to up to $7.00 per share with respect to 250,000 share
increments. Further, in connection with the amendment of Mr. Earnshaw's
Employment Agreement, the Company granted Mr. Earnshaw an incentive stock
option to acquire 100,000 shares of Common Stock at a price of $2.14 per
share, the fair market value per share at the grant date. It is contemplated
that this performance-based compensation will continue to be an important
component of executive compensation.
FISCAL 1997 CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Earnshaw's compensation for fiscal 1997 for his services as Chief
Executive Officer of the Company principally consisted of a base salary. In
February, 1997, Mr. Earnshaw entered into an amendment to his employment
agreement, effective as of January 1, 1997, that increased his base salary
for fiscal 1997 from $100,000 to $150,000. Mr. Earnshaw has continued to
earn this compensation after July 1997 and his resignation as President. Mr.
Greenstein was paid an annual base salary of $125,000 per annum through
January 1998, at which time the Company's Board of Directors increased his
annual base salary to $150,000 per annum and awarded him a $25,000 bonus and
an incentive stock option to acquire 25,000 shares, (see "Board Compensation
Committee Report on Exective Compensation/Base Salaries"). Neither Mr.
Earnshaw nor Mr. Greenstein participates in the decisions of the Compensation
Committee or the Board of Directors regarding this compensation.
Submitted by the Compensation Committee
of the Board of Directors
MICHAEL C. DODGE
JOHN C. KERR
-10-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the annual cumulative total shareholder
return on an investment of $100 on January 1, 1993 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 of 4953. 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
<TABLE>
COMPANY OR INDEX 1993 1994 1995 1996 1997
- ---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Waste Recovery, Inc. 38.89 47.22 134.72 344.44 47.17
Industry Index 68.68 64.62 77.09 88.45 94.75
Broad Market 121.13 127.17 164.96 204.98 248.30
</TABLE>
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, 1997 (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 DONALD R. PHILLIPS, 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
DONALD R. PHILLIPS
SECRETARY
Dated: April 30, 1998
-12-
<PAGE>
WASTE RECOVERY, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 18, 1998
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C>
The undersigned hereby (i) acknowledges receipt of the Notice of Annual Meeting of Shareholders dated April 30, 1998 of
WASTE RECOVERY, INC. (the "Company") to be held on May 18, 1998 at the Newark Airport Marriott Hotel, Newark International
Airport, Newark, New Jersey 07114 on Monday, May 18, 1998, at 10:00 a.m., Newark, New Jersey time, and the Proxy Statement
in connection therewith, and (ii) appoints Donald Phillips and Remona Dove, 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:
P 1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (except as marked to / / WITHHOLD AUTHORITY to vote for all nominees listed below
R the contrary below)
Jay I. Anderson
O Martin Bernstein
David Greenstein
X Thomas L. Earnshaw
Crandall S. Connors
Y Michael C. Dodge
Steven E. MacIntyre
Robert L. Thelen
Stephen P. Adik
John C. Kerr
2. The proposal to ratify the selection of Grant Thornton LLP as independent auditors for the Company to examine and report
on the Company's financial statements for the 1997 fiscal year and for the 1998 fiscal year.
/ / 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)
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C>
(CONTINUED FROM OTHER SIDE)
3. 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 , 1998
--------------------- -------------------------------------------
--------------------------------------------------
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.
</TABLE>
-14-
