<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
LOGO
LIBERTY LANE, HAMPTON, NEW HAMPSHIRE 03842
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1995
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 4, 1995, 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 23, 1995 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 29, 1995
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 4, 1995
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 4, 1995, 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, as directors, of the nominees
named herein 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 a plurality of the votes 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 29, 1995.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on March 23, 1995 are
entitled to vote at the annual meeting of stockholders. The only voting stock
of WTI outstanding is its common stock, of which 184,742,154 shares were
outstanding as of the close of business on March 23, 1995.
<PAGE>
PRINCIPAL STOCKHOLDER
The following table sets forth, as of February 1, 1995, 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, 1995, 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
-------- ------------------- -------------------- -------
<C> <S> <C> <C>
Common Stock WMX Technologies, Inc. 104,621,810(1)(2) 56.2%
3003 Butterfield Road
Oak Brook, Illinois 60521
</TABLE>
--------
(1) WMX has sole voting and investment power over 99,796,086 shares. WMX shares
voting and investment power with two wholly owned subsidiaries of WMX over
an aggregate of 4,825,724 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
Four directors are to be elected at the meeting. Three of the persons named
below are serving as directors as of the date of this proxy statement and 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 1998. One nominee,
Kay Hahn Harrell, is not currently serving as a director of the Company and has
been nominated by the Board of Directors for election as a director at the
upcoming annual meeting. In order to equalize the number of directors in each
class, if elected, Ms. Harrell will be in the class of directors with terms
expiring at the annual meeting in 1996.
Unless otherwise instructed, properly executed proxies which are returned in
a timely manner will be voted for election of the four 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 1996 and 1997, respectively.
NOMINEES FOR TERMS EXPIRING AT ANNUAL MEETING IN 1998:
William M. Daley, age 46, 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 of
the United States 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 of the United States 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.
2
<PAGE>
Paul M. Montrone, age 53, has been a director of WTI or a predecessor of WTI
known prior to August 1989 as Wheelabrator Technologies Inc. ("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 and Vice Chairman of the
Board of WTI from November 1990 until May 1991. Since December 1991, Mr.
Montrone has been President, Chief Executive Officer and a director of Fisher
Scientific International Inc. ("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 50, 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 International Inc. ("Rust"), a company owned
approximately 56% by Chemical Waste Management, Inc. ("CWM"), a wholly owned
subsidiary of WMX, and approximately 40% by WTI. Mr. Rooney is also a director
of WMX, Waste Management International plc ("WM International"), a subsidiary
of WMX owned approximately 56% by WMX, 12% by WTI and 12% by Rust, Illinois
Tool Works Inc., Caremark International Inc., Urban Shopping Centers, Inc. and
ServiceMaster Management Corporation, the general partner of ServiceMaster L.P.
NOMINEE FOR TERM EXPIRING AT ANNUAL MEETING IN 1996:
Kay Hahn Harrell, age 54, has been Chairperson and Chief Executive Officer of
Fairmarsh Consultants, which provides investment and financial consulting
services, since April 1993. Prior thereto, Ms. Harrell had been Senior Vice
President and Director of Investment Research of The Chicago Corporation, an
investment banking firm, for more than the past five years.
DIRECTORS WHOSE TERMS EXPIRE AT ANNUAL MEETING IN 1996:
Donald F. Flynn, age 55, 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 entertainment and fitness facilities designed for children.
In addition, from November 1988 to the present, Mr. Flynn has also served as
Chairman of the Board and President of Flynn Enterprises, Inc., a financial
advisory and venture capital firm. He was Senior Vice President of WMX from May
1975 to January 1991. From January 1991 through December 1994, Mr. Flynn served
as a consultant to WMX. Mr. Flynn also serves as a director of WMX,
Psychemedics Corporation and WM International.
Manuel Sanchez, age 47, 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. Mr. Sanchez is also
a director of Metropolitan Bank and Trust Company. WTI has utilized and
anticipates that it will continue to utilize the services of Sanchez & Daniels.
DIRECTORS WHOSE TERMS EXPIRE AT ANNUAL MEETING IN 1997:
Dean L. Buntrock, age 63, has been a director of WTI or 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. From May 1993 to January 1995, Mr. Buntrock served as Chairman
of the Board of CWM. Mr. Buntrock is also a director of Boston Chicken, Inc.,
First Chicago Corporation, WM International and Rust.
3
<PAGE>
James E. Koenig, age 47, 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 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 Rust and WM International.
Lt. Gen. Thomas P. Stafford, age 64, 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 and
Wackenhut, Inc.
SECURITIES OWNERSHIP OF MANAGEMENT
OWNERSHIP OF WTI COMMON STOCK
The following table sets forth certain information, as of February 1, 1995
(except for Ms. Harrell, which is as of February 10, 1995), as to the
beneficial ownership of common stock of WTI by the directors and the nominee
for director, the Chairman of the Board and Chief Executive Officer of WTI, the
four other most highly compensated executive officers of WTI as of December 31,
1994, and by all directors, nominees 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................... 5,000 *
Donald F. Flynn.................... 45,245 *
Kay Hahn Harrell................... 1,000 *
James E. Koenig.................... 121,500 *
Paul M. Montrone................... 256,000 *
Phillip B. Rooney.................. 374,769(3) *
Manuel Sanchez..................... 18,000 *
Lt. Gen. Thomas P. Stafford........ 30,212 *
John M. Kehoe, Jr.................. 294,185 *
Ray L. Patel....................... 84,788 *
John D. Sanford.................... 111,917 *
James F. Wood...................... 40,362 *
All directors, nominees and
executive officers as a group
including persons named above (15
persons).......................... 1,645,585 *
</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, 1995; (ii) WTI
shares held pursuant to WTI's Savings and Retirement Plan; (iii) 1,500 and
2,000 WTI shares over which Mr. Koenig and Mr. Daley have shared voting and
investment power with their
4
<PAGE>
respective spouses; and (iv) 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 represented by 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 were exercisable within
60 days of February 1, 1995 had been exercised by that person or group as
follows: Mr. Buntrock--33,336; Mr. Daley--3,000; Mr. Kehoe--279,592; Mr.
Koenig--120,000; Mr. Montrone--256,000; Mr. Patel--81,967; Mr. Sanchez--
18,000; Mr. Sanford--71,877; Lt. Gen. Stafford--30,000; Mr. Wood--37,402;
and all executive officers and directors as a group (including such
individuals)--1,055,330. 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, 1995,
as to the beneficial ownership of WMX common stock by the directors and the
nominee for director of WTI, the Chairman of the Board and Chief Executive
Officer of WTI, the four other most highly compensated executive officers of
WTI as of December 31, 1994, and by all directors, nominees 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................... 3,394,323 *
William M. Daley................... 1,000 *
Donald F. Flynn.................... 595,438 *
Kay Hahn Harrell................... 2,512 *
James E. Koenig.................... 131,804 *
Paul M. Montrone................... 0 *
Phillip B. Rooney.................. 1,063,260 *
Manuel Sanchez..................... 0 *
Lt. Gen. Thomas P. Stafford........ 0 *
John M. Kehoe, Jr.................. 33,374 *
Ray L. Patel....................... 3,248 *
John D. Sanford.................... 186 *
James F. Wood...................... 253 *
All directors, nominees and
executive officers as a group
including persons named above (15
persons).......................... 5,225,633 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, 1995; (ii) WMX shares issuable
upon conversion of WMX Convertible Subordinated Notes due 2005
("Convertible Notes"); (iii) WMX shares held pursuant to WMX's Profit
Sharing and Savings Plan and WTI's Savings and Retirement Plan; and (iv)
Messrs. Buntrock, Daley, Koenig, Patel and Rooney, and all executive
officers and directors as a
5
<PAGE>
group (including such individuals), who have shared voting and investment
power over 458,161, 1,000, 36,945, 2,885, 65,568 and 564,559 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 Messrs. Daley, Koenig and Patel are
held jointly with their respective spouses. Ownership of WMX shares shown
for Messrs. Buntrock 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 February 1, 1995, in the amounts indicated: Mr. Buntrock--
41,365 (held by spouse); and Mr. Rooney--107,047 (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)--148,423. 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, 1995 had been exercised as follows: Mr. Buntrock--558,673; Mr.
Flynn--87,617; Mr. Koenig--92,231; Mr. Rooney--511,453; and all executive
officers and directors as a group (including such individuals)--1,249,974.
Such numbers and percentages also assume that 312 WMX shares were issued to
Ms. Harrell upon conversion of Convertible Notes. Such persons and the
members of such group disclaim any beneficial ownership of the WMX shares
subject to such options or issuable upon conversion of Convertible Notes.
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 1994.
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), Daley,
Sanchez and Lt. Gen. Stafford are currently members of the Audit Committee. The
Compensation Committee is responsible for establishing 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 Lt. Gen. Stafford are currently members of the Compensation
Committee.
During 1994, the Audit Committee met three times and the Compensation
Committee met once. In 1994, during the time each director served in such
capacity, all of the directors attended 100% of the meetings of the Board and
no director attended less than 80% 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, 1994, and (ii)
each of the four other most highly compensated executive officers of WTI at
December 31, 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
AWARDS PAYOUTS
---------- ----------
ANNUAL COMPENSATION
--------------------------------- SECURITIES LONG-TERM ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING INCENTIVE COMPENSA-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS PAYOUTS(3) TION(4)
------------------ ---- -------- -------- --------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip B. Rooney, 1994 $ 0 $ 0 $0 0 $ -- $ 0
Chairman of the Board and 1993 0 0 0 0 97,800 0
Chief Executive Officer(1) 1992 0 0 0 0 880,200 0
John M. Kehoe, Jr., 1994 $322,500 $223,080 $0 35,294 $ -- $24,014
President and Chief 1993 300,000 240,000 0 32,688 12,569 40,340
Operating Officer 1992 254,176 145,225 0 15,874 113,116 41,973
Ray L. Patel 1994 $196,580 $ 80,000 $0 15,686 $ -- $15,685
President--Wheelabrator 1993 174,094 52,883 0 10,896 4,953 21,281
Engineered Systems Inc. 1992 153,832 168,912 0 8,350 44,572 15,376
John D. Sanford 1994 $196,250 $108,160 $0 15,686 $ -- $13,897
Vice President, Chief
Finan- 1993 174,555 69,950 0 11,622 5,191 18,113
cial Officer and Treasurer 1992 134,670 59,308 0 8,254 46,723 18,457
James F. Wood 1994 $205,000 $124,908 $0 16,471 $ -- $16,333
Senior Vice President and 1993 191,226 146,300 0 13,801 1,191 24,866
General Manager-- 1992 190,008 24,168 0 12,064 117,935 26,032
Wheelabrator Environmental
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 in 1992 and 1993 for services
rendered to the Company under a long term incentive compensation plan
covering the two-year period ended December 31, 1992.
(2) 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.
(3) 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.
(4) Amounts shown were contributed by the Company 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.
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, 1994:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(4)
------------------------------------------------- ---------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
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.. 35,294 4.33% $19.125 4/1/2001 $ 0 $ 274,792 $ 640,382
Ray L. Patel....... 15,686 1.92% $19.125 4/1/2001 $ 0 $ 122,128 $ 284,610
John D. Sanford.... 15,686 1.92% $19.125 4/1/2001 $ 0 $ 122,128 $ 284,610
James F. Wood...... 16,471 2.02% $19.125 4/1/2001 $ 0 $ 128,240 $ 298,853
All
Stockholders(5)... -- -- $19.125 4/1/2001 $ 0 $1,472,432,174 $3,431,393,101
</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 April 1, 1995.
(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.
(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 $1,472,432,174 or $3,431,393,101, respectively, during the
period from grant date to expiration date for the options expiring April 1,
2001.
8
<PAGE>
The following table sets forth certain information as to each exercise of
stock options during the year ended December 31, 1994 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....... 0 $ 0 -- / -- $ 0/$0
John M. Kehoe, Jr....... 0 $ 0 251,639/62,373 $1,529,729/$0
Ray L. Patel............ 10,000 $126,113 70,313/25,741 $ 380,927/$0
John D. Sanford......... 0 $ 0 60,023/26,183 $ 312,104/$0
James F. Wood........... 0 $ 0 23,290/29,690 $ 30,335/$0
</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, 1994 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....... -- 3 years $132,000 $132,000 $396,000
</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 than the target percentages to the extent that the
Company's performance exceeds 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 calendar years 1994, 1995 and 1996.
(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 generally 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 year-end 1994
salary, assume that a performance award will be earned at the levels shown,
and do not reflect any possible subsequent increase or decrease in the
value of the portion of the award which would be required to be deferred
under the terms of the LTIP.
ANNUAL COMPENSATION OF NON-EMPLOYEE DIRECTORS
Each member of the Board of Directors who is not an employee of WTI or an
employee of WMX or one of its other subsidiaries is paid an annual fee of
$45,000.
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 above five years, 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 1994, Messrs. Buntrock (Chairman), Montrone and
Stafford 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 an approximately 78,000 square foot
office building located in Hampton, New Hampshire. 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 was a net lease, provided for an initial term of eight years,
commencing on April 1, 1990, at a flat annual rental of $1.8 million, which was
not subject to escalation. Under the lease, WTI had an option exercisable
during established intervals to purchase the building and surrounding grounds
at the fair market value at the time such option was exercised. In December
1994, the Company exercised its option and purchased from Exeter Oak the leased
property, together with an additional parcel consisting of 20 undeveloped acres
located contiguous to the leased premises. The additional parcel was purchased
by the Company in order to enable it to control future development at its
corporate campus and to facilitate expansion of its current facilities should
the Company require additional office space in the future. The transaction was
considered and approved by the disinterested directors of the Company. The
aggregate purchase price for the leased premises and the additional parcel was
$8 million and represented the fair market value as determined by independent
appraisal.
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 1994, WTI was paid approximately $32.9 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
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 up to 1.8 percent of such
participant's base compensation, subject to applicable tax limits. The Company
also maintains a supplemental non-qualified excess benefit plan pursuant to
which a participating employee's account is credited with the amount of the
contribution that would have been made on behalf of such participant to the
savings and retirement plan but for certain tax limitations imposed on such
contributions. 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
three percent of each such employee's base 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 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 (the "Comparator Companies"). The Comparator Companies 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 1994 compensation, the Compensation Committee did not target
officer base salaries or total compensation at any specific point in the range
of salaries or total compensation paid by the Comparator Companies. The
Compensation Committee believes, however, that base salaries paid in 1994 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
one-half to two-thirds of total targeted compensation for the Company's
executive officers is "at risk" through participation in the Company's
12
<PAGE>
incentive compensation plans, including the Company's stock option plan. The
Compensation Committee believes that targeted incentive compensation
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.
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, as modified. Based upon current
levels of cash compensation payable by the Company, the Compensation Committee
does not anticipate that the $1 million deductibility cap will affect the
Company for the foreseeable future. In light of the foregoing, and because the
Compensation Committee believes it is important to retain the flexibility to
adjust incentive compensation upward or downward based upon unanticipated
circumstances and performance-related matters, the Compensation Committee has
determined not to seek to qualify the Company's incentive compensation plans
under the law and applicable regulations at this time. The Compensation
Committee will review this matter from time to time as events warrant.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
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 generally takes into account a number of
factors, including the Company's results of operations and other Company
performance measures, 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. The Compensation Committee generally does not expressly assign
greater weight to any one or more of such factors than to others.
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 the Company's results of operations
and other Company performance measures (including management's plans for the
Company's growth and profitability and achievement of strategic goals),
determines the corporate performance 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 1994, 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 25
percent to 50 percent of the participant's salary at year end were payable
depending upon the Company's percentage of attainment of budgeted core pre-tax
income (based on operating results which exclude income from equity investees).
In the case of certain officers who had management responsibility for one of
the Company's operating groups, target awards were payable based in part on the
Company's core pre-tax income and in larger part on that operating group's
percentage of attainment of its budgeted pre-tax goal. The Annual Plan award
formula for 1994 was designed to disproportionately increase or decrease a
participant's annual incentive compensation in the event that actual results
exceed or fall short
13
<PAGE>
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. 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 core pre-tax profit was
achieved. In 1994, the Company exceeded its budgeted core pre-tax profit,
thereby entitling those executive officers participating in the Annual Plan
whose bonus was based entirely on the Company's operating results to receive a
bonus in an amount equal to approximately 135 percent of their target bonus. Of
those executive officers whose bonus was based in part on the results of
individual operating units of the Company, two received bonuses equal to 148.7
percent and 100 percent of their target bonuses, respectively. In the latter
case, the Compensation Committee used its discretion to increase the amount of
the bonus paid to the executive officer in recognition of the significant
additional responsibilities undertaken by such officer during 1994 and his
success in discharging such responsibilities.
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"). Payments, if any, are to be made under the LTIP following the end of
each performance period, which normally last three years. The first performance
period extends from mid-1993 through 1995 and the second extends from January
1, 1994 through 1996. The Compensation Committee named Mr. Kehoe as the only
participant for each of such performance periods, and intends to continue to
name Mr. Kehoe as a participant in the LTIP in subsequent years. The
Compensation Committee may, in its discretion, name additional executive
officers as participants in the LTIP in the future.
Under the LTIP, the Compensation Committee determines participants' target
awards as a percentage of each participant's salary as of the end of each
performance period. 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. 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 percent 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, for the
performance period ending in 1995, downwards to 50 percent of the target award
if the Company's total stockholder return places it at a specified minimum
ranking. For the performance period ending in 1996, the minimum threshold for
payment of a bonus was set at the target award level. 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.
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
14
<PAGE>
depends upon his or her base salary and the level of that officer's management
responsibility. In 1994, 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 did
not receive an annual grant under the 1992 Option Plan in light of his
participation in a similar stock option plan maintained by WMX, executive
officers typically receive grants each year determined by dividing percentages
of the officers' salaries, which percentages range from 150 percent to 225
percent, by the market price of the Company's common stock at the time of
grant. The Compensation Committee generally intends stock option grants to
constitute at least one-half of the officers' 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 percent 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 1994. Mr. Rooney is compensated
by WMX in his capacity as President and Chief Operating Officer of that
company. WTI does not reimburse WMX for any part of Mr. Rooney's salary. During
1994, 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 1994. 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 1994, 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 1994 base compensation of Mr. Kehoe, the Compensation
Committee reviewed a number of the Company's significant accomplishments
achieved in 1993 under the leadership of Mr. Kehoe. Specifically, the
Compensation Committee evaluated the Company's 1993 operating results, which
included a 23 percent increase in revenues and approximately 30 percent
increases in net income and earnings per share. In addition, the Compensation
Committee considered Mr. Kehoe's successful efforts to refocus management on
the Company's core business of providing clean energy while at the same time
expanding the Company's opportunities in, and emphasis on, its clean water and
clean air businesses. Through such efforts, during 1993 the Company completed
the consolidation of the companies comprising its clean air businesses into a
single organization operating under centralized management; successfully
recruited experienced senior management in the clean air businesses; began or
continued construction on an independent power plant, two trash-to-energy
facilities and a biosolids pelletizer facility; completed construction and
successful start-up of the largest biosolids pelletizer facility in the world;
successfully entered the industrial water treatment market; began construction
of eight new automated and enclosed organic waste composting facilities using
proprietary technology; and identified and began development of new
opportunities for the Company's services and technologies throughout the world.
In their deliberations, however, the Compensation Committee did not accord
greater weight to any one of the matters considered over any other such matter.
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
15
<PAGE>
compensated officers of the Comparator Companies. The report concluded that Mr.
Kehoe's proposed 1994 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 Companies. 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 Companies, who is typically the chief
operating officer. Based upon the independent compensation consultant's report,
Mr. Kehoe's proposed 1994 salary would place him in the upper quartile of
salaries paid to the second highest paid officer of the Comparator Companies.
Based on these considerations, the Compensation Committee set Mr. Kehoe's
1994 base compensation at $330,000.
Annual Incentive Plan
For 1994 the Compensation Committee awarded Mr. Kehoe a target Annual Plan
participation of 50 percent of his 1994 salary, an increase of 10 percentage
points over that awarded to Mr. Kehoe in 1993. 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 50 percent level was appropriate in order for Mr.
Kehoe's intended incentive compensation to constitute a substantial part of his
intended total 1994 compensation. In making this decision, the Compensation
Committee also considered the report of the Company's compensation consultant
which indicated that, while the average of the bonuses paid to the chief
executive officers of the Comparator Companies was 36 percent of their base
salaries, the incentive compensation elements of the Company's compensation
programs generally constituted a somewhat higher percentage of base salary than
Comparator Companies averages because base salary levels are generally below
Comparator Companies' average and median salaries. Because the Company's core
pre-tax profit in 1994 exceeded budgeted core pre-tax profit as specified under
the Annual Plan, Mr. Kehoe received a bonus equal to $223,080 in 1994,
approximately 135 percent of his target under the Annual Plan.
LTIP
Under the Company's LTIP, for the performance period ending December 31,
1996, the Compensation Committee awarded Mr. Kehoe a target award equal to 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 targeted compensation for Mr. Kehoe. The
Compensation Committee also considered the level of awards typically made and
its understanding of long term compensation awards by the Comparator Companies.
As noted above, no payment will be made to Mr. Kehoe pursuant to the 1994 LTIP
award, if ever, until the completion of the specified performance period and
the Company's achievement of at least the minimum specified performance
criterion.
Stock Options
The Compensation Committee's 1994 grant of options to Mr. Kehoe under the
1992 Option Plan was determined by multiplying Mr. Kehoe's base compensation by
225 percent 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
Lt. Gen. Thomas P. Stafford
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)
LOGO
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wheelabrator Technologies Inc. $100 $111 $196 $211 $203 $170
---------------------------------------------------------------
S&P 500 Index $100 $ 97 $126 $136 $150 $152
---------------------------------------------------------------
Smith Barney Solid Waste Index $100 $ 90 $ 96 $ 88 $ 67 $ 69
</TABLE>
--------
(1) Historical results are not necessarily indicative of future performance.
(2) Assumes $100 invested on December 31, 1989 in WTI common stock, the S&P 500
Index, and the Smith Barney Solid Waste Index.
(3) 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.
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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. Under the terms of the Land Option Agreement, during 1994 the Company
leased a site at a WMI landfill to develop a composting facility and paid
$92,300 to WMI pursuant to such lease. In addition, the Company commenced
operations at a trash-to-energy facility constructed on a parcel of property in
Falls Township, Pennsylvania that was 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
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<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 1994, Resco
paid WMI a total of $10 million for disposal of waste pursuant to the Second
Amended and Restated ADA and used $2.5 million in Disposal Credits.
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 is
based upon a contractually specified formula. 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. In 1994, the disposal price
per ton, net of Disposal Credits, was $29.79. For disposal of bypass waste, the
North Broward Project will be charged the same rates as other users of the
landfill, as reduced by available Disposal Credits. During 1994, the North
Broward Project paid approximately $7.5 million in ash disposal fees to WMI,
net of Disposal Credits.
DEVELOPMENT AGREEMENT. Resco and WMI were parties to a Development Agreement
pursuant to which WMI was 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
range of development projects for which Development Payments could be charged
by Resco included 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 provided that the aggregate amount of
Development Payments would not exceed $46 million. In addition, Resco was
obligated to pay WMI, promptly after obtaining an equivalent amount of
construction financing for any Proposed Facility as to which Resco had 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 1994, WMI was charged approximately $7.6 million
under the Development Agreement, bringing aggregate Development Payments
received by WTI over the life of the agreement to $46 million. No further
Development Payments will be received under the agreement, which terminated in
August 1994.
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<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.
At the request of WMI, and in recognition of WTI's significant experience in
operating and maintaining incineration facilities, WTI agreed to provide
technical engineering assistance to all of the WMI Medical Facilities on an as-
needed basis. During 1994, WTI received $83,000 in connection with such
services. This arrangement terminated in 1994.
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
20
<PAGE>
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. The Company, WMX and
CWM are parties to an Amended and Restated Master Intercorporate Agreement (the
"Amended Intercorporate Agreement"), originally entered into in connection with
the 1990 Merger, 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). Under the Amended Intercorporate Agreement, WMX is required to
fund WTI's working capital requirements on an unsecured basis (but with rights
of set off), 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"). WTI
may borrow such 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 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, 1994, the
amount of WTI's deposits with WMX (including principal and accrued but unpaid
interest) totalled approximately $154.6 million. The largest amount on deposit
with WMX during 1994 was approximately $264 million. During 1994, WTI was paid
interest on such deposits at rates ranging from 3.09% to 7.88%, depending upon
maturity. As of December 31, 1994, approximately $205.7 million was due to WMX
from WTI (including principal and accrued but unpaid interest). The largest
amount of such obligations outstanding during 1994 was approximately $295
million. Obligations due to WMX during 1994 bore interest at rates, adjusted
every 30 days, ranging from 3.56% to 6.11% as of year-end.
Under the Amended Intercorporate Agreement, WMX also 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 1994, WTI paid WMX
approximately $1.8 million for these and related services.
Pursuant to the Amended Intercorporate Agreement, WTI is designated 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. During 1994, WTI charged WMX and its
subsidiaries approximately $11.2 million for such products. The amounts charged
for such products were determined on an arms-length basis and are believed to
approximate the market value thereof.
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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.
With the exception of the $100 Million Facility, which expires in September
1995, 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. The Company intends to negotiate with WMX prior to termination of the $100
Million Facility to obtain an extension or renewal of all or part of such
credit facility.
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 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.
WTI, CWM, Rust, WMX and WM International are also parties to a First Amended
and Restated Master License Agreement originally 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
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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 approximately 42% of the outstanding
capital stock of Rust at that time, its two principal engineering,
environmental consulting and construction businesses, its London-based
international engineering and consulting business, certain Disposal Credits and
cash. At the same time, CWM contributed to Rust, in exchange for approximately
58% of the outstanding capital stock of Rust at that time, all of its ownership
in Brand, its hazardous substance remediation services businesses, its
ownership interest in WM International and certain indebtedness owed by Brand
to CWM. In addition, WTI, CWM, Rust and various of their affiliates entered
into several ancillary agreements described below or under "WM International
Agreements" above.
Subsequent to the Rust Transaction, on May 7, 1993 Brand was merged into a
subsidiary of Rust, and Rust became owned approximately 40% by WTI, 56% by CWM,
and 4% by the former public stockholders of Brand. In February 1995, WMX
announced a proposal to acquire the shares of Rust not already owned by the
Company or CWM. Although the Company was offered the opportunity to participate
in the transaction, the Company has determined not to participate following a
review of the proposal by WTI's independent directors. If consummated, the
transaction will not affect WTI's 40% ownership interest in Rust nor will it
effect any change in control of Rust.
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
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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 WTI subsidiaries contributed to Rust. Such
services are provided on a fully-allocated cost basis. WTI was approximately
$84,000 for such services provided by Rust during 1994. 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 1994, WTI paid Rust $101.6 million for
such services, which WTI believes reflects the approximate value for which WTI
could have obtained comparable services from unaffiliated third parties. With
the exception of certain provisions related to the committed credit facility
discussed above, the Rust Intercorporate Services Agreement will terminate on
December 31, 1997 unless earlier terminated by WMX following the occurrence of
certain events of default.
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 1994, WTI made payments in addition to those described above of
(i) approximately $1.5 million to WMI for waste transportation services; (ii)
approximately $205,000 to WMX for office space rental; and (iii) approximately
$220,000 to WMI for operating a transfer station leased by WTI from a regional
waste management authority. During 1994, WMI delivered waste for disposal to
certain WTI facilities pursuant to various contractual arrangements, for which
WMI paid disposal fees aggregating approximately $13.6 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. WTI believes such annual fee
to be at a rate equal to or better than that obtainable from unaffiliated third
parties with a similar credit rating. In 1994, WTI paid WMX approximately
$98,000 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 outstanding to the directors and executive officers of the
Company since January 1, 1994, to Donald Flynn for $176,633, all of which was
repaid during 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 Company had one such loan in excess
of $60,000 outstanding to the directors and executive officers of the Company
since January 1, 1994, to Mr. Montrone, in the amount of $564,759. The loan has
been repaid and no such loans were outstanding as of March 15, 1995.
PURCHASE OF PROPERTY PURSUANT TO HAMPTON LEASE AGREEMENT. In December 1994,
WTI exercised a purchase option under an existing Lease Agreement with Exeter
Oak pursuant to which WTI leased its approximately 78,000 square foot
headquarters building in Hampton, New Hampshire. Exeter Oak is 50%-
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owned by Mr. Montrone, a director of WTI. In connection with the exercise of
the purchase option, WTI purchased the building and the surrounding grounds and
an additional 20-acre parcel for the properties' appraised value of $8 million.
These transactions are more fully described above under "Compensation--
Compensation Committee Interlocks and Insider Participation."
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP 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 1995. Representatives of Arthur Andersen LLP will be
present at the 1995 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.
FINANCIAL STATEMENTS
WTI has enclosed its Annual Report to Stockholders for the year ended
December 31, 1994 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 1996 annual
meeting must be received by WTI no later than November 30, 1995 in order to be
considered by the Board of Directors for inclusion in WTI's 1996 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 1996 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 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.
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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 4, 1995
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 4, 1995, 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
FOR each WITHHOLD AUTHORITY Nominees: William M. Daley, Kay Hahn
nominee listed to vote for each Harrell, Paul M. Montrone, Phillip B.
except nominee(s) nominee listed Rooney
written below
(Instructions: To withhold authority to vote
( ) ( ) for any individual nominee, write the
nominee's name on the line 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___________________________________________, 1995
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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
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FOLD AND DETACH HERE
