<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Clean Harbors, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Clean Harbors, 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), 14-a6(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:
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 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:
Notes:
No preliminary filing was made, because the only matters to be acted upon are
(1) the election of directors and (2) the approval of amendments to a plan as
defined in paragraph (a)(7)(ii) of Item 402 of Regulation S-K.
Item 2 at the Annual Meeting is a proposal to amend the 1992 Equity Incentive
Plan, approved at the 1992 Annual Meeting, to increase the total number of
shares authorized for issuance under the Equity Incentive Plan from 450,000
shares to 800,000 shares. The Company intends to register the shares called for
thereby under the Securities Act within the next 60 days.
The proxy statement does not include either the Long-Term Incentive Plan Awards
Table or the Pension Plan Table specified in Item 402(e) and (f), respectively,
because the Company does not have a "long-term incentive plan" as defined in
Item 402(a)(7)(iii) or a pension plan other than a 401(k) plan.
<PAGE>
To Our Fellow Stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the 1994 Annual Meeting of Stockholders, to be held on Thursday, May 19,
1994 in Boston, Massachusetts.
Information about the Annual Meeting is presented on the following pages. In
addition to the formal items of business, the meeting will include a report by
members of management on Company operations. You will have an opportunity to
ask questions of our management team, if you attend the meeting in person.
Your vote is important. You can be sure your shares are represented at the
meeting by completing, signing, and returning your proxy form in the enclosed
envelope, even if you plan to attend the meeting. Sending in your proxy will
not prevent you from voting in person at the meeting should you wish to do so.
I hope you enjoy reading the enclosed 1993 Annual Report. 1993 was a year
with many changes, for our Company and our industry. The Annual Report contains
an extensive discussion and analysis of our results of operations, and the
reengineering program undertaken to increase our productivity and improve our
operating results. We are proud of our people and their hard work over the past
year to ensure that the investments we have made in new plants, equipment and
technology will pay off in increased revenues and profits.
Thank you for your continued support of Clean Harbors. I hope to see you at
the Annual Meeting on May 19th.
Alan S. McKim
Chairman of the Board
<PAGE>
CLEAN HARBORS, INC.
1200 CROWN COLONY DRIVE
QUINCY, MASSACHUSETTS 02169
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
Notice is hereby given that the Annual Meeting of Stockholders of Clean
Harbors, Inc., a Massachusetts corporation (the "Company"), will be held at the
offices of USTrust, 40 Court Street, Boston, Massachusetts at 8:30 a.m., local
time, on Thursday, May 19, 1994 for the following purposes:
1. To elect two (2) Class II members of the Board of Directors of the
Company to serve until the 1997 Annual Meeting of Stockholders and until
their respective successors are chosen and qualified;
2. To consider and act upon a proposal to amend the Company's Equity
Incentive Plan to increase the total number of shares authorized for
issuance under the Equity Incentive Plan from 450,000 shares to 800,000
shares; and
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Stockholders of record at the close of business on April 1, 1994 will be
entitled to notice and to vote at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting in person, please date, sign and mail your proxy in the
enclosed envelope to ensure that your shares will be represented at the
meeting.
By order of the Board of Directors
C. Michael Malm, Clerk
April 7, 1994
<PAGE>
CLEAN HARBORS, INC.
1200 CROWN COLONY DRIVE
QUINCY, MASSACHUSETTS 02169
-----------------
PROXY STATEMENT
-----------------
The accompanying proxy is solicited by the Board of Directors of Clean
Harbors, Inc., a Massachusetts corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on May 19, 1994, and any adjournment
thereof.
PROXY SOLICITATION
Proxies in the accompanying form, properly executed and received prior to the
meeting and not revoked, will be voted as specified or, if no instructions are
given, will be voted in favor of the proposals described herein. Proxies may be
revoked at any time prior to the meeting by written notice given to the Clerk
of the Company. The cost of this solicitation shall be borne by the Company.
Solicitations of proxies by telephone or in person may be made by the Company's
directors, officers or other employees, but any such solicitation will be
carried on during working hours and for no additional cost, other than the time
expended and telephone charges in making such solicitation. This Proxy
Statement and the accompanying proxy form are scheduled to be mailed to
stockholders beginning on April 14, 1994.
INFORMATION AS TO VOTING SECURITIES
The holders of the Company's Common Stock and Series B Convertible Preferred
Stock vote as a single class with respect to the election of directors and most
other matters. Each issued and outstanding share of the Company's Common Stock,
$.01 par value per share, and each issued and outstanding share of the
Company's Series B Convertible Preferred Stock, $.01 par value per share, is
entitled to one vote. Only stockholders of record at the close of business on
April 1, 1994 will be entitled to vote at the meeting. On March 11, 1994, there
were 9,428,504 shares of Common Stock and 112,000 shares of Series B
Convertible Preferred Stock of the Company outstanding. Votes cast by proxy or
in person at the Annual Meeting will be counted by persons appointed by the
Company to act as election inspectors for the meeting.
The election of the Class II directors requires the affirmative vote of the
holders of a plurality of the shares of both classes of stock represented at
the meeting. Approval of the proposal to amend the Equity Incentive Plan and
any other matters which may properly come before the meeting will require the
affirmative vote of the holders of a majority of the shares represented at the
meeting. Votes withheld from any nominee for election as a director,
abstentions, and broker "non-votes" are counted as present or represented for
purposes of determining the presence of a quorum for the meeting. Therefore,
abstentions and broker "non-votes" will have the effect of "against" votes.
Broker "non-votes" occur when a nominee holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner. Usually, this would occur when brokers
holding stock in "street name" have not received any instructions from clients,
in which case the brokers (as holders of record) are permitted to vote on
"routine" proposals but not on non-routine matters. Election of directors is
considered a routine matter; a proposal to amend a stock option plan is
considered non-routine. The missing votes on non-routine matters are "broker
non-votes."
1
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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Alan S. McKim........... 39 Chairman of the Board of Directors, President
and Chief Executive Officer
John F. Kaslow.......... 61 Director
John O. Peterson........ 64 Director
Lorne R. Waxlax......... 60 Director
Daniel J. McCarthy...... 62 Director
Christy W. Bell......... 71 Director
James A. Pitts.......... 53 Senior Vice President of Finance and Administration
Treasurer and Chief Financial Officer
Mary-Ellen Drinkwater... 35 Vice President and Corporate Controller
Jorgen H. Vestergaard... 57 President, Clean Harbors Technology Corporation
Lawton T. Hemans II..... 55 Senior Vice President of Operations*
Michael R. Hatch........ 40 Senior Vice President of Facilities*
John P. Lawton.......... 33 Vice President of Sales*
</TABLE>
- --------
*Officer of Clean Harbors Environmental Services, Inc., a wholly-owned
subsidiary of the parent holding company, Clean Harbors, Inc.
Alan S. McKim founded the Company in 1980 and is Chairman of the Board of
Directors, President, and Chief Executive Officer of the Company. He serves as
a director of most of the Company's subsidiaries. Mr. McKim served as President
of the Company and its predecessor from 1980 to 1988. Mr. McKim holds an MBA
from Northeastern University. He has been a director of the Company since its
formation. His current term as a Class I director expires in 1996.
John F. Kaslow serves as Executive Director of the Northeast Region for the
Electric Power Research Institute ("EPRI"), a collaborative research
organization which provides advanced science and technology to its member
electric utilities and their customers. Prior to joining EPRI, Mr. Kaslow
served for 34 years with an electric utility company, the New England Electric
System ("NEES"), where he held a number of engineering, operating and general
management positions, including serving prior to his retirement as a director,
Executive Vice President and Chief Operating Officer of NEES, and as a director
and President of its New England Power Company subsidiary. Mr. Kaslow is a
director of Doble Engineering Company, which designs and manufactures electric
test equipment, and a trustee of Merrimack College, North Andover,
Massachusetts. He has served as a director of the Company since 1991 and his
current term as a Class I director expires in 1996.
John O. Peterson is a consultant and a director of several venture capital
investment firms. He served as Vice President of Venture Founders Corporation,
a venture capital investment firm, from May 1973 through December 1988. Mr.
Peterson has served as a consultant to the Company since December 1986. He is
currently a director of Canadian Venture Founders Corp. and Canadian Venture
Founders Mgt. Ltd., both of which are Canadian venture capital investment
companies. Mr. Peterson holds an MBA degree from Harvard Business School. He
has served as a director of the Company since 1987. His current term as a Class
II director expires this year, and he is standing for reelection for a three-
year term.
Lorne R. Waxlax served as Executive Vice President of The Gillette Company
from 1985 to 1993, with worldwide responsibility for Braun AG, Oral-B
Laboratories, and Jafra Cosmetics International. He
2
<PAGE>
is a director of two other public companies, Waban Inc. and HON Industries
Inc., and The Iams Company, a private company. He also is a member of the
advisory board of Deutsche Bank in Germany, where he was a resident for ten
years. Mr. Waxlax holds an MBA degree from Northwestern University. He accepted
an appointment to fill a vacancy on the Board of Directors of the Company in
March 1994, and his term as a Class II director expires this year. Mr. Waxlax
is standing for election for a three-year term.
Daniel J. McCarthy has been a Professor of Strategic Management at
Northeastern University since July 1972, prior to which he was President of
Computer Environments Corporation, a computer services company. He serves as a
director and on the Finance Committee of Tufts Associated Health Plan, a health
maintenance organization, and as a director of MANAGEDCOMP, Inc., which manages
worker's compensation for employers. Mr. McCarthy holds an MBA degree from
Dartmouth College and a DBA degree from Harvard Business School. He has served
as a director of the Company since 1987 and his current term as a Class III
director expires in 1995.
Christy W. Bell was Chairman of the Board of ChemClear Inc., a public company
which was primarily engaged in the business of treating industrial aqueous
waste at its plants in Baltimore, Cleveland, and Chicago, for more than five
years prior to its merger into a subsidiary of the Company in 1989. Mr. Bell
had also served as President of ChemClear prior to the merger. Mr. Bell is
President and an owner of Electro-Petroleum, Inc., Electro-Pyrolysis, Inc., and
Arc Technologies, Inc., all of which are involved in the development of
technologies for the production of energy. He is also a director of Thoratec
Laboratories Corporation. Mr. Bell has served as a director of the Company
since the ChemClear merger, and his current term as a Class III director
expires in 1995.
James A. Pitts joined the Company in March 1992 as Senior Vice President of
Finance and Administration, Treasurer and Chief Financial Officer. Prior to
joining the Company, Mr. Pitts was, from September 1991 to February 1992,
acting Chief Financial Officer for the office of The Commonwealth of
Massachusetts-appointed Receiver for the City of Chelsea, Massachusetts, and
from July 1988 to August 1991, Vice President and Chief Financial Officer of
Bain & Company, Inc., an international business consulting firm, where he was
responsible for the finance and administration operations of Bain. From 1986 to
1988, he was Executive Vice President of Cullinet Software, Inc., where he was
responsible for the finance, human resources and administration operations of
Cullinet. Mr. Pitts is a certified public accountant, holds a BBA from Niagara
University, an MBA from the University of Connecticut, and is a graduate of the
Advanced Management Program at Harvard Business School.
Mary-Ellen Drinkwater joined the Company in March 1989 as Manager of
Financial Analysis. Prior to joining the Company, she spent seven years with
the public accounting firm of Coopers & Lybrand, including two years as an
audit manager. Since joining the Company, Ms. Drinkwater has held positions as
Director of Accounting and Director of Financial Planning and Analysis. She was
promoted to Vice President and Corporate Controller of Clean Harbors
Environmental Services, Inc. in January 1993, and became Vice President of
Clean Harbors, Inc. in May 1993. As Corporate Controller, she is the principal
accounting officer for the Company and its subsidiaries. Ms. Drinkwater is a
Certified Public Accountant and holds a BS degree in Business Administration
from Northeastern University.
Jorgen H. Vestergaard joined the Company in October 1992, as President of
Clean Harbors Technology Corporation, a subsidiary aimed at expanding the
market for the Company's Clean Extraction System technology, and developing
other leading-edge technology to solve complex environmental problems. Mr.
Vestergaard is also responsible for operations of the Company's Baltimore
facility, where the Clean Extraction System is located. Prior to joining the
Company, he spent 28 years with GE Plastics, a component of General Electric
Company. He graduated from the Technical University of Denmark, with a Master's
in Chemical Engineering, and holds four patents on process technology
applications developed during his career with GE Plastics.
3
<PAGE>
Lawton T. Hemans II joined the Company in March 1994, as Senior Vice
President of Clean Harbors Environmental Services, Inc., responsible for all
field operations. From 1985 to 1993, he was with Rollins Environmental
Services, Inc., a hazardous waste incineration company, and served as President
of several operating divisions and subsidiaries of Rollins. From 1989 to 1993
he was Group Vice President--Services of Rollins. Mr. Hemans holds a BBA degree
from Michigan State University.
Michael R. Hatch is a Senior Vice President of Clean Harbors Environmental
Services, Inc., responsible for operations of the Company's waste treatment
facilities (other than Baltimore), and is President of several of the Company's
subsidiaries. From 1989 to 1990 he was Vice President of Hazardous Waste
Management of the Company's Environmental Services subsidiary and from 1990 to
1992 he was in charge of Northeast Region Operations. From 1987 to 1989, he was
Senior Vice President of the Company and, since 1986 has been President of its
Braintree subsidiary. Mr. Hatch joined the Company in 1981 as Operations
Manager and became Vice President of Operations in 1983. In 1985 and 1986, he
served as Vice President and General Manager of the Braintree subsidiary. Mr.
Hatch received a BS degree from Bridgewater State College and holds an MBA from
Boston University.
John P. Lawton is a Vice President of Clean Harbors Environmental Services,
Inc., responsible for sales and service for all Company subsidiaries. Mr.
Lawton joined the Company in 1988 as a Customer Service Account Manager at its
Braintree facility. In 1989, he became Sales Manager for the Midwest region. In
1992, he became Director of Sales for all service areas outside New England.
Mr. Lawton held various management positions with New York Air and Pan American
World Airlines from 1983 to 1988 before joining the Company. He received a BA
degree from North Adams State College.
Set forth below is information as to ownership of the Company's Common Stock
as of March 11, 1994 by each director of the Company, each of the executive
officers named on the Summary Compensation Table set forth below, and by all
directors and executive officers as a group. No director or executive officer
owns any Series B Convertible Preferred Stock. Except as otherwise indicated
below, the named owner has sole voting and investment power with respect to the
specified shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------ ----------------------- --------
<S> <C> <C>
Alan S. McKim................................. 3,555,462(2) 37.7%
John F. Kaslow................................ 2,300 *
John O. Peterson.............................. 11,056(3) *
Lorne R. Waxlax............................... 8,000 *
Daniel J. McCarthy............................ 12,000(4) *
Christy W. Bell............................... 49,352 *
James A. Pitts................................ 20,167 *
Jorgen H. Vestergaard......................... 10,000 *
Michael R. Hatch.............................. 20,334 *
John P. Lawton................................ 998 *
All current directors and executive officers
as a group (12 persons)...................... 3,691,149 38.8%
</TABLE>
- --------
*Less than 1%
(1) Beneficial ownership has been determined in accordance with Securities and
Exchange Commission regulations and includes the following number of shares
of the Company's Common Stock which may be acquired under stock options
which are exercisable within 60 days of March 11, 1994: Mr. Peterson (9,956
shares), Mr. McCarthy (11,800 shares), Mr. Kaslow (2,000 shares),
4
<PAGE>
Mr. Pitts (20,167 shares), Mr. Hatch (20,334 shares), Mr. Vestergaard
(10,000 shares), Mr. Lawton (675 shares), and all current directors and
executive officers as a group (74,932 shares).
(2) Excludes 60,000 shares owned by a trust for Mr. McKim's minor children as
to which Mr. McKim holds no voting or investment power.
(3) Includes 400 shares owned either jointly by Mr. Peterson and his wife or by
Mrs. Peterson individually, as to which Mr. Peterson shares voting and
investment power.
(4) Includes 200 shares owned by Mr. McCarthy's son as to which Mr. McCarthy
shares voting and investment power.
To the Company's knowledge, as of March 11, 1994, no person or entity
"beneficially owned" (as that term is defined by the Securities and Exchange
Commission) 5% or more of the Company's Common Stock or Series B Convertible
Preferred Stock, except as shown in the following table. Except as otherwise
indicated below, the Company understands that the named person or entity has
sole voting and investment power with respect to the specified shares. The
holders of the Company's Common Stock and Series B Convertible Preferred Stock
vote as a single class with respect to the election of directors and most other
matters.
<TABLE>
<CAPTION>
NUMBER PERCENT AND
NAME AND ADDRESS OF SHARES CLASS OF STOCK
---------------- --------- --------------
<S> <C> <C>
Alan S. McKim................................... 3,555,462(1) 37.7% Common Stock
Clean Harbors, Inc.
1200 Crown Colony Drive
Quincy, MA 02169
Brinson Partners, Inc........................... 521,500(2) 5.5% Common Stock
Brinson Trust Company
c/o Brinson Holdings, Inc.
209 South LaSalle
Chicago, IL 60604
Dimensional Fund Advisors, Inc.................. 523,100(2) 5.5% Common Stock
1299 Ocean Avenue
Santa Monica, CA 90401
Froley, Revy Investment Company, Inc............ 70,000 62.5% Series B
10900 Wilshire Blvd. Convertible
Los Angeles, CA 90024 Preferred Stock
Morgan Guaranty Trust Co. of New York........... 42,000 37.5% Series B
23 Wall Street Convertible
New York, NY 10015 Preferred Stock
</TABLE>
- --------
(1) Excludes 60,000 shares owned by a trust for Mr. McKim's minor children as
to which Mr. McKim holds no voting or investment power.
(2) Based upon ownership as of December 31, 1993 shown on Schedule 13G filed
with the Company by the specified entities in February 1994.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY FORM)
The Board of Directors of the Company is composed of six directors,
classified into three classes consisting of two directors each. One class of
directors is elected each year for a term of three years. The terms of the
Class II Directors, John O. Peterson and Lorne R. Waxlax, expire at the 1994
Annual Meeting, and the Board of Directors has nominated Mr. Peterson and Mr.
Waxlax to continue to serve as Class II Directors.
5
<PAGE>
UNLESS OTHERWISE SPECIFIED THEREIN, SHARES REPRESENTED BY THE ENCLOSED PROXY
WILL BE VOTED AT THE ANNUAL MEETING TO ELECT JOHN O. PETERSON AND LORNE R.
WAXLAX AS DIRECTORS OF THE COMPANY FOR A THREE-YEAR TERM, UNTIL THE 1997 ANNUAL
MEETING OF STOCKHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED
AND QUALIFIED, EXCEPT IN THE EVENT OF DEATH, RESIGNATION OR REMOVAL. IN THE
EVENT THAT ONE OR BOTH OF THE NOMINEES IS UNABLE TO STAND FOR ELECTION (WHICH
EVENT IS NOT NOW CONTEMPLATED), THE HOLDERS OF THE ENCLOSED PROXY WILL VOTE FOR
THE ELECTION OF A NOMINEE OR NOMINEES ACCEPTABLE TO THE REMAINING MEMBERS OF
THE COMPANY'S BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL
TO ELECT MESSRS. PETERSON AND WAXLAX AS DIRECTORS.
COMPENSATION OF DIRECTORS
The Company's policy is to pay each director who is not an employee an annual
retainer fee of $20,000 and $500 for each meeting which he attends. The Company
also reimburses directors for expenses incurred in connection with service on
the Board. In 1993, the Company paid Mr. Peterson a $4,000 consulting fee in
addition to his retainer fee. Total meeting attendance fees paid in 1993 were
as follows: Mr. Kaslow and Mr. McCarthy each $6,000; Mr. Peterson $5,500; and
Mr. Bell $4,000.
According to the Company's Equity Incentive Plan approved by stockholders at
the 1992 Annual Meeting, each director who is not an employee of the Company
receives upon election to the Board a grant of a five-year non-qualified stock
option to purchase that number of shares of the Company's Common Stock
determined by multiplying 1,000 by the number of years or fraction thereof for
which the director shall be elected, at the market price of the Common Stock on
the date of election, vesting immediately as to the first 1,000 shares of any
award and as to an additional 1,000 shares on the anniversary of the date of
election. Upon approval of the Plan at the 1992 Annual Meeting, each non-
employee director was deemed, for the purposes of the Plan, to have been
elected to the Board for the remainder of his term, and the non-discretionary
awards for directors not elected for a full three-year term were prorated.
During 1992, Mr. Bell and Mr. McCarthy each received options for 3,000 shares,
Mr. Peterson received options for 2,000 shares, and Mr. Kaslow received options
for 1,000 shares. Mr. Kaslow was re-elected in 1993 to a full three-year term
and received options for an additional 3,000 shares.
During 1993, there were eleven meetings of the Board of Directors of the
Company, of which four meetings were by written consent. During such period,
each incumbent director participated in all of the meetings of the Board of
Directors and all meetings of committees of the Board on which such director
served.
The Board of Directors has established an Audit Committee consisting of
members of the Board of Directors who are not employed by the Company. During
1993, Messrs. McCarthy and Peterson constituted the Audit Committee. The
primary functions of the Audit Committee are to recommend the selection of
independent public accountants, to review the scope of and approach to audit
work, and to meet with and review the activities of the Company's accountants
and the independent public accountants. During 1993, there were three meetings
of the Audit Committee.
The Board of Directors has also appointed two other committees: a Stock
Option Committee to administer the Company's Stock Option and Equity Incentive
Plans, and a Compensation Committee. The Compensation Committee determines
compensation arrangements for the Chief Executive Officer of the Company and
works with the Chief Executive Officer in formulating compensation and bonus
policies and programs applicable to the other officers and managers of the
Company. In June 1993, the Board of Directors merged these two committees in
order to better integrate stock options as a component of total compensation.
The Compensation and Stock Option Committee consists of three
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<PAGE>
non-employee directors, Mr. McCarthy, Mr. Peterson, and Mr. Kaslow, and often
meets on days when meetings are held by the full Board. During 1993, there were
nine meetings, of which two were held by consent and two were held in
conjunction with regularly scheduled meetings of the full Board.
The Board of Directors has not established a Nominating Committee.
COMPENSATION COMMITTEE REPORT
In April 1993, the Board of Directors merged the Compensation Committee and
the Stock Option Committee into one committee, the Compensation and Stock
Option Committee (the "Committee"), consisting of three outside directors
considered "disinterested" for purposes of Rule 16b-3 of the Securities and
Exchange Commission. Acting on behalf of the Board of Directors, the
Committee's responsibilities include the review and approval of executive
officer compensation, recommending to the full Board compensation packages for
the Chief Executive Officer and other senior executive officers, review of
compensation policies for other management, and managing the Company's Stock
Option and Equity Incentive Plans.
The fundamental philosophy of the Committee regarding executive compensation
is to offer competitive compensation opportunities and to align individual
compensation with the goals, values and priorities of the Company. Compensation
for executive officers currently consists of three basic elements: base
compensation and benefits, salary "at-risk", and awards of long-term equity
incentives through non-qualified stock options.
Base compensation and benefits for 1993 were determined based upon studies of
comparable industry groups. Salary at-risk payments for 1993 were based upon a
$1 million profit pool to be established if the Company achieved its 1993
earnings goal. Executives and managers would then be eligible to receive a
number of participating shares of the pool based upon the relative potential
impact of their positions. Individuals were then to be evaluated by senior
management according to six individualized goals and objectives in determining
whether they earned their shares. The salary at-risk pool for 1993 was not
funded, nor were individual shares paid, because the Company did not achieve
its earnings goal. A few individual bonuses were paid for 1993 based upon prior
employment contract commitments.
The final element of compensation for executive officers is long-term equity
incentives through grants of non-qualified stock option awards at the market
price of the Company's Common Stock. Awards are designed to align the interests
of executive officers with those of stockholders of the Company and to
encourage long-term retention of executives through periodic vesting of
options, most of which vest as to 20% at the end of each successive year of
service. The amount of these individual awards during 1993 was determined by
dividing an individual's total compensation paid for 1992 by the average
trading price of the Company's Common Stock during that year, and then applying
a factor of 15% to 50% depending upon the individual's position and ability to
positively impact Company results, adjusted according to his or her performance
rating. Thus, an executive officer with compensation of $100,000 and an impact
factor of 30% would be eligible to receive up to 3,000 option shares
($100,000/$10 x 30%) depending upon his or her performance rating.
From June 1991 until November 1993, the Company maintained the positions of
Co-Chief Executive Officers; Clyde D. Keaton and Alan S. McKim, the founder and
largest shareholder of the Company. During this period, the method of
establishing their compensation was for the Committee to focus on the
compensation of Mr. Keaton, and to provide base compensation and salary at-risk
to Mr. McKim equal to that of Mr. Keaton. Mr. Keaton's base compensation of
$260,000, at-risk compensation and guaranteed option awards through June 1993
were established under his original three-year employment agreement entered
into in June 1990 and remained the same through June of
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1993. In the Spring of 1993, the Committee negotiated an extension of Mr.
Keaton's employment agreement, increasing his base compensation to $300,000,
and changing his salary at-risk from the original formula, which was a
percentage of operating income in excess of $12 million, to various criteria
and specific goals established each year by the Committee. The criteria
selected by the Committee and their relative importance in determining the
payment of salary at-risk to the Co-Chief Executive Officers for the second
half of 1993 were earnings per share (50%), increased revenues (25%) and
health, compliance and safety (25%). Conditions to any bonus payment to the Co-
Chief Executive Officers were (i) a minimum earnings per share had to be
achieved, and (ii) no payment would be made if salary at-risk payments were not
made to executive officers and managers.
Both Mr. Keaton and Mr. McKim voluntarily deferred the implementation of
their salary increases; Mr. Keaton until his departure in November 1993, and
Mr. McKim for an indefinite period. According to the formula in his 1990
employment agreement, Mr. Keaton was entitled to a $9,375 bonus for the first
half of 1993 based upon the Company's net operating income. Mr. McKim has
declined his 1993 bonus of an equal amount. Although the Company achieved a
significant increase in sales and improvement in health, safety and compliance
from 1992 to 1993, because the threshold goal of earnings per share was not
achieved, no salary at-risk was earned or paid for the second half of 1993.
The Revenue Reconciliation Act of 1993 added Section 162(m) of the Internal
Revenue Code of 1986 which denies a deduction to any publicly held corporation
for compensation paid to its chief executive officer or any of its other four
highest paid executive officers in excess of $1 million, unless such
compensation (including amounts realized from the exercise of stock options) is
payable on account of the attainment of one or more performances goals set by
at least two of the corporation's outside directors and approved by the
shareholders. Although it is not anticipated that this law will have any
immediate effect upon the Company, the Committee is studying the effect of this
provision and intends to take the necessary steps to conform its compensation
policies to this new provision.
Members of the Committee
John F. Kaslow
Daniel J. McCarthy
John O. Peterson
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation information for the Chief
Executive Officer, the four other most highly compensated executive officers of
the Company and its subsidiaries who were serving as executive officers at the
end of 1993, and for Clyde D. Keaton, who was Co-Chief Executive Officer until
November 15, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
--------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- ---------- -------
SECURITIES ALL
UNDERLYING OTHER
NAME AND OPTIONS COMPEN-
PRINCIPAL GRANTED SATION
POSITION YEAR SALARY BONUS OTHER (SHARES) (2)
- --------- ---- -------- ------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan S. McKim 1993 $250,008 $ -- $ -- -- -- $1,000
Chairman of 1992 250,008 58,265 -- -- -- 1,000
the Board,
President and 1991 250,008 -- -- --
Chief
Executive Of-
ficer
James A. 1993 $147,833 $58,000(4) $ -- 7,500 -- $ 750
Pitts(3)
Senior Vice 1992 109,777 58,000 -- 50,000 --
President and
Chief Finan-
cial Officer
Jorgen H. 1993 $135,000 $65,000(4) $ -- -- -- --
Vestergaard(5)
President, 1992 30,202 -- 10,000
Clean Harbors
Technology
Corporation
Michael R. 1993 $135,000 $ -- $ -- 5,000 -- $1,000
Hatch
Senior Vice 1992 132,083 13,500 -- -- 1,000
President,
Clean Harbors 1991 125,000 --
Environmental
Services,
Inc.
John P. Lawton 1993 $ 99,687 $25,000 $ 26,560(6) 3,000 -- $1,000
Vice Presi- 1992 80,000 7,500 -- 5,000 1,000
dent of
Sales,
Clean Harbors 1991 75,000 4,125 1,000
Environmental
Services,
Inc.
Clyde D. Kea- 1993 $265,147 $ 9,375 $ 83,021(7) 150,000(8) -- $ 750
ton
former Co- 1992 259,992 58,265 198,304 50,000 -- 1,000
Chief
Executive Of- 1991 259,992 -- 50,000 --
ficer
</TABLE>
- --------
(1) No restricted stock or stock appreciation rights were awarded during 1993,
or held at the end of 1993. The Company does not have a long-term incentive
plan, and there were no long-term incentive plan payouts during 1993.
(2) Consists of employer contribution to (S)401(k) plan. The Company does not
provide any pension benefits other than the (S)401(k) plan.
(3) Mr. Pitts joined the Company in March 1992.
(4) Bonus pursuant to employment agreement, which specifies a minimum bonus for
his first two years of employment.
(5) Mr. Vestergaard joined the Company in November 1992.
(6) Includes $23,644 in 1993 relocation expenses.
(7) Includes $42,000 in 1993 housing allowance pending sale of Mr. Keaton's
former residence and $36,371 income tax gross-up on 1992 housing allowance.
(8) When Mr. Keaton resigned, he surrendered all rights to options on 450,000
shares, in return for a one-year option on 150,000 shares.
9
<PAGE>
OPTIONS
The following table illustrates the hypothetical value of stock options
granted to the individuals named in the Summary Compensation Table during 1993,
based on assumed annual growth rates of 5% and 10% in the value of the
Company's stock price over the life of the stock options. The amounts set forth
under "Potential Realizable Value at Assumed Annual Rates of Stock Price
Appreciation for Option Term" reflect required disclosures pursuant to
regulations of the Securities and Exchange Commission. The actual value to be
realized, if any, could be more or less than the assumed values depending upon
the performance of the stock. Under the terms of the Company's Stock Option and
Equity Incentive Plans, the Compensation and Stock Option Committee retains
discretion, subject to plan limits, to modify the terms of outstanding options
and to reprice the options. No stock appreciation rights were awarded during
1993.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
------------------------------------------------ ----------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS 5% 10%
UNDERLYING GRANTED TO EXERCISE OR ANNUAL ANNUAL
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION GROWTH GROWTH
NAME GRANTED 1993 PER SHARE(1) DATE RATE RATE
---- ---------- ------------- ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Alan S. McKim........... -- -- $ -- -- $ -- $ --
James A. Pitts.......... 7,500 1.6% 9.00 8/5/03 42,525 107,325
Jorgen H. Vestergaard... -- -- -- -- -- --
Michael R. Hatch........ 5,000 1.1% 9.00 8/5/03 28,350 71,550
John P. Lawton.......... 3,000 .6% 9.00 8/5/03 17,010 42,930
Clyde D. Keaton(3)...... 150,000 31.6% 7.75 11/15/94 -- 33,750
</TABLE>
- --------
(1) The exercise prices of the options granted are equal to the fair market
value of the Common Stock on the date each option was granted, except for
Mr. Keaton. See note 3.
(2) All options have a ten-year term, and are exercisable as to 20% of shares
on the first anniversary of the date of grant and as to an additional 20%
on each anniversary date thereafter, except for Mr. Keaton. See note 3.
(3) Mr. Keaton resigned on November 15, 1993. As part of a severance and
consulting arrangement, he surrendered all rights to options on 450,000
shares at prices ranging from $7.75 per share to $12.00 per share in return
for a one-year option on 150,000 shares at $7.75 per share (a price higher
than the market price of $7.25 on November 15, 1993, and equal to the
exercise price on 300,000 of his vested option shares which he
surrendered).
10
<PAGE>
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table shows for the individuals named in the Summary
Compensation Table the aggregate number of options exercised, the value
realized (market value of underlying shares on exercise minus the exercise
price), the number of unexercised options held by each individual at year-end,
and the value of unexercised in-the-money options at year-end. The high and low
sales prices of the Company's Common Stock in 1993 were $17.50 and $6.00,
respectively. The last sale price at year-end was $7.125. No stock appreciation
rights were exercised during 1993 or held by such individuals at year-end.
OPTION EXERCISES IN 1993
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OF SHARES OPTIONS AT YEAR-END YEAR-END
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan S. McKim........... -- $ -- -- -- $ -- $ --
James A. Pitts.......... 13,167 102,003 3,500 40,833 0 0
Jorgen H. Vestergaard... -- -- -- 10,000 0 0
Michael R. Hatch........ 5,000 33,625 20,334 18,544 12,709 8,465
John P. Lawton.......... -- -- 475 8,600 0 0
Clyde D. Keaton......... -- -- 150,000 -- 0 --
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
Mr. Keaton resigned on November 15, 1993. Mr. Keaton was employed under an
employment agreement dated June 18, 1990, as amended May 27, 1993. Under his
employment agreement he receives severance pay equal to his base salary plus
any bonus payable under his employment agreement through the earlier of
December 31, 1995 or the date he obtains new employment. Pursuant to Mr.
Keaton's employment agreement, he had the right to receive ten-year options for
450,000 shares of the Company's Common Stock, at market prices on four
different dates of award. When he resigned, he agreed to surrender those
options and to be available to consult with the Company through November 15,
1994, in exchange for a one-year option for 150,000 shares at $7.75 per share
(a price higher than the market price of $7.25 on November 15, 1993, and equal
to the exercise price on 300,000 of his vested option shares which he
surrendered).
Mr. Pitts is employed under an employment agreement dated March 24, 1992.
Pursuant to his employment agreement, he received ten-year options for 50,000
shares of the Company's Common Stock, vesting over three years. In the event of
a "change of control" of the Company, the options awarded to Mr. Pitts shall
vest immediately. His employment agreement also provides that if he is removed
from his position, he will receive compensation at the annual rate of $200,000
for up to one year.
Mr. Vestergaard is employed under an employment agreement dated October 9,
1992. His base salary is $135,000 per year. Mr. Vestergaard is eligible for an
annual bonus tied to defined objectives established from time to time, with a
minimum bonus for the first two years of employment of $65,000 per year.
Pursuant to his employment agreement, he received ten-year options for 10,000
shares of the Company's Common Stock, vesting over five years. He also may
receive 5,000 shares of restricted Common Stock for each Clean Extraction
System sold by Clean Harbors Technology Corporation before October 9, 1995, but
not more than 50,000 shares in total; no such stock has been granted to date.
If his employment is terminated for any reason, his stock will be purchased by
the Company for nominal value. He may also receive continuation of his base
salary for up to one year.
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the five-year return from investing $100 on
December 31, 1988 in each of Clean Harbors, Inc. Common Stock, the NASDAQ
Market Index of companies, and an index of environmental services companies,
compiled by Media General Financial Services, Inc. The environmental services
group used by Media General Financial Services, Inc. includes all companies
whose listed line-of-business is SIC Code 4953 (refuse systems), and assumes
reinvestment of dividends on the ex-dividend date. An index compares relative
performance since a particular starting date. In this instance, the starting
date is December 31, 1988, when the Company's Common Stock price closed at
$18.75 per share.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG CLEAN HARBORS, NASDAQ MARKET INDEX AND ENVIRONMENTAL SERVICES GROUP INDEX
<CAPTION>
NASDAQ Environmental
Measurement period Clean Market Services Group
(Fiscal year Covered) Harbors Index Index
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/89 $ 58.67 $ 112.89 $ 159.90
FYE 12/31/90 $ 33.33 $ 91.57 $ 142.98
FYE 12/31/91 $ 60.00 $ 117.56 $ 149.54
FYE 12/31/92 $ 64.00 $ 118.71 $ 141.15
FYE 12/31/93 $ 38.00 $ 142.40 $ 102.67
</TABLE>
AMENDMENT OF EQUITY INCENTIVE PLAN
(ITEM 2 ON PROXY FORM)
The Company's Equity Incentive Plan was approved by the stockholders at the
1992 Annual Meeting. The Equity Incentive Plan provides that the Compensation
and Stock Option Committee (the "Committee") may grant awards ("Awards") of up
to 450,000 shares of Common Stock (subject to anti-dilution adjustments, at the
sole discretion of the Committee) to employees, including directors who are
employees, in the form of incentive stock options ("ISOs") which qualify for
special federal income tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), options which are not qualified for
special tax treatment ("Non-Qualified Stock Options"), restricted stock,
performance stock units, and stock appreciation rights. Under the Equity
Incentive Plan, all employees and directors of the Company or any of its
subsidiaries are eligible to participate.
12
<PAGE>
As of March 11, 1994, there were 96,250 shares available to be awarded under
the Equity Incentive Plan. The Company desires to amend the Equity Incentive
Plan to provide that the number of shares authorized for issuance under the
Equity Incentive Plan be increased to 800,000. The Board of Directors believes
that this amendment is appropriate in order to have available sufficient equity
incentives to attract and retain the best qualified and motivated employees.
Under the terms of the Equity Incentive Plan, in order to comply with
regulatory rules under Section 16(b) of the Securities Exchange Act of 1934
(the "Exchange Act"), stockholder approval is required for any amendment that
increases the number of shares of Common Stock subject to the Equity Incentive
Plan (other than in connection with an adjustment upon a change in
capitalization).
The Board of Directors believes that the use of equity incentives will
enhance the ability of directors, officers and key employees to acquire or
increase their ownership interest in the Company, thereby increasing their
motivation to strive toward ensuring the Company's growth and success. The
Board also believes that the availability of such incentives will be a factor
in attracting and retaining those highly competent individuals upon whose
judgment, initiative and leadership the Company's continuing success depends.
The Equity Incentive Plan provides that the Committee may grant Awards to
employees, including directors who are employees, in any of the following
forms:
(A) OPTIONS. The Committee may award ISOs and Non-Qualified Stock Options
(collectively, "Options") and determine the number of shares to be covered by
each Option, the option price therefor, the term of the Option, and the other
conditions and limitations applicable to the exercise of the Option. As
required by the Code, the option price per share of Common Stock purchasable
under an ISO shall not be less than 100% of the fair market value of the Common
Stock on the date of award. The Equity Incentive Plan provides that the option
price per share of Common Stock purchasable under a Non-Qualified Stock Option
shall be determined by the Committee, and may be less than, equal to or greater
than the fair market value of the Common Stock on the date of award, but in no
event less than the par value of the Common Stock. Options may be exercisable
for not more than ten years after the date the Option is awarded. A participant
in the Equity Incentive Plan must notify the Committee in the event that the
optionee disposes of Common Stock acquired upon exercise of an ISO either
within the two-year period following the date the ISO was granted or within the
one-year period following the date the optionee receives Common Stock upon the
exercise of an ISO.
For federal income tax purposes, no taxable income results to the optionee
upon the grant of an ISO or upon the issuance of shares to the optionee upon
the exercise of the option, and no deduction is allowed to the Company upon
either the grant or the exercise of the ISO. Rather, if shares acquired upon
the exercise on an ISO are not disposed of either within the two-year period
following the date the option is granted or within the one-year period
following the date the shares are transferred to the optionee pursuant to
exercise of the option, the difference between the amount realized on any
disposition thereafter and the option price will be treated as long-term
capital gain or loss to the optionee. If a disposition occurs before the
expiration of the requisite holding periods, then the lower of (i) any excess
of the fair market value of the shares at the time of exercise of the option
over the option price, or (ii) the actual gain realized on disposition, will be
deemed to be compensation to the optionee and will be taxed at ordinary income
rates. In such event the Company will be entitled to a corresponding deduction
from its income, provided the Company withholds and deducts as required by law.
Any such increase in the income of the optionee or deduction from the income of
the Company attributable to such disposition is treated as an increase in
income or a deduction from income in the taxable year in which the disposition
occurs. Any excess of the amount realized by the optionee on disposition over
the fair market value of the shares at the time of exercise will be treated as
a capital gain.
"Alternative minimum taxable income" in excess of a taxpayer's exemption
amount is subject to the alternative minimum tax, which is imposed at the rate
of 16% of the first $175,000 of alternative
13
<PAGE>
minimum taxable income ($87,500 for married individuals filing a separate
return) and 28% thereafter, and is payable to the extent it exceeds the regular
income tax. The excess of the fair market value on the date of exercise over
the option price of shares acquired on exercise of ISOs generally constitutes
an item of alternative minimum taxable income for the purpose of the
alternative minimum tax, and the payment of any alternative minimum tax
resulting therefrom will not increase the optionee's basis for the shares
acquired for regular income tax purposes. In addition, if the aggregate fair
market value (determined at the time the option is granted) of the Common Stock
covered by ISOs which are exercisable for the first time by an individual in a
calendar year exceed $100,000, the amount of the excess will not be treated as
shares acquired through exercise on an ISO.
Under the Code, a person who is granted a Non-Qualified Stock Option will not
have taxable income at the date of grant; however, an optionee who thereafter
exercises such an option will be deemed to have received compensation income in
an amount equal to the difference between the option price and the fair market
value of the shares on the date of exercise. The optionee's basis for such
shares will be increased by the amount which is deemed compensation income. For
the year in which a Non-Qualified Stock Option is exercised, the Company will
be entitled to a deduction in the same amount as the optionee is required to
include in his or her income, provided the Company withholds and deducts as
required by law. When the optionee disposes of such shares, he or she will
recognize a capital gain or loss.
(B) STOCK APPRECIATION RIGHTS. A stock appreciation right ("SAR") entitles
the participant to receive an amount in cash or shares of Common Stock or a
combination thereof having a value equal to (or if the Committee shall so
determine at the time of grant, less than) the excess of the fair market value
of a share of Common Stock on the date of exercise over the fair market value
of a share of Common Stock on the date of grant (or over the Option exercise
price, if the SAR was granted in tandem with an Option) multiplied by the
number of shares with respect to which the SAR shall have been exercised.
Subject to the provision of the Equity Incentive Plan, the Committee may award
SARs in tandem with an Option (at or after the award of the Option), or alone
and unrelated to an Option, and determine the terms and conditions applicable
thereto, including the form of payment. Generally, SARs granted in tandem with
an Option will be exercisable at such time or times, and only to the extent
that, a related Option is exercisable, and shall not be transferable except to
the extent that a related Option is transferable.
No income will be realized by a participant in connection with the grant of
an SAR. When the SAR is exercised or when a participant receives payment in
cancellation of an Option, the participant will generally be required to
include as taxable ordinary income in the year of such exercise or payment an
amount equal to the amount of cash received and the fair market value of any
stock received. The Company will generally be entitled to a deduction for
federal income tax purposes at the same time equal to the amount includable as
ordinary income by such participant, provided the Company withholds and deducts
as required by law.
(C) PERFORMANCE STOCK UNITS. A performance stock unit ("Performance Stock
Unit") entitles a participant to acquire shares of Common Stock upon the
attainment of specified performance goals. Subject to the provisions of the
Equity Incentive Plan, the Committee may award Performance Stock Units and
determine the performance goals applicable to each such Award, the number of
such shares for each period of performance established (the "Performance
Cycle"), the duration of each Performance Cycle, and all other limitations and
conditions applicable to the awarded Performance Stock Units. There may be more
than one Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of each
Performance Stock Unit shall be equal to the fair market value of one share of
Common Stock on the date the Performance Stock Unit is earned or, in the
discretion of the Committee, on the date the Committee determines that the
Performance Stock Unit has been earned. The Committee will determine, at or
after the time of award, whether payment values will be settled in whole or in
part in cash or other property, including Common Stock or Awards.
14
<PAGE>
The recipient of Performance Stock Units will generally be subject to tax at
ordinary income rates on the amount of cash received and the fair market value
of any Common Stock issued under the Award, and the Company will generally be
entitled to a deduction equal to the amount of ordinary income realized by the
recipient, provided the Company withholds and deducts as required by law.
(D) RESTRICTED STOCK. An Award of restricted stock ("Restricted Stock")
entitles the participant to acquire shares of Common Stock for a purchase price
equal to or greater than par value, subject to such conditions and
restrictions, including a right of the Company, during a specified period or
periods, to repurchase such shares at their original purchase price (or to
require forfeiture of such shares) upon the participant's termination of
employment. Subject to the provisions of the Equity Incentive Plan, the
Committee may award shares of Restricted Stock and determine the purchase price
therefor, the duration of the restricted period during which, and the
conditions under which, the shares may be forfeited to or repurchased by the
Company, and the other terms and conditions of such Awards. The Committee may
modify or waive the restrictions with respect to any Restricted Stock. Shares
of Restricted Stock may be issued for no cash consideration or such minimum
consideration as may be required by applicable law. A participant shall have
all the rights of a stockholder with respect to the Restricted Stock including
voting and dividend rights, subject to nontransferability restrictions and
Company repurchase or forfeiture rights and subject to any other conditions
contained in the Award.
A recipient of Restricted Stock generally will be subject to tax at ordinary
income rates on the fair market value of the Common Stock at the time the
Common Stock is no longer subject to forfeiture, minus any amount paid for such
stock. However, a recipient who makes an election under Section 83(b) of the
Code within 30 days of the date of issuance of the Restricted Stock will
realize ordinary income on the date of issuance equal to the fair market value
of the shares of Restricted Stock at the time (measured as if the shares were
unrestricted and could be sold immediately), minus any amount paid for such
stock. If the election is made, no taxable income will be realized when the
shares subject to such election are no longer subject to forfeiture. If the
shares subject to such election are forfeited, the recipient will not be
entitled to any deduction, refund or loss for tax purposes with respect to the
forfeited shares. Upon sale of the shares after the forfeiture period has
expired, the holding period to determine whether the recipient has a long-term
or short-term capital gain or loss begins when the restriction period expires
(or upon earlier issuance of the shares, if the recipient elected immediate
realization of income under Section 83(b) of the Code).
(E) GENERAL. Each Award may be made alone, in addition to or in relation to
any other Award. The terms of each Award need not be identical, and the
Committee need not treat participants uniformly. Except as otherwise provided
by the Equity Incentive Plan or a particular Award, any determination with
respect to an Award may be made by the Committee at the time of award or at any
time thereafter. The Committee shall determine whether Awards are settled in
whole or in part in cash, Common Stock, other securities of the Company, Awards
or other property. The Committee may permit a participant to defer all or any
portion of a payment under the Equity Incentive Plan, including the crediting
of interest on deferred amounts denominated in Common Stock. Such a deferral
may have no effect for purposes of determining the timing of taxation of
payments. Any Common Stock or other equity security offered under the Equity
Incentive Plan to a participant subject to Section 16 of the Exchange Act (a
"Section 16 Participant") may not be sold for a period of six months after the
date of acquisition; any Common Stock or other equity security acquired by a
Section 16 Participant upon exercise of an Option may not be sold for six
months after the grant of the Option; and any SAR granted to a Section 16
Participant may not be exercised for six months after the date of grant.
The Equity Incentive Plan also provides for non-discretionary grants of Non-
Qualified Stock Options to all directors of the Company who are not employees
("Non-Employee Directors"). On the date upon which a Non-Employee Director is
elected a member of the Company's Board of Directors, and on each subsequent
election, he or she receives the grant of a Non-Qualified Stock Option to
purchase that number of shares of Common Stock determined by multiplying 1,000
by the number of years or portion
15
<PAGE>
thereof for which the Director shall be elected to serve and rounding the
result to the nearest whole number. Options granted to Non-Employee Directors
elected for a term of one year or less are immediately exercisable. Options
granted to Non-Employee Directors elected for a term of more than one year
shall be exercisable as to 1,000 shares and as to 1,000 additional shares (or
such lesser number as shall have been awarded) at the commencement of each
successive year of the term. The purchase price of the shares of Common Stock
subject to each option shall be the closing price of a share of the Common
Stock on NASDAQ on the date the Option is granted.
The number, kind and per share exercise price of shares issuable upon the
exercise of any Options outstanding or to be granted to Non-Employee Directors
shall be proportionately adjusted in the event of a stock dividend, stock split
or combination of shares of Common Stock, recapitalization or other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company.
The term of each Option granted to a Non-Employee Director shall be five
years from its date of grant, unless sooner terminated or extended in the event
of the death of the Non-Employee Director or if the Non-Employee Director's
membership on the Board is terminated. If a Non-Employee Director dies while
serving as a director, his or her options are exercisable by either his or her
executor or administrator or, if not so exercised, by the legatees or the
distributees of his or her estate, only during the 12 months following his or
her death. If a Non-Employee director's membership on the Board terminates for
any reason other than death, his or her options are exercisable only during the
three months following the date of termination.
Awards may not be made under the Equity Incentive Plan after March 15, 2002,
but outstanding Awards may extend beyond such date. Common Stock subject to
Awards which expire or are terminated prior to exercise or Common Stock which
has been forfeited under the Equity Incentive Plan will be available for future
Awards under the Plan. Both treasury shares and authorized but unissued shares
may be used to satisfy Awards under the Equity Incentive Plan. Any proceeds
received by the Company from transactions under the Equity Incentive Plan will
be used for the general purposes of the Company.
The Equity Incentive Plan further provides that the Committee will serve as
administrator. The Committee shall determine, from among those employees to
receive Awards, those to whom Awards should be granted and the type of Award to
be granted. The Board of Directors of the Company may amend, suspend, or
terminate the Plan or any portion thereof at any time. However, no amendment
shall be made without stockholder approval if such approval is necessary to
comply with any applicable tax or regulatory requirement, including any
requirements for exemptive relief under Section 16(b) of the Exchange Act, or
any successor provision. Accordingly, stockholder approval would be required
for any amendment that materially increases the number of shares of Common
Stock subject to the Equity Incentive Plan (other than in connection with an
adjustment upon a change in capitalization) or makes any change in the class of
employees of the Company eligible to be granted Awards by the Committee under
the Plan. In addition, Sections 10(a) and (c) of the Plan (which relate to the
grant of Non-Qualified Stock Options to Non-Employee Directors) may not be
amended more than once every six months other than to comport with changes in
the Code, the Employee Retirement Income Security Act, or the rules thereunder.
All Awards under the Equity Incentive Plan to date have been in the form of
Non-Qualified Stock Options. The following table shows the Awards received by
the individuals named in the Summary Compensation Table above and by other
groups of individuals under the Equity Incentive Plan, and the number of shares
covered by options granted to the foregoing under the Company's 1987 Stock
Option Plan. The table shows the aggregate number of options received under
each plan as of March 11, 1994. Some options have been exercised. For
information as to the options exercised in 1993, the number of unexercised
options held by certain individuals, and the value of unexercised in-the-money
options at the end of 1993, see the Option Exercises table above.
16
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF OPTIONS
RECEIVED
------------------------
EQUITY INCENTIVE 1987
NAME AND PRINCIPAL POSITION PLAN PLAN
--------------------------- ---------------- -------
<S> <C> <C>
Alan S. McKim......................................... -- --
Chairman of the Board, President and Chief Executive
Officer
James A. Pitts........................................ 7,500 50,000
Senior Vice President and Chief Financial Officer
Jorgen H. Vestergaard................................. 10,000 --
President, Clean Harbors Technology Corporation
Michael R. Hatch...................................... 5,000 50,000
Senior Vice President, Clean Harbors Environmental
Services, Inc.
John P. Lawton........................................ 8,000 5,075
Vice President, Clean Harbors Environmental Services,
Inc.
Clyde D. Keaton*...................................... -- 150,000
former Co-Chief Executive Officer
All current executive officers as a group (7 persons). 74,500 150,075
All current directors who are not executive officers
as a group (5 persons)............................... 12,000 22,764
All employees, including all current officers who are
not executive officers, as a group (420 persons)..... 364,250 707,272
</TABLE>
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*Pursuant to Mr. Keaton's employment agreement, he had the right to receive
ten-year options for 450,000 shares of the Company's Common Stock. When he
resigned, he surrendered those options in exchange for a one-year option for
150,000 shares.
AS DESCRIBED ABOVE, THE BOARD OF DIRECTORS BELIEVES THAT AMENDMENT OF THE
EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
UNDER THE EQUITY INCENTIVE PLAN FROM 450,000 TO 800,000 WILL ALLOW THE COMPANY
TO ATTRACT AND RETAIN THE HIGHLY TRAINED AND MOTIVATED INDIVIDUALS ON WHICH THE
FUTURE SUCCESS OF THE COMPANY DEPENDS. ACCORDINGLY, THE BOARD OF DIRECTORS
URGES THE STOCKHOLDERS TO VOTE "FOR" THE AMENDMENT OF THE EQUITY INCENTIVE
PLAN. PROXIES WILL BE VOTED IN THE MANNER SPECIFIED THEREIN WITH RESPECT TO
APPROVAL AND, IF NO SPECIFICATION IS MADE, IN FAVOR OF APPROVAL.
CERTAIN TRANSACTIONS
In March 1986, Mr. McKim acquired a 25% limited partnership interest in Wood
Road Associates Limited Partnership, which owns the property at which Clean
Harbors Environmental Services, Inc. leases space to perform engineering and
analytical services. The other 75% interest in the partnership is owned by
individuals unrelated to the Company or to Mr. McKim. The lease, executed in
March 1986, is for a period of ten years, with an option to extend the term for
an additional five years. The lease provides for the rental of 42,078 square
feet of office and laboratory space at an initial monthly rental of $47,350,
subject to annual cost of living adjustments. The Company believes that the
property is being leased at its fair rental value.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than
10% of a registered class of the Company's equity securities, to file reports
of ownership and changes of ownership with the Securities and Exchange
Commission. Copies of those reports are to be furnished to the Company. Based
solely on
17
<PAGE>
its review of copies of the reports received by it, or written representations
from certain reporting persons, the Company believes that during 1993 all such
filing requirements were satisfied on a timely basis.
INDEPENDENT ACCOUNTANTS
The Company's independent public accountants will be selected by the Board of
Directors at its meeting following the Annual Meeting of stockholders. The
Board of Directors anticipates that it will select Coopers & Lybrand to serve
as the Company's independent public accountants for the year ending December
31, 1994. Coopers & Lybrand has served as the Company's independent public
accountants since the fiscal year ended February 28, 1990. Representatives of
Coopers & Lybrand are expected to be present at the Annual Meeting to respond
to appropriate questions and will have the opportunity to make a statement if
they so desire.
STOCKHOLDER PROPOSALS
Proposals which qualified stockholders intend to present at the 1995 Annual
Meeting must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting no later than December 31,
1994.
OTHER MATTERS
THE COMPANY FILES AN ANNUAL REPORT WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WHICH INCLUDES ADDITIONAL INFORMATION ABOUT THE
COMPANY. A COPY OF THE FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES, MAY BE OBTAINED WITHOUT CHARGE, AND COPIES OF
THE EXHIBITS WHICH ARE LISTED THEREIN WILL BE FURNISHED UPON PAYMENT OF THE
COMPANY'S COSTS OF REPRODUCTION AND MAILING OF SUCH EXHIBITS. ALL SUCH REQUESTS
SHOULD BE DIRECTED TO JOHN S. INGALLS, VICE PRESIDENT, CLEAN HARBORS
ENVIRONMENTAL SERVICES, INC., P.O. BOX 9137, QUINCY, MASSACHUSETTS 02269-9137,
TELEPHONE (617) 849-1800, EXT. 4567.
Except for the matters set forth above, management knows of no other matter
which is to be brought before the meeting, but if any other matter shall
properly come before the meeting, it is the intention of the persons named in
the accompanying form of proxy to vote such proxy in accordance with their
judgment on such matter.
By Order of the Board of Directors,
C. Michael Malm, Clerk
April 7, 1994
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL
MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A
PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING,
AND YOUR COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE ANNUAL
MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR
PROXIES.
18
<PAGE>
CLEAN HARBORS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan S. McKim, James A. Pitts, and C. Michael
Malm, and each of them acting solely, with full power of substitution, as the
true and lawful attorney-in-fact and proxy for the undersigned to vote all
shares of stock of Clean Harbors, Inc. (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held at the
offices of USTrust, 40 Court Street, Boston, Massachusetts at 8:30 a.m. on
Thursday, May 19, 1994 or any adjournment thereof, hereby revoking any proxies
heretofore given. Each such proxy is hereby directed to vote upon the matters
set forth on the reverse side hereof and, in his own discretion, upon such
other matters as may properly come before the meeting.
(To be Signed on Reverse Side)
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Please mark votes as in this example. [X]
1. Election of Directors: FOR [_] WITHHELD [_]
Nominees: John O. Peterson, Lorne R. Waxlax
For, except vote withheld from the following nominee:________________________
2. Proposal to increase the number of shares authorized for issuance under the
Equity Incentive Plan from 450,000 shares to 800,000 shares:
FOR [_] AGAINST [_] ABSTAIN [_]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ABOVE.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
Date:________________
Signature:___________
NOTE: Please sign exactly as
name appears hereon. Joint
owners should each sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
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