SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
ALLWASTE, INC.
(Name of Registrant as Specified in Its Charter)
ALLWASTE, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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 transactions 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:
- --------------------------------------------------------------------------------
/ / 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 registrations 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:
- --------------------------------------------------------------------------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[Allwaste Logo] 5151 San Felipe Road, Suite 1600
Houston, Texas 77056-3609
(713) 623-8777
December 22, 1995
To the Stockholders of Allwaste, Inc.:
The Annual Meeting of Stockholders of the Company will be held on Friday,
January 19, 1996, at 1:00 p.m. (CST) at the Texas Commerce Center Auditorium,
601 Travis Street, Houston, Texas.
A notice of the Annual Meeting, proxy and proxy statement containing
information about the matters to be acted on at the Annual Meeting are
enclosed. The Company's 1995 Annual Report, which is not a part of the
enclosed proxy statement, is also enclosed and provides additional information
regarding the Company's financial results in 1995. Holders of shares of the
Company's common stock are entitled to vote at the Annual Meeting on the basis
of one vote for each share held.
All stockholders of the Company are cordially invited to attend the
Annual Meeting. If you cannot attend, please assist us in preparing for the
Annual Meeting by promptly completing, signing and returning your proxy. Even
though you return your completed and signed proxy, you will still retain the
right to revoke your proxy designation at any time prior to the Annual Meeting
and vote in person at the Annual Meeting if you wish. The prompt return of
proxies will ensure a quorum and save the Company the expense of further
solicitation.
Very truly yours,
R. L. NELSON, JR.
Chairman of the Board of Directors
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY.
NO POSTAGE IS REQUIRED ON THE ENCLOSED ENVELOPE
IF IT IS MAILED IN THE UNITED STATES.
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 1996
Notice is hereby given that the Annual Meeting of Stockholders of
Allwaste, Inc., a Delaware corporation (the "Company"), will be held at Texas
Commerce Center Auditorium, 601 Travis Street, Houston, Texas, at 1:00 p.m.
(CST) on Friday, January 19, 1996, for the following purposes:
1. To elect three Class III directors of the Company, such
directors to hold office until the third succeeding Annual Meeting of
stockholders after their election (the 1999 Annual Meeting);
2. To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants to audit the Company's
consolidated financial statements for the fiscal year ending August 31,
1996; and
3. To transact such other business as may properly be brought
before the Annual Meeting or any adjournment thereof.
Information with respect to the above matters is set forth in the proxy
statement that accompanies this notice. Only holders of record of shares of
the Company's common stock at the close of business on November 20, 1995 will
be entitled to notice of and to vote at the Annual Meeting or any postponement
or adjournment thereof. A list of such stockholders will be open to the
examination of any stockholder during ordinary business hours, for a period of
ten days prior to the Annual Meeting, at the principal executive offices of
the Company, 5151 San Felipe Road, Suite 1600, Houston, Texas 77056.
All stockholders of the Company are invited to attend the Annual Meeting.
Please complete, sign and promptly return the enclosed proxy in the envelope
provided for such purpose.
By Order of the Board of Directors,
WILLIAM L. FIEDLER
SECRETARY
Houston, Texas
December 22, 1995
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY.
NO POSTAGE IS REQUIRED ON THE ENCLOSED ENVELOPE
IF IT IS MAILED IN THE UNITED STATES.
<PAGE>
[Allwaste Logo] 5151 San Felipe Road, Suite 1600
Houston, Texas 77056-3609
(713) 623-8777
December 22, 1995
----------------------------
PROXY STATEMENT
----------------------------
SOLICITATION, REVOCABILITY AND VOTING OF PROXIES
This proxy statement is furnished to the holders of record of the common
stock, par value $.01 per share (the "Common Stock"), of Allwaste, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation on
behalf of the Board of Directors and management of the Company of proxies for
use at the Annual Meeting of Stockholders to be held on January 19, 1996, and
any postponements or adjournments thereof, for the purpose of considering and
acting on the matters set forth in the accompanying notice of the Annual
Meeting. Proxy solicitation materials are first being mailed to stockholders
on or about December 22, 1995.
Shares of Common Stock represented by an unrevoked, properly executed
proxy delivered to the Company prior to or at the time of the Annual Meeting
will be voted in accordance with the instructions specified thereon. If no
instructions are specified on the proxy, shares represented thereby will be
voted: (i) for the election of the three nominees specified herein as Class
III directors of the Company; (ii) for the ratification of the appointment of
Arthur Andersen LLP as the Company's independent public accountants for the
fiscal year ending August 31, 1996; and (iii) in the discretion of the holder
of the proxy, on all other matters that may properly come before the Annual
Meeting.
Any stockholder who has given a proxy may revoke his or her proxy by
executing a proxy bearing a later date or by delivering written notice of
revocation of his or her proxy executed in the same manner as the proxy to the
Secretary of the Company at the Company's executive offices at any time prior
to the Annual Meeting or any postponement or adjournment thereof. Prior to
exercise thereof with respect to any matter submitted to a vote of the
stockholders, any stockholder who attends the Annual Meeting or any
postponement or adjournment thereof in person may revoke any proxy previously
given and vote by ballot.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the Annual Meeting, either in
person or represented by a properly executed proxy, is necessary to constitute
a quorum for the transaction of business at the Annual Meeting. If there are
not sufficient shares represented in person or by proxy at the Annual Meeting
to constitute a quorum, the Annual Meeting may be postponed or adjourned in
order to permit further solicitation of proxies by the Company. Proxies given
pursuant to this solicitation and not revoked will be voted at any
postponement or adjournment of the Annual Meeting in the manner set forth
herein.
The election of directors will be determined by a plurality of the votes
cast by holders of shares of Common Stock present in person or represented by
duly executed proxies, and the approval of any other matters (including the
ratification of the selection of the Company's independent certified public
accountants) will require the affirmative vote of the holders of a majority of
the shares present in person or represented by duly executed proxies at the
Annual Meeting and entitled to vote on the subject matter. Accordingly, in the
case of shares that are present at the Annual Meeting for quorum purposes, not
voting such shares for a particular nominee for director (including by
withholding authority on the proxy) will not operate to prevent the election
of such nominee if other stockholders vote for such nominee; an abstention on
any other proposal will operate to prevent approval of such proposal to the
same extent as a vote against such proposal; and a broker "non-vote" (which
results when a broker holding shares for a beneficial owner has not received
timely voting instructions on certain matters from such beneficial owner) will
have no effect on the outcome of the vote on any of
1
the proposals. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business.
The total expense of the Annual Meeting, including the expense of
preparing and mailing proxy solicitation materials, will be borne by the
Company. In addition to solicitation of proxies by mail, certain directors,
officers, representatives and regular employees of the Company may solicit
proxies by telephone, telegram and personal interview. Such individuals will
not receive additional compensation from the Company for solicitation of
proxies but may be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation. Banks, brokers and others who hold shares
of the Company's Common Stock in nominee names also may be requested by the
Company to distribute proxy solicitation materials to beneficial owners and
will be reimbursed by the Company for reasonable out-of-pocket expenses which
they may incur in so doing. Brokers and other custodians, nominees and
fiduciaries also will be reimbursed by the Company for the reasonable expenses
they may incur in sending proxy solicitation materials to the beneficial
owners of the Company's Common Stock.
VOTING SECURITIES, SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
All stockholders of record as of the close of business on November 20,
1995 will be entitled to notice of and to vote at the Annual Meeting. On
November 20, 1995, there were 39,175,929 shares of Common Stock issued and
outstanding and held of record by 2,947 persons. The Common Stock is the only
outstanding class of voting securities of the Company. Stockholders are
entitled to one vote for each share of Common Stock held by them on all
matters to be voted on at the Annual Meeting. Cumulative voting for the
election of directors is not permitted.
2
The following table sets forth information as of November 30, 1995 with
respect to the beneficial ownership of the Company's Common Stock by: (i) all
record and beneficial holders of 5% or more of the shares of the Company's
issued and outstanding Common Stock; (ii) each director and nominee for
director of the Company individually; (iii) each executive officer named in
the Summary Compensation Table set forth below under the heading "Executive
Compensation" ("Named Executive Officers"); and (iv) all directors, nominees
for director and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SOLE VOTING OPTIONS
AND EXERCISABLE SHARES HELD OTHER TOTAL
INVESTMENT WITHIN UNDER 401(K) BENEFICIAL BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER POWER 60 DAYS PLAN(1) OWNERSHIP OWNERSHIP OF CLASS
------------------------ ----------- ----------- ------------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Asset ................. 3,383,400 - 0 - - 0 - - 0 - 3,383,400 8.6%
Management, L.P.(2)
Fund Asset Management, L.P.(2)
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Heartland Group, Inc. ............... 3,141,800 - 0 - - 0 - - 0 - 3,141,800 8.0
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
R. L. Nelson, Jr..................... 1,021,456 185,500 2,315 2,000(3) 1,211,271 3.1
Robert M. Chiste..................... 83,575 120,000 - 0 - - 0 - 203,575 *
Michael A. Baker..................... - 0 - 55,000 - 0 - 19,600(4) 74,600 *
Robert L. Knauss..................... - 0 - 70,000 - 0 - - 0 - 70,000 *
T. Michael Young..................... 2,000 65,000 - 0 - - 0 - 67,000 *
Thomas J. Tierney.................... 20,000 47,500 - 0 - - 0 - 67,500 *
John U. Clarke....................... 5,000 10,000 - 0 - - 0 - 15,000 *
Ricardo J. Besquin................... - 0 - 17,500 - 0 - - 0 - 17,500 *
Fred M. Ferreira..................... 16,300 178,250 5,097 - 0 - 199,647 *
I. T. Corley......................... 20,000 134,250 9,126 - 0 - 163,376 *
Steven B. Bowles..................... 5,085 32,500 17,744 - 0 - 55,329 *
Fletcher Thorne-Thomsen, Jr.......... 38,000 39,000 - 0 - - 0 - 77,000 *
Berry E. Rankin...................... 19,300 64,950 4,256 - 0 - 88,506 *
All directors, nominees for
director and executive officers
as a group (14 persons)............ 1,178,447(5) 669,375(6) 17,331(7) 21,800(8) 1,886,953 4.7%
</TABLE>
- ------------
* Indicates less than 1.0%.
(1) Share amounts included in this column represent shares allocated to the
employee through participation in the Allwaste Employee Retirement Plan
(the "401(k) Plan") according to a 401(k) Plan statement dated as of June
30, 1995, with respect to which NationsBank Texas, N.A., the 401(k) Plan
Trustee, has sole voting power and the employee has sole investment power.
(2) Merrill Lynch Asset Management, L.P. d/b/a Merrill Lynch Asset Management
("MLAM") and Fund Asset Management, L.P. d/b/a Fund Asset Management
("FAM") are indirect wholly-owned subsidiaries of Merrill Lynch & Co.,
Inc., which may be deemed to share investment and voting authority with
MLAM and FAM.
(3) Represents shares of Common Stock held by Mr. Nelson as custodian with
respect to which Mr. Nelson possesses sole voting and investment power.
(4) Represents shares of Common Stock held in trust with respect to which Mr.
Baker serves as trustee and possesses sole voting and investment power.
(5) Excludes shares of Common Stock held by Messrs. Ferreira, Thorne-Thomsen,
Bowles, Corley and Rankin, each of whom are Named Executive Officers that
resigned as an officer and/or director of the Company subsequent to the
Company's fiscal year-end.
(6) Includes all options to purchase shares of Common Stock which are
exercisable as of November 30, 1995 and within the next 60 days, but
excludes: (i) options to purchase 924,125
3
shares of Common Stock granted to seven executive officers that are not
currently exercisable or exercisable within the next 60 days (such other
options become exercisable in various annual installments through April
1998); (ii) options to purchase 52,500 shares of Common Stock granted to
five executive officers in October 1995; (iii) options to purchase an
aggregate of 154,000 shares of Common Stock (of which, options to purchase
64,950 shares of Common Stock are exercisable as of November 30, 1995 and
within the succeeding 60 days) granted to Mr. Rankin, a Named Executive
Officer who resigned as an officer of the Company subsequent to the
Company's fiscal year-end but has remained employed by one of the
Company's wholly-owned subsidiaries; and (iv) options to purchase an
aggregate of 860,000 shares of Common Stock (of which, options to purchase
384,000 shares of Common Stock are exercisable as of November 30, 1995 and
within the succeeding 60 days) granted to Messrs. Ferreira,
Thorne-Thomsen, Bowles and Corley, each of whom are Named Executive
Officers that resigned as an officer and director of the Company
subsequent to the Company's fiscal year-end, under the Company's 1992
Limited Non-Qualified Stock Option Plan (the "1992 Plan"). The options
granted to each of Messrs. Ferreira, Thorne-Thomsen, Bowles and Corley
under the 1992 Plan have terms substantially similar to those of the
original grants of such options under the Company's Amended and Restated
1989 Replacement Non-Qualified Stock Option Plan (the "1989 Plan"). See
"Board Compensation Committee Report on Executive
Compensation -- Executive Compensation Program -- Stock Option Awards."
(7) Excludes an aggregate of 36,223 shares of Common Stock held in accounts in
the Company's 401(k) Plan on behalf of Messrs. Ferreira, Bowles, Corley
and Rankin.
(8) Includes 200 shares of Common Stock held by the spouse of Darren B.
Miller, the Company's Vice President -- Treasurer and Controller.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The business and affairs of the Company, as provided in the Sixth Article
of the Company's Amended and Restated Certificate of Incorporation (the
"Charter"), are managed and controlled by the Board of Directors. The Sixth
Article of the Charter provides that the total number of directors that will
constitute the entire Board will be not less than nine and not more than
fifteen and that the directors shall be divided into three equal or nearly
equal classes. The term of office of Class III directors expires at this
Annual Meeting of Stockholders to be held January 19, 1996; the term of office
of Class I directors expires at the 1997 Annual Meeting of Stockholders (I.E.,
one year of the term remaining); and the term of office of the Class II
directors expires at the 1998 Annual Meeting of Stockholders (I.E., two years
of the term remaining).
The Board of Directors currently consists of eight directors. As
permitted by the Company's Corrected Bylaws, the vacant Class I director
position will be filled by the remaining members of the Board on
identification of and acceptance of a proper candidate. Three nominees (Class
III), each of whom is an incumbent Class III Director, are proposed to be
elected at this Annual Meeting to serve for a three-year term to expire at the
1999 Annual Meeting of Stockholders and until their successors are chosen and
have qualified.
VOTE REQUIRED
The affirmative vote of the holders of a plurality of the outstanding
shares of Common Stock, present in person or represented by duly executed
proxies at the Annual Meeting, for the election of a given nominee is
necessary to elect such nominee as a director of the Company (i.e., the
director nominees receiving the greatest number of votes cast will be elected,
regardless of the number withheld from voting for the election of such
director nominees). See "Solicitation, Revocability and Voting of Proxies."
4
DIRECTORS AND NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The following table sets forth with respect to each nominee named herein
and each director whose term of office will continue for a period after the
Annual Meeting: (i) the name and age of such person, (ii) the principal
occupation of such person and (iii) the year during which such person first
became a director of the Company or of its predecessor. Three nominees are
proposed to be elected at this Annual Meeting, each of whom is an incumbent
Class III director and each of whom will serve for a three-year term to expire
at the 1999 Annual Meeting of Stockholders and until their successors are
chosen and have qualified. The persons named as proxies in the accompanying
proxy, or their substitutes, will vote for the nominees for director who have
been designated as such by the Board of Directors. If, for any reason not
presently known, any nominee is not available for election, the proxy holders,
in their discretion, may vote for another person who may be nominated in place
of such nominee.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- --------------------- --------
CLASS I -- DIRECTORS WHOSE TERMS EXPIRE AT THE FIRST
SUCCEEDING ANNUAL MEETING (1997)
<S> <C> <C> <C>
Michael A. Baker ................... 50 Independent Business Consultant 1984
R. L. Nelson, Jr. .................. 57 Chairman of the Board of Directors of 1978
the Company
CLASS II -- DIRECTORS WHOSE TERMS EXPIRE AT THE SECOND
SUCCEEDING ANNUAL MEETING (1998)
Robert L. Knauss ................... 64 Chairman and Chief Executive Officer 1988
of Baltic International USA, Inc.
T. Michael Young ................... 51 President and Chief Executive Officer 1989
of Hi-Lo Automotive, Inc.
Robert M. Chiste ................... 48 President and Chief Executive Officer 1995
of the Company
CLASS III -- DIRECTOR NOMINEES FOR TERMS EXPIRING AT THE THIRD
SUCCEEDING ANNUAL MEETING (1999)
Thomas J. Tierney .................. 64 Chairman of the Board of Corporate 1990
Communications Center, Inc.
Ricardo J. Besquin ................. 43 President and Chairman of the Board 1993
of Perforadata, Inc.
John U. Clarke ..................... 42 President of Concept Capital Group, 1995
Inc.
</TABLE>
Michael A. Baker has served as a Director of the Company since November
1984. From June 1989 to October 1991, Mr. Baker served as an officer and
director of Sanifill, Inc., a Houston-based landfill development company
founded by Mr. Baker and others, and he continued to serve as a member of the
Board of Directors of Sanifill through May 1992. Mr. Baker has served as a
director of American Medical Response, Inc., a Boston-based company engaged in
the provision of a national ambulance service network, since February 1992 and
currently serves as an outside consultant to various private companies.
Raymond L. Nelson, Jr. is the principal founder and Chairman of the Board
of Directors of the Company. Since founding the Company, Mr. Nelson has at
various times served as its President, Chief Executive Officer and Chief
Operating Officer. Mr. Nelson has been involved in various aspects of the
waste industry for over 30 years. Prior to starting the Allwaste Services
businesses in January 1978, Mr. Nelson was a divisional Vice President of
Browning-Ferris Industries, Inc., a Houston-based waste
5
services company, principally working in the areas of acquisitions, operations
and market development.
Robert M. Chiste, a Director of the Company since January 1995, became
President and Chief Executive Officer of the Company in October 1994. He
served as Chairman, Chief Executive Officer and President of American National
Power, Inc., a successor company of Transco Energy Ventures company (TEVCO),
since it was created in 1986. From 1981 to 1986, he served, most recently, as
a Senior Vice President of Enron Oil and Gas Corporation and its predecessor.
Mr. Chiste also serves as a director of Franklin Credit Management Corp., a
New York-based financial services company.
Robert L. Knauss became a Director of the Company in March 1988. Mr.
Knauss is Chairman and Chief Executive Officer of Baltic International USA,
Inc., an aviation investments company based in Houston, Texas. Mr. Knauss
served as the Dean and Distinguished University Professor of the University of
Houston Law Center from 1981 to 1993. Mr. Knauss is also a director of The
Mexico Fund, Inc., an investment fund based in Mexico City; Equus II, Inc., an
investment fund based in Houston, Texas; and Air Baltic Corporation, an
international airline based in Riga, Latvia.
T. Michael Young became a Director of the Company in March 1989. Mr.
Young is, and has been, President and Chief Executive Officer of Hi-Lo
Automotive, Inc., a retailer of automotive supplies based in Houston, Texas,
since October 1987.
Ricardo J. Besquin became a Director of the Company in October 1993.
Since 1978, Mr. Besquin has held various executive positions with Perforadata,
S.A. de C.V., an oil service company based in Mexico City, Mexico, currently
serving as President and Chairman of the Board.
John U. Clarke became a Director of the Company in July 1995. Since May
1995, Mr. Clarke has served as the President of Concept Capital Group, Inc., a
Houston-based financial and strategic advisory services firm. He served as
Executive Vice President -- Chief Financial and Administrative Officer of
Cabot Oil & Gas Corporation, a Houston-based independent natural gas producer,
from August 1993 to February 1995. From April 1981 to May 1993, Mr. Clarke was
employed with Transco Energy Company, serving most recently as Senior Vice
President and Chief Financial Officer.
Thomas J. Tierney became a Director of the Company in February 1990. Mr.
Tierney serves as Chairman of the Board of Directors of Corporate
Communications Center, Inc., a Dallas-based communications company, a position
he has held for the past 20 years. Mr. Tierney has over 35 years of experience
in marketing and finance for a variety of businesses. Mr. Tierney is also a
director of M/A/R/C, Inc., an engineering services company based in Irving,
Texas, and Comerica Bank-Texas.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended August 31, 1995, the Board of Directors held
four meetings and acted six times by unanimous written consent. During fiscal
1995, except as noted below, each member of the Board of Directors attended at
least 75% of all meetings of the Board of Directors and committees of the
Board of Directors of which such director was a member. Ricardo J. Besquin
attended fewer than 75% of the meetings of the Board of Directors and
committees of the Board of Directors of which he was a member during the
fiscal year ended August 31, 1995.
There are four standing committees of the Board of Directors which have
the following described responsibilities and authority. The Acquisition
Committee, which consisted of I.T. Corley (chairman), Michael A. Baker and
Ronald L. Stanfa, met once in fiscal 1995 and was disbanded in January 1995.
AUDIT COMMITTEE. The Audit Committee consists of T. Michael Young
(chairman), Robert L. Knauss and Thomas J. Tierney. The Audit Committee: (i)
makes recommendations to the Board of Directors with respect to the
independent auditors that conduct the annual examination of the Company's
accounts; (ii) approves major accounting policies; (iii) periodically reviews
principal internal controls and related organizational matters to assure that
necessary actions are taken to maintain a sound and modern system of financial
controls; (iv) reviews the scope of the annual examination of accounts and the
division of responsibilities between the external and internal auditors;
6
(v) periodically reviews the findings and recommendations of the external and
internal auditors; (vi) provides a means of communication between the Board of
Directors and accounting personnel, both external and internal; and (vii)
provides the directors with information and advice on matters pertaining to
accounting policies and financial controls. During fiscal 1995, the Audit
Committee held two meetings and took no action by unanimous written consent.
COMPENSATION COMMITTEE. The Compensation Committee consists of Michael
A. Baker (chairman) and Robert L. Knauss. Mr. David H. Batchelder served as
the chairman of the Compensation Committee from January 20, 1995 until his
resignation as a director of the Company in November 1995. Following the
resignation of Mr. Batchelder as a director, the remaining members of the
Compensation Committee elected Mr. Baker to serve as chairman of the
Compensation Committee. The Compensation Committee periodically determines the
amount and form of compensation and benefits payable to all principal officers
and certain other management personnel. This committee also performs the
duties of administration with respect to the Company's stock option and
management bonus plans and recommends amendments or changes to such plans. The
Compensation Committee assures that effective succession planning is conducted
for key management positions. During fiscal 1995, the Compensation Committee
held three meetings and acted once by unanimous written consent.
EXECUTIVE COMMITTEE. The Executive Committee consists of R. L. Nelson,
Jr. (chairman), Robert M. Chiste and Thomas J. Tierney. During the intervals
between meetings of the Board of Directors, this committee may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Company, except with respect to extraordinary
matters such as taking action with respect to the amendment of the Charter, a
merger of the Company, a sale of all or substantially all of the Company's
assets, or the declaration of dividends. During fiscal 1995, the Executive
Committee did not meet and took no action by unanimous written consent.
NOMINATING COMMITTEE. The Nominating Committee consists of R. L. Nelson,
Jr. (chairman) and Ricardo J. Besquin. Prior to his resignation as a member of
the Company's Board of Directors in July 1995, Mr. Ronald L. Stanfa was the
chairman of this committee. Following Mr. Stanfa's resignation, the remaining
members of the committee elected Mr. Nelson as the chairman of the Nominating
Committee. The Nominating Committee reviews the size and composition of the
Board of Directors, apportions the directors into classes, and makes
recommendations with respect to nominations for the election of directors. The
Nominating Committee will consider suggestions from stockholders for nominees
to serve as directors, if such proposals are submitted in writing to R. L.
Nelson, Jr., 5151 San Felipe Road, Suite 1600, Houston, Texas 77056-3609.
During fiscal 1995, the Nominating Committee met twice and took no action by
unanimous written consent.
COMPENSATION OF DIRECTORS
During the 1995 fiscal year, fees for all directors aggregated $95,500,
including amounts paid for committee participation. Non-employee directors of
the Company receive $2,500 for each directors' meeting attended and $2,000 for
each committee meeting attended. In addition, the Company reimburses the
directors for all expenses relating to attendance at meetings. The Company
does not pay director fees to directors who also are employees of the Company.
No member of the Board of Directors was compensated during fiscal 1995 for his
service as a director of the Company other than pursuant to the Company's
standard compensation arrangement for directors. Non-employee directors also
receive annual stock option awards according to a predetermined formula.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From September 1, 1994 through January 20, 1995, the Compensation
Committee of the Board of Directors consisted of Robert L. Knauss (chairman),
David H. Batchelder and Ricardo J. Besquin. From January 21, 1995 until the
Company's fiscal year-end of August 31, 1995, the Compensation Committee of
the Board of Directors consisted of David H. Batchelder (chairman), Michael A.
Baker and Robert L. Knauss. Following the resignation of David H. Batchelder
as a member of the Company's Board of Directors in November 1995, the members
of the Compensation Committee
7
voted to elect Michael A. Baker as the chairman of the Compensation Committee,
to serve in such capacity until new committee members are chosen by the Board
of Directors in January 1996. No member of the Compensation Committee of the
Board of Directors of the Company was, during fiscal 1995, a current or former
officer or employee of the Company or any of its subsidiaries. In addition, no
executive officer of the Company served as: (i) a member of the compensation
committee (or other Board committee performing equivalent functions) of
another entity, one of whose executive officers served on the Company's
Compensation Committee, (ii) a director of another entity, one of whose
executive officers served on the Company's Compensation Committee, or (iii) a
member of the compensation committee (or other Board committee performing
equivalent functions) of another entity, one of whose executive officers
served as a director of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EACH OF THE THREE NOMINEES FOR CLASS III DIRECTOR, SUCH DIRECTORS
TO SERVE UNTIL THE 1999 ANNUAL MEETING OF STOCKHOLDERS.
EXECUTIVE OFFICERS
The following table lists the name, age, position and period of service
with the Company or predecessor company of each executive officer of the
Company.
<TABLE>
<CAPTION>
SERVED AS
EXECUTIVE
OFFICER
NAME AGE SINCE POSITION
---- --- --------- --------
<S> <C> <C> <C>
R. L. Nelson, Jr..................... 57 1978 Chairman of the Board of Directors
Robert M. Chiste..................... 48 1994 President and Chief Executive Officer
David E. Fanta....................... 36 1995 Senior Vice President -- Operations
James E. Rief........................ 52 1995 Senior Vice President -- Technology &
Administration
T. Wayne Wren, Jr.................... 47 1995(1) Vice President -- Chief Financial
Officer
William L. Fiedler................... 37 1994 Vice President, General Counsel and
Secretary
Darren B. Miller..................... 36 1994 Vice President -- Treasurer and
Controller
Albert B. Rosenbaum, III............. 46 1989 Vice President -- Industry and
Government Relations; Corporate
Compliance Officer
</TABLE>
- ------------
(1) As noted below, Mr. Wren previously served as the Company's Vice President
and Chief Financial Officer from August 1991 to December 1993. Mr. Wren
then entered into a consulting agreement with the Company, pursuant to
which he rendered financial consulting services to the Company from
January 1994 through June 1994.
For biographies of Messrs. Nelson and Chiste, see "Proposal No. 1 --
Election of Directors."
David E. Fanta became the Senior Vice President -- Operations of the
Company in November 1995, having served as the Vice President -- Central Group
of Allwaste Environmental Services, Inc., a wholly-owned subsidiary of the
Company ("AES"), since September 1993. Mr. Fanta has served AES in various
capacities since 1985.
James E. Rief was elected as the Company's Senior Vice
President -- Technology & Administration in July 1995. Prior to joining the
Company, Mr. Rief served as the Director of Information Systems and
Administration of Cabot Oil & Gas Corporation from May 1994 to July 1995. He
served as the Vice President & Chief Information Officer of American
Exploration Company, a Houston-based energy company, from October 1990 to May
1994.
8
T. Wayne Wren, Jr. became the Company's Vice President -- Chief Financial
Officer in November 1995. From January 1994 to November 1995, Mr. Wren served
as an independent financial consultant. He previously served as the Company's
Vice President -- Chief Financial Officer from August 1991 to December 1993.
He also provided financial consulting services to the Company pursuant to a
consulting agreement from January 1994 to June 1994. For approximately seven
years prior to joining the Company in August 1991, Mr. Wren served as Senior
Vice President -- Finance and Administration of Prairie Producing Company, an
independent oil company based in Houston, Texas.
William L. Fiedler joined the Company in February 1990 as Senior Counsel
and became Vice President, General Counsel and Secretary in February 1994.
Darren B. Miller was elected Vice President -- Treasurer and Controller
in July 1995, having served as a Vice President since July 1994 and as
Controller since January 1992. Mr. Miller has served the Company in other
capacities since April 1989.
Albert B. Rosenbaum III joined the Company in September 1989 as Vice
President -- Industry and Government Relations and in October 1991 was named
Corporate Compliance Officer. For 14 years prior to joining the Company, Mr.
Rosenbaum was a Vice President of National Tank Truck Carriers, Inc., a
non-profit association, and his duties included overseeing lobbying efforts in
Washington, D.C. on behalf of the trucking industry and industry relations.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has employment agreements with all executive officers of the
Company that prohibit such officers from disclosing the Company's trade
secrets and generally restrict these individuals from competing with the
Company for a period of two years after their respective dates of termination
of employment. Each of the agreements provides for automatic renewal on an
annual basis at the end of its stated term and is terminable by the Company
for "cause" on 10 days' written notice and without "cause" by either party on
30 days' written notice.
Mr. Nelson's employment agreement provides that he will be entitled to
continue to receive his then-base monthly salary for a period of six months
after the date of termination if his employment is terminated by the Company
without "cause."
In the event Mr. Chiste's employment is terminated by the Company for
reasons other than "cause," he will be entitled to continue to receive his
base salary at his current base salary rate for 2 years after such
termination. Further, in such case, the 126,316 shares of restricted stock
granted to Mr. Chiste pursuant to his employment agreement with the Company
will continue to vest as provided in his employment agreement.
Under the terms of a Severance and Retirement Agreement between the
Company and Mr. Fred Ferreira, as amended, Mr. Ferreira is entitled to
receive: (i) an annual retirement benefit of $36,000 per year for the next 10
years; (ii) 4 months' base salary at his current salary rate; (iii)
reimbursement of the sales commission on Mr. Ferreira's residence, which
commission will not exceed the lesser of (a) 6% of the sales price or (b)
$30,000; (iv) 30,000 shares of restricted stock; (v) a stock option to
purchase 80,000 shares of Common Stock; and (vi) a grant under the Company's
1992 Plan of an amount equal to all vested options held by Mr. Ferreira under
the Company's 1989 Plan that would have expired under the 1989 Plan following
termination of his employment with the Company.
Under the terms of a Severance Agreement between the Company and Mr.
Thorne-Thomsen, Mr. Thorne-Thomsen is entitled to receive: (i) payment of his
base salary at his current salary rate through July 30, 1996; and (ii) a grant
under the Company's 1992 Plan of an amount equal to all vested options held by
Mr. Thorne-Thomsen under the Company's 1989 Plan that would have expired under
the 1989 Plan following termination of his employment with the Company.
9
The employment agreement between the Company and Mr. Corley provided that
he would be entitled to continue to receive his then-base monthly salary for a
period of three months after the date of termination if his employment was
terminated by the Company without "cause." In connection with the sale of the
Company's glass recycling operations completed in September 1995, Mr. Corley
resigned from his positions as Executive Vice President -- Chief Financial
Officer of the Company and as a director of the Company; therefore, no
severance payments were made to Mr. Corley. In connection with the termination
of his employment with the Company, Mr. Corley was, however, granted under the
Company's 1992 Plan an amount equal to all vested options held by Mr. Corley
under the Company's 1989 Plan that would have expired under the 1989 Plan
following termination of his employment with the Company. See "Voting
Securities, Security Ownership of Management and Principal Stockholders."
Under the terms of the employment agreement between the Company and Mr.
Bowles, if his employment were terminated by the Company without "cause" prior
to July 5, 1996, he would be entitled to continue to receive his then base
monthly salary for the lesser of (i) a period of one year or (ii) the number
of months remaining after such termination through July 5, 1996. In addition,
his employment agreement with the Company provided that in the event the
Company underwent a change-in-control and Mr. Bowles were unsuccessful in
negotiating an employment relationship with the successor entity, Mr. Bowles
would have the option of entering into a consulting relationship with the
Company for a six-month period, pursuant to which he would be entitled to
receive compensation at twice the rate of his then base monthly salary. If,
however, Mr. Bowles became an employee of the successor entity to the Company
in the event of a change-in-control and remained an employee of such entity
for a period of at least one year, he would be entitled to receive a bonus
equal to one-third of his base cash compensation for such year. In connection
with the sale of the Company's glass recycling operations, which was completed
in September 1995, Mr. Bowles resigned from his position as Vice
President -- Recycling Division of the Company; therefore, the Company did not
make any severance payments to Mr. Bowles. Mr. Bowles was granted under the
Company's 1992 Plan an amount equal to all vested options held by Mr. Bowles
under the Company's 1989 Plan that would have expired under the 1989 Plan
following termination of his employment with the Company. See "Voting
Securities, Security Ownership of Management and Principal Stockholders."
The employment agreement between the Company and Mr. Rankin provides that
he will be entitled to continue to receive his then-base monthly salary for a
period of three months after the date of termination if his employment was
terminated by the Company without "cause."
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee of the Board of
Directors of the Company shall not be deemed incorporated by reference by any
general statement incorporating this proxy statement by reference into any
filing under the Securities Act of 1933, as amended (the "Securities Act"), or
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and shall not be deemed filed under either of the Securities Act or the
Exchange Act except to the extent that the Company specifically incorporates
this information by reference.
OVERVIEW
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for supervising the development of and making recommendations to
the Board of Directors with respect to the Company's executive compensation
policies. In addition, the Committee makes annual recommendations to the Board
of Directors concerning compensation to be paid to the President and Chief
Executive Officer (the "CEO") and each of the other executive officers of the
Company. The Committee is composed entirely of independent outside directors
of the Company, none of whom are currently, nor have any of them ever been,
officers or employees of the Company.
10
The Committee also oversees all aspects of the Company's executive
compensation program, including many of the Company's employee benefit plans.
The Company currently maintains a variety of compensation and benefit plans in
which its executive officers may participate, including the Company's 1989
Plan, the 401(k) Plan and the Corporate Management Bonus Plan.
ALLWASTE'S COMPENSATION PHILOSOPHY
The principles guiding the executive compensation program are designed to
link executive compensation and stockholder value. The goals of the program
are:
o To compensate employees in a manner that aligns the employees'
interests with the interests of the stockholders;
o To encourage continuation of the Company's entrepreneurial
spirit;
o To reward executives for successful long-term strategic
management;
o To recognize outstanding performance; and
o To attract and retain highly qualified and motivated executives.
The Company has maintained the philosophy that compensation of the
executive officers should be directly and materially linked to objective
measures of operating and performance criteria. To achieve this, compensation
is leveraged through annual bonuses and stock option incentives. The Company's
strategy with respect to executive compensation includes establishing base
salaries for executives at a level somewhat below the industry average, while
providing more aggressive bonuses which, when combined with base salary
amounts, give the Company's executives the potential to earn in excess of
competitive industry compensation if the specified performance goals for the
Company are achieved. The Company also grants to its executives and other key
employees stock options at current market value, which options have no
monetary value to the executives unless and until the market price of the
Company's Common Stock increases. In this manner, the Company's executives are
well-compensated when the Company achieves its operating and performance
goals. On the other hand, in less profitable years, an executive's pay is more
likely than not below competitive industry compensation. The mix of base
salary, bonuses and stock option awards reflects the Company's intention to
link executive compensation to the Company's operational performance and the
price of its Common Stock. The Committee intends to continue to examine ways
to more closely link its annual bonus and long-term incentive plans to the
Company's stock performance, with the objective of creating plans that
strengthen the relationship between stockholder value and executive
compensation.
In order to make its recommendations to the Board of Directors concerning
executive officer compensation for fiscal 1995, the Committee reviewed an
executive compensation survey prepared for the Company by William M. Mercer
Incorporated, an independent consulting firm ("Mercer"), in developing the
Company's compensation plan. In setting fiscal 1995 executive compensation,
the Committee reviewed and evaluated the fiscal 1994 compensation of the
Company's executive officers as compared with (i) companies within the
Company's industry, both at the local and national level, (ii) companies
comparable to the Company in size and capitalization, and (iii) companies with
similar growth histories and future growth plans. Although several of the
companies used as comparable companies also appear in the group of peer
companies used in constructing the graph appearing under the caption
"Executive Compensation -- Stock Performance Graph," that peer group differs
in that it is limited to companies in the industrial and environmental
services industry and does not include companies that, due to size, geographic
location and other factors, were included among the companies evaluated in the
Mercer compensation survey.
The Revenue Reconciliation Act of 1993 restricts the ability of a
publicly-traded corporation to deduct compensation in excess of $1,000,000
paid to its CEO and the four most highly-compensated executive officers. Based
on its current compensation structure, the Company does not anticipate that
any of its officers will reach this $1,000,000 threshold in the near future.
11
EXECUTIVE COMPENSATION PROGRAM
The components of the Company's fiscal 1995 executive compensation
program that are subject to the discretion of the Committee on an individual
basis include: (a) base salaries; (b) annual cash performance-based bonuses;
and (c) stock options.
BASE SALARY
In line with the Company's current policy with respect to the base
salaries of its executive officers, the Committee recommends to the Board of
Directors salaries for each of the Company's executive officers. The Committee
believes that these salaries are conservative as compared with salaries for
similar positions at comparable companies. The market pricing approach is used
to set base salary targets for executive positions at 90% of average
competitive compensation. An individual performance and experience factor is
applied to the base salary targets to determine each executive's actual base
salary, within a range of +/- 20% of the targets. For fiscal 1995, the base
salaries of each of Messrs. Ferreira, Bowles, Thorne-Thomsen and Rankin, Named
Executive Officers, were increased by percentages ranging from 3.3% to 28.0%.
The base salaries for Messrs. Nelson and Corley were not increased during
fiscal 1995.
ANNUAL CASH BONUS
The Company expects to compensate its executives for achievement of
Company goals and, on attainment of established minimum thresholds, individual
performance goals. Incentive bonus awards are determined by a formula composed
of four factors: an executive's base salary, the applicable categorized bonus
availability percentage for an executive, the Company's performance and
individual performance and experience factors. The bonus availability
percentage refers to the percentage range of each individual executive's base
salary which is used to determine the highest amount of such individual's
potential bonus. The more senior the level of an executive's position, the
higher the bonus availability percentage. The bonus availability percentage
applicable to the Named Executive Officers, other than the CEO, ranged from
70% to 90% for fiscal 1995.
Company performance goals, which are established for each fiscal year
during the budgeting process, require the achievement of growth in reported
earnings per share over the prior fiscal year, measured against a targeted
range established at the beginning of the fiscal year by the Board of
Directors. The minimum earnings per share target is based on achieving good
growth in light of the economic conditions, industry fundamentals and business
climate and other factors affecting the Company. The maximum earnings per
share target is based on extraordinary growth in light of the factors
considered. If the minimum earnings per share growth target is not achieved,
no award of bonus compensation is made. The Committee applies a subjective,
case-by-case individual performance and experience factor to determine each
executive's actual bonus amount, which in no event will exceed the maximum
bonus availability established for each executive. Because the Company did not
achieve the performance goals established for fiscal 1995, bonuses were not
paid to any of the executive officers under these programs.
The Company's group vice presidents participate in bonus plans applicable
to operations personnel, which plans are separate from the corporate bonus
program. Such programs operate in a similar manner to the above-described
corporate program, except that performance goals are based on the operations
of a given group, subsidiary or other business unit.
STOCK OPTION AWARDS
Stock option awards for executives, other than the CEO, are reviewed by
the CEO and approved by the Committee. The amount of annual stock option
awards is determined by applying a predetermined multiple (the more senior the
level of an executive's position, the higher the stock option multiple) to
each executive's base compensation for the ensuing fiscal year and dividing
the resulting dollar amount by the then current market price of the Company's
Common Stock. For fiscal 1995, the range of multiples applicable to the base
compensation of the named executive officers, other than the CEO, ranged from
.9 to 1.7. The Committee applies a subjective, case-by-case individual
performance and experience factor to the resulting target option award to
determine each executive's
12
actual stock option award, within a range of +/- 20% of the target option
award. Finally, the Committee may, in its discretion, make supplemental stock
option awards to executives and others whose actions, in a specific
transaction or event, have resulted in an extraordinary contribution to the
Company.
During the fiscal year ended August 31, 1995, the Committee granted to
the Named Executive Officers, other than the CEO, options to acquire an
aggregate of 540,000 shares of Common Stock at an exercise price of $6.50 per
share. At August 31, 1995, the Named Executive Officers, other than the CEO,
held options covering an aggregate of 1,359,000 shares of Common Stock, of
which options to acquire an aggregate of 634,450 shares were vested and
exercisable. See "Executive Compensation -- Option/SAR Grants in Fiscal 1995."
Subsequent to fiscal 1995, the Committee granted options to acquire an
aggregate of 325,000 shares of Common Stock under the 1992 Plan to Messrs.
Corley and Bowles in replacement of options that would have expired under the
terms of the Company's 1989 Plan following the termination of their employment
with the Company. In addition, subsequent to the end of fiscal 1995, the
Committee granted options to acquire an aggregate of 455,000 shares of Common
Stock under the 1992 Plan to Messrs. Ferreira and Thorne-Thomsen in
replacement of options that would have expired under the 1989 Plan following
the termination of their employment with the Company in November 1995. These
new options have substantially similar terms to those of the original grants
under the 1989 Plan, except that in the case of Messrs. Corley and Bowles,
such options will expire no later than April 30, 1998. The Committee also
granted Mr. Ferreira an additional option to purchase 80,000 shares of Common
Stock under the 1992 Plan.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The terms of Mr. Chiste's compensation package were negotiated with
reference to the compensation being paid to Mr. Nelson, who was then serving
as the Company's President and CEO. Mr. Nelson's compensation for fiscal 1995
had been set through evaluation of the factors set forth above under
"-- Executive Compensation Program -- Base Salary," including the results of
the Mercer compensation survey. Mr. Chiste's employment agreement provides for
an initial base salary of $275,000. Rather than provide a base salary amount
that is substantially higher than that of other executives at comparable
companies, the base salary element of Mr. Chiste's total incentive
compensation package is designed to potentially represent a smaller percentage
of total compensation, with annual bonus and stock option incentives providing
Mr. Chiste with a greater opportunity to increase his total compensation if
the Company achieves its performance and stock price objectives, as compared
with other CEOs in the industry. His employment agreement also contemplated
payment of a guaranteed bonus of $875,000, with $275,000 of this amount being
payable as an initial signing bonus and $150,000 to be paid during each of the
succeeding four years (subject to deferral and forfeiture). In addition, Mr.
Chiste remains eligible to participate in the Corporate Management Bonus Plan,
with a bonus availability percentage of 90% for fiscal 1995. In recognition of
Mr. Chiste's contributions in connection with the Company's sale of its glass
recycling operations as of September 1, 1995, the Company amended its
employment agreement with Mr. Chiste to provide for the issuance to Mr. Chiste
of 126,316 shares of restricted Common Stock in lieu of the remaining cash
bonus amounts, with 25% of such shares of restricted Common Stock vesting each
year for the next four years (subject to forfeiture).
BASE SALARY
Mr. Chiste's base salary was negotiated in connection with his employment
agreement. The Committee expects that in evaluating potential increases to Mr.
Chiste's salary in future years, it will, as it does with other executive
officers of the Company, use a percentage of average competitive compensation
as a base target salary and subsequently apply an adjusting factor of +/- 20%
based on the subjective individual performance and level of experience
considerations.
ANNUAL BONUS
Mr. Chiste received a one-time signing bonus of $275,000 during fiscal
1995. In recognition of Mr. Chiste's contributions in connection with the
Company's sale of its glass recycling operations on
13
September 1, 1995, the Company amended its employment agreement with Mr.
Chiste to provide for the grant to Mr. Chiste of 126,316 shares of restricted
stock in lieu of payment of an aggregate of $600,000 in guaranteed cash bonus
payments initially contemplated by the employment agreement. In addition, Mr.
Chiste, along with the other executive officers, is eligible to participate in
the Company's Corporate Management Bonus Plan. The categorized bonus
availability percentage is higher (90%) for the CEO position than for other
executives in recognition of the CEO's increased responsibilities and greater
control over the policies and goals of the Company.
STOCK OPTION AWARDS
Mr. Chiste's participation in the Company's stock option program is on
the same general terms as other executive officers, although the amounts that
may potentially be granted to Mr. Chiste are larger as a result of a higher
stock option award multiple assigned to his executive position and to the
higher total compensation (base salary plus bonus) to which the multiple is
applied. As contemplated by his employment agreement with the Company, Mr.
Chiste was granted an initial stock option to purchase 600,000 shares of
Common Stock, at an exercise price of $6.50, under the 1989 Plan during fiscal
1995.
Members of the Compensation Committee:
Michael A. Baker
Robert L. Knauss
14
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued for each of the Company's fiscal years ended
August 31, 1995, 1994 and 1993 to: (i) the Company's CEO, (ii) the four most
highly compensated executive officers of the Company, determined as of August
31, 1995, and (iii) two additional individuals who would have been among the
four most highly compensated executive officers of the Company if they had
been serving as executive officers of the Company as of August 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARDS
--------------
ANNUAL COMPENSATION(1) (G)
------------------------------------ SECURITIES (I)
(A) UNDERLYING ALL OTHER
NAME AND PRINCIPAL (B) (C) (D) OPTIONS/SARS) COMPENSA-
POSITION YEAR SALARY($)(2) BONUS($) (#) TION($)(3)
- ------------------------------------- --------- ------------ -------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Robert M. Chiste(4).................. 1995 $226,942 $275,000(5) 600,000 -0-
President and Chief Executive
Officer 1994 -0- -0- -0- -0-
1993 -0- -0- -0- -0-
- -----------------------------------------------------------------------------------------------------------
R. L. Nelson, Jr.(6)................. 1995 301,229 -0- 200,000 3,878(7)
Chairman of the Board 1994 286,282 201,800 90,000 3,048(8)
1993 277,000 -0- 150,000 5,521(9)
- -----------------------------------------------------------------------------------------------------------
Fred M. Ferreira(10)................. 1995 235,081 -0- 150,000 3,029
Executive Vice President and Chief
Operating Officer 1994 177,692 126,000 45,000 1,695
1993 175,800 -0- 40,000 3,034
- -----------------------------------------------------------------------------------------------------------
I. T. Corley(11)..................... 1995 218,454 -0- 30,000 3,044
Executive Vice President and Chief
Financial Officer 1994 207,307 141,100 65,000 1,393
1993 206,200 -0- 95,000 1,684
- -----------------------------------------------------------------------------------------------------------
Steven B. Bowles(12)................. 1995 162,054 64,503 50,000 3,008
Vice President -- Recycling
Division 1994 140,815 26,892 30,000 382
1993 22,867 -0- 20,000 -0-
- -----------------------------------------------------------------------------------------------------------
Fletcher Thorne-Thomsen, Jr.(13)..... 1995 158,800 -0- 60,000 969
Senior Vice President -- Corporate
Development 1994 89,736 60,600 60,000 -0-
1993 -0- -0- -0- -0-
- -----------------------------------------------------------------------------------------------------------
Berry E. Rankin(14).................. 1995 180,331 -0- 50,000 2,293
Vice President -- Container
Services Division 1994 127,800 39,232 35,000 2,027
1993 134,500 103,000 41,000 2,209
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes salary and/or bonus amounts deferred pursuant to Section 401(k)
of the Internal Revenue Code of 1986, as amended. Does not include the
value of certain other compensation to the named individuals that did not
exceed the lesser of $50,000 or 10% of each individual's total annual
salary and bonus shown in the table.
(2) Represents base salary amounts actually earned during the fiscal periods.
Annual base salary adjustments, if any, are effective on November 1 of
each year.
(3) Represents the amount of the Company's match for each executive officer
under the Allwaste Employee Retirement Plan, a defined contribution plan
which was established effective October 1, 1990, as amended and restated
effective as of June 30, 1995.
(4) Mr. Chiste was elected as the Company's President and Chief Executive
Officer, effective as of October 17, 1994.
(5) Represents a one-time signing bonus contemplated by the terms of Mr.
Christe's employment agreement with the Company.
(6) During fiscal 1995, Mr. Nelson served as the Company's Chairman of the
Board, President, Chief Executive Officer and Chief Operating Officer for
the period from September 1, 1994 to October 17, 1994, with $44,615 of
his salary attributable to that period. From October 17, 1994 through the
remainder of the fiscal year, Mr. Nelson served solely as the Chairman of
the Board.
15
(7) Includes $1,832 in imputed interest in connection with advances to Mr.
Nelson from the Company.
(8) Includes $1,078 in imputed interest in connection with advances to Mr.
Nelson from the Company.
(9) Includes $2,821 in imputed interest in connection with advances to Mr.
Nelson from the Company.
(10) Mr. Ferreira resigned from his positions as Executive Vice President and
Chief Operating Officer of the Company and as a member of the Company's
Board of Directors in November 1995.
(11) Mr. Corley resigned from his positions as Executive Vice President and
Chief Financial Officer of the Company and as a member of the Company's
Board of Directors in July 1995.
(12) Mr. Bowles, who joined the company in July 1993, resigned from his
position as the Company's Vice President -- Recycling Division in July
1995.
(13) Mr. Thorne-Thomsen, who joined the Company in January 1994, resigned from
his position as the Senior Vice President -- Corporate Development and as
a member of the Company's Board of Directors in November 1995.
(14) Mr. Rankin resigned as the Vice President -- Container Services Division
of the Company in November 1995 but remains employed by one of the
Company's wholly-owned subsidiaries.
16
The following table shows information about option grants in the last
fiscal year to the CEO and the Named Executive Officers of the Company.
OPTION/SAR GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
- ----------------------------------------------------------------------------------------------------- --------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#)(1)(2) FISCAL 1995 ($/SH)(3) DATE 5% 10%
- ------------------------------------- ----------------- ------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert M. Chiste..................... 600,000 33.1% 6.50 4/14/1999 $ 957,541 $2,088,688
- ----------------------------------------------------------------------------------------------------------------------------
R. L. Nelson, Jr..................... 200,000 11.0% 6.50 4/14/1999 319,180 696,299
- ----------------------------------------------------------------------------------------------------------------------------
Fred M. Ferreira..................... 150,000 8.3% 6.50 4/14/1999 239,385 522,172
- ----------------------------------------------------------------------------------------------------------------------------
I. T. Corley......................... 30,000 1.7% 6.50 4/30/1998 47,877 104,434
- ----------------------------------------------------------------------------------------------------------------------------
Steven B. Bowles..................... 50,000 2.8% 6.50 4/30/1998 79,795 174,057
- ----------------------------------------------------------------------------------------------------------------------------
Fletcher Thorne-Thomsen, Jr.......... 60,000 3.3% 6.50 4/14/1999 95,754 208,869
- ----------------------------------------------------------------------------------------------------------------------------
Berry E. Rankin...................... 50,000 2.8% 6.50 4/14/1999 79,795 174,057
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Each of these options were granted under the 1989 Plan and become
exercisable according to a standardized vesting schedule: 20% vests six
months after the date of grant; 25% vests 18 months after the date of
grant; 25% vests 30 months after the date of grant; and 30% vests 42
months after the date of grant. The options expire 54 months after the
date of grant. The Company has not granted stock appreciation rights.
(2) Under the terms of the 1989 Plan, the Committee retains discretion,
subject to 1989 Plan limits, to modify the terms of outstanding options
and to reprice the options.
(3) The exercise price per share for all options granted was equal to the fair
market value per share as of the date of grant. The exercise price and tax
withholding obligations related to exercise may be paid by delivery of
already owned shares, and tax withholding obligations may be satisfied by
withholding of the underlying shares, subject to certain conditions.
(4) The potential realizable value through the expiration date of options has
been determined assuming that the per share market price of Common Stock
appreciates at the indicated rate, compounded annually over the four and
one-half year term of each option, with the exercise price of the options
subtracted from such appreciated share price. These values have been
determined based on assumed rates of appreciation and are not intended to
forecast the possible future appreciation, if any, of the price or value
of the Company's Common Stock. The actual value, if any, an executive may
realize will depend on the excess of the stock price on the date the
option is exercised over the exercise price. No gain to the optionees is
possible without an increase in the stock price.
17
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1995
AND FISCAL 1995 YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(D) (E)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
(B) UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES (C) OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED VALUE FISCAL 1995 YEAR-END (#) FISCAL 1995 YEAR-END ($)(1)
(A) ON EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Chiste..................... -0- -0- 120,000 480,000 -0- -0-
- --------------------------------------------------------------------------------------------------------------------------------
R. L. Nelson, Jr..................... -0- -0- 185,500 254,500 $ 55,688 $68,063
- --------------------------------------------------------------------------------------------------------------------------------
Fred M. Ferreira..................... -0- -0- 178,250 156,750 115,344 34,031
- --------------------------------------------------------------------------------------------------------------------------------
I. T. Corley......................... -0- -0- 134,250 90,750 73,094 51,906
- --------------------------------------------------------------------------------------------------------------------------------
Steven B. Bowles..................... -0- -0- 32,500 67,500 23,063 28,188
- --------------------------------------------------------------------------------------------------------------------------------
Fletcher Thorne-Thomsen, Jr.......... -0- -0- 39,000 81,000 23,625 28,875
- --------------------------------------------------------------------------------------------------------------------------------
Berry E. Rankin...................... 39,169 $3,650 64,950 67,050 14,281 19,594
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options. The value of
unexercised options represents the difference between the exercise price
of such options and the closing sales price of the Company's Common Stock
on August 31, 1995, as reported by the New York Stock Exchange, Inc.,
$5.375 per share.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors,
officers and persons holding more than 10% of a registered class of the
Company's equity securities to file with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange, Inc. initial reports
of ownership, reports of changes in ownership and annual reports of ownership
of Common Stock and other equity securities of the Company. Such directors,
officers and greater-than-ten-percent stockholders are also required to
furnish the Company with copies of all such filed reports.
Based solely on review of the copies of such reports furnished to the
Company during and with respect to the period from September 1, 1994 through
August 31, 1995, the Company believes that Mr. Ronald L. Stanfa, a former
director of the Company, was late in filing a Form 4 covering two
transactions.
STOCK PERFORMANCE GRAPH
The stock performance graph which follows shall not be deemed
incorporated by reference by any general statement incorporating this proxy
statement by reference into any filing under the Securities Act or under the
Exchange Act and shall not be deemed filed under either of such Acts except to
the extent that the Company specifically incorporates this information by
reference.
18
The line graph below compares the yearly percentage change in the
Company's Common Stock against the cumulative total return of (i) the S&P 500
and (ii) peer group companies selected in good faith for the Company's five
most recently completed fiscal years, assuming the investment of $100 on
September 1, 1990 and the reinvestment of all dividends since that date to
August 31, 1995. The data used was obtained from published sources and is
believed to be accurate.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Allwaste, Inc. ..... $100.00 $ 63.51 $ 62.16 $ 52.70 $ 71.62 $ 58.11
S & P 500 .......... $100.00 $126.91 $136.96 $157.80 $166.43 $202.12
Peer Group(1) ...... $100.00 $ 75.42 $ 62.04 $ 59.27 $ 74.77 $ 85.21
The Company's Common Stock performance shown by the above graph is not
necessarily indicative of future Common Stock performance. The total return on
investment (change in the year-end stock price plus reinvested dividends) for
each of the periods for the Company, the S&P 500, and the peer group companies
is based on the stock price or composite index at August 31, 1990.
- ------------
(1) The above graph compares the performance of the Company with the S&P 500
and a group of peer industrial and environmental services companies, not
including the Company, with the investment weighted based on average
annual market capitalization. Other companies in the peer group are as
follows: Allied Waste Industries, Inc.; Astrotech International
Corporation; Browning-Ferris Industries, Inc.; C.H. Heist Corp.; Horsehead
Resource Development Company, Inc.; IMCO Recycling, Inc.; Laidlaw, Inc.
(Class B Shares); Mid-American Waste Systems, Inc.; Republic Waste
Industries, Inc.; Sanifill, Inc.; Serv-Tech, Inc.; Team, Inc.; USA Waste
Services, Inc.; Wellman, Inc.; and Western Waste Industries.
19
PROPOSAL NUMBER 2:
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
On recommendation of the Audit Committee, and subject to ratification by
the stockholders, the Board of Directors has appointed Arthur Andersen LLP as
independent public accountants to examine the Company's consolidated financial
statements for the fiscal year ended August 31, 1996. Arthur Andersen LLP has
served as the Company's independent public accountants since 1986.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement, if they so
desire, and will have the opportunity to respond to appropriate questions from
those attending the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDING AUGUST 31, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 1, 1994, the Company entered into a lease agreement with R. L.
Nelson, Jr., Chairman of the Board of Directors of the Company, for
approximately eight acres of land and improvements on which the Company's Deer
Park, Texas operations are located. This lease supersedes the lease agreement
previously entered into between the Company and Mr. Nelson with respect to a
portion of such land and improvements. The primary term of the lease is five
years with automatic one-year extensions after the primary term unless either
party gives notice of termination ninety days prior to the end of the then
current term. The base rental payable under the lease is $10,500 per month.
Under the terms of the lease agreement in effect during fiscal 1995, the
Company paid to Mr. Nelson a total of $126,000. Management believes that the
terms of this transaction were and are as favorable to the Company as those
available from an unrelated third party.
From time to time during fiscal 1995, R.L. Nelson, Jr., Chairman of the
Board of Directors of the Company, received cash advances from the Company.
The largest aggregate amount of Mr. Nelson's indebtedness outstanding
thereunder at any time during fiscal 1995 was $55,000. Aggregate imputed
interest for fiscal 1995 equal to $1,832 on these interest-free advances is
included in the column entitled "All Other Compensation" appearing in the
Summary Compensation Table set forth above under the heading "Executive
Compensation."
REPORT ON FORM 10-K
The Company filed its Annual Report on Form 10-K for the year ended
August 31, 1995 with the SEC on November 29, 1995. A copy of the report,
including any financial statements and schedules and a list describing any
exhibits not contained therein, may be obtained without charge by any
stockholder. Written requests for copies of the report should be directed to
Stockholder Services, Allwaste, Inc., 5151 San Felipe Road, Suite 1600,
Houston, Texas 77056-3609.
OTHER MATTERS
The cost of solicitation of proxies will be borne by the Company. Proxy
cards and materials will also be distributed to the beneficial owners of
Common Stock through brokers, custodians, nominees and other similar parties,
and the Company expects to reimburse such parties for their expenses in
connection with such distribution.
The Board of Directors knows of no matters that are expected to be
presented at the Annual Meeting other than those described in this proxy
statement. Should any other matter properly come before the Annual Meeting,
however, it is intended that the persons named in the form of proxy
20
accompanying this proxy statement, acting thereunder, will vote in accordance
with their best judgment on such matters.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal to be presented by a stockholder at the Company's 1997
Annual Meeting of Stockholders must be received by the Company no later than
August 23, 1996, so that it may be considered by the Company for inclusion in
its proxy statement and form of proxy relating to that Annual Meeting.
WILLIAM L. FIEDLER
SECRETARY
Houston, Texas
December 22, 1995
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY.
NO POSTAGE IS REQUIRED ON THE ENCLOSED ENVELOPE
IF IT IS MAILED IN THE UNITED STATES.
<PAGE>
[FRONT OF PROXY CARD]
ALLWASTE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ALLWASTE INC. - COMMON STOCK PROXY - FOR THE ANNUAL MEETING OF
STOCKHOLDERS AT 1:00 P.M., JANUARY 19, 1996, AT
TEXAS COMMERCE CENTER AUDITORIUM, 601 TRAVIS STREET, HOUSTON TEXAS.
The undersigned hereby appoints R.L. Nelson, Jr. and Robert M. Chiste, or
either of them, with full power of substitution, as Proxies to vote the Common
Stock of the undersigned at the above stated Annual Meeting and any adjournments
thereof, on the matters set forth in the Notice of Annual Meeting and Proxy
Statement, as follows:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
[BACK OF PROXY CARD]
Please mark your
[X] votes as in this
example.
FOR WITHHOLD INCUMBENT CLASS III
ALL NOMINEES AUTHORITY NOMINEES ARE:
1. Election of Directors ------------ --------- -------------------
for the terms set Thomas J. Tierney
forth in the attached [ ] [ ] Ricardo J. Besquin
Proxy Statement. John U. Clarke
FOR ALL NOMINEES, EXCEPT THE FOLLOWING: ________________________________
2. Ratification of Independent FOR AGAINST ABSTAIN
Auditors for the fiscal year --- ------- -------
ending August 31, 1996. [ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote on such other matters
as may properly come before the Annual Meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE
VOTED FOR ALL NOMINEES IN PROPOSAL 1, FOR PROPOSAL 2, AND WITH THE DISCRETION OF
THE PROXY OR PROXIES, ON ANY OTHER BUSINESS.
Any proxy heretofore given by the undersigned with respect to such Common Stock
is hereby revoked.
Receipt of the Notice of the Annual Meeting and Proxy Statement is hereby
acknowledged.
Do you plan to attend the Annual Meeting? Yes [ ] No [ ]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE ______________________ ______________________ DATE ___________ 19___
SIGNATURE IF HELD JOINTLY
NOTE: (Joint owners must EACH sign. Please sign EXACTLY as your name(s)
appear(s) on this card. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please give your FULL title.)
