<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CHEMICAL WASTE MANAGEMENT, INC.
(Name of Registrant as Specified in its Charter)
THE BOARD OF DIRECTORS OF CHEMICAL WASTE MANAGEMENT, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing fee (check the appropriate box):
[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1/
4) Proposed maximum aggregate value of transaction:
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/1/Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
LOGO CHEMICAL WASTE MANAGEMENT, INC.
3001 Butterfield Road . Oak Brook, Illinois 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1994
You are cordially invited to attend the annual meeting of stockholders of
Chemical Waste Management, Inc. which will be held at the Mellon Bank Building,
8 Loockerman Street, Dover, Delaware on Thursday, May 5, 1994 at 10:30 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, 1994 are
entitled to vote at the meeting. A list of such stockholders will be available
for examination by any stockholder for any purpose germane to the meeting,
during normal business hours, at the principal office of the Company, 3001
Butterfield Road, Oak Brook, Illinois, 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.
/s/ Thomas A. Witt
Thomas A. Witt
Secretary
Oak Brook, Illinois
March 30, 1994
YOU ARE URGED TO MARK, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
Printed on recycled paper
LOGO
<PAGE>
CHEMICAL WASTE MANAGEMENT, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1994
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Chemical Waste Management, Inc. (the "Company") of
proxies for use at the annual meeting of stockholders of the Company to be held
at the Mellon Bank Building, 8 Loockerman Street, Dover, Delaware at 10:30
a.m., Eastern time, on May 5, 1994, and at any adjournment or adjournments
thereof. Proxies properly executed and returned in a timely manner will be
voted at the meeting in accordance with the directions noted thereon. If no
direction is indicated, they will be voted for the election of the nominees
named herein as directors and on other matters presented for a vote in
accordance with the judgment of the persons acting under the proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted, either in person at the meeting, by written notice to the Secretary of
the Company or by delivery of a later-dated proxy.
The affirmative vote of the holders of a plurality of the shares present in
person or represented by proxy and entitled to vote at the meeting is required
for the election of each director. The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy and entitled
to vote at the meeting is required for approval of any other matter submitted
to the stockholders for their consideration. An automated system administered
by the Company's transfer agent tabulates 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, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
The Company's executive offices are located at 3001 Butterfield Road, Oak
Brook, Illinois 60521 (telephone 708/218-1500). It is expected that proxy
materials will first be mailed to stockholders on or about March 30, 1994.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on March 23, 1994 are
entitled to vote at the annual meeting of stockholders. The only voting stock
of the Company outstanding is its common stock, of which 212,422,463 shares
were outstanding as of the close of business on March 23, 1994. Each share of
common stock is entitled to one vote.
INFORMATION WITH RESPECT TO CERTAIN STOCKHOLDER
As of February 1, 1994, WMX Technologies, Inc., a Delaware corporation
("WMX"), located at 3003 Butterfield Road, Oak Brook, Illinois, owned
beneficially an aggregate of 164,278,417 shares, or approximately 79%, of the
Company's outstanding common stock, with sole voting and investment power over
all of such shares. The Company and WMX have an agreement relating to certain
restrictions on disposition by WMX of the shares of the Company's common stock
owned by WMX, and to registration rights (both demand and participation), which
expires December 31, 1996. By virtue of their relationship with WMX, Messrs.
Buntrock and Rooney may be deemed to own beneficially the shares of the
Company's
1
<PAGE>
common stock owned by WMX. Each of the above named persons disclaims beneficial
ownership of such shares. No other person is known by the Company to own, as of
February 1, 1994, more than five percent of the Company's common stock.
ELECTION OF DIRECTORS
Three directors are to be elected at the meeting. The persons named below
have been designated by the Board as nominees for election as Class II
directors, for a term expiring at the annual meeting of stockholders in 1997.
Except for Mr. Pedersen, who is serving as a Class III director and who has
been nominated by the Board of Directors to serve as a Class II director so
that the sizes of the respective classes are more nearly equal, each of the
nominees is serving as a Class II director of the Company as of the date
hereof.
Unless otherwise instructed, properly executed proxies which are returned
will be voted for election of the three nominees as Class II directors. If,
however, any of such nominees should be unable or should fail to act as such by
virtue of an unexpected occurrence, the proxies will be voted for such other
person or persons 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. The Class I and Class III directors named
below have terms which expire in 1996 and 1995, respectively.
NOMINEES FOR TERMS EXPIRING AT THE ANNUAL MEETING IN 1997 (CLASS II DIRECTORS):
Donald F. Flynn, age 54, has been a director of the Company since September
1986, and was its Chief Financial Officer from September 1986 to November 1987.
Mr. Flynn has served as Chairman of the Board and President of Flynn
Enterprises, Inc., a financial advisory and venture capital firm, since
February 1988. He has also served as Chairman of the Board and Chief Executive
Officer of Discovery Zone Inc., a franchisor and operator of indoor fun and
fitness centers for children, since July 1992. Since January 1, 1991, Mr. Flynn
has also served as a consultant to WMX. Mr. Flynn served as Senior Vice
President of WMX from May 1975 to January 1991, as Chief Financial Officer of
WMX from March 1972 to December 1989 and as its Treasurer from May 1979 to
December 1986. He was elected a director of WMX in 1981, and is also a director
of Blockbuster Entertainment Corporation, Discovery Zone, Inc., Psychemedics
Corporation, Wheelabrator Technologies Inc. ("WTI"), which is an approximately
55% owned subsidiary of WMX, and Waste Management International plc ("WM
International"), which is a subsidiary of WMX owned approximately 56% by WMX,
12% by WTI and 12% by Rust International Inc. ("Rust"), which is a subsidiary
of the Company owned approximately 56% by the Company, 40% by WTI and 4% by
public stockholders.
Peter H. Huizenga, age 55, is a director of WMX, a position to which he was
first elected in September 1968. Mr. Huizenga has been President of Huizenga
Capital Management, an investment management firm, since October 1990. He has
also been of counsel to the law firm of Hlustik, Huizenga & Williams for more
than the past five years. He also served as Vice President and Secretary of WMX
from May 1975 and September 1968, respectively, until his retirement from those
positions in January 1988. Mr. Huizenga has served as a director of the Company
since 1986.
Peer Pedersen, age 69, has been Managing Partner of the law firm of Pedersen
& Houpt, P.C. for more than the past five years. Mr. Pedersen has served as a
director of the Company since 1986. He has been a director of WMX since 1979,
and is also a director of Aon Corporation, Boston Chicken, Inc. and Discovery
Zone, Inc.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1995 (CLASS III
DIRECTORS):
James E. Koenig, age 46, has been Senior Vice President of WMX since May
1992, and Vice President and Treasurer of WMX since 1986. Mr. Koenig has also
served as Chief Financial Officer of WMX since
2
<PAGE>
1989. From 1984 to 1986, Mr. Koenig was Staff Vice President and Assistant to
the Chief Financial Officer of WMX. Mr. Koenig has been employed by WMX since
1977. He also served as Vice President, Chief Financial Officer and Treasurer
of WTI from November 1990 until May 1993. Mr. Koenig has served as a director
of the Company since 1992. He is also a director of WTI, WM International and
Rust.
D. P. Payne, age 51, has served as President and Chief Executive Officer and
a director of the Company since September 1991. From August 1990 until May
1993, he also served as a Senior Vice President of WMX. Prior thereto, Mr.
Payne had been Vice President and Area General Manager of the Midwestern Area
of International Business Machines Corporation from prior to 1987. Mr. Payne is
also a director of Rust.
Phillip B. Rooney, age 49, President and Chief Operating Officer of WMX since
November 1984, commenced employment with WMX in March 1969. He first became an
officer of WMX in 1971 and was elected a director of WMX in August 1981. Since
January 1994, he has also served as Chairman of the Board and Chief Executive
Officer of Waste Management, Inc. ("WMI"), a wholly owned subsidiary of WMX.
Since November 1990, he has also served as Chairman of the Board and Chief
Executive Officer of WTI and since January 1993 as Chairman of the Board of
Rust. Mr. Rooney has served as a director of the Company since 1986. Mr. Rooney
is also a director of WTI, WM International, Rust, Illinois Tool Works Inc.,
Caremark International Inc., ServiceMaster Management Corporation, the general
partner of ServiceMaster Limited Partnership, and Urban Shopping Centers, Inc.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1996 (CLASS I DIRECTORS):
Dean L. Buntrock, age 62, has served as a director of WMX and as its Chairman
of the Board and Chief Executive Officer since 1968. From September 1980 to
November 1984, he also served as its President. Mr. Buntrock has served as a
director of the Company from 1978 to 1984 and from 1986 to the present. Mr.
Buntrock is Chairman of the Board of Directors of the Company and is also a
director of Rust, WM International, WTI, Boston Chicken, Inc., First Chicago
Corporation and Stone Container Corporation.
James B. Edwards, age 66, has been President of the Medical University of
South Carolina since November 1982. From January 1981 to November 1982, he
served as the United States Secretary of Energy, and previously as Governor of
the State of South Carolina. Dr. Edwards has served as a director of the
Company since 1986. Dr. Edwards is also a director of Phillips Petroleum
Company, SCANA Corporation, South Carolina National Bank, IMO Industries Inc.,
Brendle's, Inc., Encyclopaedia Britannica, National Data Corporation and
Communications Satellite Corporation.
Jerome D. Girsch, age 48, has been Executive Vice President, Chief Financial
Officer, Treasurer and Controller and a director of the Company since March
1993. Mr. Girsch has served as Vice President of WMX from 1981 until May 1993,
as Controller of WMX from 1986 to 1990 and as principal accounting officer of
WMX from April 1988 to 1990. From August 1992 until March 1993, Mr. Girsch
served as President of the Midwest Group of WMI. From January 1990 until August
1992, Mr. Girsch served as Executive Vice President of WMI.
Kay Hahn Harrell, age 53, 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.
3
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of common stock of the Company by the directors of
the Company, the President and Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of December 31, 1993,
and all directors and persons serving as executive officers of the Company as a
group:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMPANY PERCENT OF
COMMON STOCK COMPANY COMMON
NAME BENEFICIALLY OWNED(1)(2)(3) STOCK(2)(3)(4)
---- --------------------------- --------------
<S> <C> <C>
Dean L. Buntrock............................... 614,033 *
James B. Edwards............................... 21,400 *
Donald F. Flynn................................ 300,668 *
Jerome D. Girsch............................... 26,593 *
Kay Hahn Harrell............................... 3,000 *
Peter H. Huizenga.............................. 170,516 *
James E. Koenig................................ 89,021 *
D. P. Payne.................................... 123,530 *
Peer Pedersen.................................. 40,000 *
Phillip B. Rooney.............................. 627,105 *
James T. Banks................................. 33,557 *
Rodger D. Henson............................... 56,719 *
Richard C. Scherr.............................. 8,740 *
All directors and executive officers as a group
including persons named above (14 persons).... 2,121,826 1.0
</TABLE>
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* Less than one percent
(1) The above persons and members of such group have sole voting power and sole
investment power over shares listed, except for (i) shares covered by
options granted under the Company's stock option plans which were
exercisable within 60 days of February 1, 1994; (ii) shares issuable upon
exchange of Liquid Yield Option Notes due 2012 issued by WMX ("LYONs");
(iii) shares held pursuant to the WMX Profit Sharing and Savings Plan; and
(iv) 1,203 shares held jointly by Mr. Koenig and his former spouse, over
which he has shared voting and investment power. Ownership of shares shown
for Messrs. Huizenga and Dr. Edwards includes shares of common stock of the
Company 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.
Shares were held by or for the benefit of such spouses or children of the
following persons at February 1, 1994 in the amounts indicated: Mr.
Huizenga--9,142 (including 345 shares issuable upon exchange of LYONs (held
by spouse as custodian for children)); and Dr. Edwards--400 (held by
spouse). Each of the above named persons and members of such group
disclaims any beneficial ownership of such shares.
(2) Excludes 164,278,417 shares beneficially owned by WMX 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. Each such person disclaims
beneficial ownership of such shares.
(3) The numbers and percentages of shares shown in the table are based on the
assumption that currently outstanding stock options which were exercisable
within 60 days of February 1, 1994 had been exercised as follows: Mr.
Buntrock--342,099; Dr. Edwards--20,000; Mr. Flynn--163,384; Mr. Girsch--
19,593; Ms. Harrell--2,000; Mr. Koenig--87,818; Mr. Payne--123,530; Mr.
Rooney--515,951; Mr. Banks--33,557; Mr. Henson--56,719; Mr. Scherr--7,240;
and all executive officers and directors as a group (including such
individuals)--1,378,835. Such numbers and percentages also assume that 344
shares were issued upon exchange of LYONs to Mr. Huizenga. Such persons and
the members of such group
4
<PAGE>
disclaim any beneficial ownership of the shares subject to such options or
issuable upon exchange of such LYONs.
(4) Mr. Huizenga, a director of the Company, in his capacity as trustee of a
family trust, made a late filing of a report required by Section 16(a) of
the Securities Exchange Act of 1934, as amended, with respect to a prior
fiscal year, relating to the holdings by such trust of shares of the
Company's common stock. Trust ownership of such shares was previously
reported on a timely basis in Mr. Huizenga's individual filings.
OWNERSHIP OF WMX COMMON STOCK
The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of common stock of WMX by the directors of the
Company, the President and Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of December 31, 1993,
and all directors and persons serving as executive officers of the Company as a
group:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF WMX PERCENT OF
COMMON STOCK WMX COMMON
NAME BENEFICIALLY OWNED(1)(2) STOCK(2)
---- ------------------------ ----------
<S> <C> <C>
Dean L. Buntrock..................... 3,073,992 *
James B. Edwards..................... 1,200 *
Donald F. Flynn...................... 1,012,526 *
Jerome D. Girsch..................... 217,900 *
Kay Hahn Harrell..................... 2,200 *
Peter H. Huizenga.................... 8,131,130 1.7
James E. Koenig...................... 192,786 *
D. P. Payne.......................... 71,939 *
Peer Pedersen........................ 212,381 *
Phillip B. Rooney.................... 742,239 *
James T. Banks....................... -- *
Rodger D. Henson..................... 16,324 *
Richard C. Scherr.................... 800 *
All directors and executive officers
as a group including persons named
above (14 persons).................. 13,675,417 2.8
</TABLE>
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* Less than one percent
(1) The above named persons and members of such group have sole voting power
and sole investment power over shares listed, except for (i) shares covered
by options granted under WMX's stock option plans and which were
exercisable within 60 days of February 1, 1994; (ii) shares held pursuant
to WMX's Profit Sharing and Savings Plan; and (iii) Messrs. Buntrock,
Huizenga, Koenig, Pedersen and Rooney, who have shared voting and
investment power over 132,888, 224,394, 82,428, 12,381 and 30,074 shares,
respectively. Such shares shown for Messrs. Buntrock, Huizenga, Pedersen
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 or foundations. Such shares shown for Mr. Koenig are held
jointly with his former spouse. Ownership of shares shown for Messrs.
Buntrock, Girsch, Henson, Huizenga, Koenig and Rooney includes shares of
common stock of WMX 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. Shares were held by or for the benefit of such spouses or
children of the following persons at February 1, 1994 in the amounts
indicated: Mr. Buntrock--40,314 (held by spouse); Mr. Girsch--27,050 (held
by spouse); Mr. Henson--6 (held by spouse); Mr. Huizenga--680,598 (held by
spouse directly and as trustee); and Mr. Rooney--104,643 (held directly by
adult child and by spouse directly and as trustee for children).
Additionally, ownership of shares shown for Mr. Koenig includes 1,200
shares held by him as trustee of a family trust in which he has no
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<PAGE>
pecuniary interest. Such persons and the members of such group disclaim any
beneficial ownership of such shares.
(2) The numbers and percentages of shares as shown in the table are based on
the assumption that currently outstanding stock options granted by WMX and
exercisable within 60 days of February 1, 1994 had been exercised as
follows: Mr. Buntrock--282,122; Mr. Flynn--29,893; Mr. Girsch--64,681; Mr.
Koenig--107,767; Mr. Payne--71,739; and Mr. Rooney--211,521. Such persons
and the members of such group disclaim any beneficial ownership of the
shares subject to such options.
OWNERSHIP OF RUST COMMON STOCK
The following table sets forth certain information as of February 1, 1994 as
to the beneficial ownership of common stock of Rust by the directors of the
Company, the President and Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of December 31, 1993,
and all directors and persons serving as executive officers of the Company as a
group:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF
RUST COMMON STOCK RUST COMMON
NAME BENEFICIALLY OWNED(1)(2) STOCK(2)
---- ------------------------ -----------
<S> <C> <C>
Dean L. Buntrock.................... 15,000 *
James B. Edwards.................... -- *
Donald F. Flynn..................... -- *
Jerome D. Girsch.................... -- *
Kay Hahn Harrell.................... -- *
Peter H. Huizenga................... -- *
James E. Koenig..................... 10,168 *
D. P. Payne......................... 4,000 *
Peer Pedersen....................... -- *
Phillip B. Rooney................... 60,010 *
James T. Banks...................... -- *
Rodger D. Henson.................... -- *
Richard C. Scherr................... -- *
All directors and executive officers
as a group including persons named
above (14 persons)................. 89,178 *
</TABLE>
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* Less than one percent
(1) The above named persons and members of such group have sole voting power
and sole investment power over shares listed, except for (i) Rust shares
covered by options exercisable within 60 days of February 1, 1994 and (ii)
Mr. Koenig, who has shared voting and investment power over 3,500 shares
(held jointly with former spouse). The table excludes 46,682,031 shares
beneficially owned by the Company that may be deemed to be beneficially
owned by Messrs. Buntrock, Girsch, Koenig, Payne and Rooney because each
such person may be deemed to be an affiliate of Rust. Each such person
disclaims any beneficial ownership of such shares.
(2) The numbers and percentages of shares shown in the table are based on the
assumption that currently outstanding stock options granted by Rust and
exercisable within 60 days of February 1, 1994 had been exercised as
follows: Mr. Koenig--6,668; Mr. Payne--4,000; and Mr. Rooney--50,010. Such
persons and the members of such group disclaim any beneficial ownership of
the shares subject to such options.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held an aggregate of six regular and special meetings
in 1993. The Board of Directors has, pursuant to its powers, designated certain
committees of the Board, including a Compensation and Stock Option Committee
and an Audit Committee, the functions and membership of which are described
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<PAGE>
below. Because the Company is a majority owned subsidiary of WMX, the Board
does not have a standing nominating committee.
The Compensation and Stock Option Committee is responsible for making
recommendations to the Board of Directors regarding salaries and incentive
bonuses to be paid to officers of the Company, for the administration of and
the grant of options under the Company's 1992 Stock Option Plan and for the
administration of options granted under the Company's 1986 Stock Option Plan,
as amended (together with the 1992 Stock Option Plan, the "Employee Plans").
The Audit Committee's functions include making recommendations to the Board of
Directors on the selection of the Company's independent auditors, reviewing the
arrangements for and scope of the independent auditors' examination, meeting
with the independent auditors and certain officers of the Company to review the
adequacy of internal controls and reporting, and performing any other duties or
functions deemed appropriate by the Board of Directors.
Messrs. Pedersen, Buntrock and Huizenga, Dr. Edwards and Ms. Harrell are
currently members of the Compensation and Stock Option Committee, and Mr.
Pedersen, Dr. Edwards and Ms. Harrell are currently members of the Audit
Committee. The Compensation and Stock Option Committee was formed in January
1993 as the successor to the Executive Compensation Committee of the Board, at
which time its functions were combined with those of the Stock Option Committee
and the Stock Option Committee was disbanded.
During 1993, the Audit Committee met four times and the Compensation and
Stock Option Committee met five times. The Executive Compensation Committee and
the Stock Option Committee each met once. In 1993, during the time each
director served in such capacity, each director attended 100% of the aggregate
meetings of the Board of Directors and applicable committees, and no director
attended less than 75% of the aggregate of all meetings of the Board of
Directors and all applicable committee meetings.
7
<PAGE>
COMPENSATION
The following table sets forth certain information with respect to
compensation for services in all capacities paid by the Company and its
subsidiaries for the past three years to or on behalf of (i) the President and
Chief Executive Officer of the Company at December 31, 1993, and (ii) each of
the four other most highly compensated executive officers of the Company at
December 31, 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ---------- ---------
OTHER SECURITIES
ANNUAL UNDER- LONG TERM
NAME AND COMPEN- LYING INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SATION(1)(2) OPTIONS(3) PAYOUTS COMPENSATION(1)
------------------ ---- -------- ------- ------------ ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
D.P. Payne, 1993 $400,000 $ 0 -- 62,696 $ 0 $5,217
President and 1992 380,000 76,000 -- 73,616 0 5,077
Chief Executive Officer 1991 104,615(4) 0 -- 100,000 0 --
James T. Banks, 1993 210,000 0 -- 19,749 0 4,200
Vice President and 1992 210,000 0 -- 24,410 0 4,346
General Counsel 1991 190,000 0 -- 13,217 3,000 --
Jerome D. Girsch, 1993 375,000 0 -- 58,777 0 5,217
Executive 1992 0 0 -- 0 0 0
Vice President 1991 0 0 -- 0 0 --
Rodger D. Henson, 1993 195,000 0 -- 18,339 0 4,400
Vice President 1992 179,000 0 -- 20,806 0 4,211
1991 170,000 0 -- 11,826 0 --
Richard C. Scherr, 1993 190,000 0 -- 17,868 0 4,300
Vice President- 1992 69,423(4) 45,000(5) -- 3,851 0 1,888
Environment, 1991 0 0 -- 0 0 --
Health & Safety
</TABLE>
- --------
(1) In accordance with the revised rules on executive officer and director
compensation disclosure adopted by the Securities and Exchange Commission,
amounts of Other Annual Compensation and All Other Compensation are
excluded for the Company's 1991 fiscal year. Amounts of All Other
Compensation are amounts contributed by the Company for fiscal years 1992
and 1993 under the WMX Technologies, Inc. Profit Sharing and Savings Plan
for the persons named above.
(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) Options to purchase shares of the Company's common stock granted under the
Employee Plans. In 1991, Mr. Payne also received options to purchase 12,500
shares of common stock of The Brand Companies, Inc. ("Brand") under that
company's Stock Option Plan for Non-Employee Directors. These options were
cancelled in May 1993 when Brand was merged into a subsidiary of Rust. Mr.
Payne also received options to purchase 20,000 shares of Rust common stock
in 1993.
(4) Reflects employment for partial year.
(5) Paid upon commencement of employment.
8
<PAGE>
STOCK OPTIONS
The following table sets forth certain information with respect to stock
options granted to the persons named in the Summary Compensation Table during
the year ended December 31, 1993:
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (5)
------------------------------------------------------- -------------------------------------
PERCENTAGE MARKET
NUMBER OF OF TOTAL PRICE
SECURITIES OPTIONS EXERCISE AT
UNDERLYING GRANTED TO PRICE GRANT
OPTIONS EMPLOYEES (PER (PER EXPIRATION
NAME GRANTED(1)(2) IN 1993(3) SHARE) SHARE) DATE 0% 5% 10%
---- ------------- ---------- -------- ------- ---------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. P. Payne
Company Options........ 62,696 3.86 $15.95 $15.95 4/1/2000 $ 0 $ 407,101 $ 948,718
Rust Options........... 20,000 1.53 16.7625 18.625(4) 3/8/2003 37,250 271,513 630,919
James T. Banks.......... 19,749 1.22 15.95 15.95 4/1/2000 0 128,235 298,843
Jerome D. Girsch........ 58,777 3.62 15.95 15.95 4/1/2000 0 381,654 889,416
Rodger D. Henson........ 18,339 1.13 15.95 15.95 4/1/2000 0 119,080 277,506
Richard C. Scherr....... 17,868 1.10 15.95 15.95 4/1/2000 0 116,021 270,379
All stockholders as a
group(6)............... -- -- 15.95 15.95 4/1/2000 0 1,373,200,404 3,200,140,880
</TABLE>
- -------
(1) Options become exercisable in three equal cumulative annual installments
commencing April 1, 1994. Options to purchase Rust common stock become
exercisable 20% six months after the date of grant and 20% each year
thereafter.
(2) Options were granted for a term of seven years (10 years for Rust options),
subject to earlier termination in certain events related to termination of
employment. Option holder has the right to have shares withheld to satisfy
tax withholding requirements in connection with the exercise of options.
(3) Includes options granted to all participants in the Company's stock option
plans.
(4) The exercise price per share is equal to 90% of the average of the closing
price of Brand common stock on the National Association of Securities
Dealers Automated Quotation System for each of the five trading days
commencing on April 19, 1993. Rust common stock did not trade until May 10,
1993, the first trading day after Brand was merged into a subsidiary of
Rust, and shares of Brand (other than those owned by Rust or exchanged for
cash in the merger) were converted, on a one-for-one basis, into shares of
Rust.
(5) 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 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 to purchase Company common
stock were granted at fair market value and holders of such options will
not recognize any gain without an increase in the stock price, which
increase benefits all Company stockholders commensurately. The Company did
not use an alternative formula to attempt to value options at date of
grant, as management is not aware of any formula which determines with
reasonable accuracy a present value of options of the type granted to
optionees.
(6) Based upon the market price of the Company's common stock and the total
shares outstanding as of the date of grant, if the market price of the
Company's common stock increased at the 5% or 10% rates shown in the above
table, stockholders as a group would realize aggregate gains (excluding
dividends) of $1,373,200,404 and $3,200,140,880, respectively, during the
period from grant date to expiration date for the options expiring April 1,
2000.
9
<PAGE>
The following table sets forth certain information as to each exercise of
stock options during the year ended December 31, 1993 by the persons named in
the Summary Compensation Table and the fiscal year end value of unexercised
options:
AGGREGATED OPTION EXERCISES IN 1993, AND 1993 YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT DECEMBER
DECEMBER 31, 1993 31, 1993(1)
------------------------- -------------------------
SHARES ACQUIRED
NAME ON EXERCISE VALUE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. P. Payne
Company Options........ 0 $ 0 87,460 148,852 $ 0 $ 0
Rust Options........... 0 0 4,000 16,000 23,950 95,800
James T. Banks.......... 0 0 17,539 41,670 0 0
Jerome D. Girsch........ 0 0 0 58,777 0 0
Rodger D. Henson........ 0 0 42,376 37,211 0 0
Richard C. Scherr....... 0 0 1,284 20,435 0 0
</TABLE>
- --------
(1) Market value less exercise price, before payment of applicable income
taxes.
LONG-TERM INCENTIVE PLAN AWARDS
The following table sets forth certain information as to awards under the
Chemical Waste Management, Inc. Long Term Incentive Plan (the "LTIP") with
respect to the year ended December 31, 1993 to the persons named in the Summary
Compensation Table:
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE BASED
NUMBER OF SHARES, OTHER PERIOD PLANS(3)
UNITS OR OTHER UNTIL MATURATION ---------------------------
NAME RIGHTS(1) OR PAYOUT(2) THRESHOLD TARGET MAXIMUM
- ---- ----------------- ---------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
D. P. Payne............. -- 2.6 years $80,000 $160,000 $480,000
James T. Banks.......... -- -- -- -- --
Jerome D. Girsch........ -- 2.6 years 75,000 150,000 450,000
Rodger D. Henson........ -- -- -- -- --
Richard C. Scherr....... -- -- -- -- --
</TABLE>
- --------
(1) Awards consist of the designation of target percentages of annual salary at
the end of the performance period to be paid if the Company achieves
certain performance objectives. No payout occurs unless the Company
achieves certain threshold performance objectives. Above the threshold,
payouts may be greater or less than the target percentages to the extent
that the Company's performance exceeds or fails to meet target objectives
specified. Payouts under the LTIP are based on the rank of the Company's
total stockholder return (stock price appreciation plus reinvested
dividends) among the total stockholder returns of the companies that
comprise the Standard & Poor's 500 Stock Index over the performance period.
(2) The performance period includes seven months of calendar year 1993 and
calendar years 1994 and 1995.
(3) At the end of the performance period, an amount equal to 50% of the
performance award, if any, is paid in cash, and the remaining 50% is deemed
to be invested in common stock of the Company. The participant is entitled
to receive the value of such deemed investment on the date three years
after the end of the performance period; provided that the participant is
an officer of the Company or one of its subsidiaries on that date.
Estimated future payouts were calculated using 1993 salaries and reflect
the total performance award without accounting for any increase or decrease
in the value of the deferred portion of the award.
10
<PAGE>
PENSION AND RETIREMENT PLANS
The following table sets forth estimated annual benefits payable upon
retirement under the WMX Technologies, Inc. Pension Plan and the Chemical Waste
Management, Inc. Supplemental Executive Retirement Plan to employees of the
Company in specified compensation and years of service classifications:
ANNUAL PENSION AND RETIREMENT PLAN BENEFITS
<TABLE>
<CAPTION>
YEARS OF SERVICE (2)(3)
--------------------------------------------
REMUNERATION (1) 15 20 25 30 35
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000.......................... $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
200,000.......................... 45,000 60,000 75,000 90,000 105,000
300,000.......................... 67,500 90,000 112,500 135,000 157,500
400,000.......................... 90,000 120,000 150,000 180,000 210,000
500,000.......................... 112,500 150,000 187,500 225,000 262,500
600,000.......................... 135,000 180,000 225,000 270,000 315,000
700,000.......................... 157,500 210,000 262,500 315,000 367,500
800,000.......................... 180,000 240,000 300,000 360,000 420,000
</TABLE>
- --------
(1) Upon normal retirement at age 65 or after completing five years of
participation in the WMX Technologies, Inc. Pension Plan (the "Pension
Plan"), whichever is later, a participant is entitled to a pension based on
the average of the participant's eligible compensation for the highest five
consecutive years out of his or her last 10 years of service. For this
purpose, a participant's eligible compensation generally includes all of
his or her cash compensation, subject to certain statutory maximums. The
annual benefit, payable for a participant's life only, is equal to (i) 1%
of average eligible compensation, multiplied by (ii) the number of his or
her years of service, and, for a participant retiring at age 65 with 10
years of service, may not be less than $100 per month. Under the Chemical
Waste Management, Inc. Supplemental Executive Retirement Plan (the "SERP"),
eligible participants who retire following age 60 or retire with at least
30 years of service are entitled to an additional monthly benefit equal to
(i) 1.5% of the participant's Final Average Compensation per year of
service (Final Average Compensation is the monthly average compensation of
such participant for the highest three consecutive calendar years out of
his or her last 10 calendar years of service), reduced by (ii) the amount
of such participant's monthly benefit under the Pension Plan. Compensation
used for calculating benefits under the SERP includes only the
participant's salary and annual incentive bonus. Eligible participants are
those officers who have served in such capacities for at least 10 years at
the time of retirement. Payment of benefits under the SERP is made on the
same basis as payments under the Pension Plan.
(2) At December 31, 1993, the credited years of service for Messrs. Payne,
Banks, Girsch, Henson and Scherr were 3, 8, 18, 15 and 1, respectively.
(3) Benefits shown are computed on a straight-life annuity basis at normal
retirement age. Provision is made for payment of pensions in joint and
survivor form and in various other forms and at other times, on an
actuarially equivalent basis. Benefits are not subject to reduction for
social security benefits.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors of the Company who is not an employee
or former officer of the Company or WMX currently being compensated by the
Company or WMX under a consulting agreement is paid an annual fee of $35,000.
In addition, during 1993, Mr. Olin Neill Emmons, a former director of the
Company, and Dr. James B. Edwards, received fees of $10,000 and $8,000,
respectively, for their services as members of a special committee formed to
evaluate and advise the Company on the transaction in which Rust was organized
(as described below under "Certain Transactions--Organization of Rust").
Members of the Board who are not directors of WMX also are provided with major
medical insurance covering medical and dental expenses in excess of coverage
provided by their primary health insurance program.
11
<PAGE>
DEFERRED DIRECTOR'S FEE PLAN
The Company has an unfunded deferred compensation plan in which members of
its Board of Directors who are not employees of the Company or WMX may
participate. Under the Deferred Director's Fee Plan, such 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 the Company's
common stock and, during the period of deferral, are credited with the
dividends and stock splits, if any, that would have been received had such
investment actually been made. Upon termination of the director's service, the
common stock deemed reflected by his deferred account is deemed to be sold at
the then fair market value as prescribed in the Plan and the proceeds of such
sale (or an amount equal to the amount originally deferred, if greater) are
distributed to the director in cash, in a lump sum or installments.
STOCK OPTION PLANS FOR NON-EMPLOYEE DIRECTORS
The 1992 Stock Option Plan for Non-Employee Directors (the "Directors' Plan")
provides for awards of options covering an aggregate of 100,000 shares of the
Company's common stock. Each director of the Company who is neither an officer
nor full-time employee of the Company or any of its subsidiaries or of WMX,
upon election or appointment to the Board of Directors, is granted an option
under the Directors' Plan to purchase a total of 10,000 shares of the Company's
common stock at the fair market value of the stock 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 the Company'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 the Company's common stock receive other securities, or any other relevant
change in the capitalization of the Company, 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.
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 the Company for any reason other than death, permanent
disability, resignation or retirement. In the event of termination 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 such resignation or retirement,
but only to the extent it was exercisable on such date.
Prior to January 1, 1992, upon election to the Board of Directors, non-
employee directors received options for 20,000 shares under the Company's 1986
Plan for Non-Employee Directors, the terms of which are substantially similar
to the Directors' Plan. No person who is the holder of an option granted under
the 1986 Plan for Non-Employee Directors, the Chemical Waste Management, Inc.
1986 Stock Option Plan or the Chemical Waste Management, Inc. 1992 Stock Option
Plan or who has purchased shares upon the exercise of such an option is
eligible for a grant of options under the Directors' Plan.
DIRECTORS' CHARITABLE ENDOWMENT PLAN
The Company maintains a Directors' Charitable Endowment Plan pursuant to
which the Company purchases life insurance policies on members of the Board of
Directors who are not eligible to participate in
12
<PAGE>
a comparable plan established by WMX. Death benefits will be paid to the
Company, and the Company in turn will donate such death benefits (up to
$100,000 for each year of service on the Company's Board of Directors, subject
to a maximum contribution for each participant of $1,000,000) to one or more
charitable organizations recommended by the director. Directors derive no
financial benefit from this program since all charitable deductions accrue
solely to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
At various times during 1993, Messrs. Pedersen, Buntrock and Huizenga, Dr.
Edwards and Ms. Harrell served as members of the Compensation and Stock Option
Committee of the Company's Board of Directors. During 1993, the Company entered
into a number of transactions with WMX and certain of its affiliates, which are
described under "Certain Transactions" below. None of such transactions
constituted compensation to any of the individuals comprising such committees.
In accordance with rules promulgated by the Securities and Exchange
Commission, the information captioned "REPORT OF THE COMPENSATION
COMMITTEE" and "COMPANY 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 COMMITTEE
The compensation of the Company's executive officers is determined by the
Compensation and Stock Option Committee (the "Compensation Committee") of the
Board of Directors. Each member of the Compensation Committee is a director who
is not an employee of the Company or any of its subsidiaries. Messrs. Buntrock,
Rooney and Koenig were the members of the Compensation Committee until January
1993, at which time the Compensation Committee members consisted of Messrs.
Pedersen, Edwards and Huizenga and O. Neill Emmons, who is no longer a director
of the Company. Ms. Harrell became a member of, and Mr. Buntrock rejoined, the
Compensation Committee in May and August 1993, respectively.
GENERAL POLICIES
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 upper management to achieve both short-term and long-
term objectives and to reward exceptional leadership, performance and
contributions to the development of the Company's business. To attain these
objectives, the Company's executive compensation program includes a base
salary, coupled with a substantial cash incentive component which is "at risk"
based on the performance of the Company's business, primarily as reflected in
the achievement of pre-determined financial or other performance goals. The
Company's policy also is that as an executive officer's level of management
responsibility in the Company increases, a greater portion of his or her
potential total compensation depends upon the Company's performance as measured
by objective standards over one or more years.
Many of the Company's employees, including its executive officers, also are
eligible to be granted stock options periodically in order to more directly
align their interests with the long-term financial interests of the Company's
stockholders. In addition, most Company employees, including its executive
officers, participate in a profit-sharing program. Pursuant to the profit
sharing program, the Company makes annual contributions to a trust for the
benefit of participating employees, of up to 2% of their compensation, in
proportion to increases in the Company's pre-tax income over the previous year.
In assessing the competitiveness of the overall compensation and individual
compensation components of the Company's executive officers, the Compensation
Committee considers data from a variety of surveys
13
<PAGE>
of and comparisons to other companies. As to the Company's most senior
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. These comparator companies
consist primarily of environmental, chemical, transportation and engineering
and construction services companies with sales between $100 million and $7
billion and were selected primarily because their industries, size and
operating and financial characteristics make it likely that they will compete
for the services of executives who have experience and skills similar to those
which the Company requires. In making its decision on 1993 compensation, the
Compensation Committee did not target officer base salaries or total
compensation at any specific point in the range of salaries or total
compensation paid by comparator companies. However, the Compensation Committee
believes that base salaries paid in 1993 to its most senior executives
correspond generally to the median of the range of salaries paid by the
comparator companies. It is also the Company's general practice to target
approximately one-half to two-thirds of total targeted compensation for the
Company's executive officers to be "at risk" through participation in the
Company's incentive compensation plans, which the Compensation Committee
believes is substantially consistent with the practices of the comparator
companies and 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 $1,000,000 in 1994 and
subsequent years may be non-deductible for federal income tax purposes unless
the compensation qualifies as "performance-based" compensation or is otherwise
exempt under the law and proposed Internal Revenue Service regulations issued
in December 1993. The Compensation Committee believes that the new law and
proposed regulations require clarification, and that based upon current levels
of cash compensation payable by the Company, the $1,000,000 deductibility cap
will not affect the Company in 1994. For these reasons, the Compensation
Committee has deferred any decision regarding the Company's policy on this
matter. The Compensation Committee will review this matter from time to time as
the new law and proposed regulations are clarified.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE
Salary
The Compensation Committee annually establishes, subject to the approval of
the Board of Directors, the base salaries which will be paid to the Company's
executive officers during the coming year. In setting salaries, the
Compensation Committee takes into account several factors, including
competitive compensation data, comparisons of salaries and responsibilities
among the Company's executive officers, the extent to which an individual may
participate in the incentive compensation plans maintained by the Company and
its affiliates, and qualitative factors bearing on an individual's experience,
responsibilities, management and leadership abilities and job performance.
Incentive Compensation Plans
The Compensation Committee also administers the terms of the Company's
incentive compensation plans in which the executive officers participate. In
doing so, the Compensation Committee considers management's plans for the
Company's growth and profitability and achievement of strategic goals,
determines the criteria to be used for the determination of incentive
compensation awards, and fixes the levels of target and maximum awards for
participants and the minimum level of attainment of performance objectives
necessary for awards to be made under each incentive compensation plan. The
Company has typically had in effect at any one time both an annual and multi-
year incentive compensation plan, as well as a stock option plan.
Annual Plan
For 1993, each of the Company's executive officers 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
14
<PAGE>
from 20% to 40% of the participant's salary at year end were payable depending
upon the extent to which the Company's earnings per share increased over the
prior year (or, in the case of Mr. Payne, depending in part on the Company's
and in part on WMX Technologies, Inc.'s respective earnings per share
increases, or in the case of certain officers who had management responsibility
for one of the Company's operating groups, depending in part on the increase in
the Company's earnings per share and in part on the extent of any increase over
the prior year in that operating group's pre-tax income). The Annual Plan award
formula for 1993 was designed in such a way as to disproportionately increase
or decrease a participant's annual incentive compensation in the event that
actual results exceed or fall short of targeted levels. The maximum incentive
bonus in each case was set at an amount equal to twice the amount of a
participant's target bonus. In addition, the percentage of the target award
otherwise payable to a participant (other than Mr. Payne) could be increased or
decreased depending upon the Compensation Committee's review of an evaluation
of such participant's management performance. The Annual Plan also required the
Compensation Committee to find that Mr. Payne had furthered the implementation
of the Company's environmental principles before any award could be paid to him
under the Annual Plan.
Under the terms of the Annual Plan, no award was payable to any participant
unless a specified minimum percentage of the budgeted increase in the relevant
operating results was achieved. Because those minimum percentages were not
achieved in 1993, no award was or will be paid under the Annual Plan for 1993
to the Company's executive officers.
Long Term Plan
In 1993, the Compensation Committee approved and the Board of Directors
adopted the Chemical Waste Management, Inc. Long Term Incentive Plan (the "Long
Term Plan"), and named two of the Company's executive officers as participants.
Under the Long Term Plan, each participant's target award was 40% of his salary
at the end of the initial performance period (ending December 31, 1995). The
target award would be payable depending on the Company's total return to
stockholders compared to that of the companies comprising the Standard & Poor's
500 Stock Index (the "S&P 500") during the performance period. 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 Long Term Plan, participants will be
paid target awards 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 awards to be paid will vary
upwards to 300% of the target award if the Company's total stockholder return
places it at a higher percentile ranking in relation to the S&P 500 companies
and downwards to 50% of the target award if the Company's total stockholder
return places it at a specified minimum ranking. If the Company's total
stockholder return places it below the specified minimum ranking in relation to
the S&P 500 companies, then no award is to be paid for the relevant performance
period.
The Long Term Incentive Plan 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 officers, who forfeit deferred amounts if they leave
the Company during the deferral period, to remain with the Company and an
additional linkage between compensation and Company performance.
Payments, if any, are to be made under the Long Term Incentive Plan only
following the end of the first performance period on December 31, 1995. The
Compensation Committee intends to name certain of the Company's executive
officers participants in the Long Term Plan for successive three-year
performance periods ending on December 31, 1996 and subsequent years. The Long
Term Plan replaces the Company's 1991 Performance Unit Plan under which payout
was to have been based on the growth of the Company's earnings per share over
the two-year period ended December 31, 1993. No payments were or will be made
under the 1991 Performance Unit Plan.
15
<PAGE>
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 Plan"), and by a management committee to all other eligible
employees under the Company's 1990 ServiceShares Stock Option Plan. Among the
Company's executive officers, the number of shares subject to options granted
to each individual generally depends upon his or her base salary and the level
of that officer's management responsibility. The largest grants are awarded to
the most senior officers who, in the view of the Compensation Committee, have
the greatest potential impact on the Company's profitability and growth. These
officers typically receive grants each year which the Compensation Committee
intends to constitute at least one-half of their total targeted "at risk"
compensation. All options under the 1992 plan are non-qualified stock options
which are granted at an exercise price equal to 100% of fair market value on
the date of grant. These options typically have a term of seven years and
become exercisable in cumulative increments of one-third of the total number of
shares subject to the option during each of the first three years of the option
term.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Salary
In determining the 1993 base compensation of D. P. Payne, the Company's Chief
Executive Officer, the Compensation Committee made particular note of several
considerations, which are presented below in the order of their significance in
the Compensation Committee's view.
First, the Compensation Committee considered the Company's accomplishments
during 1992. During that year, the Company's revenues increased approximately
12% to nearly $1.36 billion, and its operating margin was in excess of 16%. The
Compensation Committee believed that this performance under Mr. Payne's
leadership compared very favorably against the Company's direct competitors.
The Compensation Committee also noted that Mr. Payne was highly instrumental in
the Company's implementation of several efficiency-enhancing operational and
corporate office reorganization steps, the resolution of several legal and
environmental disputes involving the Company and the recruitment of new
managerial talent for the Company.
Second, the Compensation Committee considered a report and data furnished by
the Company's compensation consultant concerning Mr. Payne's compensation
relative to that of the chief executive officers of the comparator companies
referenced above under "General Policies." The report concluded that Mr.
Payne's 1993 proposed salary would be within the bounds of reasonableness for a
company targeting salary at a median level.
Based on these considerations, the Compensation Committee approved Mr.
Payne's base compensation at $400,000 for the year 1993.
Incentive Compensation Plans
Annual Plan
For 1993, the Compensation Committee awarded Mr. Payne a target Annual Plan
participation of 40% of his 1993 salary, with 75% of any bonus payable to him
to be determined in accordance with the performance criteria of the CWM Annual
Plan (the increase in the earnings per share of the Company's common stock) and
the balance determined in accordance with the WMX Technologies, Inc. Corporate
Incentive Bonus Plan performance criteria (the increase in the earnings per
share of WMX common stock). This participation level was the same as that
awarded to Mr. Payne in prior years. The Compensation Committee determined that
in light of the Long Term Plan and stock option components of Mr. Payne's
incentive compensation structure (discussed below), Mr. Payne's participation
in the Annual Plan at the 40% level was appropriate in order for Mr. Payne's
intended incentive compensation to constitute a substantial part of his
targeted total 1993 compensation. In making this decision, the Compensation
Committee also
16
<PAGE>
considered the report of the Company's compensation consultant, which, citing a
survey of 300 major service, industrial and financial companies, reported that,
on average, chief executive officer bonuses actually paid during the survey
period averaged 60% of salary. However, because neither the Company nor WMX
achieved in 1993 the minimum increases in earnings per share required for an
award under the Annual Plan to be paid, no payment was or will be made to Mr.
Payne under the Annual Plan for 1993.
Long Term Plan
Under the Company's new Long Term Plan, for the first performance period
ending December 31, 1995, the Compensation Committee awarded Mr. Payne a target
award of 40% of his salary as of the end of such period. The Compensation
Committee's selection of the 40% participation level for Mr. Payne reflects the
Company's compensation practices, under which incentive compensation under the
Long Term Plan, together with the Annual Plan and stock options, is to comprise
between one-half and two-thirds of total target compensation for Mr. Payne. The
Compensation Committee also considered its understanding of long term
compensation awards by other companies. As noted above, no payment will be made
to Mr. Payne, if ever, under the Long Term Plan until the completion of the
first performance period.
Stock Options
The Compensation Committee's 1993 grant of options to Mr. Payne under the
1992 Plan was determined by dividing two and one-half times Mr. Payne's base
compensation by the 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 again the goals of maintaining
incentive compensation as a substantial portion of Mr. Payne's total
compensation and of making stock option grants at a level of at least one-half
of total incentive compensation and the Company's historical stock option grant
practices. In addition, Mr. Payne received as a non-employee director of Rust
an option to purchase 20,000 shares of Rust common stock under the Rust
International Inc. Non-Employee Director Stock Option Plan. In making its 1993
grant of options to Mr. Payne under the 1992 Plan, the Compensation Committee
considered the Rust grant to Mr. Payne.
Peer Pedersen, Chairman
Dean L. Buntrock
James B. Edwards
Kay Hahn Harrell
Peter H. Huizenga
James E. Koenig
Phillip B. Rooney
17
<PAGE>
COMPANY STOCK PERFORMANCE
The following graph and table compare the yearly changes in the cumulative
total returns on the Company's common stock, the Standard & Poors 500 Index and
the Smith Barney Hazardous Waste Index (in each case assuming dividend
reinvestment):
COMPARISON OF 5-YEAR CUMULATIVE RETURN
VS. S&P 500 AND SMITH BARNEY HAZARDOUS WASTE INDICES(1)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chemical Waste Management, Inc. $100 $170 $171 $169 $167 $ 68
- -------------------------------------------------------------------
S&P 500 Index $100 $132 $128 $166 $179 $197
- -------------------------------------------------------------------
Smith Barney Hazardous Waste Index $100 $139 $137 $140 $132 $ 74
</TABLE>
(1) Assumes $100 invested on December 31, 1988 in Company common stock, the S&P
500 Index and the Smith Barney Hazardous Waste Index. Historical results
are not necessarily indicative of future performance.
18
<PAGE>
CERTAIN TRANSACTIONS
The Company and WMX (or certain of its subsidiaries) have entered into a
number of interrelated agreements with respect to their ongoing relationships.
Because of the complexity of the various relationships between the Company and
WMX (including their respective subsidiaries), there can be no assurance that
each of such agreements, or the transactions provided for therein, considered
separately, has been or will be effected on terms no less favorable to the
Company than could have been obtained from unaffiliated third parties. However,
it has been the intention of the Company 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
the Company, 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. Although the Company has not adopted any formal procedures designed to
assure that conflicts of interest will not occur, the Company intends to seek
the approval of its independent directors for any agreement which its
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 or its affiliated companies.
The following is a summary of certain past and anticipated future
arrangements and transactions between the Company and WMX or its affiliates.
The Company anticipates that, if necessary, it will be able to negotiate an
extension of the agreements described below which expire on December 31, 1994.
ORGANIZATION OF RUST
Pursuant to an Organizational Agreement among Brand, the Company and WTI, on
January 1, 1993, the Company contributed to Rust, in exchange for 46,682,031
shares of Rust common stock, or approximately 58% of the outstanding capital
stock of Rust: (i) 100% of its ownership in Brand, which amounted to 12,575,870
shares, or 56% of the outstanding common stock of Brand; (ii) its hazardous
substance remediation services business, consisting primarily of CWM Remedial
Services Group, Inc.; (iii) beneficial ownership of all WM International
ordinary shares owned by the Company, constituting 12% of the outstanding
ordinary shares of WM International, together with all of the Company's rights
attendant to such shares; and (iv) an aggregate of $141,000,000 in principal
amount of indebtedness outstanding under that certain Temporary Funding
Agreement dated February 22, 1991, as amended, between Brand and the Company.
At the same time, WTI contributed to Rust, in exchange for 33,216,060 shares of
Rust common stock, or approximately 42% of the outstanding capital stock of
Rust: (i) 100% of the outstanding common stock of its two principal
engineering, construction and environmental and infrastructure consulting
businesses, SEC Donohue Inc. and Rust International Corporation (Delaware);
(ii) 100% of the common stock of its London-based international engineering and
consulting business, Wheelabrator Technologies International Holdings Inc.;
(iii) certain disposal credits in the aggregate amount of $30,000,000 at
facilities owned or operated by WMI; and (iv) an aggregate of $68,000,000 in
cash, notes receivable and pre-funded acquisition costs. In addition, the
Company, WTI, Rust and various of their affiliates entered into various
ancillary agreements and the parties agreed to cause Rust to repay to the
Company the outstanding indebtedness of the Company's hazardous substance
remediation services subsidiary in the aggregate principal amount of
$75,000,000. This transaction was approved by the independent members of the
Boards of Directors of CWM, WTI and Brand.
On January 1, 1993, Rust, Brand and Rust Services Inc., a wholly-owned
subsidiary of Rust, entered into an Agreement and Plan of Merger pursuant to
which Brand was merged into Rust Services Inc. Each share of Brand common stock
outstanding immediately prior to the effective time of the merger (other than
shares of Brand common stock held by Rust or held in the treasury of Brand,
which were cancelled) was converted, at the option of the holder thereof, into
one share of common stock of Rust or the right to receive $18.75 in cash. The
cost (approximately $130,000,000) of acquiring the Brand shares exchanged for
cash was financed through Rust's credit facility with WMX described below.
19
<PAGE>
CASH MANAGEMENT, FINANCING AND RELATED ARRANGEMENTS
The Company and WMX have entered into an agreement under which WMX will
manage the Company's cash and fund the Company's cash requirements, up to a
maximum of $750,000,000, from year to year until terminated as of the end of a
calendar year upon 30 days notice. WMX will make demand loans to the Company,
at a rate equivalent to WMX's effective rate for 30-day commercial paper plus
such number of basis points as effectively reimburses WMX for its expenses in
obtaining funds. WMX will also make term loans, at the option of the Company,
with maturities up to ten years, at rates equivalent to WMX's cost for loans of
similar duration, or such floating rates of interest as may be agreed upon. If
the Company is in a positive cash position with WMX, the Company is entitled to
interest at a rate based on WMX's 30-day commercial paper rate. If the Company
demonstrates the availability to it of better returns on short-term investments
or lower borrowing costs, WMX has agreed to provide such terms to the Company.
During 1993, such transactions resulted in aggregate interest charges to the
Company of $20,955,989, and at December 31, 1993, the Company owed WMX
$744,304,833.
WMX has also agreed to continue to provide the Company (at the Company's
expense) with all appropriate insurance coverages and bid, performance and
other surety bonds to the extent reasonably available, and to use all
reasonable efforts to furnish such corporate guarantees, letters of credit and
bonds relating to certain continuing federal environmental financial assurance
mechanisms as the Company may reasonably request, subject to certain
limitations and conditions, from year to year until terminated as of the end of
a calendar year upon 30 days notice. The Company has agreed to indemnify WMX
against certain losses and expenses that may be incurred by WMX in connection
therewith. The Company's allocable share of insurance costs will be determined
on the basis of the risk and loss experience rating system utilized by WMX.
The Company, WMX, WTI and Rust have also entered into a Rust Intercorporate
Services Agreement pursuant to which WMX agreed to loan to Rust up to
$350,000,000, and provide Rust (at Rust's expense) with all appropriate
insurance coverages and bid, performance and other surety bonds to the extent
reasonably available, all on terms substantially similar to WMX's arrangement
with the Company described above. The arrangement is in effect until December
31, 1997. In August 1993, the maximum amount of this credit facility was
increased to $450,000,000 until December 31, 1993, at which time Rust executed
a promissory note to WMX in the aggregate amount of $100,000,000, bearing
interest at an annual rate of 6% and maturing on December 31, 1998, and the
maximum amount of the credit facility was reduced to $350,000,000. On December
31, 1993, $50,000,000 outstanding under the credit facility was converted into
a five year term loan bearing interest at an annual rate of 6%. During 1993,
such transactions resulted in aggregate interest charges to Rust of $8,584,653,
and at December 31, 1993, Rust owed WMX approximately $390,000,000.
Pursuant to that Agreement, the Company has agreed to reimburse Rust for
certain business development expenses in an amount not to exceed $10,000,000 in
each of 1993 and 1994 (to induce Rust to develop and implement a business
development program with a particular emphasis on its hazardous substance
remediation services business). Rust has the right to defer the Company's
obligation to reimburse such expenses from year to year until December 31,
1997. Such reimbursement for 1993 was deferred.
MANAGEMENT, TECHNICAL AND OTHER SERVICES
The Company and WMX and their various subsidiaries provide services to each
other in the ordinary course of business. During 1993, revenue earned by the
Company from WMX and its affiliated companies for such services was
$217,404,417, and operating expenses charged to the Company by WMX and such
affiliates for such services were $16,762,692. In January 1992, the Company
committed to dispose of a minimum of 770,000 tons of such non-hazardous solid
wastes in landfills owned or operated by affiliates of WMX over the 24 month
period ended December 31, 1993 at negotiated rates which the Company believes
were favorable. This commitment was terminated by mutual agreement as of May
31, 1993.
20
<PAGE>
WMX, the Company and WTI have agreed that Rust will be a 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 industrial construction services of the type generally
offered by Rust and its subsidiaries. WTI is a preferred vendor to WMX and the
Company of certain engineered products and services and CWM is a preferred
vendor to a subsidiary of Rust of services of the type provided by CWM.
In 1993, the Company was charged an aggregate of approximately $9,795,000 by
WMX and a subsidiary for various administrative, accounting, financial and
other services. WMX has agreed to provide such services to the Company from
year to year until the arrangement is terminated as of the end of a calendar
year upon 30 days notice. Pursuant to such agreement, WMX is entitled to
reimbursement for its fully allocated costs of providing services.
The Company leases certain office facilities, including the Company's
corporate headquarters, from WMX or the WMX Technologies, Inc. Pension Trust,
and certain chemical waste management facilities from subsidiaries of WMX, for
which the Company made payments aggregating $1,547,376 in 1993, consisting of
rent and reimbursement of incidental costs. In addition, the Company subleased
certain facilities to WMX, for which WMX paid rent of $133,000.
INTERNATIONAL BUSINESS OPPORTUNITIES AGREEMENT
The Company has also entered into an Amended and Restated International
Business Opportunities Agreement, as amended, with WMX, Rust, WTI, WM
International and an affiliate of WM International pursuant to which, in part,
the Company 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. Opportunities in North America (other than
those relating to hazardous substance remediation services which have been
allocated to Rust) relating to storage, processing, treatment or disposal of
(i) radioactive wastes, or (ii) hazardous wastes regulated under the Resource
Conservation and Recovery Act or wastes the storage, treatment or disposal of
which as of January 1993 was regulated under the Toxic Substances Control Act
in the United States, (iii) such wastes in Canada which would be so regulated
in the United States, or (v) wastes in Mexico which are currently or in the
future regulated as hazardous or toxic under Mexican law, have been allocated
to the Company. Opportunities worldwide relating to (a) architectural services,
(b) engineering and design services, other than those relating to (1) chimneys
and air pollution control equipment and facilities, (2) facilities and systems
for water, wastewater and sewage treatment outside North America, but only (x)
where the customer is seeking third-party operation and maintenance services in
addition to those customarily involved in start-up and commissioning tests, or
(y) which are designed for treating hazardous waste streams, whether or not the
customer is seeking third-party operation and maintenance services, and (3)
waste-to-energy facilities outside of North America, (c) procurement,
construction and construction management services, including marine
construction and dredging, but excluding such services as they relate to (1)
hazardous substance remediation services outside North America, (2) chimneys
and air pollution control equipment and facilities, (3) facilities and systems
for water, wastewater and sewage treatment outside North America, but only (in
the case of facilities and systems falling within this item (3)) (x) where the
customer is seeking third-party operation and maintenance services in addition
to those customarily involved in start-up and commissioning tests, or (y) which
are designed for treating hazardous waste streams, whether or not the customer
is seeking third-party operation and maintenance services, and (4) waste-to-
energy facilities outside North America, (d) scaffolding services, (e)
demolition and dismantling services, (f) environmental consulting services,
including, without limitation, environmental facility siting and permitting
services, remedial investigations and feasibility studies, contaminant
assessments, risk assessments and air quality analyses, and (g) industrial
facility and power plant maintenance services have been allocated to Rust, as
well as opportunities in North America relating to hazardous substance
remediation services.
21
<PAGE>
Pursuant to that Agreement, the Company and Rust also agreed not to conduct
waste management services operations, including, without limitation,
collection, transfer, recycling and land disposal of solid wastes; collection,
storage, processing, treatment or disposal of hazardous wastes (including
hazardous substance remediation services); the design, development,
construction, operation and maintenance of waste-to-energy facilities; and the
design, engineering and construction (where the customer is seeking third-party
operation and maintenance services in addition to those customarily involved in
start-up and commissioning tests), operation and maintenance of facilities and
systems for water, wastewater and sewage treatment (including facilities for
treating hazardous waste streams, whether or not the customer is seeking third-
party operation and maintenance services), outside of North America until the
later of July 1, 2000 and the date WMX ceases to beneficially own a majority of
the outstanding voting equity interests of the Company or Rust, as the case may
be, or a majority of all outstanding voting equity interests of WM
International.
RUST SHAREHOLDERS' AGREEMENT
Rust, WTI and the Company have entered into a Rust Shareholders' and
Registration Rights Agreement pursuant to which the Company and WTI each will
have certain demand and participation registration rights and rights of first
refusal with respect to Rust common stock. The Company and WTI also have the
right to purchase from Rust at fair market value such number of shares of Rust
common stock as may be necessary to maintain beneficial ownership of 51% and
22%, respectively. A shareholder's right to purchase Rust common stock will
terminate on the earlier of (i) January 1, 2003, (ii) the April 30 in any
calendar year following a year in which the right is exercisable, the
shareholder has failed to exercise the right and such shareholder does not
beneficially own at least 50% (in the case of the Company) or at least 20% (in
the case of WTI) of Rust common stock then outstanding, and (iii) the date on
which such shareholder owns less than 51% (in the case of the Company) or less
than 22% (in the case of WTI) of such Rust common stock then outstanding, as a
direct result of transfers by such shareholder. 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.
INTERNATIONAL DEVELOPMENT AGREEMENT
Pursuant to a Third Amended and Restated International Development Agreement,
the Company, Rust, WTI, WMX and certain of their affiliates have agreed that
for so long as WMX has beneficial ownership of a majority of the outstanding
shares of WM International and so long as Rust has beneficial ownership of
shares having not less than 10% of the voting power of WM International, each
of WMX, Rust and WTI will vote their WM International shares so that one
designee of Rust (or such greater number as shall equal the total number of
directors multiplied by the percentage of outstanding WM International shares
beneficially owned by Rust, reduced to the nearest whole number) will be
elected to the Board of Directors of WM International. Mr. Buntrock has been
designated as Rust's designee. The Company has an option, which has been
assigned to Rust, to maintain beneficial ownership of WM International
outstanding shares at a level having not less than 10% of the voting power of
outstanding WM International securities. In addition, Rust has granted to WMX a
right of first refusal with respect to its beneficial interest in the WM
International shares, WMX has granted to Rust certain participation rights with
respect to a disposition of WM International shares and WM International has
granted to Rust 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.
OTHER TRANSACTIONS
WMX and certain of its subsidiaries, on one hand, and the Company, on the
other hand, have previously transferred various chemical waste management
businesses and other properties to each other and have conditionally agreed to
indemnify each other against liabilities and obligations, including unknown or
contingent environmental and other liabilities, if any, primarily related to
such businesses and properties transferred to them. Also, WMX has conditionally
agreed to indemnify the Company against liabilities and
22
<PAGE>
obligations primarily related to certain chemical waste businesses which
continue to be owned by the Company, and previously agreed to retain certain
chemical waste facilities which WMX or its subsidiaries had acquired and which
are no longer in operation. In this connection, the Company has agreed until
September 30, 2006, subject to certain volume limitations, to provide treatment
and disposal services at a rate equal to its cost plus 10% in respect of
hazardous wastes from sites owned or used by WMX, and WMX has agreed to extend
the same arrangement to the Company in respect of non-hazardous wastes from
sites owned or used by the Company.
The Company has granted to WMX the right to purchase from the Company such
number of shares of capital stock as may be necessary to enable WMX to
beneficially own, together with all other shares of capital stock of the
Company beneficially owned by WMX, capital stock having not less than 55% of
the voting power of all capital stock of the Company having power to vote in
the election of directors. This right is exercisable any time when WMX
beneficially owns capital stock of the Company possessing less than 55% of such
voting power, and expires on the March 31 next following a December 31 as of
which WMX fails to own beneficially capital stock possessing more than 50% of
the voting power of all outstanding capital stock of the Company. The purchase
price for such shares will be the then current fair market value of such
shares.
In the ordinary course of business, various assets, including used vehicles,
equipment, land, leasehold improvements, furniture and fixtures, are
transferred at their net book value between the Company and WMX and its
affiliated companies. During 1993, net transfers of such assets to WMX and its
affiliated companies from the Company amounted to an aggregate of $8,174,913.
Such amount includes proceeds from the sale to WMI of certain assets comprising
a facility that manufactures containers for the Company and WMI for
approximately $7,107,758, which was equivalent to their net book value and
which the Company believes was substantially equivalent to their fair market
value. The transaction was approved by the independent directors of the
Company.
In April 1993, the Company transferred to WMI certain assets and licensed to
WMI certain technology used in connection with the bioremediation of oil
contaminated soils for an aggregate of $2,500,000, which was determined to be
the fair market value of such assets and technology based on management
projections. At the time of the transfer, the Company's investment in those
assets and technology was approximately $19,000. The transaction was approved
by the independent directors of the Company.
In connection with the 1988 offering by WMX of LYONs exchangeable for shares
of the Company's common stock and in consideration of an extension of the term
of the intercompany financing agreements described above, the Company has
agreed to use its best efforts to maintain a current registration statement
covering the shares of the Company's common stock issuable upon exchange of the
LYONs and to indemnify WMX against certain liabilities, including liabilities
under the Securities Act of 1933, as they may relate to the registration
statement.
When an option is exercised by an optionee under the Employee Plans 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
normally 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.
Such loans were extended in 1993 until May 31. The largest amounts of such
loans from the Company in excess of $60,000 which were outstanding to the
directors and executive officers of the Company since January 1, 1993 were as
follows: Jerry E. Dempsey, a former director of the Company--$310,004; and Mr.
Flynn--$248,019. 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. None of such loans from the Company in
excess of $60,000 were outstanding to the directors and executive officers of
the Company in 1993.
23
<PAGE>
VOTING OF SHARES HELD IN DIVIDEND
REINVESTMENT AND STOCK PURCHASE PLAN
If you are a participant in the Chemical Waste Management, Inc. Dividend
Reinvestment and Stock Purchase Plan, the proxy card provided to you covers the
shares held for you by the plan and any shares held directly by you. If you do
not return such proxy card, your shares held in this plan (as well as any
shares owned by you directly) will not be voted for you. You are, therefore,
urged to return the proxy card promptly, duly signed and dated.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. acted as the Company's independent auditors for the
year ended December 31, 1993, and has been selected by the Board of Directors,
upon the recommendation of its Audit Committee, to continue to act as the
Company's independent auditors in 1994. Representatives of Arthur Andersen &
Co. will be present at the 1994 annual meeting of stockholders. They 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
The Company has enclosed its Annual Report to Stockholders for the year ended
December 31, 1993 with this Proxy Statement. Stockholders are referred to the
report for financial and other information about the Company, but such report
is not incorporated in this Proxy Statement and is not a part of the proxy
soliciting material.
PROPOSALS BY STOCKHOLDERS
Any proposals by stockholders intended to be presented at the 1995 annual
meeting must be received by the Company no later than November 30, 1994 in
order to be considered by the Board of Directors for inclusion in the Company's
1995 proxy statement. In order for a stockholder to nominate a candidate for
director, under the Company's by-laws, timely notice of the nomination must be
received by the Company 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
the Company 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 the Company 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 the Company's 1995 proxy
statement.
In each case, the notice must be given to the Secretary of the Company, whose
address is 3001 Butterfield Road, Oak Brook, Illinois 60521. Any stockholder
desiring a copy of the Company's by-laws will be furnished one without charge
upon written request of the Secretary.
24
<PAGE>
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 the
Company personally or by mail, telephone, telegraph, or otherwise, but such
persons will not be compensated for such services. Brokerage firms, banks,
fiduciaries, voting trustees or other nominees will be requested to forward the
soliciting material to the beneficial owners of stock held of record by them.
The entire cost of the Board of Directors' solicitation will be borne by the
Company.
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,
/s/ Thomas A. Witt
Thomas A. Witt
Secretary
25
<PAGE>
PROXY
PROXY
CHEMICAL WASTE MANAGEMENT, INC.
ANNUAL MEETING, MAY 5, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dean L. Buntrock, Peter H. Huizenga and Peer Pedersen, each with power of
substitution, are hereby authorized to vote all shares of common stock of
Chemical Waste Management, Inc. which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders of Chemical Waste
Management, Inc. to be held on Thursday, May 5, 1994, and at any adjournments
thereof, as designated below, and in their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
meeting.
A MAJORITY (OR IF ANY ONE, THEN THAT ONE) OF THE ABOVE PERSONS OR THEIR
SUBSTITUTES WHO SHALL BE PRESENT AND ACTING AT THE MEETING SHALL HAVE THE
POWERS CONFERRED HEREBY.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE.
1. ELECTION OF CLASS II DIRECTORS.
Nominees: Donald F. Flynn, Peter H. Huizenga, Peer Pedersen
FOR [_] WITHHOLD [_] FOR ALL [_] (Except Nominee(s) written below)
-----------------------------------------------------------------------
2. In their discretion, on such other business as may properly come before the
meeting.
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.
Dated: _____________________________________, 1994
Signature(s) ___________________________________________________________________
________________________________________________________________________________
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.
