<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WHEELABRATOR TECHNOLOGIES INC.
(Name of Registrant as Specified in its Charter)
THE BOARD OF DIRECTORS OF WHEELABRATOR TECHNOLOGIES INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing fee (check the appropriate box):
[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_]$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11/1/:
(4) Proposed maximum aggregate value of transaction:
- --------
/1/Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_]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:
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<PAGE>
LOGO
LIBERTY LANE, HAMPTON, NEW HAMPSHIRE 03842
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1994
You are cordially invited to attend the annual meeting of stockholders of
Wheelabrator Technologies Inc. which will be held at the Mellon Bank Building,
8 Loockerman Street, Dover, Delaware on Thursday, May 5, 1994, at 10:00 a.m.,
Eastern time, for the following purposes:
1. To elect directors.
2. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 24, 1994 are
entitled to vote at the meeting. A list of such stockholders will be available
for examination by any stockholder for any purpose germane to the meeting,
during normal business hours, at the Mellon Bank Building, 8 Loockerman Street,
Dover, Delaware, for a period of 10 days prior to the meeting.
It is important that your shares be represented at the meeting regardless of
the size of your holdings. Whether or not you intend to be present at the
meeting in person, we urge you to mark, date and sign the enclosed proxy and
return it in the envelope provided for that purpose, which does not require
postage if mailed in the United States.
LOGO
Stephen P. Stanczak
Secretary
Hampton, New Hampshire
March 30, 1994
YOU ARE URGED TO MARK, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
Printed on recycled
paper
LOGO
<PAGE>
LOGO
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1994
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Wheelabrator Technologies Inc. ("WTI" or the "Company")
of proxies for use at the annual meeting of stockholders of WTI to be held at
the Mellon Bank Building, 8 Loockerman Street, Dover, Delaware at 10:00 a.m.,
Eastern time, on May 5, 1994, and at any adjournment or adjournments thereof.
Proxies properly executed and returned in a timely manner will be voted at the
meeting in accordance with the directions noted thereon. If no direction is
indicated, they will be voted for the election of the nominees named herein as
directors and on other matters presented for a vote in accordance with the
judgment of the persons acting under the proxies. Any stockholder giving a
proxy has the power to revoke it at any time before it is voted, either in
person at the meeting, by written notice to the Secretary of WTI or by delivery
of a later-dated proxy.
Election of each director requires the affirmative vote of the holders of a
plurality of the shares of WTI's common stock present in person or represented
by proxy and entitled to vote at the meeting. Approval of any other matter
submitted to the stockholders for their consideration requires the affirmative
vote of the holders of a majority of the shares of WTI's common stock present
in person or by proxy and entitled to vote at the meeting. An automated system
administered by WTI's transfer agent is used to tabulate the votes represented
by proxy. Ballots submitted at the meeting are tabulated by hand. Abstentions
and broker non-votes are counted as shares present in the determination of
whether the shares of stock represented at the meeting constitute a quorum.
Each is tabulated separately. Abstentions are counted in tabulations of the
votes cast on proposals presented to stockholders. Broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
WTI's principal executive offices are located at Liberty Lane, Hampton, New
Hampshire 03842 (telephone 603/929-3000). It is expected that proxy materials
will be mailed to stockholders beginning on or about March 30, 1994.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on March 24, 1994 are
entitled to vote at the annual meeting of stockholders. The only voting stock
of WTI outstanding is its common stock, of which 189,062,482 shares were
outstanding as of the close of business on March 24, 1994. All references in
this proxy statement to WTI's common stock reflect the two-for-one stock split
distributed in the form of a stock dividend in January 1993. Each share of
common stock is entitled to one vote.
<PAGE>
PRINCIPAL STOCKHOLDER
The following table sets forth, as of February 1, 1994, information
concerning ownership of shares by WMX Technologies, Inc. ("WMX"). Except as set
forth below, management knows of no person who, as of February 1, 1994, owned
more than 5% of WTI's outstanding capital stock.
<TABLE>
<CAPTION>
PERCENT
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE OF OF
CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
-------- ------------------- -------------------- -------
<S> <C> <C> <C>
Common Stock WMX Technologies, Inc. 104,621,810(1)(2) 55.4%
3003 Butterfield Road
Oak Brook, Illinois 60521
</TABLE>
- --------
(1) WMX has sole voting and investment power over 99,796,086 shares. WMX owns
approximately 79% of the outstanding common stock of Chemical Waste
Management, Inc. ("CWM"), and therefore WMX may be deemed to share voting
and investment power with CWM over 1,025,724 shares owned by CWM. WMX
disclaims any beneficial ownership of the shares owned by CWM. WMX shares
voting and investment power with a wholly-owned subsidiary of WMX over an
additional 3,800,000 shares. WTI and WMX have entered into various
agreements relating to certain restrictions on disposition by WMX of common
stock of WTI owned by WMX, WMX's right to purchase shares of WTI's common
stock, and registration rights (both demand and participation). Additional
information regarding the relationships between WTI and WMX is set forth
below under the caption "Certain Transactions and Other Matters."
(2) Messrs. Buntrock and Rooney may be deemed to beneficially own the shares of
WTI common stock beneficially owned by WMX and shown in the table above
because each such person may be deemed to be an affiliate of WMX. Each such
person disclaims any beneficial ownership of such WTI shares.
ELECTION OF DIRECTORS
Three directors are to be elected at the meeting. The persons named below
have been designated by the Board of Directors as nominees for election as
directors for a term expiring at the annual meeting of stockholders in 1997.
All of the nominees are serving as directors as of the date of this proxy
statement.
Unless otherwise instructed, properly executed proxies which are returned in
a timely manner will be voted for election of the three nominees. If, however,
any of such nominees should be unable or should fail to act as a nominee by
virtue of an unexpected occurrence, the proxies will be voted for such other
person as will be determined by the holders of the proxies in their discretion,
or the Board of Directors may make an appropriate reduction in the number of
directors to be elected. Two additional classes of directors named below have
terms which expire in 1995 and 1996, respectively.
NOMINEES FOR TERMS EXPIRING AT ANNUAL MEETING IN 1997:
Dean L. Buntrock, age 62, has been a director of WTI or a predecessor of WTI
known prior to August 1989 as Wheelabrator Technologies Inc. ("Old WTI") since
September 1988. Mr. Buntrock has been Chairman of the Board and Chief Executive
Officer of WMX since 1968 and was President of WMX from September 1980 to
November 1984. Since May 1993, Mr. Buntrock has also been Chairman of the Board
of CWM, a position he previously held from 1986 to September 1991. Mr. Buntrock
is also a director of Boston Chicken, Inc., First Chicago Corporation, Stone
Container Corporation, Waste Management International plc ("WM International"),
a subsidiary of WMX owned approximately 56% by WMX, 12% by WTI and 12% by Rust
International Inc. ("Rust"), and Rust, a company owned approximately 56% by CWM
and approximately 40% by WTI.
James E. Koenig, age 46, has been a director of WTI since September 1990. Mr.
Koenig served as Vice President, Chief Financial Officer and Treasurer of WTI
from November 1990 to May 1993. Mr. Koenig has
2
<PAGE>
served as Senior Vice President of WMX since May 1992, as Chief Financial
Officer of WMX since December 1989 and as Vice President and Treasurer of WMX
since December 1986. Mr. Koenig is also a director of CWM, Rust and WM
International.
Lt. Gen. Thomas P. Stafford, age 63, has been a director of WTI or Old WTI
since September 1987.
Lt. Gen. Stafford has been a consultant with General Technical Services, Inc.
(consulting) since 1984. He is co-founder and has been Vice Chairman of
Stafford, Burke and Hecker, Inc., a Washington-based consulting firm, since
1982. After serving as an astronaut for a number of years, he retired in 1979
from the U.S. Air Force as Deputy Chief of Staff for Research, Development and
Acquisition and became Vice Chairman of Gibraltar Exploration Limited, an oil
and gas exploration and production company. Lt. Gen. Stafford is Chairman of
the Board of the Omega Watch Corporation of America, and is a director of
Tremont, Inc., Seagate Technologies, Inc., CMI, Inc., Pacific Scientific
Company, Allied-Signal, Inc., Fisher Scientific International Inc. ("Fisher
Scientific") and Wackenhut, Inc.
DIRECTORS WHOSE TERMS EXPIRE AT ANNUAL MEETING IN 1995:
William M. Daley, age 45, has been a director of WTI since December 1993.
Prior thereto he served as a director of WTI from August 1992 until August
1993, at which time he resigned to serve as Special Counsel to the President
for the North American Free Trade Agreement. Mr. Daley has been a partner of
the Chicago law firm of Mayer, Brown & Platt from May 1993 until the present,
excluding a three month leave to serve as Special Counsel to the President for
the North American Free Trade Agreement; and prior thereto, from 1985 to 1989.
Mr. Daley served as President and Chief Operating Officer of Amalgamated Bank
of Chicago from October 1990 to May 1993. From January 1993 to May 1993 Mr.
Daley also served as President of AmalgaTrust Co., Inc. From October 1989 until
October 1990 he served as the Vice Chairman of Amalgamated Bank of Chicago. Mr.
Daley is also a director of the Federal National Mortgage Association. WTI has
utilized and anticipates that it will continue to utilize the services of
Mayer, Brown & Platt.
Paul M. Montrone, age 52, has been a director of WTI or Old WTI since prior
to 1989. He also served as Chairman of the Board and Chief Executive Officer of
WTI from prior to 1989 until November 1990. Since December 1991, Mr. Montrone
has been President, Chief Executive Officer and a director of Fisher
Scientific, a manufacturer of laboratory equipment and supplies. He has also
been Vice Chairman of the Board of Abex, Inc. ("Abex"), a designer and
manufacturer of engineered components for aerospace, defense, industrial and
commercial markets, or its predecessors since 1992. Since prior to 1989, Mr.
Montrone has also been President of The General Chemical Group, Inc., a
chemical company. From prior to 1989 until 1992 he served as the Managing
Director--President of The Henley Group, Inc.
Phillip B. Rooney, age 49, has been a director of WTI or Old WTI since
September 1988. Mr. Rooney has been Chairman of the Board and Chief Executive
Officer of WTI since November 1990. He has also been President and Chief
Operating Officer of WMX since November 1984 and, since January, 1994, Chairman
of the Board and Chief Executive Officer of Waste Management, Inc. ("WMI"), a
wholly-owned subsidiary of WMX. Since January 1993, Mr. Rooney has also served
as Chairman of the Board of Rust. Mr. Rooney is also a director of WMX, CWM, WM
International, Rust, Illinois Tool Works Inc., Caremark International Inc.,
Urban Shopping Centers, Inc. and ServiceMaster Management Corporation, the
general partner of ServiceMaster L.P.
DIRECTORS WHOSE TERMS EXPIRE AT ANNUAL MEETING IN 1996:
Donald F. Flynn, age 54, has been a director of WTI or Old WTI since
September 1988. Since July 1992 Mr. Flynn has served as the Chairman of the
Board and Chief Executive Officer of Discovery Zone, Inc., a franchisor and
operator of indoor fun and fitness centers for children. He has also served as
Chairman of the Board and President of Flynn Enterprises, Inc., a financial
advisory and venture capital firm, since February 1988. He was Senior Vice
President of WMX from 1975 to January 1991. He also served as Chief
3
<PAGE>
Financial Officer of WMX from March 1972 to December 1989 and was Treasurer of
WMX from May 1979 to December 1986. He has been a director of CWM since
September 1986 and was Chief Financial Officer of CWM from September 1986 to
November 1987. Since January 1, 1991, Mr. Flynn has served as a consultant to
WMX. Mr. Flynn also serves as a director of WMX, Blockbuster Entertainment
Corporation, Psychemedics Corporation and WM International.
Manuel Sanchez, age 46, has been a director of WTI since August 1992. Mr.
Sanchez is a co-founder and has been a partner of the Chicago law firm of
Sanchez & Daniels since April 1987. From 1981 to 1987 he was a partner at the
law firm of Hinshaw, Culbertson, Moelmann, Hoban & Fuller. WTI has utilized and
anticipates that it will continue to utilize the services of Sanchez & Daniels.
SECURITIES OWNERSHIP OF MANAGEMENT
OWNERSHIP OF WTI COMMON STOCK
The following table sets forth certain information, as of February 1, 1994
(except for Mr. Daley, which is as of March 9, 1994), as to the beneficial
ownership of common stock of WTI by the directors, the Chairman of the Board
and Chief Executive Officer, and the four other most highly compensated
executive officers of WTI as of December 31, 1993, and by all directors and
persons serving as executive officers of WTI as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WTI COMMON STOCK PERCENT OF WTI
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK(2)
---- ------------------------ ---------------
<S> <C> <C>
Dean L. Buntrock.................. 135,000(3) *
William M. Daley.................. 1,000 *
Donald F. Flynn................... 80,245 *
James E. Koenig................... 243,000 *
Paul M. Montrone.................. 406,000 *
Phillip B. Rooney................. 274,769(3) *
Manuel Sanchez.................... 12,000 *
Lt. Gen. Thomas P. Stafford....... 30,212 *
John T. Dowd...................... 30,399 *
John M. Kehoe, Jr................. 266,220 *
John D. Sanford................... 100,248 *
James F. Wood..................... 26,378 *
All directors and executive
officers as a group including
persons named above (14 persons). 1,713,581 *
</TABLE>
- --------
*Less than one percent.
(1) The above named persons and members of such group have sole voting power
and sole investment power over WTI shares listed, except (i) WTI shares
covered by options exercisable within 60 days of February 1, 1994; (ii) WTI
shares held pursuant to WTI's Savings and Retirement Plan; (iii) 3,000 WTI
shares over which Mr. Koenig has shared voting and investment power with
his former spouse; (iv) 1,000 WTI shares over which Mr. Daley has shared
voting and investment power with his spouse; and (v) 10,000 WTI shares that
may be deemed to be beneficially owned by each of Messrs. Buntrock, Flynn
and Rooney as a result of restricted units granted pursuant to WTI's
Restricted Unit Plan for Non-Employee Directors. Such restricted units are
the only restricted units remaining outstanding under such plan, and no
further restricted units will be granted under such plan. At the time any
of Messrs. Buntrock, Flynn or Rooney cease to be a member of the Board,
such person will receive 10,000 shares of WTI common stock or, at the
discretion of the Board, the cash equivalent thereof. Such persons disclaim
any beneficial ownership of the WTI shares subject to such restricted
units.
(2) The numbers and percentages of WTI shares owned by the above named persons
and the members of such group assume, in each case, that currently
outstanding stock options covering WTI shares which
4
<PAGE>
were exercisable within 60 days of February 1, 1994 had been exercised by
that person or group as follows: Mr. Buntrock--33,336; Mr. Kehoe--251,639;
Mr. Koenig--240,000; Mr. Dowd--21,354; Mr. Montrone--406,000; Mr. Sanchez--
12,000; Mr. Sanford--60,023; Lt. Gen. Stafford--30,000; Mr. Wood--23,290;
and all executive officers and directors as a group (including such
individuals)--1,181,827. Such persons and the members of such group disclaim
any beneficial ownership of the WTI shares subject to such options.
(3) Excludes an aggregate of 104,621,810 shares that may be deemed to be
beneficially owned by Messrs. Buntrock and Rooney because each such person
may be deemed to be an affiliate of WMX (See "Principal Stockholder"). Each
such person disclaims any beneficial ownership of such WTI shares.
OWNERSHIP OF WMX COMMON STOCK
The following table sets forth certain information, as of February 1, 1994,
as to the beneficial ownership of WMX common stock by the directors, the
Chairman of the Board and Chief Executive Officer, and the four other most
highly compensated executive officers of WTI as of December 31, 1993, and by
all directors and persons serving as executive officers of WTI as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF WMX COMMON STOCK PERCENT OF WMX
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK(2)
---- ------------------------ ---------------
<S> <C> <C>
Dean L. Buntrock.................. 3,073,992 *
William M. Daley.................. 1,000 *
Donald F. Flynn................... 1,012,526 *
James E. Koenig................... 192,786 *
Paul M. Montrone.................. 0 *
Phillip B. Rooney................. 742,239 *
Manuel Sanchez.................... 0 *
Lt. Gen. Thomas P. Stafford....... 0 *
John T. Dowd...................... 1,180 *
John M. Kehoe, Jr................. 22,079 *
John D. Sanford................... 184 *
James F. Wood..................... 251 *
All directors and executive
officers as a group including
persons named above (14 persons). 5,046,470 1.0
</TABLE>
- --------
*Less than one percent.
(1) The above named persons and members of such group have sole voting power
and sole investment power over WMX shares listed, except (i) WMX shares
covered by options granted under WMX's stock option plans which were
exercisable within 60 days of February 1, 1994; (ii) WMX shares held
pursuant to WMX's Profit Sharing and Savings Plan and WTI's Savings and
Retirement Plan; and (iii) Messrs. Buntrock, Daley, Koenig and Rooney, and
all executive officers and directors as a group (including such
individuals), who have shared voting and investment power over 132,888,
1,000, 82,428, 30,074 and 246,390 WMX shares, respectively. Such WMX shares
shown for Messrs. Buntrock and Rooney are held in trusts or foundations
over which such individuals share voting and investment power with other
co-trustees or directors of such trusts and foundations. Such WMX shares
shown for Mr. Daley are held jointly with his spouse, and such WMX shares
shown for Mr. Koenig are held jointly with his former spouse. Ownership of
WMX shares shown for Messrs. Buntrock, Dowd and Rooney, and for all
officers and directors as a group, includes WMX shares not held directly by
them but held by or for the benefit of (i) their spouses or (ii) their
minor children and other children residing with them, as to which they have
neither investment power nor voting power. WMX shares were held by or for
the benefit of such spouses or children of the following directors and all
executive officers and directors as a group at
5
<PAGE>
February 1, 1994, in the amounts indicated: Mr. Buntrock--40,314 (held by
spouse); Mr. Dowd--23 (held by spouse for child); and Mr. Rooney--104,603
(held by adult child and by spouse directly and as trustee for children);
and all executive officers and directors as a group (including such
individuals)--144,951. Additionally, ownership of shares shown for Mr.
Koenig includes 1,200 WMX shares held by him as trustee of a family trust in
which Mr. Koenig has no pecuniary interest. Each of the above named persons
and the members of such group disclaim any beneficial ownership of such WMX
shares.
(2) The numbers and percentages of WMX shares owned by the above named persons
and the members of such group assume that currently outstanding stock
options covering WMX shares which were exercisable within 60 days of
February 1, 1994 had been exercised as follows: Mr. Buntrock--282,122; Mr.
Flynn--29,893; Mr. Koenig--107,767; Mr. Rooney--211,521; and all executive
officers and directors as a group (including such individuals)--631,303.
Such persons and the members of such group disclaim any beneficial
ownership of the WMX shares subject to such options.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has, pursuant to its powers, designated several
committees of the Board, including an Audit Committee and a Compensation and
Stock Option Committee (the "Compensation Committee"), the functions and
membership of which are described below. Because a majority of the Company's
outstanding common stock is owned by WMX, the Board of Directors does not have
a standing Nominating Committee. The Board of Directors held four regular
meetings in 1993.
The Audit Committee's functions include making recommendations to the Board
of Directors on the selection of WTI's auditors, reviewing the arrangements for
and scope of the independent auditors' examination, meeting with the
independent auditors, the Board of Directors and certain officers of WTI to
review the adequacy of internal controls and reporting, reviewing compliance
with and adherence to the Company's policies on business ethics and
environmental compliance, and performing any other duties or functions deemed
appropriate by the Board of Directors. Messrs. Montrone (Chairman), Sanchez and
Lt. Gen. Stafford are currently members of the Audit Committee. The
Compensation Committee is responsible for establishing and making
recommendations to the Board of Directors regarding salaries and bonuses to be
paid to executive officers of WTI and its principal subsidiaries, and for the
administration of WTI's 1986, 1988, 1989 and 1992 Stock Option Plans and the
grant of options under the 1992 Stock Option Plan (no further options may be
granted under the 1986, 1988 or 1989 Stock Option Plans). Messrs. Buntrock
(Chairman) and Montrone are currently members of the Compensation Committee. In
March 1993, the name of the Compensation Committee was changed to the
Compensation and Stock Option Committee, at which time its functions were
combined with those of the Stock Option and Equity Purchase Program
Administrative Committee, which committee was then disbanded.
During 1993, the Compensation Committee met five times and the Audit
Committee met three times. In 1993, during the time each director served in
such capacity, seven directors attended 100% of the aggregate of all meetings
of the Board and applicable committee meetings, and one director, Lt. General
Thomas P. Stafford, attended 100% of the meetings of the Board and 71% of the
aggregate of all meetings of the Board and all meetings held by committees of
the Board on which such director served.
6
<PAGE>
COMPENSATION
The following table sets forth certain information with respect to cash
compensation for services in all capacities paid or accrued by WTI and its
subsidiaries for the past three years, to or on behalf of (i) the Chairman of
the Board and Chief Executive Officer of WTI at December 31, 1993, and (ii)
each of the four other most highly compensated executive officers of WTI at
December 31, 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ---------------------
AWARDS PAYOUTS
---------- ----------
SECURITIES LONG-TERM ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING INCENTIVE COMPENSA-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2)(3) OPTIONS PAYOUTS(4) TION(2)
------------------ ---- -------- -------- ------------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip B. Rooney, 1993 $ 0 $ 0 0 0 $ 97,800 $ 0
Chairman of the Board and 1992 0 0 0 0 880,200 0
Chief Executive Officer(1) 1991 0 0 -- 0 0 --
John M. Kehoe, Jr., 1993 $300,000 $240,000 0 32,688 $ 12,569 $40,340
President and Chief 1992 254,176 145,225 0 15,874 113,116 41,973
Operating Officer 1991 225,000 110,240 -- 18,908 0 --
John D. Sanford 1993 $174,555 $ 69,950 0 11,622 $ 5,191 $18,113
Vice President, Chief Finan- 1992 134,670 59,308 0 8,254 46,723 18,457
cial Officer and Treasurer 1991 125,838 38,000 -- 10,084 0 --
James F. Wood 1993 $191,226 $146,300 0 13,801 $ 1,191 $24,865
Senior Vice President and 1992 190,008 24,168 0 12,064 117,935 26,033
General Manager 1991 188,591 75,740 -- 15,966 0 --
Wheelabrator Environmen-
tal Systems Inc.
John T. Dowd 1993 $181,154 $ 69,372 0 13,075 $ 2,629 $13,825
Senior Vice President 1992 140,348 61,556 0 8,888 23,665 17,614
and General Manager 1991 130,195 39,210 -- 11,068 0 --
Wheelabrator Clean Air Systems Inc.
Wheelabrator Clean Water Systems
Inc.
</TABLE>
- --------
(1) Mr. Rooney is compensated by WMX in his capacity as an employee of WMX and
received no cash compensation from WTI for his services, except that Mr.
Rooney received compensation from WTI for services rendered to the Company
under a long term incentive compensation plan covering the two-year period
ended December 31, 1992.
(2) In accordance with the revised rules on executive officer and director
compensation disclosure adopted by the Securities and Exchange Commission,
amounts of Other Annual Compensation and All Other Compensation are
excluded for the Company's 1991 fiscal year. Amounts shown under All Other
Compensation are amounts contributed by the Company for fiscal years 1992
and 1993 under the Company's Savings and Retirement Plan and non-qualified
excess benefit plan. Pursuant to the non-qualified excess benefit plan,
each participant's account is credited with the amount of the contribution,
if any, that would have been made on behalf of such participant to the
Savings and Retirement Plan but for certain limitations on such
contributions imposed by the Internal Revenue Code of 1986, as amended. All
such Company contributions are fully vested.
(3) Excludes perquisites and other benefits unless the aggregate amount of such
compensation equals at least the lesser of $50,000 and 10 percent of the
total annual salary and bonus reported for the named executive officer.
(4) Amounts shown were paid pursuant to the Company's Performance Unit Plan, a
long term incentive plan covering the two-year period ended December 31,
1992.
7
<PAGE>
STOCK OPTIONS
The following table sets forth certain information with respect to stock
options granted to the persons named in the Summary Compensation Table during
the year ended December 31, 1993:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM(4)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------------
NAME GRANTED(1)(2) IN FISCAL YEAR PER SHARE DATE(3) 0% 5% 10%
---- ------------- -------------- --------- ---------- -- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip B. Rooney....... 0 -- -- -- -- -- --
John M. Kehoe, Jr....... 32,688 4.9% $20.65 3/8/2000 $0 $ 274,796 $ 640,391
John D. Sanford......... 11,622 1.7% $20.65 3/8/2000 $0 $ 97,702 $ 227,687
James F. Wood........... 13,801 2.1% $20.65 3/8/2000 $0 $ 116,020 $ 270,376
John T. Dowd............ 13,075 2.0% $20.65 3/8/2000 $0 $ 109,917 $ 256,152
All Stockholders(5)..... -- -- $20.65 3/8/2000 $0 $1,570,055,582 $3,658,897,155
</TABLE>
- --------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of WTI's common stock, and to have shares
withheld to satisfy tax withholding requirements in connection with the
exercise of options. Such options become immediately exercisable upon a
change in control of the Company, as defined in the option plan. Options
are non-transferable other than by will or the laws of descent and
distribution.
(2) Options become exercisable in three equal cumulative annual installments
commencing March 8, 1994.
(3) Options were granted for a term of seven years, subject to earlier
termination in certain events related to termination of employment.
(4) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's common stock. Such amounts are based
on the assumption that the named persons hold the options granted for their
full seven year term. The actual value of the options will vary in
accordance with the market price of the Company's common stock. The column
headed "0%" is included to demonstrate that the options were granted at
fair market value and that the optionees will not recognize any gain
without an increase in the stock price, which increase benefits all
stockholders commensurately. The Company did not use an alternative formula
to attempt to value options at the date of grant as management is not aware
of any formula which determines with reasonable accuracy a present value of
options of the type granted to the optionees.
(5) Based upon the market price of the Company's common stock and the total
shares outstanding at the date of grant, if the market price of the
Company's common stock increased at the 5% or 10% rates shown in the table
above, stockholders as a group would realize aggregate gains (excluding
dividends) of $1,570,055,582 or $3,658,897,155, respectively, during the
period from grant date to expiration date for the options expiring March 8,
2000.
8
<PAGE>
The following table sets forth certain information as to each exercise of
stock options during the year ended December 31, 1993 by the persons named in
the Summary Compensation Table and the fiscal year end value of unexercised
options:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Phillip B. Rooney....... 533,336 $4,284,475 -- / -- $ 0/$ 0
John M. Kehoe, Jr....... 0 $ 0 229,148/49,570 $2,212,931/$58,027
John D. Sanford......... 0 $ 0 50,034/20,486 $ 453,522/$30,672
James F. Wood........... 0 $ 0 9,346/27,163 $ 39,182/$47,214
John T. Dowd............ 5,140 $ 75,182 10,342/22,689 $ 49,089/$33,435
</TABLE>
- --------
(1) Market value less exercise price, before payment of applicable federal and
state taxes.
LONG TERM INCENTIVE PLAN AWARDS
The following table sets forth certain information as to awards made under
the Wheelabrator Technologies Inc. Long Term Incentive Plan (the "LTIP") with
respect to the year ended December 31, 1993 to the persons named in the Summary
Compensation Table:
LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE BASED
NUMBER OF SHARES, OTHER PERIOD PLANS(3)
UNITS OR OTHER UNTIL MATURATION ---------------------------
NAME RIGHTS(1) OR PAYOUT(2) THRESHOLD TARGET MAXIMUM
---- ----------------- ---------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John M. Kehoe, Jr....... -- 2.6 years $60,000 $120,000 $360,000
</TABLE>
- --------
(1) Awards consist of the designation of target percentages of annual salary at
the end of the performance period to be paid if the Company achieves
certain performance objectives. No payout occurs unless the Company
achieves certain threshold performance objectives. Above the threshold,
payouts may be greater or less than the target percentages to the extent
that the Company's performance exceeds or fails to meet target objectives
specified. Payouts under the LTIP are based on the rank of the Company's
total stockholder return (stock price appreciation plus reinvested
dividends) among the total stockholder returns of the companies that
comprise the Standard & Poor's 500 Stock Index over the performance period.
(2) The performance period includes seven months of calendar year 1993 and
calendar years 1994 and 1995.
(3) At the end of the performance period, an amount equal to 50% of the
performance award, if any, is paid in cash, and the remaining 50% is deemed
to be invested in Company common stock. The participant is entitled to
receive the value of such deemed investment on the date three years after
the end of the performance period; provided that the participant is an
officer of the Company or one of its affiliates on that date. The estimated
future payouts were calculated using Mr. Kehoe's 1993 salary and reflect
the total performance award without accounting for any increase or decrease
in the value of the deferred portion of the award.
ANNUAL COMPENSATION OF NON-EMPLOYEE DIRECTORS
Each member of the Board of Directors who is not an employee of WTI or an
employee or director of WMX is paid an annual fee of $45,000. In addition,
during 1993, each such person received a fee of $8,000 for service as a member
of a Special Committee of the Board of Directors formed to act upon the Rust
Transaction (as described below under "Certain Transactions and Other
Matters"), except that Mr. Montrone received a fee of $10,000 for his services
as Chairman of such Special Committee.
9
<PAGE>
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
WTI maintains a Deferred Director's Fee Plan under which non-employee
directors may make an irrevocable election to defer receipt of all or a portion
of the directors fees payable to them until termination of their membership on
the Board of Directors. Such deferred amounts are deemed to be invested in
WTI's common stock and during the period of deferral such deferred amounts are
credited with the dividends or stock splits, if any, that would be received had
such investment actually been made. Upon termination of the director's service,
the common stock reflected by the deferred account is deemed to be sold, and
the deemed proceeds of such sale (or an amount equal to the amount originally
deferred, if greater) will be distributed to the director in cash, either in a
lump sum or installments.
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
The Retirement Plan for Non-Employee Directors (the "Directors' Retirement
Plan") was amended by the Board of Directors on June 10, 1991 to limit
participation in such plan to those non-employee directors and former non-
employee directors who were covered by the plan as of such date. No person who
becomes a non-employee member of the Board of Directors after June 10, 1991
will be eligible for retirement benefits under the Directors' Retirement Plan.
As amended, the Directors' Retirement Plan provides that any non-employee
director elected to the Board of Directors in connection with the August 1989
merger of Old WTI into Resco Holdings Inc. ("Resco"), a wholly-owned subsidiary
of WTI (the "1989 Merger"), or at any time thereafter prior to June 10, 1991
who retires from the Board of Directors with at least five years of service as
a non-employee director of WTI (or Old WTI or certain other predecessor
companies) is eligible for an annual retirement benefit for the remainder of
the director's lifetime equal to 50% of the director's fee in effect at the
director's retirement. The annual retirement benefit will be increased by 10%
of such fee for each additional year of eligible service, up to 100% of such
fee for 10 or more years of service as a non-employee director or for directors
who retire at age 72, the mandatory retirement age for directors. The benefit
payable by WTI to a retired non-employee director will be reduced by the amount
of any retirement benefit payable to such director under the Retirement Plan
for Non-Employee Directors of Old WTI or certain other predecessor companies,
but in no event below the amount that would be payable by taking into account
only service as a non-employee director of WTI.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The 1991 Stock Option Plan for Non-Employee Directors (the "Directors Plan")
covers 300,000 shares of WTI's common stock. Each director of WTI who is
neither an officer nor full-time employee of WTI or any of its subsidiaries and
who is neither an officer, employee or director of WMX or any of its
subsidiaries, other than WTI and WTI's subsidiaries, upon election or
appointment to the Board of Directors, is granted an option under the Directors
Plan to purchase a total of 15,000 shares of WTI's common stock at the fair
market value (as defined in the Directors Plan) of the stock of WTI at the time
of grant. All options under the Directors Plan are for a term of 10 years from
the date of grant and become exercisable with respect to 20% of the total
number of shares subject to the option six months after the date of grant and
with respect to an additional 20% at the end of each 12-month period thereafter
on a cumulative basis during the succeeding four years.
Under the Directors Plan, in the event that WTI's shares of common stock are
changed by a stock dividend, split or combination of shares, or a merger,
consolidation or reorganization with another company in which holders of WTI's
common stock receive other securities, or any other relevant change in the
capitalization of WTI, a proportionate or equitable adjustment will be made in
the number or kind of shares subject to unexercised options or available for
options and in the purchase price for shares. If an option expires or is
terminated or cancelled unexercised as to any shares, such released shares may
again be optioned (including a grant in substitution for a cancelled option).
Shares subject to options may be made available from unissued or reacquired
shares of common stock.
10
<PAGE>
Options are not transferable by the optionee otherwise than by will or the
laws of descent and distribution. Options terminate if the optionee ceases to
be a director of WTI for any reason other than death, permanent disability,
resignation or retirement. In the event of termination of employment because of
death or permanent disability, the optionee or his heirs, legatees or legal
representative may exercise the option in full at any time during its term
within three months after the date of termination. In the event of resignation
or retirement, an option may be exercised by the optionee (or if he dies after
retirement by his heirs, legatees or legal representative) at any time during
its term within three months after the date of retirement, but only to the
extent it was exercisable on the date of retirement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
At various times during 1993, Messrs. Buntrock (Chairman), Montrone and Daley
served as members of the Compensation Committee of WTI's Board of Directors.
Mr. Montrone served as Managing Director-Chairman of the Board and Chief
Executive Officer of WTI from September 1987 until November 1990, and as Vice
Chairman of the Board of WTI from November 1990 to June 1991. On March 22,
1990, WTI entered into a Lease Agreement with Exeter Oak Realty Company, Ltd.
("Exeter Oak"), under which WTI leased approximately 78,000 square feet in an
office building located in Hampton, New Hampshire. Prior to this time the
building was leased by Exeter Oak to an unrelated third party upon
substantially similar financial terms. Exeter Oak is 50%-owned by Mr. Montrone.
The lease was considered and approved by a Special Committee of the Board of
Directors of WTI, composed solely of disinterested directors. The lease, which
is a net lease, provides for an initial term of eight years, commencing on
April 1, 1990, at a flat annual rental of $1.8 million, which is not subject to
escalation. WTI has an option to extend the lease for two successive five-year
periods, in each case at the same $1.8 million annual rental. In addition, WTI
has an option under the lease to purchase the building, exercisable at the end
of the fourth, eighth, thirteenth and eighteenth year of the lease. The first
such option period commenced on February 1, 1994 and was scheduled to end on
March 31, 1994. Exeter Oak agreed to extend the term of the option period
through May 1994 in order to allow WTI to evaluate whether to purchase the
building. Under the lease, WTI may purchase the building by giving notice of
its intention to exercise its option in which case the purchase price will be
the fair market value of the building and surrounding grounds at the time such
option was exercised, as determined by independent appraisal. The Company is
currently evaluating whether to exercise its option to acquire the building,
but expects to give notice of its intention to do so prior to the end of the
option period.
Mr. Daley is a partner in the law firm of Mayer, Brown & Platt, the services
of which the Company has utilized and anticipates that it will continue to
utilize. Mr. Rooney, WTI's Chairman and Chief Executive Officer, is a member of
the Board of Directors of WMX. Mr. Buntrock is the Chairman of the Board and
Chief Executive Officer of WMX. In 1993, WTI was paid approximately $32.4
million for goods and services provided to WMX and its subsidiaries (other than
the Company and its subsidiaries). The various transactions between WTI and WMX
and their respective subsidiaries are described below under "Certain
Transactions and Other Matters--Transactions Between WTI and WMX."
11
<PAGE>
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Report of the
Compensation and Stock Option Committee" and "WTI Stock Performance" will not
be deemed to be filed or to be proxy soliciting material or incorporated by
reference in any prior or future filings by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
GENERAL POLICIES
The compensation of the Company's executive officers is determined by the
Compensation Committee of the Board of Directors. The Company's compensation
programs are intended to enable the Company to attract, motivate, reward and
retain the management talent required to achieve aggressive corporate
objectives in a rapidly changing and technology-based industry, and thereby
increase stockholder value. The Company's policy is to provide incentives to
its senior management to achieve both short-term and long-term objectives and
to reward exceptional leadership, performance and contributions to the
development of the Company's business. To attain these objectives, the
Company's executive compensation program includes a base salary, coupled with a
substantial cash incentive component which is "at risk" based on the
performance of the Company's business, primarily as reflected in the
achievement of pre-determined financial or other performance goals. The
Company's policy also is that as an executive officer's level of management
responsibility in the Company increases, a greater portion of his or her
potential total compensation depends upon the Company's performance as measured
by objective standards over one or more years.
Many of the Company's employees, including its executive officers, also are
eligible to be granted stock options periodically in order to more directly
align their interests with the long-term financial interests of the Company's
stockholders. In addition, most Company employees, including its executive
officers, participate in a savings and retirement program. Pursuant to the
savings portion of such program, the Company will make a matching contribution
on behalf of each participating employee equal to 30% of such participant's
contribution, subject to applicable tax limits. Additional matching
contributions may be made at the discretion of the Board of Directors based
upon the Company's operating results. Pursuant to the retirement portion of
such program, the Company makes annual contributions to a trust for the benefit
of participating employees equal to 3% of each such employee's compensation.
Participants become fully vested in the Company's contributions after five
years of employment with the Company or its affiliates.
In assessing the competitiveness of the overall compensation and individual
compensation components of the Company's executive officers, the Compensation
Committee considers data from a variety of surveys of, and comparisons to,
other companies. With respect to the Company's executive officers, the
Compensation Committee reviews primarily compensation data for a group of
comparator companies compiled with the assistance of the Company's independent
compensation consultant. While these comparator companies include several which
also are included in the waste industry index shown in the proxy statement
performance graph, they were selected primarily because their size and
operating and financial characteristics make it likely that they will compete
for the services of executives who have experience and skills similar to those
which the Company requires. In making its decision on 1993 compensation, the
Compensation Committee did not target officer base salaries or total
compensation at any specific point in the range of salaries or the total
compensation paid by comparator companies. The Committee believes, however,
that base salaries paid in 1993 to its executive officers correspond generally
to the lower end of the range of comparator companies. It is the Company's
general practice to structure the incentive components of executive officers'
compensation so that approximately 40 percent to 60 percent of total targeted
compensation for the Company's executive officers is "at risk" through
participation in the Company's incentive compensation plans, including the
Company's stock option plan, which the Compensation Committee believes
constitutes a somewhat higher percentage of total targeted compensation than
that of the comparator companies. The Compensation Committee believes, however,
that a greater emphasis on "at risk" compensation elements will result in the
enhancement of stockholder value.
12
<PAGE>
Under the Omnibus Budget Reconciliation Act of 1993, compensation paid to
certain executive officers of the Company in excess of $1 million in 1994 and
subsequent years may be non-deductible for federal income tax purposes unless
the compensation is "performance-based" or otherwise exempt under the law and
proposed Internal Revenue Service regulations issued in December 1993. The
Compensation Committee believes that the new law and proposed regulations
require clarification and that, based upon current levels of cash compensation
payable by the Company, the $1 million deductibility cap will not affect the
Company in 1994. For these reasons, the Compensation Committee has deferred any
decision regarding the Company's policy on this matter. The Compensation
Committee will review this matter from time to time as the new law and
regulations are clarified.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE
Salary
The Compensation Committee annually establishes the base salaries which will
be paid to the Company's executive officers during the coming year. In setting
salaries, the Compensation Committee takes into account several factors,
including competitive compensation data, comparisons of salaries and
responsibilities among the Company's executive officers, the extent to which an
individual may participate in the incentive compensation plans maintained by
the Company and qualitative factors bearing on an individual's experience,
responsibilities, management and leadership abilities and job performance.
Incentive Compensation Plans
The Compensation Committee also administers the terms of the Company's
incentive compensation plans in which executive officers participate. In doing
so, the Compensation Committee considers management's plans for the Company's
growth and profitability and achievement of strategic goals, determines the
criteria to be used for the determination of incentive compensation awards, and
fixes the levels of target and maximum awards for participants and the minimum
level of attainment of performance objectives necessary for awards to be made
under each incentive compensation plan. The Company has typically had in effect
at any one time both an annual and multi-year incentive compensation plan, as
well as a stock option plan.
Annual Plan
For 1993, each of the Company's executive officers (except Mr. Rooney) was a
named participant in the Company's Corporate Incentive Bonus Plan (the "Annual
Plan"). Under the Annual Plan, target awards for such officers ranging from 20%
to 40% of the participant's salary at year end were payable depending upon the
extent to which the Company's earnings per share increased over the prior year
(or, in the case of certain officers who had management responsibility for one
of the Company's operating groups, depending in part on the increase in the
Company's earnings per share and in larger part on that operating group's
percentage of attainment of budgeted increase in pre-tax income over the prior
year). The Annual Plan award formula for 1993 was designed to
disproportionately increase or decrease a participant's annual incentive
compensation in the event that actual results exceed or fall short of targeted
levels. The maximum incentive bonus in each case was set at an amount equal to
twice the amount of a participant's target bonus. In addition, the percentage
of the target bonus otherwise payable to a participant (other than Mr. Kehoe)
could be increased or decreased depending upon the Compensation Committee's
review of an evaluation of such participant's management performance. The
Annual Plan also required the Compensation Committee to find that Mr. Kehoe had
furthered the implementation of the Company's environmental principles before
any award could be paid to him under the Annual Plan.
Under the terms of the Annual Plan, no award was payable to any participant
unless a specified minimum percentage of the budgeted increase in the relevant
operating results were achieved. The increase in the Company's earnings per
share for 1993 significantly exceeded the targeted objectives. Accordingly,
those executive officers participating in the Annual Plan whose bonus was based
entirely on the Company's operating results received a bonus in an amount equal
to 200% of their target bonus. Of those executive officers whose bonus is based
in part on the results of individual operating units of the Company, one
received a bonus equal to 200% of his target bonus and one received a bonus in
an amount slightly less than his target bonus, reflecting the 1993 performance
of their individual operating units.
13
<PAGE>
Long Term Plan
In 1993, the Compensation Committee approved and the Board of Directors
adopted the Wheelabrator Technologies Inc. Long Term Incentive Plan (the
"LTIP"), and named Mr. Kehoe as the only participant. Under the LTIP, Mr.
Kehoe's target award equals 40% of his salary at the end of the initial
performance period, December 31, 1995. The target award would be payable
depending on the Company's total return to stockholders compared to that of the
companies comprising the Standard & Poor's 500 Stock Index (the "S&P 500")
during the performance period (which commenced on June 1, 1993). Total return
to stockholders is defined for this purpose as the sum of price appreciation
plus reinvested dividends over the performance period, divided by the share
price at the beginning of the period. Under the LTIP, Mr. Kehoe will be paid
his target award if the Company's total stockholder return places it at a
percentile ranking selected by the Compensation Committee in relation to the
S&P 500 companies. The percentage of the target award to be paid will vary
upwards to 300% of the target award if the Company's total stockholder return
places it at a higher percentile ranking in relation to the S&P 500 companies
and downwards to 50% of the target award if the Company's total stockholder
return places it at a specified minimum ranking. If the Company's total
stockholder return places it below the specified minimum ranking in relation to
the S&P 500 companies, then no award is to be paid for the relevant performance
period.
The LTIP also mandates that the payment of one-half of any award otherwise
payable at the end of a performance period be deferred for an additional three-
year period. During the deferral period, such amount is to be deemed invested
in shares of the Company, subject to increase or decrease in value over the
deferral period. The purpose of the deferral is to provide an additional
incentive to participants (who forfeit deferred amounts if they leave the
Company during the deferral period) to remain with the Company and an
additional linkage between compensation and Company performance.
Payments, if any, are to be made under the LTIP following the end of the
first performance period on December 31, 1995. The Compensation Committee
intends to name Mr. Kehoe as a participant in the LTIP for successive three-
year performance periods ending on December 31, 1996 and subsequent years. The
Compensation Committee may, in its discretion, name additional executive
officers as participants in the LTIP in the future. The LTIP replaced the
Company's 1991 Performance Unit Plan which was terminated in December 1992 in
connection with the Rust Transaction (described below under "Certain
Transactions and Other Matters").
Stock Options
Stock options are granted to key employees, including the Company's executive
officers, by the Compensation Committee under the Company's 1992 Stock Option
Plan (the "1992 Option Plan"). Among the Company's executive officers, the
number of shares subject to options granted to each individual generally
depends upon his or her base salary and the level of that officer's management
responsibility. In 1993, the largest grant was awarded to the Company's Chief
Operating Officer, reflecting Mr. Kehoe's potential to significantly impact the
Company's profitability and growth. With the exception of Mr. Rooney, who has
not received an annual grant under the 1992 Option Plan in light of his
participation in a similar stock option plan maintained by WMX, executive
officers of the Company typically receive grants each year which the
Compensation Committee intends to constitute at least one-half of their total
targeted "at risk" compensation. All options under the 1992 Option Plan are
non-qualified stock options which are granted at an exercise price equal to
100% of fair market value on the date of grant. These options typically have a
term of seven years and become exercisable in cumulative increments of one-
third of the total number of shares subject to the option during each of the
first three years of the option term.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Although he was actively involved in the management and affairs of the
Company, Phillip B. Rooney, the Company's Chairman and Chief Executive Officer,
did not receive any salary from the Company for 1993. Mr. Rooney is compensated
by WMX in his capacity as President and Chief Operating Officer of that
14
<PAGE>
company. WTI does not reimburse WMX for any part of Mr. Rooney's salary. During
1993, Mr. Rooney did not participate in the Company's annual incentive bonus
plan and, accordingly, did not receive any compensation thereunder. In
addition, although he was eligible to participate in the 1992 Option Plan, Mr.
Rooney did not receive a grant thereunder during 1993. He was also eligible to
participate in the LTIP, but was not named as a participant thereunder.
COMPENSATION OF THE PRESIDENT AND CHIEF OPERATING OFFICER
In light of the fact that the Company's Chief Executive Officer received no
compensation from the Company for 1993, the Compensation Committee deems it
appropriate to review its deliberations in respect of the Company's most highly
compensated executive officer, John M. Kehoe, Jr.
Salary
In determining 1993 base compensation of Mr. Kehoe, the Company's President
and Chief Operating Officer, the Compensation Committee made note of several
considerations. In their deliberations, however, the Compensation Committee did
not accord greater weight to any one of the matters considered over any other
such matter.
Prior to Mr. Kehoe's election as President and Chief Operating Officer of WTI
in January 1993, he served as President of the Company's principal operating
subsidiary, Wheelabrator Environmental Systems Inc. ("WESI"). Accordingly, in
assessing the appropriateness of Mr. Kehoe's proposed 1993 compensation, the
Compensation Committee reviewed his performance as President of WESI. In that
regard, the Committee considered, among other factors, the outstanding 1992
operating results (including substantial increases in revenue) reported by the
businesses for which Mr. Kehoe had primary management responsibility, the
successful project development activities undertaken by WESI in 1992, the
substantial growth of the Company's water pollution control technologies and
services during 1992 (for which Mr. Kehoe also exercised primary management
responsibility), and the outstanding safety and environmental records achieved
in 1992 and prior years by the trash-to-energy facilities operated by WESI. In
addition, the Compensation Committee considered the significant additional
responsibilities which Mr. Kehoe would undertake in 1993 as the President and
Chief Operating Officer of the Company.
The Compensation Committee also considered a report and data furnished by the
Company's compensation consultant concerning Mr. Kehoe's compensation. As the
Company's highest paid executive officer, the Compensation Committee evaluated
Mr. Kehoe's compensation relative to that of the most highly compensated
officers of the comparator companies referenced above under "General Policies."
The report concluded that Mr. Kehoe's proposed 1993 salary would be towards the
lower end of the range of predictive salaries which could be expected to be
paid to the chief executive of a similarly sized company within the comparator
group. The Compensation Committee also noted, however, that as the Company's
Chief Operating Officer, Mr. Kehoe's compensation should also be viewed in
comparison to the second highest paid officer in the comparator group, who is
typically the chief operating officer. Based upon the independent compensation
consultant's report, Mr. Kehoe's proposed 1993 salary would place him at
approximately the median level of salaries paid to the second highest paid
officer of the peer group companies.
Based on these considerations, the Compensation Committee set Mr. Kehoe's
1993 base compensation at $300,000.
Annual Incentive Plan
For 1993 the Compensation Committee awarded Mr. Kehoe a target Annual Plan
participation of 40% of his 1993 salary. The Compensation Committee determined
that in light of the LTIP and stock option components of Mr. Kehoe's incentive
compensation structure (discussed below), Mr. Kehoe's participation in the
Annual Plan at the 40% level was appropriate in order for Mr. Kehoe's intended
incentive compensation to constitute a substantial part of his intended total
1993 compensation. In making this decision, the Compensation Committee also
considered the report of the Company's compensation consultant, which, citing a
survey of 300 major service, industrial and financial companies, reported that
15
<PAGE>
bonuses actually paid to the second most senior executive officer during the
survey period averaged 50% of salary. The Committee took account of the
consultant's report that over time the actual bonus amounts paid tend to
average at or slightly above target levels. Because the Company exceeded the
1993 targeted increase in earnings per share specified under the Annual Plan,
Mr. Kehoe received a bonus equal to $240,000 in 1993, 200% of his target under
the Annual Plan.
LTIP
Under the Company's new LTIP, for the performance period commencing June 1,
1993 and ending December 31, 1995, the Compensation Committee awarded Mr. Kehoe
a target award of 40% of his salary as of the end of such period. The
Compensation Committee's selection of the 40% participation level for Mr. Kehoe
reflects the Company's compensation practices, under which incentive
compensation under the LTIP, together with the Annual Plan and stock options,
is to comprise between one-half and two-thirds of total target compensation for
Mr. Kehoe. The Compensation Committee also considered the level of awards
typically made and its understanding of long term compensation awards by other
companies. As noted above, no payment will be made to Mr. Kehoe, if ever, until
the completion of the first performance period.
Stock Options
The Compensation Committee's 1993 grant of options to Mr Kehoe under the 1992
Option Plan was determined by multiplying Mr. Kehoe's base compensation by 2.25
and dividing the product of that calculation by the per share option exercise
price, which was the fair market value of a share of the Company's common stock
as of the date of grant. In selecting this formula, the Compensation Committee
considered the Company's historical stock option grant practices, as well as
the goal of maintaining incentive compensation as a substantial portion of Mr.
Kehoe's total compensation and of making stock option grants at a level of
approximately one-half of total incentive compensation.
Dean L. Buntrock (Chairman)
Paul M. Montrone
16
<PAGE>
WTI STOCK PERFORMANCE
The following graph and table compare the yearly percentage change in the
cumulative total returns on WTI's common stock, the Standard & Poor's 500 Index
and the Smith Barney Solid Waste Index (in each case assuming dividend
reinvestment, but only for the portion of the period for which dividends were
paid in the case of the Company):
COMPARISON OF 5-YEAR CUMULATIVE RETURN
VS. S&P 500 AND SMITH BARNEY SOLID WASTE INDICES(1)(2)(3)(4)
[GRAPH]
<TABLE>
<CAPTION>
8/25/89 1989 1990 1991 1992 1993
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wheelabrator Technologies Inc. $100 $173 $192 $340 $365 $352
- ------------------------------------------------------------------
S&P 500 Index $100 $102 $ 99 $129 $139 $153
- ------------------------------------------------------------------
Smith Barney Solid Waste Index $100 $114 $102 $109 $100 $ 76
</TABLE>
- --------
(1) Historical results are not necessarily indicative of future performance.
(2) Prior to the August 24, 1989 merger between the Company and a partially-
owned subsidiary of the Company, immediately followed by a 1-for-4 reverse
stock split, the common stock of the Company was traded on the NASDAQ
National Market System. On August 25, 1989, the Company's common stock
commenced trading on The New York Stock Exchange. Therefore, it is not
possible to provide comparable information for periods prior to August 25,
1989.
(3) Assumes $100 invested on August 25, 1989 in WTI common stock and the S&P
500 Index, and, in the case of the Smith Barney Solid Waste Index, as of
August 31, 1989 (as such information is only available as of month-end).
(4) Upon consummation of the merger on September 7, 1990 between WTI and a
subsidiary of WMX (the "1990 Merger") pursuant to which WMX obtained
majority ownership of WTI, each share of the Company's common stock
outstanding on the merger date (except shares held by WMX) was converted
into (i) .574 of a share of Company common stock and (ii) .469 of a share
of WMX common stock. The performance graph and table assume that all of the
shares of WMX common stock were sold by the recipient thereof immediately
following the 1990 Merger and that the proceeds of such sale (without
deductions for brokerage commissions or other costs) were reinvested by
such recipient in the Company's common stock on the same date. The
foregoing transactions would have resulted in ownership of approximately
the same number of shares of Company common stock both before and after the
1990 Merger.
17
<PAGE>
CERTAIN TRANSACTIONS AND OTHER MATTERS
TRANSACTIONS BETWEEN WTI AND WMX
WTI and certain of its subsidiaries are parties to agreements with WMX and
certain of its subsidiaries which, among other things, govern the ongoing
relationships between the various members of the WMX family of companies. A
number of such agreements, some of which are described below, were entered into
in connection with the 1988 acquisition by WMI (then known as Waste Management
of North America, Inc.) of a 22% interest in WTI (the "1988 Transaction") and
the subsequent 1990 Merger which resulted in WMX acquiring ownership of a
majority of WTI's common stock. A number of additional agreements were entered
into in connection with WTI's acquisition of an equity interest in WM
International in 1991 and the formation of Rust in January 1993, each of which
transactions is described below.
Due to the complexity of the various relationships between WTI and WMX
(including their respective subsidiaries), there can be no assurance that each
of such agreements, or the transactions provided for therein, when considered
separately, has been or will be effected on terms no less favorable to WTI than
could have been obtained from unaffiliated third parties. It has, however, been
the intention of both WTI and WMX that such agreements and transactions, taken
as a whole, should accommodate their respective interests in a manner that is
fair to all parties, while continuing certain mutually beneficial joint
arrangements. Additional or modified arrangements and transactions may be
entered into by WTI, WMX and their respective subsidiaries. While any such
future arrangements and transactions are expected to be determined through
negotiation between them, there can be no assurance that conflicts of interest
will not occur. The Company intends to seek the approval of its independent
directors for any agreement which management or any independent director of the
Company believes to be of material importance to the Company and to involve a
significant conflict of interest with WMX and its affiliated companies.
LAND OPTION AGREEMENT. Pursuant to a Land Option Agreement originally entered
into at the time of the 1988 Transaction and subsequently amended, Resco, as
the successor by merger to Old WTI, was granted an exclusive option (the "Land
Option") to purchase, lease or sublease parcels of real estate at or adjacent
to landfill facilities located in the United States or Canada owned or leased
by WMI or its affiliates or subsidiaries. The potential uses for such option
parcels include trash-to-energy facilities, biosolids management and organic
waste composting facilities and, should WTI exercise its option under the
Medical Waste Option Agreement described below, medical waste incineration and
autoclave facilities. The Land Option Agreement has an initial term of 10
years, subject to Resco's right to extend the term an additional 15 years upon
payment of $10 million to WMI prior to the expiration of the initial term. The
per-acre purchase price of any parcel purchased pursuant to the Land Option
Agreement will be equal to the greater of (i) $40,000, as adjusted for
inflation, and (ii) the book value per acre on the books of WMI for such
parcel. If Resco elects to lease or sublease a parcel, and the parties are
unable to agree on a fair market rental for the parcel, the rent payable under
the lease or sublease will be a percentage (based upon a market rate of return)
of the purchase price of such parcel, as calculated in the manner described
above. The Company is currently constructing a trash-to-energy facility on a
parcel of property in Falls Township, Pennsylvania acquired under the Land
Option Agreement from WMI in 1988.
SECOND AMENDED AND RESTATED AIRSPACE DEDICATION AGREEMENT. The original
Airspace Dedication Agreement was entered into in connection with the 1988
Transaction and was subsequently amended in June 1992. Pursuant to such
agreement, WMI agreed to dedicate airspace at landfill sites owned, leased or
operated by subsidiaries or affiliates of WMI (a "Disposal Site") for the
disposal of ash residue ("Ash Residue") (which includes ash residue from
medical waste incineration facilities in the event WTI exercises its right to
acquire WMI's medical waste business pursuant to the Medical Waste Option
Agreement described below) and non-hazardous biosolids and by-pass waste
("Other Waste") generated at or from facilities owned or operated by Resco. In
December 1992, the agreement was again amended and restated in connection with
the formation
18
<PAGE>
of Rust, described below under "Rust Transaction," to expand the definition of
Other Waste to include special wastes removed from third-party sites being
remediated by Resco or any of its affiliates. The Second Amended and Restated
Airspace Dedication Agreement (the "Second Amended and Restated ADA") was
executed in connection with the assignment by Resco to Rust of $30 million of
disposal credits.
Under the Second Amended and Restated ADA, Resco may reserve dedicated
airspace at any one or more Disposal Sites for a term ending August 12, 2008,
subject to extension in certain circumstances involving an event of force
majeure. Such reservations of airspace must be at Disposal Sites properly
permitted to dispose of the type of waste proposed for disposal, and may not
exceed a total of 35% of the airspace available for the type of waste proposed
for disposal at any such Disposal Site. The price-per-ton that will be charged
Resco by WMI to dispose of waste covered by the Second Amended and Restated ADA
at any Disposal Site will generally be not greater than the most favorable per
ton price charged by the Disposal Site to customers other than Resco for the
acceptance and disposal of similar quantities and types of waste on similar
terms and conditions excluding, however, charges to disposal customers who pay
a premium for long-term guaranteed waste disposal. Under the original
agreement, WMI granted Resco disposal credits totalling $70 million ("Disposal
Credits"), to be applied against the aggregate cost of disposing of Ash Residue
at the rate of 20% of the applicable disposal price described above. The
availability of the Disposal Credits was extended to cover all waste eligible
for disposal under the Second Amended and Restated ADA. As amended and
restated, the ADA also provides for Disposal Credits to be applied against
disposal fees paid by Resco and its subsidiaries under separately negotiated
disposal arrangements with WMI, such as the arrangement described below under
"Disposal Agreement". On January 1, 1993, as a part of the consideration paid
by WTI in the Rust Transaction described below, Resco contributed $30 million
in unused Disposal Credits to Rust. The contribution of Disposal Credits was
made pursuant to a provision of the ADA allowing Resco to sell all or any part
of the unused portion of the Disposal Credits to any third party, subject to
WMI's right of first refusal with respect to each such sale. In 1993, Resco
paid WMI a total of $8.7 million for disposal of waste pursuant to the Second
Amended and Restated ADA and used $1.9 million in Disposal Credits, all of
which related to the Disposal Agreement described below.
DISPOSAL AGREEMENT. In 1989, Waste Management Inc. of Florida, a subsidiary
of WMI, entered into a Disposal Agreement with a Resco subsidiary for the
disposal of ash residue and bypass waste from the 2,250 ton-per-day trash-to-
energy facility owned and operated by such subsidiary in Broward County,
Florida (the "North Broward Project"). The disposal price for ash residue,
established at $30 per ton in 1990, will be escalated at a rate of not less
than 5% per year. In 1993, the disposal price was $41 per ton of ash residue.
For disposal of bypass waste, the North Broward Project will be charged the
same rates as other users of the landfill. Pursuant to the Second Amended and
Restated ADA, described above, the amount paid by the North Broward Project for
disposal of ash residue and bypass waste since June 1, 1992 has been reduced by
Disposal Credits available thereunder. During 1993, the North Broward Project
paid approximately $8.7 million in ash disposal fees to WMI, net of Disposal
Credits.
DEVELOPMENT AGREEMENT. Resco and WMI are parties to a Development Agreement,
amended in June 1992, pursuant to which WMI is obligated to make payments (the
"Development Payments") to Resco to cover development costs incurred prior to
August 12, 1994 with respect to certain development projects undertaken by
Resco. The Development Agreement allows for the carry-forward from year-to-year
of any unused portion of WMI's payment obligation. The range of development
projects for which Development Payments can be charged by Resco include trash-
to-energy facilities, water and wastewater treatment facilities, biosolids
treatment facilities, composting facilities and recycling or reclamation
facilities developed by Resco (the "Proposed Facilities"). The terms of the
Development Agreement provide that the aggregate amount of Development Payments
will not exceed $46 million. In addition, Resco is obligated to pay WMI,
promptly after obtaining an equivalent amount of construction financing for any
Proposed Facility as to which Resco has applied any Development Payments, a
success fee in an amount equal to 112% of the aggregate amount of the
Development Payments paid by WMI in respect of such Proposed Facility. During
1993, WMI was charged approximately $6.9 million under the Development
Agreement.
19
<PAGE>
RESTATED FUNDING AGREEMENT. Pursuant to a Restated Funding Agreement entered
into between WMX and WTI in connection with the 1990 Merger, WMX agreed to use
all reasonable efforts to assist WTI, at WTI's request, in obtaining and
maintaining a credit rating of "A" or better from Standard & Poor's Corporation
or Moody's Investors Service for WTI's long-term unsecured debt securities.
WMX's obligations under the Restated Funding Agreement, which terminate on
August 12, 2008, may involve anything from contingent credit support
obligations to and including WMX's purchase from WTI of up to $200 million
principal amount of WTI securities, which may be either debt, equity or a
combination thereof (the "Securities"). WMX's obligations will be deemed
satisfied by the purchase of the Securities, even if the purchase of all of the
Securities does not enable WTI to obtain an "A" rating. In addition, the
obligation to purchase any of the Securities will be suspended if WTI does not
reasonably demonstrate its ability to pay interest or dividends, as the case
may be, on the Securities. WMX's obligations will also be suspended during any
period in which WTI obtains and maintains an "A" rating and will be reduced to
the extent that the purchase of a lesser amount of Securities will allow WTI to
obtain or maintain such a rating. WTI has received an implied "A" credit rating
from Standard & Poor's Corporation and an implied "A3" credit rating from
Moody's Investors Service. The attainment of such ratings did not involve the
sale of any Securities to WMX. Any Securities issued to WMX will be subject to
mandatory repayment or redemption in equal annual installments during the
twenty-five years following their date of issuance, and they may be prepaid or
redeemed by WTI, at its option, if the directors of WTI not otherwise
affiliated with WMX or WTI conclude that such repayment or redemption is in the
best interests of WTI and its stockholders. Any Securities redeemed or prepaid
prior to August 12, 2008 will restore availability under the $200 million
purchase obligation referred to above.
MEDICAL WASTE OPTION AGREEMENT. In connection with the 1990 Merger, a Medical
Waste Option Agreement was entered into between WMI and WTI and provides, among
other things, that during the period when WTI's option referred to below is
exercisable, WMI will continue to own, operate and develop all medical waste
incineration facilities and autoclave projects owned, operated or under
development by WMI (individually a "WMI Medical Facility" and collectively the
"WMI Medical Facilities") prior to the 1990 Merger. The Medical Waste Option
Agreement, which grants WTI the option to purchase the WMI Medical Facilities
and all medical waste collection and transportation businesses and related
assets operated as an adjunct to any specific WMI Medical Facility, became
exercisable on January 1, 1991 and expires on December 31, 1997.
The purchase price payable upon exercise of the option will equal 85% of the
then current fair market value of the WMI Medical Facilities. In the event WTI
does not exercise its option prior to December 31, 1997, WMI will then
immediately have an option to purchase, for cash, the stand-alone medical waste
disposal facilities and medical waste collection and transportation services of
WTI, at a cost of 85% of their then current fair market value. WMI's option
will expire on the first anniversary of the initial date on which such option
becomes exercisable. WTI does not currently own any such facilities or provide
such collection and transportation services. In the event WMI or WTI exercises
its acquisition option, the other party will not compete with the medical waste
disposal business of the exercising party, subject to certain exceptions, so
long as both WMI and WTI remain majority-owned subsidiaries of WMX. If neither
WMI nor WTI exercises its option, each shall be free to pursue the medical
waste incineration, collection, transportation and autoclave business, and WTI
may pursue the medical waste collection and transportation business in
connection with medical waste incineration or autoclave facilities owned or
operated by it.
MEDICAL WASTE OPERATING AND MAINTENANCE AGREEMENTS. At the request of WMI,
and in recognition of WTI's significant experience in operating and maintaining
incineration facilities, WMI and a subsidiary of WTI entered into a Management
Services Contract in June 1991 related to the WMI Medical Facilities. The
contract expired on December 31, 1992. The Management Services Contract
contemplated that, unless and until WTI exercised its option to acquire the WMI
Medical Facilities, WMI and WTI would negotiate mutually acceptable Operation
and Maintenance Agreements pursuant to which the WTI subsidiary would assume
day-to-day managerial control of certain facilities covered under the
Management Services Contract, with a long-term goal of implementing WTI's
operating systems and controls at such facilities. During 1992,
20
<PAGE>
WMI and WTI negotiated five such Operation and Maintenance Agreements for WMI
Medical Facilities, two of which were terminated on December 31, 1992 and three
of which were terminated during 1993. During 1993, WTI received approximately
$531,000 in connection with the services performed under the Operation and
Maintenance Agreements. Such fees were based on reimbursement of all out-of-
pocket expenses incurred, all direct labor costs of WTI personnel operating the
facilities, plus a fee equal to 5% of budgeted costs. On January 1, 1993, WTI
and WMI executed a new Technical Support Services Agreement pursuant to which
WTI agreed to provide technical engineering assistance to all of the WMI
Medical Facilities on an as-needed basis. WTI will be reimbursed for all direct
and indirect costs in providing such services. During 1993, WTI received
$177,000 in connection with services performed under the Technical Support
Services Agreement.
INTELLECTUAL PROPERTY LICENSING AGREEMENT. In connection with the 1990
Merger, an Intellectual Property Licensing Agreement was entered into among
WTI, WM International and WMI and provides, among other things, that WTI has a
10-year, non-exclusive, royalty-free license, with two successive 5-year
renewal options, to (i) the "BRINI" recycling and composting technology owned
by WM International; (ii) the Recycle America(R) and Recycle Canada(R)
trademarks and logos and the related materials separation and processing
technology of WMI for use in conjunction with the development or operation of
recycling facilities at or adjacent to any WTI facility; and (iii) the
proprietary technology and know-how of WMI in the area of landfill gas recovery
and the conversion of such gas to energy. WMI further agreed to use reasonable
and good faith efforts to give WTI substantial responsibility for the
electricity-generating portion of each landfill gas-to-energy facility owned by
WMI. WMI agreed that only WTI shall develop the business of designing,
constructing, operating and maintaining landfill gas recovery facilities for
governmental, industrial and other third party customers, and that WMI will
assist WTI in such development. To the extent WTI develops landfill gas
recovery technology and know-how during the period of its license (and
renewals) from WMI, it will share such technology and know-how with WMI on a
similar royalty-free basis. WTI may waive its rights to develop landfill gas
recovery systems on a case-by-case basis in those situations in which minimum
financial objectives established by the Board of Directors can not be achieved
by WTI through development of such projects. Projects waived by WTI may be
developed by WMI. The licenses and related rights and obligations to conduct
business granted under the Intellectual Property Licensing Agreement shall
terminate, as to facilities not already operational, contractually committed or
the subject of, or contemplated by, a bid or other submission previously made
by WTI or WMI, as the case may be, at the earlier of the termination of the
stated license periods, the expiration of any patent licensed pursuant thereto,
or the date on which WTI is no longer a majority-owned subsidiary of WMX.
AMENDED AND RESTATED MASTER INTERCORPORATE AGREEMENT. In connection with the
1990 Merger, a Master Intercorporate Agreement among WMX, CWM and WTI was
entered into which provides, among other things, that WTI invest its excess
cash in WMX obligations (so long as such investments would not be a material
factor in affecting the ability of WTI to obtain or maintain an "A" long-term
debt rating) having maturities selected by WTI of up to ten years. Under the
Master Intercorporate Agreement, WMX was required to fund WTI's working capital
requirements on an unsecured basis (but with rights of set-off) with the
maturity of any advance to be selected by WTI (not to exceed 270 days), and
with the aggregate outstanding advances not to exceed at any time the amount of
WTI excess cash then invested with WMX (the "Compensating Balance Facility"),
plus (until September 1995 and to the extent not prohibited by agreements with
third parties) $100 million (the "$100 Million Facility"). WMX charged WTI
interest on such advances at an interest rate equal to WMX's then current cost
of commercial paper having a term equal to the maturity for such advance. The
Master Intercorporate Agreement was amended and restated in November 1993 to
allow WTI more flexibility in selecting the maturities of advances made by WMX
to WTI. Under the Amended and Restated Master Intercorporate Agreement (the
"Amended Intercorporate Agreement"), WTI may now borrow funds from WMX on open
account under both the $100 Million Facility and the Compensating Balance
Facility at floating interest rates that will match WMX's 30-day commercial
paper rate plus WMX's cost of providing funds. WTI may at its option also
borrow funds for fixed terms of up to ten years under the Compensating Balance
Facility (however the maturities of such borrowings may not extend beyond the
date on which WTI's deposits with WMX come due) and for fixed terms of up to
270
21
<PAGE>
days under the $100 Million Facility. The interest rate for any fixed or term
loan borrowing by WTI will be WMX's total effective cost for borrowings of a
comparable maturity. To the extent that WTI can demonstrate the availability to
it of lower short-term borrowing rates, or higher rates of return on short-term
investments involving risks comparable to those inherent in investments in
short-term debt instruments of WMX, it is entitled to pay such rates on amounts
borrowed from WMX or receive such rates on amounts invested with WMX, as the
case may be. As of December 31, 1993, the net amount of WTI's deposits with WMX
(including principal and accrued but unpaid interest) totalled approximately
$413.5 million. As of December 31, 1993, approximately $398.6 million was due
to WMX from WTI (including principal and accrued but unpaid interest).
Under the Amended Intercorporate Agreement, WMX agreed to make available to
WTI various corporate and support services, including, among other things, the
services of WMX's transportation, federal and state government affairs, legal
and environmental audit departments. The Amended Intercorporate Agreement also
requires WMX to make available to WTI the services of WMX's corporate risk
management department for purposes of administering WTI's insurance and risk
management programs. Such corporate support and risk management services are
supplied by WMX on a cost reimbursement basis. In 1993, WTI paid WMX
approximately $1.4 million for these and related services.
Pursuant to the Amended Intercorporate Agreement, WMX and CWM designated WTI
as the preferred vendor to WMX and CWM for all engineered products of the types
then being manufactured or assembled by WTI and for air pollution control
systems and equipment provided by WTI. WTI's previous status as a preferred
vendor of industrial process design, engineering, construction and construction
management services was modified pursuant to the Rust Intercorporate Services
Agreement, described below under "Rust Transaction." During 1993, WTI charged
WMX and its subsidiaries approximately $11.8 million for such products and
services. The amounts charged for such services were determined on an arms-
length basis and are believed to approximate the market value thereof.
The Amended Intercorporate Agreement also provides that WMX has the
cumulative, continuing right to purchase from WTI for cash or cash equivalents
such number of shares of WTI capital stock as may be necessary for WMX to
continue to own a majority of WTI's outstanding voting stock. WMX's rights
under this option will expire in the event that such option is exercisable as
of the end of any calendar year and is not exercised by April 30 of the
immediately following year. The purchase price for the shares of WTI capital
stock will be the then current fair market value of such shares. WTI is
required to maintain a sufficient number of shares of authorized but unissued
capital stock, together with any treasury stock, to permit WMX to exercise its
option, and will take such reasonable steps as WMX may request to cause such
shares to be listed on the New York Stock Exchange upon issuance and to be
subject to the registration rights currently held by WMX with respect to shares
of WTI stock already held by it.
The Amended Intercorporate Agreement will terminate at the time of the
termination of WMX's option to maintain WTI as a majority-owned subsidiary of
WMX.
WM INTERNATIONAL AGREEMENTS. The Company, WMX, CWM, WM International, Waste
Management International, Inc., Waste Management Europe N.V., WTI International
Holdings Inc. and RIH Inc. are parties to a Third Amended and Restated
International Development Agreement ("IDA") dated January 1, 1993. The IDA is a
successor to an agreement originally entered into by WMX, CWM, WTI and certain
of their affiliates in connection with the 1990 Merger.
The IDA was twice amended and restated in its entirety, first in connection
with the initial public offering by WM International of ordinary shares of its
capital stock, and again in connection with the Rust Transaction, described
below, primarily to provide for the transfer, from CWM to Rust, of CWM's rights
thereunder. Pursuant to the IDA, as amended, WTI, WMX and Rust have agreed to
vote their WM International shares so that one designee of WTI (or such greater
number as shall equal the total number of directors multiplied by the
percentage of outstanding WM International shares held by WTI, reduced to the
nearest whole number) shall be elected to the Board of Directors of WM
International, so long as WTI
22
<PAGE>
continues to own or has the right to acquire at least 10% of WM International's
outstanding shares (Mr. Rooney has been designated by WTI as its designee).
This agreement also grants WTI an option to maintain beneficial ownership of WM
International's outstanding shares at a level having not less than 10% of the
voting power of outstanding WM International securities. Pursuant to this
agreement, WTI granted to WMX certain rights of first refusal with respect to
its WM International shares, WMX granted to WTI certain participation rights
with respect to a disposition of WM International shares by WMX, and WM
International granted to WTI rights to participation and demand registrations
under the Securities Act of 1933 and rights to have WM International facilitate
sales in offerings made outside of the United States.
At the time of WM International's initial public offering, WTI, CWM, WMX,
Waste Management International, Inc. and WM International entered into an
International Business Opportunities Agreement, which includes certain terms
previously contained in the IDA and the Master Intercorporate Agreement
discussed above. The International Business Opportunities Agreement was amended
and restated in connection with the Rust Transaction, described below, and Rust
was added as a party. Under the Amended and Restated International Business
Opportunities Agreement, the parties agreed that in order to minimize the
potential for conflicts of interest among various subsidiaries under the common
control of WMX, WMX has the right to direct all business opportunities to the
WMX-controlled subsidiary which, in WMX's reasonable and good faith judgment,
has the most experience and expertise in that line of business. Waste
management services opportunities outside of North America will be allocated
primarily to WM International, and WTI has agreed not to conduct waste
management services operations outside of North America other than through its
interest in WM International until the later of July 1, 2000 and the date WMX
ceases to beneficially own a majority of the outstanding shares of common stock
of WTI or a majority of all outstanding voting equity interests of WM
International. The Amended and Restated International Business Opportunities
Agreement allocates certain business opportunities, previously allocated to
WTI, to Rust in connection with the transfer of WTI's engineering,
environmental consulting and construction businesses to Rust pursuant to the
Rust Transaction.
WTI, CWM, Rust, WMX and WM International are also parties to a First Amended
and Restated Master License Agreement which was modified to add Rust as a party
to the existing Master License Agreement entered into in connection with the
initial public offering of WM International. Under the Master License
Agreement, as amended, each of WMX, CWM, Rust and WTI, on the one hand, and WM
International, on the other, was granted the right to obtain from time to time
a non-exclusive license of patents, technology, trademarks, know-how and other
intellectual property of the other. A party's license of intellectual property
would be usable only within the scope of activities allocated to the party by
the Amended and Restated International Business Opportunities Agreement and
would be subject to the party's payment of a royalty equal to the fair market
value of the license at the time of the grant of the license (subject to a
"most favored nation" pricing provision). Sublicensing is not permitted. All of
the parties have agreed to share business information and to keep such
information confidential. Any services to be provided by the licensing party in
connection with the grant of the license and the compensation for the services
would be as agreed by the parties to the license at the time of its grant. The
Amended and Restated International Business Opportunities Agreement permits WTI
to license technology to third parties anywhere in the world, subject to
certain conditions.
RUST TRANSACTION. In December 1992, an Organizational Agreement was entered
into among WTI, CWM and The Brand Companies, Inc. ("Brand") pursuant to which
WTI and CWM agreed to organize Rust and to acquire newly issued shares of Rust
in exchange for contributing certain businesses to Rust (the "Rust
Transaction"). On January 1, 1993, pursuant to the Organizational Agreement,
WTI contributed to Rust, in exchange for 33,216,060 shares of Rust common
stock, or approximately 41.6% of the outstanding capital stock of Rust at that
time: (i) 100% of the outstanding common stock of its two principal
engineering, environmental consulting and construction businesses; (ii) 100% of
the common stock of its London-based international engineering and consulting
business; (iii) Disposal Credits in the aggregate amount of $30 million
pursuant to the Second Amended and Restated ADA; and (iv) an aggregate of $68
million in cash,
23
<PAGE>
notes receivable and pre-funded acquisition costs. At the same time, CWM
contributed to Rust, in exchange for 46,682,031 shares of Rust common stock, or
approximately 58.4% of the outstanding capital stock of Rust at that time: (i)
100% of its ownership in Brand, which amounted to 12,575,870 shares, or 56.2%
of the outstanding common stock of Brand; (ii) 100% of the outstanding capital
stock of CWM's hazardous substance remediation services businesses; (iii)
beneficial ownership of all WM International ordinary shares owned by CWM,
constituting approximately 12% of the outstanding ordinary shares of WM
International, together with all of CWM's rights attendant to such shares; and
(iv) an aggregate of $141 million in principal amount of indebtedness owed by
Brand to CWM. In addition, WTI, CWM, Rust and various of their affiliates
entered into various ancillary agreements and the parties agreed to cause Rust
to repay the outstanding indebtedness owed to CWM by one of the contributed
businesses in the aggregate principal amount of $75 million.
On January 1, 1993, Brand entered into a definitive merger agreement with
Rust pursuant to which Brand was to be merged into a subsidiary of Rust (the
"Brand Merger"), and shares of Brand (other than those owned by Rust) would be
converted, on a one-for-one bases, into shares of Rust, or, for those Brand
stockholders so electing, the right to receive $18.75 per Brand share in cash.
On May 7, 1993, the Brand Merger was consummated, and Rust is now owned
approximately 40% by WTI, 56% by CWM, and 4% by the former public stockholders
of Brand. The consideration received in the Rust Transaction by each of WTI,
CWM and the public stockholders of Brand was determined by arms-length
negotiations among Special Committees composed of independent members of the
respective Boards of Directors of WTI, CWM and Brand, based upon valuations
prepared for the Special Committees by independent investment banking firms
retained by each such committee.
As a part of the Rust Transaction, WTI, Rust and CWM entered into a Rust
Shareholders' and Registration Rights Agreement (the "Rust Shareholders'
Agreement") pursuant to which WTI and CWM each have certain demand and
participation registration rights and rights of first refusal with respect to
Rust common stock. WTI and CWM also have the right to purchase from Rust such
number of shares of Rust common stock as may be necessary to maintain
beneficial ownership of 22% and 51%, respectively, of the outstanding capital
stock of Rust until the earlier of (a) January 1, 2003, (b) April 30 in the
year following the year in which such option becomes exercisable, unless prior
to such April 30 WTI or CWM, as the case may be, acquires a sufficient number
of shares of Rust common stock to have at least 20% or 50%, respectively, of
the voting power, and (c) the date on which WTI's or CWM's, as the case may be,
ownership becomes less than 22% or 51%, respectively, of the outstanding shares
of Rust as a direct result of transfers by WTI or CWM, as the case may be
(other than to a subsidiary of WTI or CWM). For so long as WTI or its
subsidiaries own or have the option to acquire at least 20% of the issued and
outstanding shares of Rust common stock, WTI will have the right to nominate
two directors of Rust. Under the Rust Shareholders' Agreement, CWM has agreed
to vote its Rust shares so that WTI's designees shall be elected to the Board
of Directors of Rust (Messrs. Rooney and Koenig have been so designated by
WTI).
WTI, WMX, CWM and Rust have also entered into the Rust Intercorporate
Services Agreement pursuant to which WMX has committed to loan to Rust up to
$350 million, and to provide Rust (at Rust's expense) with all appropriate
insurance coverages and bid, performance and other surety bonds to the extent
reasonably available, all on terms substantially similar to WMX's arrangement
with WTI as described above under "Amended and Restated Master Intercorporate
Agreement." Under the Rust Intercorporate Services Agreement, Rust has also
agreed to provide WTI with certain administrative and benefit services
previously managed by one of the subsidiaries contributed to Rust. Such
services are provided on a fully-allocated cost basis. WTI was charged $609,000
for such services provided by Rust during 1993. WMX, WTI and CWM have also
agreed that Rust will be the preferred vendor of architectural, design,
engineering, construction and construction management services (including
related procurement services), environmental consulting and engineering
services, hazardous substance remediation services, and industrial maintenance
and other construction services of the type generally offered by Rust and its
subsidiaries to third parties. During 1993,
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WTI paid Rust approximately $144.7 million for such services. The Rust
Intercorporate Services Agreement will terminate on December 31, 1997 unless
earlier terminated by WMX following the occurrence of certain events of
default.
Also pursuant to the Organizational Agreement, WTI entered into the various
amended and restated agreements described above under "WM International
Agreements." In addition, the ADA between WMI and Resco, was amended in
connection with the Rust Transaction as more fully described above under
"Second Amended and Restated Airspace Dedication Agreement."
OTHER PAYMENTS. WTI provides services to, and purchases services from, WMX
and its affiliated companies in the ordinary course of business at market
rates. During 1993, WTI made payments of (i) approximately $1.5 million to WMI
for waste transportation services and (ii) approximately $168,000 to WMX for
office space rental. During 1993, WMI delivered waste for disposal to certain
WTI facilities pursuant to various contractual arrangements, for which WMI paid
disposal fees aggregating approximately $14.7 million.
WMX has agreed to provide a guarantee in respect of WTI's outstanding
indebtedness at one of its trash-to-energy facilities. As consideration for
WMX's credit support, the Company pays WMX an annual fee equal to 0.25% of the
principal amount of such outstanding indebtedness. In 1993, WTI paid WMX
approximately $135,160 for such credit support.
OTHER TRANSACTIONS
STOCK OPTION PLAN LOANS. When an option is exercised by an optionee under the
1992 Stock Option Plan or the Directors Plan at a time when the fair market
value of the underlying stock exceeds the option exercise price, the difference
is treated as ordinary income to the optionee for income tax purposes and the
Company is entitled to a deduction equal to such amount. The Internal Revenue
Service has indicated that it will disallow such a deduction unless the
employer withholds the tax payable by the optionee by reason of such exercise.
To facilitate the purchase of stock upon exercise of such options, and to
assure itself of the deductions, the Company has a policy of making available
interest-free loans, in an amount up to the equivalent of all applicable tax
withholding requirements, to optionees whose exercise of options results in
ordinary income to them in excess of $10,000. All such loans are required to be
repaid not later than April 15 in the year following the year in which such
loans were made, unless otherwise extended. The Company had one such loan in
excess of $60,000 which was outstanding to the directors and executive officers
of the Company since January 1, 1993, which was to Mr. Flynn for $176,633, all
of which was outstanding as of March 15, 1994. The Company also makes available
to optionees interest-free loans for a period not to exceed 15 days to
facilitate the exercise of options and the sale of the underlying stock. The
largest amounts of such loans from the Company in excess of $60,000 which were
outstanding to the directors and executive officers of the Company since
January 1, 1993 were as follows: Mr. Daley--$85,500; and Mr. Flynn--$593,518.
All of such loans have been repaid, and no such loans were outstanding as of
March 15, 1994.
HAMPTON LEASE AGREEMENT. On March 22, 1990, WTI entered into a Lease
Agreement with Exeter Oak under which WTI leased approximately 78,000 square
feet in its headquarters office building located in Hampton, New Hampshire.
Exeter Oak is 50%-owned by Mr. Montrone, a director of WTI. The lease agreement
and WTI's option to purchase the building are more fully described above under
"Compensation-Compensation Committee Interlocks and Insider Participation."
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. has been selected by the Board of Directors, upon the
recommendation of its Audit Committee, to continue to act as the Company's
independent auditors in 1994. Representatives of Arthur Andersen & Co. will be
present at the 1994 annual meeting of stockholders, will have the opportunity
to make a statement if they desire to do so, and will be available to respond
to appropriate questions.
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FINANCIAL STATEMENTS
WTI has enclosed its Annual Report to Stockholders for the year ended
December 31, 1993 with this proxy statement. Stockholders are referred to the
report for financial and other information about WTI, but such report is not
incorporated in this proxy statement and is not a part of the proxy soliciting
material.
PROPOSALS BY STOCKHOLDERS
Any proposals by stockholders intended to be presented at the 1995 annual
meeting must be received by WTI no later than November 30, 1994 in order to be
considered by the Board of Directors for inclusion in WTI's 1995 proxy
statement. In order for a stockholder to nominate a candidate for director,
under WTI's by-laws timely notice of the nomination must be received by WTI in
advance of the meeting. Ordinarily, such notice must be received not less than
30 nor more than 60 days before the meeting (but if WTI gives less than 40
days' notice of the meeting, then such notice must be received prior to the
meeting and within 10 days after notice of the meeting is mailed or other
public disclosure of the meeting is made). The stockholder filing the notice of
nomination must describe various matters regarding the nominee, including such
information as name, address, occupation and shares held.
In order for a stockholder to bring other business before a stockholder
meeting, timely notice must be received by WTI within the time limits described
above. Such notice must include a description of the proposed business, the
reasons therefor, and other specific matters. These requirements are separate
from and in addition to the requirements a stockholder must meet to have a
proposal considered for inclusion in WTI's 1995 proxy statement.
In each case the notice must be given to the Secretary of WTI, whose address
is 3003 Butterfield Road, Oak Brook, Illinois 60521. Any stockholder desiring a
copy of WTI's by-laws will be furnished one without charge upon written request
to the Secretary.
OTHER MATTERS
You are again urged to attend the annual meeting. Proxies will be solicited
by the Board of Directors through use of the mails. Proxies may also be
solicited by directors, officers and a small number of other employees of WTI
personally or by mail, telephone, telegraph or otherwise, but such persons will
not be compensated for such services. Brokerage firms, banks, fiduciaries,
voting trustees or other nominees will be requested to forward the soliciting
material to the beneficial owners of stock held of record by them, and WTI has
hired Reinhard Associates to coordinate the solicitation of proxies by and
through such holders for a fee of approximately $2,500 plus expenses. The
entire cost of the Board of Directors' solicitation will be borne by WTI.
The Board of Directors does not intend to present, and does not have any
reason to believe that others will present, any item of business at the annual
meeting other than those specifically set forth in the notice of the meeting.
However, if other matters are presented for a vote, the proxies will be voted
as to such matters in accordance with the judgment of the persons acting under
the proxies.
By Order of the Board of Directors,
LOGO
Stephen P. Stanczak
Secretary
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WHEELABRATOR TECHNOLOGIES INC.
Annual Meeting, May 5, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Phillip B. Rooney and Stephen P. Stanczak, each with power of substitution,
are hereby authorized to vote all shares of common stock of Wheelabrator
Technologies Inc. which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of Wheelabrator Technologies Inc.,
to be held on Thursday, May 5, 1994, and at any adjournments, as specified on
the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
(Please mark this Proxy and sign and date it on the
reverse side hereof and return it in the enclosed envelope.)
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FOLD AND DETACH HERE
A vote FOR proposal 1 is recommended by the Board of Directors.
1. Election of Directors with terms expiring at Annual Meeting in 1997.
FOR each WITHHOLD AUTHORITY Nominees: Dean L. Buntrock, James E. Koenig,
nominee listed to vote for each Lt. General Thomas P. Stafford
nominee listed
(Instructions: To withhold authority to vote
( ) ( ) for any individual nominee, write the
nominee's name on the space provided below)
---------------------------------------------
2. In their discretion, on such other
business as may properly come
before the meeting.
A MAJORITY (OR IF ONLY ONE, THEN THAT ONE) OF THE
PERSONS NAMED ON THE REVERSE SIDE OR THEIR SUBSTITUTES
WHO SHALL BE PRESENT AND ACTING AT THE MEETING SHALL
HAVE THE POWERS CONFERRED HEREBY.
DATED___________________________________________, 1994
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Signature of Stockholder(s)--Please sign name exactly
as imprinted (do not print). Please indicate any
change of address.
NOTE: Executors, administrators, trustees and others
signing in a representative capacity should indicate
the capacity in which they sign. If shares are held
jointly, EACH holder should sign.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
