<PAGE>
[AMERICAN DISPOSAL SERVICES LOGO]
April 21, 1997
Dear Stockholder:
It is our pleasure to invite you to the Annual Meeting of Stockholders of
American Disposal Services, Inc. to be held on Wednesday, May 28, 1997, at 10:00
A.M., local time, at the offices of Proskauer Rose Goetz & Mendelsohn LLP, 1585
Broadway, 27th Floor, New York, New York 10036.
Whether or not you plan to attend and regardless of the number of shares you
own, it is important that your shares be represented at the meeting.
Accordingly, you are urged to sign, date and return your proxy promptly in the
enclosed envelope, which requires no postage if mailed in the United States.
I sincerely hope you will be able to join us at the meeting. The officers and
directors of the Company look forward to seeing you at that time.
Sincerely,
/s/ DC Stoller /s/ Richard De Young
David C. Stoller Richard De Young
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
745 MCCLINTOCK DRIVE
SUITE 305
BURR RIDGE, ILLINOIS 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of AMERICAN DISPOSAL SERVICES, INC. (the
"Company") will be held at the offices of Proskauer Rose Goetz & Mendelsohn LLP,
1585 Broadway, 27th Floor, New York, New York 10036, on Wednesday, May 28, 1997,
at 10:00 A.M., local time, for the following purposes:
1. To elect directors of the Company for the ensuing year;
2. To approve an amendment to the Company's Stock Option Plan to increase
by 500,000 the number of shares of the Company's Common Stock for
which options may be granted thereunder;
3. To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company; and
4. To transact any such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on April 15, 1997 are
entitled to vote at the meeting and at any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Ann L. Straw
Secretary
April 21, 1997
2
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
745 MCCLINTOCK DRIVE
SUITE 305
BURR RIDGE, ILLINOIS 60521
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1997
The accompanying proxy is solicited by and on behalf of the Board of
Directors of American Disposal Services, Inc., a Delaware corporation (the
"Company"), to be used at the Annual Meeting of Stockholders to be held at the
offices of Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, 27th Floor, New
York, New York 10036, on Wednesday, May 28, 1997, at 10:00 A.M., local time, and
at any adjournments thereof.
When the accompanying proxy is properly executed and returned, the shares
of common stock of the Company, par value $.01 per share (the "Common Stock"),
it represents will be voted at the meeting in accordance with any directions
noted thereon and, if no direction is indicated, the shares it represents will
be voted: (i) FOR the election of the nominees for directors of the Company
listed herein; (ii) FOR the approval of an amendment to the Company's Stock
Option Plan to increase by 500,000 the number of shares of Common Stock for
which options may be granted thereunder; (iii) FOR the ratification of the
appointment of Ernst & Young LLP as the independent auditors of the Company for
the current fiscal year; and (iv) in the discretion of the holders of the proxy
with respect to any other business that may properly come before the meeting and
at any adjournments thereof. Any stockholder signing and delivering a proxy may
revoke it at any time before it is voted by delivering to the Secretary of the
Company a written revocation or a duly executed proxy bearing a date later than
the date of the proxy being revoked. Any stockholder attending the meeting in
person may withdraw his proxy and vote his shares.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made primarily by mail; however, officers and regular
employees of the Company may solicit proxies personally or by telephone or by
telegram. Those persons will not be compensated specially for such services.
The Company may reimburse brokers, banks, custodians, nominees, and fiduciaries
holding shares of Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
material to the beneficial owners of such shares.
A copy of the Notice of Annual Meeting of Stockholders accompanies this
Proxy Statement. The approximate date on which this Proxy Statement first will
be mailed to stockholders of the Company is April 21, 1997.
3
<PAGE>
VOTING RIGHTS
Only holders of record of shares of Common Stock at the close of business
on April 15, 1997 will be entitled to notice of and to vote at the Annual
Meeting of Stockholders. On that date, the Company had outstanding 8,872,501
shares of Common Stock, the holders of which are entitled to one vote per share
on each matter to come before the Annual Meeting. Voting rights are non-
cumulative.
The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Directors will be elected at the Annual Meeting by a plurality of the
votes cast. For each other item to be acted upon at the Annual Meeting, the
affirmative vote of a majority of the votes cast will be required for approval.
Abstentions and broker non-votes (which occur when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner) are counted for purposes of
determining the presence or absence of a quorum at the meeting. Abstentions are
counted in tabulations of the votes cast on proposals presented to stockholders,
but broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
PRINCIPAL STOCKHOLDERS
The Company is the sole stockholder of ADS, Inc., an Oklahoma corporation
("ADS"), and County Disposal, Inc., a Delaware corporation ("CDI"). The Company
acquired all of the shares of common stock of ADS and CDI effective January 1,
1996 in exchange for which the previous stockholders of ADS and CDI received all
of the then outstanding shares of the Company's Common Stock (the "Exchange").
As part of the Exchange, all options and warrants that had previously been
granted by ADS and CDI were cancelled in exchange for options and warrants
granted by the Company.
As of March 31, 1997, the persons listed in the following table were the
only persons known to the Company to be the beneficial owners of more than five
percent of the Company's outstanding shares of Common Stock.
NUMBER OF SHARES
NAME AND ADDRESS OF COMMON STOCK PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK
- ------------------- ------------------ ------------
Charterhouse Environmental Holdings, L.L.C. (1) 1,867,289 21.05%
Charterhouse Equity Partners II, L.P. (2) 2,511,973 28.31%
CDI Equity, LLC (3) 644,109 7.26%
The Equitable Companies Incorporated (4) 927,200 10.45%
The Capital Group Companies, Inc. (4) 575,000 6.48%
__________________________
(1) The address of Charterhouse Environmental Holdings, L.L.C. ("Charter
Environmental") is c/o Charterhouse Group International, Inc., 535 Madison
Avenue, New York, New York 10022. Charterhouse Equity Partners, L.P.
("CEP") and StollerCo Partners, L.P. are the members of Charter
Environmental, with a majority of the ownership interests being held by
CEP. The general partner of CEP is CHUSA Equity Investors, L.P., whose
general partner is Charterhouse Equity, Inc., a wholly-owned subsidiary of
Charterhouse Group International, Inc. ("Charterhouse"). As a result of
the foregoing, all of the shares of Common Stock held by Charter
4
<PAGE>
Environmental would, for purposes of Section 13(d) of the Securities
Exchange Act of 1934, be considered to be beneficially owned by
Charterhouse.
(2) The address of Charterhouse Equity Partners II, L.P. ("CEP II") is c/o
Charterhouse Group International, Inc., 535 Madison Avenue, New York, New
York 10022. The general partner of CEP II is CHUSA Equity Investors II,
L.P., whose general partner is Charterhouse Equity II, Inc., a wholly-owned
subsidiary of Charterhouse. As a result of the foregoing, all of the
shares of Common Stock held by CEP II would, for purposes of Section 13(d)
of the Securities Exchange Act of 1934, be considered to be beneficially
owned by Charterhouse.
(3) The address of CDI Equity, LLC ("CDI Equity") is c/o Aetna Life and
Casualty Company, Conveyor IG6U, 151 Farmington Avenue, Hartford,
Connecticut 06156. The member interests in CDI Equity are held as follows:
99% by Aetna Life Insurance Company, which is a wholly-owned subsidiary of
Aetna Life and Casualty Company, and 1% by CDI Equity, Inc., a wholly-owned
subsidiary of Aetna Life Insurance Company.
(4) Information regarding The Equitable Companies Incorporated ("Equitable")
and The Capital Group Companies, Inc. ("Capital Group") is based on
Schedules 13G filed by such persons with the Securities and Exchange
Commission as of December 31, 1996. Equitable filed its 13G jointly on
behalf of itself, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie
Mutuelle, AXA Courtage Assurance Mutuelle and AXA. The address of
Equitable is 787 Seventh Avenue, New York, NY 10019. The address of the
Capital Group is 353 South Hope Street, Los Angeles, CA 90071.
5
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, the entire Board of Directors is to
be elected. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE SHARES OF
COMMON STOCK REPRESENTED BY A PROXY DELIVERED TO THE BOARD OF DIRECTORS WILL BE
VOTED FOR THE SEVEN NOMINEES NAMED UNDER "MANAGEMENT" BELOW. Each nominee has
consented to being named as a nominee in this Proxy Statement and to serve if
elected. However, if any such nominee should become unable to serve as a
director for any reason, votes will be cast instead for a substitute nominee
designated by the Board of Directors or, if none is so designated, will be cast
according to the judgment of the person or persons voting the proxy.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and the paragraphs that follow it present certain
information concerning the nominees for directors, who are the sole current
directors, and the executive officers of the Company. Directors are elected
annually to serve until the next annual meeting of stockholders and until their
successors have been elected. Officers are elected by and serve at the
discretion of the Board of Directors. There are no family relationships between
any of the directors and executive officers of the Company.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
POSITIONS AND OFFICES OWNED AS OF PERCENT OF
NOMINEES FOR DIRECTORS AGE WITH THE COMPANY MARCH 31, 1997 COMMON STOCK
- ---------------------- --- --------------------- -------------- ------------
<S> <C> <C> <C> <C>
David C. Stoller (1)(2) 46 Chairman; Director 124,172 1.38%
Richard De Young (1)(3) 43 President; Director 121,536 1.35%
Merril M. Halpern (2) 62 Director -- --
A. Lawrence Fagan (2) 67 Director -- --
Richard T. Henshaw, III (2) 58 Director -- --
G.T. Blankenship (4) 68 Director 100,935 1.14%
Norman Steisel 54 Director -- --
<CAPTION>
EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS
- ---------------------
<S> <C> <C> <C> <C>
Richard Kogler (1) 37 Vice President; Chief 10,345 *
Operating Officer
Stephen P. Lavey 35 Vice President; Chief -- --
Financial Officer
Ann L. Straw (1) 43 Vice President; General 6,103 *
Counsel and Secretary
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
EXECUTIVE OFFICERS POSITIONS AND OFFICES OWNED AS OF PERCENT OF
WHO ARE NOT DIRECTORS AGE WITH THE COMPANY MARCH 31, 1997 COMMON STOCK
- ---------------------- --- --------------------- -------------- ------------
<S> <C> <C> <C> <C>
Lawrence R. Conrath, Sr.(1)(5) 40 Vice President; 20,246 *
Controller
John J. McDonnell (1)(6) 42 Vice President - 33,940 *
Engineering
Mary T. Ryan (7) 43 Vice President - 4,000 *
Corporate Affairs
All directors and executive 421,277 4.59%
officers as a group (13
persons) (1)
</TABLE>
__________________________
* Less than one percent.
(1) Includes options exercisable within 60 days of March 31, 1997 to purchase
124,172, 119,069, 10,345, 32,944, 19,348 and 6,103 shares granted under the
Company's Stock Option Plan to Messrs. Stoller, De Young, Kogler, McDonnell
and Conrath and Ms. Straw, respectively. For purposes of computing the
percentage of outstanding shares beneficially held by each person or group
of persons named above on a given date, any security which such person or
persons has the right to acquire within 60 days after such date is deemed
to be beneficially owned for the purpose of computing the percentage
ownership of such person or group of persons, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Merril M. Halpern and A. Lawrence Fagan are executive officers, directors
and stockholders of Charterhouse and Richard T. Henshaw, III and David C.
Stoller are executive officers of Charterhouse. Messrs. Halpern, Fagan,
Henshaw and Stoller each disclaim beneficial ownership of the shares of
Common Stock beneficially owned by Charterhouse.
(3) Includes 2,467 shares held jointly by Mr. De Young and his wife.
(4) Includes 7,995 shares held by Mr. Blankenship's wife, of which Mr.
Blankenship disclaims beneficial ownership.
(5) Includes 498 shares held jointly by Mr. Conrath and his wife and 400 shares
held in an IRA for the benefit of Mr. Conrath.
(6) Includes 996 shares held by Mr. McDonnell's minor children.
(7) Shares held jointly by Ms. Ryan and her husband.
7
<PAGE>
DAVID C. STOLLER has been Chairman and a director of the Company since the
Exchange. He has served in the same capacities for ADS (since January 1993) and
CDI (since May 1995). Since January 1997, he has been a Managing Director of
Charterhouse, which is a private investment firm specializing in leveraged
buy-out acquisitions. From August 1992 through December 1996, Mr. Stoller
served as the Chairman of Charterhouse Environmental Capital Group, Inc.
("Charterhouse Environmental Capital"), which provided management and consulting
services to companies with environmental operations including the Company.
Charterhouse Environmental Capital is an affiliate of Charterhouse. Mr. Stoller
was a partner at the law firm of Milbank, Tweed, Hadley & McCloy (where he
remains as "Of Counsel") from January 1989 through July 1992.
RICHARD DE YOUNG has been President and a director of the Company since the
Exchange. He has also served as President of ADS since April 1994 and as a
director since September 1993 and was the Chief Operating Officer and Vice
President for ADS from January 1993 through April 1994. Mr. De Young has been a
director of CDI since May 1995, and its President since July 31, 1996. From
June 1982 through January 1993 he was employed by Waste Management of North
America, a subsidiary of WMX Technologies, Inc. ("WMX"), most recently as a
Regional Operations Vice President, with responsibility for landfill and
collection operations in the Midwest region.
MERRIL M. HALPERN has served as a director of the Company since the
Exchange. Since October 1984, Mr. Halpern has served as Chairman of the Board
of Charterhouse. From 1973 to October 1984, Mr. Halpern served as President and
Chief Executive Officer of Charterhouse. Mr. Halpern is also a director of
Designer Holdings Ltd., a developer and marketer of designer sportswear lines
("Designer Holdings"); Insignia Financial Group, Inc., a real estate management
firm; and Microwave Power Devices, Inc., a manufacturer of highly linear power
amplifiers primarily for the wireless telecommunications market ("MPD").
A. LAWRENCE FAGAN has served as a director of the Company since the
Exchange. He has been President of Charterhouse since January 1997 and formerly
served as Executive Vice President of Charterhouse since 1984. Mr. Fagan is
also a director of Designer Holdings and MPD.
RICHARD T. HENSHAW, III has been a director of the Company since the
Exchange. He has served as a director of ADS (since January 1993) and CDI
(since May 1995). Mr. Henshaw has been a Managing Director of Charterhouse
since January 1997 and formerly served as a Senior Vice President of
Charterhouse since 1991. Prior thereto he was a Senior Vice President of The
Bank of New York. Mr. Henshaw is also a director of Cornell Corrections, Inc.,
a provider of privatized correctional services.
G.T. BLANKENSHIP has been a director of the Company since the Exchange. He
previously served as a director of ADS (since January 1991). Mr. Blankenship
has been a self-employed private investor since 1990.
NORMAN STEISEL has been a director of the Company since July 1996. He has
been the President of EnEssCo Strategies, a strategic consulting services firm
specializing in government regulated markets, since January 1994. From January
1990 through December 1993, Mr. Steisel was the First Deputy Mayor of the City
of New York. Prior to 1990, he was a Senior Vice President at Lazard Freres &
Co., specializing in environmental corporate and municipal finance.
RICHARD KOGLER has been a Vice President and the Chief Operating Officer of
the Company since the Exchange. He previously served in the same capacities for
ADS since May 1995 and as President of CDI between May 1995 and July 1996. He
has been Vice President of CDI since July 31, 1996. From October 1984 through
May 1995 Mr. Kogler was employed by WMX, most recently as a Regional Operations
Vice President.
STEPHEN P. LAVEY has been a Vice President and the Chief Financial Officer
of the Company since February 1997. He was previously employed by Bank of
America from June 1990 through January 1997, most recently as a Vice President
in its Environmental Services Lending Group, specializing in the solid waste,
environmental engineering and water purification industries. Mr. Lavey is also
a Certified Public Accountant.
8
<PAGE>
ANN L. STRAW has been a Vice President and the General Counsel of the
Company since the Exchange. She previously served in the same capacities for
ADS (since June 1995) and for CDI (since June 1995). She has been the Secretary
of the Company since the Exchange, and of ADS and CDI since July 31, 1995. From
1986 through May 1995 she was employed by WMX, most recently as a Group Counsel
for WMX's Midwest Group.
LAWRENCE R. CONRATH, SR. has been Controller of the Company since the
Exchange and a Vice President since May 1996. He previously served as
Controller for ADS since May 1994. Prior to joining the Company, Mr. Conrath
spent two years with United Waste Systems, Inc., as Regional Controller of its
Michigan region. From 1978 through 1990, Mr. Conrath was employed by WMX in
several financial positions, most recently as Director of Accounting for the WMX
Urban Services Group. Mr. Conrath is also a Certified Public Accountant.
JOHN J. MCDONNELL has been a Vice President--Engineering of the Company
since the Exchange. He previously served as Environmental Engineer for ADS
(since February 1993) and CDI (since June 1995). From 1985 through February
1993, Mr. McDonnell was employed by WMX, most recently as an Engineering
Manager.
MARY T. RYAN has been a Vice President--Corporate Affairs since March 1997
after joining the Company in November 1996. From May 1996 to November 1996, she
was previously employed by Ketchum Public Relations as Senior Vice President,
Corporate Issues. From July 1984 to April 1995 she was employed by WMX
Technologies, Inc., most recently as Vice President, Management Services.
BOARD COMMITTEES AND MEMBERSHIP
The Board of Directors has established a compensation committee and an
audit committee. The compensation committee (which is comprised of Messrs.
Blankenship and Henshaw) reviews executive salaries, administers any bonus,
incentive compensation and stock option plans of the Company, including the
Company's Stock Option Plan, and approves the salaries and other benefits of the
executive officers of the Company. In addition, the compensation committee
consults with the Company's management regarding pension and other benefit plans
and compensation policies and practices of the Company. The audit committee
(which is comprised of Messrs. Fagan and Steisel) reviews the professional
services provided by the Company's independent auditors, the independence of
such auditors from management of the Company, the annual financial statements of
the Company and the Company's system of internal accounting controls. The
audit committee also reviews such other matters with respect to the accounting,
auditing and financial reporting practices and procedures of the Company as it
may find appropriate or may be brought to its attention.
The Company does not have a nominating committee. The Board of Directors
held 9 meetings in 1996. In addition, the audit committee held one meeting in
1996 and the compensation committee held 3 meetings in 1996. Each of the
directors attended at least 75% of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings of all committees of the
Board on which such director served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Company's compensation committee determined the
compensation of all the Company's executive officers. No member of the
compensation committee or executive officer of the Company has a relationship
that would constitute an interlocking relationship with the executive officers
or directors of another entity.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's directors,
officers, and any persons holding more than 10 percent of the Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership, on a timely basis, to the Securities and Exchange Commission. Based
on material provided to the
9
<PAGE>
Company, all such required reports were filed on a timely basis in 1996 except
for one report on Form 5 for Mr. Conrath, which report was filed one day past
the deadline.
DIRECTOR COMPENSATION
The only directors who are compensated for services as a director are
Messrs. Blankenship and Steisel, each of whom receives $2,000 for each meeting
of the Board of Directors that he attends and $500 for each meeting of a
committee of the Board of Directors that he attends.
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 1996 and
1995, the cash compensation paid and shares underlying options granted to each
of the five most highly compensated executive officers whose salary for each
such fiscal year was in excess of $100,000. The Company did not pay bonuses to
these individuals during the years ended December 31, 1996 and 1995.
SUMMARY OF COMPENSATION TABLE
Shares
underlying
options
Year Salary granted
------ --------- ------------
Richard De Young, President(1) . . . . . 1996 $275,442 282,743
1995 $230,092 0
Scott Flamm(2) . . . . . . . . . . . . . 1996 $225,000 83,989
1995 $122,106 0
David C. Stoller(3). . . . . . . . . . . 1996 $125,000 218,371
1995 0 0
Richard Kogler(4). . . . . . . . . . . . 1996 $160,500 52,082
1995 $93,246 0
Ann L. Straw(5). . . . . . . . . . . . . 1996 $142,500 34,863
1995 $73,125 0
__________________________
(1) Options to purchase 282,743 shares were granted to Mr. De Young in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years.
(2) Mr. Flamm resigned from the Company in February 1997, at which time he
received a severance payment of $125,000. Options to purchase 83,989
shares were granted to Mr. Flamm in 1996 as part of the Exchange to replace
options to purchase shares of ADS and CDI granted in prior years.
(3) Options to purchase 218,371 shares were granted to Mr. Stoller in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years. Mr. Stoller's 1996 compensation figure reflects
employment during the period from August 1996 through December 1996.
(4) Options to purchase 29,857 shares were granted to Mr. Kogler in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years. Mr. Kogler's 1995 compensation figure reflects
employment during the period from May 1995 through December 1995.
10
<PAGE>
(5) Options to purchase 19,863 shares were granted to Ms. Straw in 1996 as part
of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years. Ms. Straw's 1995 compensation figure reflects
employment during the period from June 1995 through December 1995.
STOCK OPTIONS
The following table contains information concerning the grant of options to
purchase shares of the Company's Common Stock to each of the named executive
officers of the Company during the year ended December 31, 1996. No stock
appreciation rights ("SARS") were granted in 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (1)
----------------------------- ------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTION EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE (2) 5% 10%
- ---- ---------- ------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard De Young(3) . . . 0 0% N/A N/A $ 0 $ 0
Scott Flamm(3)(4) . . . . 0 0% N/A N/A $ 0 $ 0
David C. Stoller(3) . . . 0 0% N/A N/A $ 0 $ 0
Richard Kogler(3) . . . . 22,225 32.6% $9.00 07/30/06 $ 125,795 $ 318,788
Ann L. Straw(3) . . . . . 15,000 22.0% $9.00 07/30/06 $ 84,901 $ 215,155
</TABLE>
__________________________
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Company's Common Stock over the term of the options. The potential
realizable values set forth above do not take into account applicable tax
and expense payments that may be associated with such option exercises.
Actual realizable value, if any, will be dependent on the future price of
the Common Stock on the actual date of exercise, which may be earlier than
the stated expiration date. The 5% and 10% assumed annualized rates of
stock price appreciation over the exercise period of the options used in
the table above are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future price of the Common Stock on any date. There is no representation
either express or implied that the stock price appreciation rates for the
Common Stock assumed for purposes of this table will actually be achieved.
(2) Each option is subject to earlier termination if the officer's employment
with the Company is terminated for certain reasons.
(3) Options granted in 1996 as part of the Exchange to replace options to
purchase shares of ADS and CDI granted in prior years are excluded.
(4) Mr. Flamm resigned from the Company in February 1997.
11
<PAGE>
The following table sets forth information for each of the named executive
officers with respect to the value of options outstanding as of December 31,
1996. There were no options exercised during 1996.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1996 DECEMBER 31, 1996 (1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard De Young . . . . . . 111,376 171,367 $ 1,244,921 $ 1,907,651
Scott Flamm(2) . . . . . . . 47,759 36,230 $ 529,647 $ 401,791
David C. Stoller . . . . . . 124,171 94,200 $ 1,377,056 $ 1,044,678
Richard Kogler . . . . . . . 9,169 42,913 $ 101,967 $ 441,697
Ann L. Straw . . . . . . . . 6,103 28,760 $ 67,869 $ 295,844
</TABLE>
__________________________
(1) Represents the difference between $18.50, the last reported sales price per
share of the Common Stock on December 31, 1996, and the exercise price per
share of the in-the-money options, multiplied by the number of shares
underlying the in-the-money options.
(2) Mr. Flamm resigned from the Company in February 1997.
EMPLOYMENT AGREEMENTS
In May 1996, Mr. Stoller entered into an employment agreement with the
Company under which he serves as the Company's Chairman. The employment
agreement provides for a current annual base salary of $300,000 and terminates
on July 30, 1997, but is automatically renewed for successive one-year terms
unless either party terminates the agreement on 180 days' notice. The
employment agreement provides that Mr. Stoller will receive a $600,000 payment
in the event his employment is terminated following a "change-in-control" of the
Company.
In May 1996, Mr. De Young entered into an employment agreement with the
Company, under which he serves as the Company's President. The employment
agreement provides for a current annual base salary of $300,000 and terminates
in July 1999. The employment agreement provides that Mr. De Young will receive
a $600,000 payment in the event his employment is terminated following a
"change-in-control" of the Company. In addition, if the Company retains an
officer (other than the Chairman of the Board) in a capacity that is senior to
Mr. De Young, or if his responsibilities are materially diminished (other than
for cause), Mr. De Young will have the right to terminate his employment in
which event he will be entitled to receive payments equal to the greater of
$750,000 or the remaining aggregate amount of base salary otherwise payable
under the employment agreement.
In May 1995, Mr. Kogler entered into an employment agreement with the
Company which provides for a current annual base salary of $172,000 and an
initial term of three years (continuing on an at-will basis thereafter).
In June 1995, Ms. Straw entered into an employment agreement with the
Company under which she serves as its Vice President and General Counsel. The
employment agreement provides for a current annual salary of $158,000 and
terminates on June 2, 1998, but is automatically renewed for successive one-year
terms unless either party terminates on 30 days' notice.
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COMPENSATION COMMITTEE REPORT
COMPENSATION POLICIES. The principal goal of the Company's compensation
program as administered by the Compensation Committee is to help the Company
attract, motivate and retain the executive talent required to develop and
achieve the Company's strategic and operating goals with a view to maximizing
shareholder value. The key elements of this program and the objectives of each
element are as follows:
BASE SALARY. Individual experience and performance is considered when
setting salaries within the range for each position. Annual reviews are held
and adjustments are made based on attainment of individual goals and in a manner
consistent with the Company's overall operating and financial performance.
LONG-TERM INCENTIVES. The Company provides its executives with long-term
incentive compensation through grants of stock options under the Company's Stock
Option Plan. The grant of stock options aligns the executive's interests with
those of the Company's stockholders by providing the executive with an
opportunity to purchase and maintain an equity interest in the Company and to
share in the appreciation of the value of the Company's Common Stock.
PRESIDENT'S COMPENSATION. As discussed under "Management -- Employment
Agreements," the Company entered into an employment agreement with Mr. De Young
in May 1996, which was prior to the formation of the Compensation Committee.
Since May 1996 the Company has paid Mr. De Young at the rate provided in the
Employment Agreement. Options to purchase 282,743 shares of Common Stock were
granted to Mr. De Young in 1996 as part of the Exchange to replace options to
purchase shares of ADS and CDI granted in prior years.
The Compensation Committee
Richard T. Henshaw III
G.T. Blankenship
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PERFORMANCE GRAPH
The following performance graph compares the five-month cumulative return
of the Company's Common Stock to the total returns of the NASDAQ Market Index
and a peer group index. Each case assumes a $100 investment on July 25, 1996
(the first day of public trading of the Company's Common Stock) and reinvestment
of any dividends.
$210
- 205.6
$200
-
$190
-
$180
-
$170
-
$160
-
$150
-
$140
-
$130
- 121.3
$120 120.2
-
$110
-
$100 | | | | | |
07/25/96 12/31/96
Legend
Symbol CRSP Total Returns Index for: 07/25/96 12/31/96
______ [] American Disposal Services, Inc. 100.0 205.6
-- * Nasdaq Stock Market (US Companies) 100.0 121.3
- ------ /\ Self-Determined Peer Group 100.0 120.2
Companies in the Self-Determined Peer Group
ALLIED WASTE INDUSTRIES INC BROWNING FERRIS INDUSTRIES INC
EASTERN ENVIRONMENTAL SVC INC REPUBLIC INDUSTRIES INC
SUPERIOR SERVICES INC USA WASTE SERVICES INC
UNITED WASTE SYSTEMS INC WMX TECHNOLOGIES INC
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used
D. The index level for all series was set to $100.0 on 07/25/96.
14
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CERTAIN TRANSACTIONS
Mr. Stoller is an officer of Charterhouse Environmental Capital, an
affiliate of Charterhouse, which provided management and consulting services to
the Company from 1993 through the closing of the Company's initial public
offering on July 30, 1996. These services included: services relating to the
Company's banking and other financial relationships including assistance in
connection with the financing and refinancing of corporate indebtedness;
analysis and assistance from both a financial and operational standpoint in
connection with the expansion of the Company's business operations; assistance
with strategic planning; and advice related to acquisitions. Fees paid by the
Company to Charterhouse Environmental Capital were $515,000 in 1994, $659,000 in
1995 and $466,000 in 1996.
On November 16, 1995, the Company borrowed $12.5 million from Charterhouse
Equity Partners II, L.P. See "Principal Stockholders." The loan was scheduled
to mature on November 15, 1996 and bore interest at a rate per annum equal to
the prime rate plus 3%. The Company repaid this loan in June 1996 with $7.5
million of borrowings under its credit facility and the remaining $5.0 million
was repaid with existing cash.
Effective as of January 1, 1996, the Company entered into agreements with
each of its executive officers providing that, upon such officer's exercise of
stock options granted in exchange for options previously granted by CDI, the
Company will pay to such officer an amount equal to the tax savings actually
recognized by the Company as a result of the deductions attributable to such
exercise. In no event can the payment to be received by an executive officer
under such agreement exceed the difference between the federal income tax
actually paid by such officer as a result of such option exercise and the amount
of federal income tax that would have been paid by such officer had such option
exercise been taxed at the capital gains rate.
15
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PROPOSAL 2
APPROVAL OF THE AMENDMENT TO
THE AMERICAN DISPOSAL SERVICES, INC.
1996 STOCK OPTION PLAN
The affirmative vote of the holders of at least a majority of the shares of
Common Stock present and entitled to vote at the meeting is required to approve
the amendment to the American Disposal Services, Inc. 1996 Stock Option Plan
(the "Plan") to increase by 500,000 the number of shares of the Company's Common
Stock for which options may be granted under the Plan. Under the Plan as
currently in effect, options to purchase 1,100,000 shares of Common Stock were
subject to grant, all of which have been granted. The Compensation Committee
and the Board of Directors have each approved this amendment. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE THEIR SHARES FOR THE PROPOSAL TO
AMEND THE PLAN. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE SHARES OF
COMMON STOCK REPRESENTED BY A PROXY DELIVERED TO THE BOARD OF DIRECTORS WILL BE
VOTED FOR THE AMENDMENT TO THE PLAN.
THE PLAN
On March 21, 1997, the Compensation Committee and the Board of Directors of
the Company approved (subject to stockholder approval) the amendment to the
Plan. The Plan is a stock plan providing for the grant of incentive stock
options and nonqualified stock options to key employees and consultants of the
Company and its subsidiaries. The following description of the Plan is a
summary and is qualified in its entirety by reference to the Plan, a copy of
which has been filed as an Exhibit to the Company's Registration Statement on
Forms S-1 (333-4889).
DURATION. No option may be granted under the Plan after December 31, 2005
(the "Termination Date"). Options granted prior to the Termination Date,
however, may extend beyond such date and the provisions of the Plan will
continue to apply thereto.
PURPOSE. The purpose of the Plan is to attract and retain eligible
participants of outstanding competence and to encourage their best efforts on
behalf of the Company. The Board of Directors believes that stock options
provide performance incentives to eligible participants to the benefit of the
Company and its stockholders and recommends approval of the amendment.
ADMINISTRATION. The Plan is administered by the Compensation Committee,
which determines the key employees and consultants eligible to receive options
and the terms thereof, all in a manner consistent with the Plan. The
Compensation Committee has full and final authority to determine the persons to
whom, and the time or times at which, options are granted, the number of shares
subject to each option (subject to a maximum of 250,000 option shares that may
be granted in any year to any one employee, with any unused portion of this
limitation available to be carried forward), the number of options which shall
be treated as incentive stock options, the duration of each option, appropriate
vesting requirements, and other terms and provisions of each option. The
Compensation Committee also has the authority to accelerate the vesting of a
stock option. In determining persons who are to receive options, and the number
of shares to be covered by each option, the Compensation Committee considers,
among other things, the persons's position, responsibilities, service,
accomplishments, and such person's present and future value to the Company.
SHARES SUBJECT TO OPTIONS. The Plan currently provides that the total
number of shares of Common Stock subject to options is 1,100,000 shares, subject
to adjustment under certain circumstances. Options which terminate or expire
unexercised are available for subsequent grants. There are presently no shares
of Common Stock available for the grant of options and the purpose of the
proposed amendment to the Plan is to make available for the grant of options a
new pool of 500,000 shares of Common Stock.
OPTIONS. The Plan provides for the grant of incentive stock options and
nonqualified stock options to key employees and consultants, as determined by
the Compensation Committee. The exercise price of incentive stock
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<PAGE>
options granted under the Plan shall be at least 100% of the fair market value
of the Common Stock on the date of grant and the exercise price of nonqualified
stock options shall be at least equal to the par value of the Common Stock. The
Compensation Committee may provide that options will be exercisable in full at
any time or from time to time during the option term or provide for the exercise
thereof in such installments at such time as the Compensation Committee may
determine. Nonqualified stock options shall be exercisable for not more than
ten years, and incentive stock options may be exercisable for up to ten years
except as otherwise provided. An option may be exercised only during the
optionee's employment, provided, however, that if employment terminates as a
result of death, disability or retirement, then options may be exercised for a
period of one year, and if employment is terminated by the Company without
cause, then options may be exercised for a period of 90 days, in each case
subject to the earlier expiration of the option in accordance with the terms of
its grant. The Compensation Committee may provide that an optionee may pay for
shares upon exercise of an option (i) in cash, (ii) in already-owned shares of
Common Stock, (iii) by agreeing to surrender then exercisable options equivalent
in value, (iv) by payment through a cash or margin arrangement with a broker,
(v) in shares otherwise issuable upon exercise of the option or (vi) by such
other medium or by any combination of (i), (ii), (iii), (iv) or (v) as
authorized by the Compensation Committee.
ADJUSTMENTS AND AMENDMENTS OF THE PLAN. Adjustments to the Plan and to
outstanding options will be made to reflect stock dividends, recapitalizations,
and similar events. The Compensation Committee has the right to amend, suspend,
or terminate the Plan at any time; provided, however, that, unless otherwise
required by law or specifically provided in the Plan, the rights of a
participant with respect to options granted prior to such amendment, suspension
or termination, may not be materially impaired without the consent of such
participant and provided further that without the approval of the stockholders
of the Company entitled to vote, no amendment may be made which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
the Plan (except to reflect stock dividends, recapitalizations, and similar
events), (ii) decrease the minimum purchase price of any option, (iii) increase
the individual limitation set forth in Article VI.A of the Plan, or (iv) extend
the maximum option period. The Plan is not subject to any of the requirements
of the Employee Retirement Income Security Act of 1974, as amended. The Plan is
not, nor is it intended to be, qualified under Section 401(a) of the Code.
EXTRAORDINARY TRANSACTIONS. In the event the Company proposes to merge
with, or into or sell or otherwise transfer all or substantially all of its
assets or in the event of the acquisition of all or substantially all of the
Company's Common Stock by a single person and/or group acting in concert, all
then outstanding options shall become fully vested.
NON-ASSIGNABILITY OF OPTIONS. No option may be assignable or transferable
by the recipient, except by will or by the laws of descent and distribution.
During the lifetime of a recipient, options may be exercisable only by him or
his personal representative or guardian. No option or interest therein may be
pledged, attached, or otherwise encumbered other than in favor of the Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The rules concerning the Federal
income tax consequences with respect to stock options granted pursuant to the
Plan are quite technical. Moreover, the applicable statutory provisions are
subject to change, as are their interpretations and applications which may vary
in individual circumstances. Therefore, the following discussion of tax
consequences is designed to provide a general understanding thereof as of the
date hereof.
Under current federal income tax laws, the grant of an incentive stock
option generally has no income tax consequences for the optionee or the Company.
No taxable income results to the optionee upon the grant or exercise of an
incentive stock option. However, the amount by which the fair market value of
the stock acquired pursuant to the incentive stock option exceeds the exercise
price is an adjustment item for purposes of Alternative Maximum Tax. If no
disposition of the shares is made within either two years from the date the
incentive stock option was granted or one year from the date of exercise of the
incentive stock option, any gain or loss realized upon disposition of the shares
will be treated as a long-term capital gain or loss to the optionee. The
Company will not be entitled to a tax deduction upon such exercise of an
incentive stock option, nor upon a subsequent disposition of the shares unless
such disposition occurs prior to the expiration of the holding period described
above. In general, if the optionee does not
17
<PAGE>
satisfy the foregoing holding periods, any gain equal to the difference between
the exercise price and the fair market value of the stock at exercise (or, if a
lesser amount, the amount realized on disposition over the exercise price) will
constitute ordinary income. In the event of such a disposition before the
expiration of the holding period described above, the Company is entitled to a
deduction at that time equal to the amount of ordinary income recognized by the
optionee. Any gain in excess of the amount recognized by the optionee as
ordinary income would be taxed to the optionee as short-term or long-term
capital gain (depending on the applicable holding period).
An optionee will realize no taxable income upon the grant of a nonqualified
option and the Company will not receive a deduction at the time of such grant
unless the option has a readily ascertainable fair market value (as determined
under applicable tax law) at the time of grant. Upon exercise of a nonqualified
stock option an optionee generally will recognize ordinary income in an amount
equal to the excess of the fair market value of the stock on the date of
exercise over the exercise price. Upon a subsequent sale of the stock by the
optionee, the optionee will recognize short-term or long-term capital gain or
loss depending upon his or her holding period for the stock. The Company will
generally be allowed a deduction equal to the amount recognized by the optionee
as ordinary income.
In addition: (i) any officers and directors of the Company subject to
Section 16(b) of the Securities Exchange Act of 1934 may be subject to special
rules regarding the income tax consequences concerning their options; (ii) any
entitlement to a tax deduction on the part of the Company is subject to the
applicable Federal tax rules, including, without limitation, Section 162(m) of
the Internal Revenue Code (the "Code"); and (iii) in the event that the
exercisability of an option is accelerated because of a change in control,
payments relating to the options, either alone or together with certain other
payments may constitute parachute payments under Code Section 280G, which may be
subject to excise tax.
18
<PAGE>
PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997 and recommends
the ratification by the stockholders of that reappointment. IN THE ABSENCE OF
INSTRUCTIONS TO THE CONTRARY, THE SHARES OF COMMON STOCK REPRESENTED BY A PROXY
DELIVERED TO THE BOARD OF DIRECTORS WILL BE VOTED FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting of Stockholders and will be available to respond to appropriate
questions and make such statements as he or she may desire.
STOCKHOLDERS PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1998
must submit the same in writing so as to be received at the executive office of
the Company on or before December 31, 1997. Such proposals must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to stockholders' proposals.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1996 is
being mailed together with this Proxy Statement to the Company's stockholders of
record at the close of business on April 15, 1997.
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of the
Company.
By Order of the Board of Directors,
Ann L. Straw
Secretary
April 21, 1997
STOCKHOLDERS ARE REQUIRED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL
BE APPRECIATED.
19
<PAGE>
PROXY AMERICAN DISPOSAL SERVICES, INC.
745 MCCLINTOCK DRIVE
BURR RIDGE, ILLINOIS 60521
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON MAY 28, 1997
The undersigned hereby appoints DAVID C. STOLLER, RICHARD DE YOUNG and ANN
L. STRAW, or any of them, with the power of substitution, as proxies and hereby
authorizes them to represent and to vote, as designated below, all shares of
Common Stock of American Disposal Services, Inc. (the "Corporation") held of
record by the undersigned at the close of business on April 15, 1997 at the
Annual Meeting of Stockholders to be held on May 28, 1997.
1. ELECTION OF DIRECTORS:
/ / FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY BELOW):
G.T. Blankenship Richard De Young A. Lawrence Fagan Merril M. Halpern
Richard T. Henshaw III Norman Steisel David C. Stoller
/ / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. PROPOSAL TO AMEND THE STOCK OPTION PLAN:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be SIGNED on other side)
<PAGE>
(CONTINUED FROM OTHER SIDE)
4. In their discretion, the Proxies are authorized to vote upon any other
business that may properly come before the meeting and any adjournments
thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
Dated: ____________________ , 1997
__________________________________
Signature
__________________________________
Signature, if held jointly
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY. IF SHARES
ARE REGISTERED IN MORE THAN ONE
NAME, THE SIGNATURES OF ALL SUCH
PERSONS ARE REQUIRED. A CORPORATION
SHOULD SIGN IN ITS FULL CORPORATE
NAME BY A DULY AUTHORIZED OFFICER,
STATING SUCH OFFICER'S TITLE.
TRUSTEES, GUARDIANS, EXECUTORS AND
ADMINISTRATORS SHOULD SIGN IN THEIR
OFFICIAL CAPACITY GIVING THEIR FULL
TITLE AS SUCH. A PARTNERSHIP SHOULD
SIGN IN THE PARTNERSHIP NAME BY AN
AUTHORIZED PERSON, STATING SUCH
PERSON'S TITLE AND RELATIONSHIP TO
THE PARTNERSHIP.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
