UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. _____)
Filed
by
the Registrant þ
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by
a party other than the Registrant ¨
Check
the
appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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WASTE
CONNECTIONS, INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Check box if any part of the fee is offset as provided by Exchange Act
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previously. Identify the previous filing by registration statement number,
or
the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Folsom,
California
April 4,
2007
Dear
Stockholders:
You
are
cordially invited to attend the Waste Connections, Inc. Annual Meeting of
Stockholders on Wednesday, May 16, 2007, at 10 a.m. (Pacific
Time). The meeting will be held at the Sheraton Grand Sacramento, 1230 J
Street, Sacramento, California 95814. Directions to the Sheraton Grand
Sacramento appear on the back cover of this notice of annual meeting and proxy
statement.
The
matters to be acted upon are described in the accompanying notice of annual
meeting and proxy statement. At the meeting, we will also report on Waste
Connections’ operations. We are excited to be celebrating our tenth year
as a company in 2007. As always, we are looking forward to meeting our
stockholders in person, and responding to any questions you may have about
the
company.
YOUR
VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual
Meeting of Stockholders, we urge you to vote and submit your proxy in order
to
ensure the presence of a quorum. You may do so by returning your proxy
card by mail or, pursuant to instructions you receive from your bank or broker,
by using the Internet or your telephone. If you attend the meeting, you
will have the right to revoke any proxy you previously submitted and vote your
shares in person.
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Very
truly yours,
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Ronald
J. Mittelstaedt
Chairman
and Chief Executive Officer
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WASTE
CONNECTIONS,
INC.
35
Iron
Point Circle, Suite 200
Folsom,
California 95630
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
The
Annual Meeting of Stockholders of Waste Connections, Inc. will be held on
Wednesday, May 16, 2007, at 10:00 a.m. (Pacific Time). The
meeting will be held at the Sheraton Grand Sacramento, 1230 J Street,
Sacramento, California 95814, for the following purposes:
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To
elect two Class III directors to serve for a term of three years;
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To
approve the proposal to amend our Amended and Restated Certificate
of
Incorporation to increase the authorized number of shares of common
stock
from 100,000,000 to 150,000,000 shares; and
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To
ratify the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending December
31,
2007.
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Only
stockholders of record of Waste Connections common stock at the close of
business on March 20, 2007, are entitled to receive notice of and to vote
at the Annual Meeting of Stockholders or any adjournment thereof.
Waste
Connections’ Annual Report to Stockholders for the fiscal year 2006 is enclosed
for your convenience.
Stockholders
of record may vote their proxies by signing, dating and returning the enclosed
proxy card. If your shares are held in the name of a bank or broker, you
may be able to vote on the Internet or by telephone. Please follow the
instructions on the form you receive. The method by which you decide to
vote will not limit your right to vote at the Annual Meeting of
Stockholders. If you later decide to attend the Annual Meeting of
Stockholders, you may revoke your previously submitted proxy and vote your
shares in person.
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By
Order of the Board of Directors,
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Robert
D. Evans
Secretary
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April 4,
2007
Your
vote is important. Whether
or not you plan to attend the Annual Meeting of Stockholders, please sign and
date the enclosed proxy card or follow any telephone or Internet procedures
established by your bank or broker as promptly as possible in order to ensure
your representation at the annual meeting.
PROXY
STATEMENT
Table
of Contents
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WASTE
CONNECTIONS,
INC.
35
Iron
Point Circle, Suite 200Folsom,
California 95630
FOR
THE
ANNUAL
MEETING OF STOCKHOLDERS
We
sent
you these proxy materials because our Board of Directors is soliciting your
proxy to vote your shares at the annual meeting. This proxy statement
includes information that we are required to provide to you under the rules
of
the Securities and Exchange Commission and that is designed to assist you in
voting your shares.
We
will
bear the costs of soliciting proxies from our stockholders. In addition to
soliciting proxies by mail, our directors, officers and employees, without
receiving additional compensation, may solicit proxies by telephone or in
person.
We
will
arrange for banks and brokers to forward these proxy materials to the beneficial
owners of our common stock for whom they hold shares of record, and we will
reimburse them for reasonable out-of-pocket expenses incurred in forwarding
these materials. We began mailing these proxy materials to our
stockholders on or about April 6, 2007.
Every
holder of Waste Connections common stock, as recorded in our stock register
at
the close of business on March 20, 2007, may vote at the annual
meeting. As of March 20, 2007, 68,675,641 shares of our common stock
were outstanding and entitled to vote. Each stockholder of record is
entitled to one vote for each share of our common stock held by the
stockholder. In addition, on March 20, 2007, we had 5,882,354 shares
of common stock reserved for issuance upon the conversion of our outstanding
3.75% Convertible Senior Notes Due 2026, none of which is entitled to vote
at
the annual meeting. Shares and share prices discussed in this proxy
statement have been adjusted to reflect our three-for-two stock split, in the
form of a 50% stock dividend, effective as of March 13, 2007.
You
may
vote in person at the annual meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You may revoke your proxy
before we vote it at the meeting by submitting a new proxy with a later date,
voting in person at the meeting or notifying our Corporate Secretary in writing
at: Waste Connections, Inc., 35 Iron Point Circle, Suite 200, Folsom,
California, 95630. We will count your most current proxy, unless you vote
in person at the meeting.
Our
Board
of Directors is asking for your proxy. Giving us your proxy means that you
authorize us to vote your shares at the meeting in the manner you direct.
You can vote by proxy:
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by
mail by signing, dating and mailing the enclosed proxy card; or
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by
telephone or over the Internet if your shares are held in the name
of a
bank or broker, and instructions for voting in this manner are included
in
information you receive from your bank or broker.
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If
you
sign your proxy card but do not give voting instructions, we will vote your
shares as follows:
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in
favor of our two director candidates;
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in
favor of the proposal to amend our Amended and Restated Certificate
of
Incorporation to increase the authorized number of shares of common
stock
from 100,000,000 to 150,000,000 shares; and
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in
favor of the ratification of the appointment of the independent registered
public accounting firm.
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For
any
other matters that may properly come before the meeting, your shares will be
voted at the discretion of the proxy holders. You may vote for both, one
or neither of our director candidates. You may also vote for or against
the other proposals, or you may abstain from voting.
You
may
receive more than one proxy card depending on how you hold your shares.
Shares registered in your name are covered by one proxy card. If you hold
shares through someone else, such as a broker, you may also receive material
from them asking how you want to vote. You should complete and return each
proxy card or other voting instruction request provided to you.
In
order
to carry on the business of the annual meeting, we must have a quorum.
This means that at least a majority of the outstanding shares eligible to vote
as of the close of business on the record date must be present at the meeting,
either by proxy or in person.
Abstentions,
directions to withhold authority and broker non-votes are counted as present
at
the meeting for determining whether we have a quorum. A broker non-vote
occurs when a broker signs and returns a proxy but does not vote on a particular
proposal because the broker does not have discretionary voting power for that
particular item and has not received voting instructions from the beneficial
owner.
Directors
are elected by a plurality of shares present at the meeting, meaning the two
nominees that receive the highest number of votes cast in favor of their
election will be elected.
The
affirmative vote of at least a majority of the outstanding shares of common
stock is required to approve the amendment of our Amended and Restated
Certificate of Incorporation.
The
ratification of the appointment of the independent registered public accounting
firm requires the favorable vote of a majority of the shares present, either
by
proxy or in person, and entitled to vote.
Abstentions
and directions to withhold authority have the same effect as a vote against
a
matter because they are considered present and entitled to vote, but are not
voted.
Broker
non-votes will be considered present for quorum purposes but not considered
entitled to vote. Accordingly, broker non-votes will have no effect on the
vote.
Only
stockholders, their proxy holders and our invited guests may attend the
meeting. If you plan to attend, please bring identification and, if you
hold shares in street name, you should bring your bank or broker statement
showing your beneficial ownership of our stock in order to be admitted to the
meeting.
We
will
use an automated system administered by our transfer agent to tabulate the
votes
at the annual meeting. Under certain circumstances, a broker or other
nominee may have discretionary authority to vote certain shares of common stock
if the broker or nominee has not received instructions from the beneficial
owner
or other person entitled to vote.
2
Our
Board
of Directors is currently composed of six directors and is divided into three
classes. One class is elected each year for a three-year term. Our
Board of Directors has nominated Messrs. Mittelstaedt and Guillet for reelection
to the Board of Directors to serve as Class III Directors until the annual
meeting of stockholders to be held in 2010 and until a successor for each has
been duly elected and qualified. Proxies will be voted, unless otherwise
indicated, for the reelection of Messrs. Mittelstaedt and Guillet to the Board
of Directors. Proxies will be voted in a discretionary manner if either of
Messrs. Mittelstaedt or Guillet is unable to serve. Each of Messrs. Mittelstaedt
and Guillet is currently a director of Waste Connections. On March 1,
2007, the Board of Directors elected Mr. Guillet to fill a new directorship
created by the Board of Directors, which increased the number of directors
comprising the entire Board from five to six.
Certain
information about Messrs. Mittelstaedt and Guillet and the directors serving
in
Class I and Class II, whose terms expire in future years, is set forth
below.
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Name
and Background
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Age
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Director
Since
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Nominees
for Class III Directors for Terms Expiring in
2010
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Ronald
J. Mittelstaedt
has been Chief Executive Officer and a director of Waste Connections
since
the company was formed in September 1997, and was elected Chairman
in
January 1998. Mr. Mittelstaedt was also President of the company
from Waste Connections’ formation through August 2004. Mr.
Mittelstaedt has more than 18 years of experience in the solid waste
industry. He holds a B.A. degree in Business Economics with a
finance emphasis from the University of California at Santa Barbara.
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43
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1997
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Edward
E. “Ned” Guillet
is
an independent human resources consultant. From October 1, 2005
until December 31, 2006, he was Senior Vice President, Human
Resources for the Gillette Global Business Unit of The Procter &
Gamble Company, a position he held subsequent to the merger of Gillette
with Procter & Gamble. From July 1, 2001 until
September 30, 2005, Mr. Guillet was Senior Vice President, Human
Resources and an executive officer of The Gillette Company, a global
consumer products company. He joined Gillette in 1974 and has held a
broad range of leadership positions in its human resources
department. Mr. Guillet is a former member of Boston University’s
Human Resources Policy Institute. He holds a B.A. degree in English
Literature and Secondary Education from Boston College.
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2007
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Class
I Directors Continuing in Office — Terms Expiring in
2008
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Eugene
V. Dupreau
has been Vice President –
Western
Region and a director of Waste Connections since February 1998. Mr.
Dupreau served as President and a director of Madera Disposal Systems,
Inc. beginning in 1981 and 1985, respectively, and held both positions
until Waste Connections acquired Madera in 1998. Mr. Dupreau holds a
B.S. degree in Business Administration from Fresno State University
and
has completed advanced coursework in waste management. Mr. Dupreau
also holds two California State Contractor Licenses, Classes A and
C 12. He has served as a director of several civic and
charitable organizations in Madera County.
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1998
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Robert
H. Davis
is
President of Rubber Recovery Inc., a private, California-based scrap
tire
processing and recycling company. Prior to acquiring Rubber Recovery
Inc., Mr. Davis was President/Chief Executive Officer and a director
of
GreenMan Technologies, Inc., a publicly traded tire shredding and
recycling company, from 1997 to 2006. Prior to joining GreenMan, Mr.
Davis served as Vice President of Recycling for Browning-Ferris
Industries, Inc. from 1990 to 1997. A 30-year veteran of the solid
waste and recycling industry, Mr. Davis has also held executive positions
with Fibres International, Garden State Paper Company and SCS Engineers,
Inc. Mr. Davis holds a B.S. degree in Mathematics from California
Polytechnic University and has done graduate work at George Washington
University in Solid Waste Management.
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2001
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3
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Class
II Directors Continuing in Office — Terms Expiring in
2009
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Michael
W. Harlan is
Executive Vice President and Chief Operating Officer of U.S. Concrete,
Inc., a major producer of ready-mixed concrete and related concrete
products. Mr. Harlan also served as U.S. Concrete’s Chief Financial
Officer from September 1998 to November 2004. From
November 1997 to January 30, 1998, Mr. Harlan served as a
consultant to Waste Connections on various financial matters. From
March 1997 to August 1998, Mr. Harlan was Vice President and
Chief Financial Officer of Apple Orthodontix, Inc., a publicly traded
company that provides practice management services to orthodontic
practices in the U.S. and Canada. From April 1991 to
December 1996, Mr. Harlan held various positions in the finance and
acquisition departments of USA Waste Services, Inc. (including Sanifill,
Inc., which was acquired by USA Waste Services, Inc.), including
serving
as Treasurer and Assistant Secretary, beginning in
September 1993. From May 1982 to April 1991, Mr.
Harlan held various positions in the tax and corporate financial
consulting services division of Arthur Anderson LLP, where he was
a
Manager since July 1986. Mr. Harlan is a Certified Public
Accountant and holds a B.A. degree from the University of
Mississippi.
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1998
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William
J. Razzouk
is
Chief Executive Officer of Newgistics, Inc., a provider of intelligent
returns management solutions for direct retailers and technology
companies. Mr. Razzouk also owns WJR Advisors and WJR Ventures,
management consulting and investment firms. From August 2000 to
December 2002, he was a Managing Director of Paradigm Capital Partners,
LLC, a venture capital firm in Memphis, Tennessee that focuses on
meeting
the capital and advisory needs of emerging growth companies. From
September 1998 to August 2000, he was Chairman of PlanetRx.com, an
e-commerce company focused on healthcare and sales of prescription
and
over-the-counter medicines, health and beauty products and medical
supplies. He was also Chief Executive Officer of PlanetRx.com from
September 1998 until April 2000. From April 1998 until September
1998, Mr. Razzouk owned a management consulting business and an investment
company that focused on identifying strategic acquisitions. From
September 1997 until April 1998, he was the President, Chief Operating
Officer and a director of Storage USA, Inc., a then publicly traded
(now
private) real estate investment trust that owns and operates more
than
350 mini storage warehouses. He served as the President and
Chief Operating Officer of America Online from February 1996 to June
1996. From 1983 to 1996, Mr. Razzouk held various management
positions at Federal Express Corporation, most recently as Executive
Vice
President, Worldwide Customer Operations, with full worldwide profit
and
loss responsibility. Mr. Razzouk previously held management
positions at ROLM Corporation, Philips Electronics and Xerox
Corporation. He previously was a director of Fritz Companies, Inc.,
Sanifill, Inc., Cordis Corp., Storage USA, PlanetRx.com, America
Online
and La Quinta Motor Inns. Mr. Razzouk holds a Bachelor of Journalism
degree from the University of Georgia.
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1998
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THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE
REELECTION OF MESSRS. MITTELSTAEDT AND GUILLET TO THE BOARD OF DIRECTORS.
4
We
have
adopted Corporate Governance Guidelines to promote the effective functioning
of
our Board of Directors and its Committees, to promote the interests of
stockholders and to ensure a common set of expectations concerning how the
Board
of Directors, its Committees and management should perform their respective
functions. We have also adopted a Code of Conduct and Ethics that applies
to all of our directors, officers and employees. Copies of our Corporate
Governance Guidelines and our Code of Conduct and Ethics are available on our
website at www.wasteconnections.com.
A
copy of either may also be obtained, free of charge, by writing to the Secretary
of Waste Connections, Inc., 35 Iron Point Circle, Suite 200, Folsom,
California, 95630.
Our
Board
of Directors held seven meetings during 2006, four of which were regularly
scheduled and three of which were special meetings held telephonically.
The Board of Directors has five standing committees: an Executive Committee,
an
Audit Committee, a Compensation Committee, a Special Equity Award Committee,
and
a Nominating and Corporate Governance Committee. Each director attended at
least 75% of the meetings of the Board of Directors and the committees on which
he served in 2006. Our policy on director attendance at annual meetings of
stockholders is that directors are invited but not required to attend. Mr.
Mittelstaedt, the Chairman of the Board, and Mr. Dupreau attended the annual
meeting of stockholders in 2006.
The
Executive Committee, whose Chairman is Mr. Mittelstaedt and whose other current
members are Mr. Harlan and Mr. Razzouk, met three times in 2006. The
Executive Committee is authorized to exercise all of the powers and authority
of
the Board of Directors in managing our business and affairs, other than to
authorize matters required by Delaware law to be approved by the stockholders,
and other than adopting, amending or repealing any of our Bylaws. Between
meetings of the Board of Directors, the Executive Committee approves all
acquisitions by us for stock and all acquisitions by us for cash or other
consideration of $5.0 million or more.
The
Audit
Committee, whose chairman is Mr. Harlan and whose other current members are
Mr.
Razzouk and Mr. Davis, met twelve times in 2006. The Board of Directors
has determined that all of the members of the Audit Committee are “financially
literate” within the meaning of Section 303A.07 of the New York Stock
Exchange Listed Company Manual. The Board of Directors has also determined
that Mr. Harlan is an “audit committee financial expert” as defined in
Item 404(d)(5) of Regulation S-K. The committee’s duties are
discussed below under “Audit Committee Report.” A current copy of the
Audit Committee charter, which our Board of Directors has adopted, is available
on our website at www.wasteconnections.com.
A
copy of the Audit Committee Charter may also be obtained, free of charge, by
writing to the Secretary of Waste Connections, Inc., 35 Iron Point Circle,
Suite 200, Folsom, California, 95630.
The
Compensation Committee, whose chairman is Mr. Razzouk and whose other current
members are Mr. Harlan and Mr. Davis, met two times in 2006. This
committee is responsible for establishing our executive officer compensation
policies and administering such policies. The Compensation Committee
studies, recommends and implements the amount, terms and conditions of payment
of any and all forms of compensation for our directors and executive officers;
approves and administers any guarantee of any obligation of, or other financial
assistance to any officer or other employee; and approves the grant of options,
warrants, restricted stock and other forms of equity incentives to officers,
directors, employees, agents and consultants. See “Executive Compensation
— Compensation Discussion and Analysis.” A current copy of the
Compensation Committee charter is available on our website at www.wasteconnections.com.
A
copy of the Compensation Committee Charter may also be obtained, free of charge,
by writing to the Secretary of Waste Connections, Inc., 35 Iron Point
Circle, Suite 200, Folsom, California, 95630.
The
Special Equity Award Committee, which the Board of Directors established on
October 25, 2005, is empowered with separate but concurrent authority with
the Compensation Committee to make awards to all eligible individuals -
typically new hires - under the company’s various equity incentive plans,
subject to certain exceptions and limitations set by the Board. The
committee may not, for example, grant annual awards to the company’s employees,
officers, directors and consultants, which are typically authorized by the
Compensation Committee annually in February; the committee may not grant awards
to the company’s executive officers or
5
directors;
and the committee may not grant more than 37,500 options and warrants or
more than 10,500 restricted stock and restricted stock unit awards to an
eligible individual in any given calendar year. Mr. Mittelstaedt is the
chair and sole member of the Special Equity Award Committee.
The
Nominating and Corporate Governance Committee, whose chairman is Mr. Davis
and
whose other current members are Messrs. Harlan and Razzouk, met four times
in
2006. The committee is responsible for recommending director nominees to
the Board of Directors and developing and implementing corporate governance
principles. A copy of the Nominating and Corporate Governance Committee
Charter is available on our website at www.wasteconnections.com.
A
copy of the Nominating and Corporate Governance Committee Charter may also
be
obtained, free of charge, by writing to the Secretary of Waste Connections,
Inc., 35 Iron Point Circle, Suite 200, Folsom, California,
95630.
The
Board
of Directors has determined that each of Messrs. Harlan, Razzouk, Davis - who
together make up each of the Board’s Audit, Compensation and Nominating and
Corporate Governance Committees - and Mr. Guillet, is “independent” within the
meaning of the standards set forth in our Corporate Governance Guidelines.
These independent, non-management directors meet in an executive session,
without management, at each of our four regularly scheduled Board of Directors
meetings. The Chair of the Audit Committee, currently Mr. Harlan, presides
over each meeting of the company’s non-management directors.
As
set
forth in our Corporate Governance Guidelines, a majority of the members of
our
Board of Directors must be independent. For a director to be considered
independent, the Board of Directors must determine that the director is
“independent” within the meaning of Section 303A.02 of the New York Stock
Exchange Listed Company Manual. In addition, for a director to be
considered independent, the Board of Directors must determine that the director
has no material relationship with the company, either directly or indirectly
as
a partner, shareholder or officer of an organization that has a relationship
with the company. No director who is a former employee of the company, is
a former employee or affiliate of any current auditor of the company or its
subsidiaries, is a part of an interlocking directorate in which any executive
officer of the company serves on the compensation committee of another company
that concurrently employs such director or has an immediate family member in
any
of the foregoing categories, can be independent until three years after such
employment, affiliation or relationship has ceased.
The
Board
of Directors reviews all commercial, industrial, banking, consulting, legal,
accounting, charitable and familial relationships of each director to assess
whether any of them is a material relationship so as to impair that director’s
independence. A “material relationship” means a direct or indirect
commercial, industrial, banking, consulting, legal, accounting, charitable
or
familial relationship that is reasonably likely to affect the independent and
objective judgment of the director in question, provided that the direct or
indirect ownership of any amount of our stock is not deemed to constitute a
material relationship. The following commercial or charitable
relationships are not considered to be material relationships that would impair
a director’s independence: if a director of Waste Connections (a) is also an
executive officer of another company that does business with Waste Connections
and the annual sales to, or purchases from, Waste Connections are less than
the
greater of one million dollars or two percent of the annual revenue of
that other company; (b) is an executive officer of another company that is
indebted to Waste Connections, or to which Waste Connections is indebted, and
the total amount of either company’s indebtedness to the other is less than
one percent of the total consolidated assets of that other company; or
(c) serves as an officer, director or trustee of a charitable organization,
and Waste Connections’ discretionary charitable contributions to that
organization are less than one percent of that organization’s total annual
receipts. The Board of Directors reviews annually whether its members
satisfy these categorical independence tests before any non-management member
stands for re-election to the Board.
All
relationships not covered by the preceding paragraph are reviewed by the
directors who satisfy the independence tests set forth above to determine
whether they are material so as to impair a director’s independence. If
the Board of Directors determines that any relationship is immaterial even
though it does not meet the categorical tests for immateriality set forth above,
we will explain in our next proxy statement the basis for the Board’s
determination.
Waste
Connections does not make any personal loans or extend credit to any director
or
officer, other than those expressly permitted under applicable laws and
regulations. All such arrangements must be administered by the
Compensation Committee, and such arrangements not already maintained on
July 30, 2002, must also be
6
approved
in advance by the Compensation Committee. No independent director or his
or her immediate family member may provide personal services to Waste
Connections for compensation, other than as permitted under New York Stock
Exchange rules.
In
addition to the general requirements for independent Board members described
above, members of the Audit Committee must also satisfy the additional
independence requirements of the New York Stock Exchange and Rule 10A-3 of
the Securities Exchange Act of 1934, as amended. These rules, among other
things, prohibit a member of the Audit Committee, other than in his capacity
as
a member
of
the Audit Committee, the Board of Directors or any other committee of the Board,
from receiving any compensatory fees from or being an affiliated person of
Waste
Connections or any of its subsidiaries. As a matter of policy, the Board
of Directors also applies this additional requirement to members of the
Compensation and Nominating and Corporate Governance Committees.
Our
Board
of Directors believes that directors must have the highest personal and
professional ethics, integrity and values. They must be committed to
representing the long-term interests of our stockholders. They must have
objective perspective, practical wisdom, mature judgment and expertise, and
operational or financial skills and knowledge useful to the oversight of our
business. Our goal is to have a Board of Directors that represents diverse
experiences at policy-making levels in business and other areas relevant to
our
activities. Directors should be committed to serving on the Board for an
extended period of time.
In
addition to the foregoing qualities, the Nominating and Corporate Governance
Committee will take a number of other factors into account in considering
candidates as nominees for the Board of Directors, including the
following: (i) whether the candidate is independent within the
meaning of our Corporate Governance Guidelines; (ii) relevant business,
academic or other experience; (iii) willingness and ability to attend and
participate actively in Board and Committee meetings and otherwise to devote
the
time necessary to serve, taking into consideration the number of other boards
on
which the candidate serves and the candidate’s other business and professional
commitments; (iv) potential conflicts of interest; (v) whether the
candidate is a party to any adverse legal proceeding; (vi) the candidate’s
reputation; (vii) specific expertise and qualifications relevant to any
Committee that the candidate is being considered for, such as whether a
candidate for the Audit Committee meets the applicable financial literacy or
audit committee financial expert criteria; (viii) willingness and ability
to meet our director’s equity ownership guidelines; (ix) willingness to
adhere to our Code of Conduct and Ethics; (x) ability to interact
positively and constructively with other directors and management;
(xi) willingness to participate in a one-day new director orientation
session; (xii) willingness to attend educational forums or workshops to
enhance understanding of new and evolving governance requirements; and
(xiii) the size and composition of the current Board.
When
seeking director candidates, the Nominating and Corporate Governance Committee
may solicit suggestions from incumbent directors, management, third party
advisors, business and personal contacts, and stockholders. The Committee
may also engage the services of a search firm. After conducting an initial
evaluation, the Nominating and Corporate Governance Committee will make
arrangements for candidates it considers suitable to be interviewed by one
or
more members of the Committee. Each candidate will be required to complete
a standard directors’ and officers’ questionnaire, completed by all of the
directors annually. The Committee may also ask the candidate to meet with
members of our management. If the Committee believes that the candidate
would be a valuable addition to the Board of Directors, it will recommend the
candidate for nomination to the Board.
The
Nominating and Corporate Governance Committee will apply the criteria described
above when considering candidates recommended by stockholders as nominees for
the Board of Directors. In addition, any of our stockholders may nominate
one or more persons for election as a director of the company at an annual
meeting of stockholders if the stockholder complies with the notice, information
and consent provisions contained in our Amended and Restated Bylaws. We
have an advance notice Bylaw provision relating to the nomination of
Directors. Pursuant to that provision, to be considered for inclusion in
our proxy materials, notice of a stockholder’s nomination of a person for
election to the Board of Directors must be received by the Secretary of Waste
Connections in writing at the address listed on the first page of this Proxy
Statement no later than the close of business (California time) on the
120th day
prior to the anniversary date of our proxy statement released to stockholders
in
connection with the previous year’s annual meeting. To be considered
timely, stockholder proposals submitted after this deadline
7
must
be
received as set forth above no later than the close of business (California
time) on the 90th day
prior to the annual meeting of stockholders. The stockholder’s written
notice must include information about the proposed nominee, including name,
age,
business address, residence address, telephone number, email address, principal
occupation, number of shares of our common stock beneficially owned, and any
other information required in proxy solicitations for the election of directors,
including employment history, participation as a director of other public or
private corporations, and information about any relationship or understanding
between the proposing stockholder and the candidate or any other person (naming
that person) pursuant to which the nomination is to be made. The written
notice must be accompanied by the executed consent of each nominee to serve
as a
director if elected. In addition, the stockholder giving the notice must
include the following information: such stockholder’s name, record address,
phone number, email address, number of shares of our common stock beneficially
owned, and a description of all arrangements or understandings between the
stockholder and each nominee and any other person (naming such person) pursuant
to which each nomination is to be made by the stockholder.
Before
nominating a sitting director for reelection at an annual meeting, the
Nominating and Corporate Governance Committee will consider the director’s
performance and contribution to the Board of Directors.
Stockholders
and other interested parties may communicate with the Board of Directors
generally, with the non-management directors as a group or with a specific
director at any time by writing to the Board of Directors, the non-management
directors or a specific director, care of the Secretary of Waste Connections,
Inc., 35 Iron Point Circle, Suite 200, Folsom, California,
95630. The Secretary will forward all communications to the Board of
Directors, the non-management directors or a specific director, as applicable,
as soon as practicable after receipt without screening the communication.
Stockholders and other interested parties are requested to provide their contact
information and to state the number of shares of our common stock that they
beneficially own in their communications to the Board of Directors.
Because other appropriate avenues of communication exist for matters that are
not of stockholder interest, such as general business complaints or employee
grievances, stockholders and other interested parties are urged to limit their
communications to the Board of Directors to matters that are of stockholder
interest and that are appropriate for consideration at the Board level.
In
2006,
the Compensation Committee of our Board of Directors consisted of Messrs.
Razzouk, Harlan and Davis. None of our executive officers served as a
director or member of the compensation committee of another entity which had
an
executive officer that served as a director or member of our Compensation
Committee.
8
The
following table provides compensation information for the year ended December
31, 2006, for each member of our Board of Directors. Mr. Guillet, who the
Board of Directors elected on March 1, 2007, to fill a new directorship it
created, is not included in the table below, as he was not a member of our
Board
in 2006.
|
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards
($) (2)
|
Option
Awards
($) (3)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||
|
Ronald
J. Mittelstaedt (1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Eugene
V. Dupreau (1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Robert
H. Davis
|
39,000
|
57,028
|
(4)
|
—
|
(7)
|
—
|
—
|
—
|
96,028
|
|||||||||||||
|
Michael
W. Harlan
|
43,500
|
57,028
|
(5)
|
—
|
(8)
|
—
|
—
|
—
|
100,528
|
|||||||||||||
|
William
J. Razzouk
|
39,000
|
57,028
|
(6)
|
—
|
(9)
|
—
|
—
|
—
|
96,028
|
|||||||||||||
|
(1)
|
|
Directors
who are officers or employees of Waste Connections do not currently
receive any compensation as directors or for attending meetings of
the
Board of Directors or its committees.
|
|
(2)
|
|
Stock
awards consist of restricted stock units granted under our Second
Amended
and Restated 2004 Equity Incentive Plan. Amounts shown do not reflect
compensation actually received by the director. Instead, the amounts
shown are the dollar amounts recognized by us as compensation expense
for
financial reporting purposes in 2006 for stock awards pursuant to
the
Financial Accounting Standards Board’s Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based
Payment,
or SFAS 123(R), excluding estimates of forfeitures related to
service-based vesting conditions. Although the amounts shown do not
reflect estimated forfeitures, the amounts actually recognized in
our
financial statements are reduced for estimated forfeitures pursuant
to
SFAS 123(R). These compensation expense amounts reflect stock awards
granted in 2006 only, the first year we granted stock awards to our
directors. The assumptions used to calculate the value of stock
awards are set forth under Note 1 of the Notes to Consolidated
Financial Statements included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2006, filed with the Securities
and Exchange Commission, or the SEC, on February 13, 2007.
|
|
(3)
|
|
No
option awards were made to any of our directors as compensation for
their
service as directors or for attending meetings of the Board of Directors
or its committees in 2006. See the “Principal Stockholders” table on
page 12 for details on the amount of our common stock
beneficially owned by each of our directors as of March 15,
2007.
|
|
(4)
|
The
grant date fair value of this award computed in accordance with
SFAS 123(R) is $130,350, and disregards estimates of forfeitures
related to service-based vesting conditions. As of December 31,
2006, Mr. Davis had an aggregate of 5,625 shares of stock awards
in the
form of restricted stock units outstanding.
|
|
|
(5)
|
The
grant date fair value of this award computed in accordance with
SFAS 123(R) is $130,350, and disregards estimates of forfeitures
related to service-based vesting conditions. As of December 31,
2006, Mr. Harlan had an aggregate of 5,625 shares of stock awards
in the
form of restricted stock units outstanding.
|
|
|
(6)
|
The
grant date fair value of this award computed in accordance with
SFAS 123(R) is $130,350, and disregards estimates of forfeitures
related to service-based vesting conditions. As of December 31,
2006, Mr. Razzouk had an aggregate of 5,625 shares of stock awards
in the
form of restricted stock units outstanding.
|
|
|
(7)
|
As
of December 31, 2006, Mr. Davis had an aggregate of 31,500 option
awards outstanding.
|
|
|
(8)
|
As
of December 31, 2006, Mr. Harlan had an aggregate of 76,500 option
awards outstanding.
|
|
|
(9)
|
As
of December 31, 2006, Mr. Razzouk had an aggregate of 31,500 option
awards outstanding.
|
9
As
of
February 1, 2007, the Compensation Committee raised the monthly cash
retainer each independent director receives by $500 from $1,625 per month to
$2,125 per month. The $4,500 fee each independent director receives for
attending in person each Board meeting and each committee meeting, unless held
in conjunction with a full Board meeting, remained unchanged. Each Board
member is also eligible for reimbursement of reasonable expenses incurred.
Committee chairs receive the following additional cash compensation, which
amounts are added to their monthly retainers: Audit Committee Chair —
$500, Compensation Committee Chair — $125, and Nominating and Corporate
Governance Committee Chair — $125. The monthly cash retainer is intended
to compensate independent directors for participation in meetings held by
conference call and for incidental participation in company affairs between
meetings.
Other
than Mr. Guillet, who the Board of Directors elected on March 1, 2007 to fill
a
new directorship it created, we granted each independent director an option
to
purchase shares of our common stock at the time of his initial election or
appointment. Historically, we have also granted each independent director
an option to purchase between 16,875 and 45,000 shares of our common stock
each year during which the director served on the Board of Directors.
However, consistent with our intention of granting more restricted stock units
and fewer stock options to our management team, in 2006 we granted each
independent director 5,625 restricted stock units under our Second Amended
and
Restated 2004 Equity Incentive Plan and no options. The units granted in
2006 vest in two successive, equal, annual installments upon the director’s
completion of each year of continued service on the Board of Directors over
the
two-year period measured from the February 14, 2006, grant date. The
annual grants made to each of our independent directors in 2007 consisted of
4,500 restricted stock units and no options. The units granted in
2007 vest in two successive, equal installments upon the February 1, 2007
grant date and the first anniversary of the grant date. In connection with
Mr. Guillet’s election to the Board of Directors, we granted him 4,500
restricted stock units that vest in two successive, equal installments upon
the
March 5, 2007, grant date and the first anniversary of the grant
date.
Historically,
the Board of Directors had a policy that required each independent director
to
own a number of shares of our common stock with a market value at the time
of
purchase equal to approximately three times the director’s annual cash
compensation for serving as a director. New directors were required to
acquire ownership of that number of shares over a three-year period of time
commencing with their appointment or election to the Board of Directors.
On
February 1, 2007, the Compensation Committee updated this policy and
approved a requirement that each non-management director of the company own
a
number of shares of the company’s common stock having a market value of at least
$150,000 in 2007, as measured by current market value or purchase price,
whichever is higher. This requirement will increase to $200,000 in 2008.
Unless otherwise satisfied, current directors and new directors will achieve
this requirement by retaining one half of all restricted stock unit grants
as
they vest, measured on an after tax basis, until the value of their holdings
reach the required level.
10
The
following table shows the amount of our common stock beneficially owned, as
of
March 15, 2007, by: (i) each person or entity that we know owns more
than 5% of our common stock; (ii) our named executive officers and each of
our directors and nominees; and (iii) all of our current directors and
executive officers as a group. An asterisk in the Percent of Class column
indicates beneficial ownership of less than 1% by a director or nominee. Shares
and share prices discussed in this proxy statement have been adjusted to reflect
our three-for-two stock split, in the form of a 50% stock dividend, effective
as
of March 13, 2007.
|
Name
of Beneficial Owner(1)
|
Amount
and
Nature
of
Beneficial
Ownership(2)
|
Percent
of
Class
|
||||||
|
T.
Rowe Price Associates, Inc.
(3)
|
6,567,975
|
|
|
|
9.56
|
%
|
||
|
Columbia
Wanger Asset Management, L.P. (3)
|
3,466,573
|
|
|
|
5.05
|
|
||
|
Ronald
J. Mittelstaedt
|
1,050,681
|
(4)
|
|
|
1.53
|
|||
|
Steven
F. Bouck
|
1,033,226
|
(5)
|
|
|
1.50
|
|
||
|
Robert
D. Evans
|
540,172
|
(6)
|
|
|
0.79
|
|
||
|
Worthing
F. Jackman
|
313,480
|
(7)
|
|
|
0.46
|
|
||
|
Darrell
W. Chambliss
|
313,250
|
(8)
|
0.46
|
|
||||
|
Eugene
V. Dupreau
|
275,878
|
(9)
|
|
|
0.40
|
|
||
|
Michael
W. Harlan
|
58,312
|
(10)
|
|
|
*
|
|
||
|
Robert
H. Davis
|
38,737
|
(11)
|
|
|
*
|
|
||
|
William
J. Razzouk
|
42,187
|
(11)
|
|
|
*
|
|
||
|
Edward
E. “Ned” Guillet
|
2,250
|
*
|
||||||
|
All
executive officers and directors as a group
(16 persons)
|
4,561,991
|
|
6.64
|
|||||
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission. In general, a person who has voting power
and/or investment power with respect to securities is treated as
the
beneficial owner of those securities. Except as otherwise indicated
by
footnote, we believe that the persons named in this table have sole
voting
and investment power with respect to the shares of common stock
shown.
|
|
(2)
|
Shares
of common stock subject to options and/or warrants currently exercisable
or exercisable within 60 days after March 15, 2007, shares of
common stock into which convertible securities are convertible within
60 days after March 15, 2007, and shares which will become
issuable within 60 days after March 15, 2007, pursuant to
outstanding restricted stock units count as outstanding for computing
the
percentage beneficially owned by the person holding such options,
warrants, convertible securities and restricted stock units, but
are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. On October 27, 2005, our Board
of Directors accelerated the vesting of outstanding options previously
awarded to employees. In addition, to prevent unintended benefits to
the company’s executive officers and other selected corporate, regional
and field employees, restrictions were imposed on any shares obtained
through the exercise of such accelerated options. Accordingly, the
Resale Restriction Agreement that the company entered into with each
of
these employees, including each of the named executive officers,
prevents
the sale of any shares acquired from the exercise of an accelerated
option
prior to the earlier of the original vesting date of the option,
or the
individual’s termination of employment.
|
|
(3)
|
The
address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street,
Baltimore, Maryland, 21202. The address of Columbia Wanger Asset
Management, L.P. is 227 West Monroe Street, Suite 3000, Chicago,
Illinois, 60606. The share ownership of T. Rowe Price Associates,
Inc. is based on Schedules 13G/A filed with the Securities and
Exchange Commission on February 14, 2007. The share ownership of
Columbia Wanger Asset Management, L.P. is based on a Schedule 13G/A
filed with the Securities and Exchange Commission on January 11,
2007.
|
|
(4)
|
Includes
676,192 shares subject to options exercisable within 60 days of
March 15, 2007; 135,000 shares subject to a range forward collar
contract that settles on June 11, 2007, and will require Mr.
Mittelstaedt to sell such shares at that time at a price per share
designated in the contract; and 371,437 shares held by Mittelstaedt
Enterprises, L.P., of which Mr. Mittelstaedt is a limited partner.
Excludes 2,850 shares held by the Mittelstaedt Family Trust as to
which Mr. Mittelstaedt disclaims beneficial
ownership.
|
11
|
(5)
|
Includes
728,483 shares subject to options exercisable within 60 days of
March 15, 2007. Excludes 3,900 shares owned by
Mr. Bouck’s two minor sons as to which Mr. Bouck disclaims
beneficial ownership.
|
|
(6)
|
Includes
536,422 shares subject to options exercisable within 60 days
after March 15, 2007.
|
|
(7)
|
Includes
312,189 shares subject to options exercisable within 60 days
after March 15, 2007.
|
|
(8)
|
Includes
222,920 shares subject to options exercisable within 60 days
after March 15, 2007.
|
|
(9)
|
Includes
109,500 shares subject to options exercisable within 60 days
after March 15, 2007; and 900 shares of restricted stock granted
under our 2002 Restricted Stock Plan, which shares vest on February
23,
2008.
|
|
(10)
|
Includes
46,500 shares subject to options exercisable within 60 days
after March 15, 2007.
|
|
(11)
|
Includes
31,500 shares subject to options exercisable within 60 days
after March 15, 2007.
|
Philosophy
and Objectives
Throughout
this proxy statement, the individuals who served as our Chief Executive Officer
and our Chief Financial Officer during 2006, as well as our three other most
highly compensated executive officers in 2006, are referred to as the named
executive officers, or the NEOs.
The
Compensation Committee’s philosophy with respect to the compensation of the
named executive officers does not differ materially from the philosophy that
applies to other executive officers. The Compensation Committee believes
that compensation paid to NEOs should be closely aligned with our performance
on
both a short-term and long-term basis, linked to specific, measurable results
intended to create value for stockholders and should assist us in attracting
and
retaining key executives critical to our long-term success.
In
establishing compensation for NEOs, the Compensation Committee’s objectives are
to:
| · |
Attract
and retain individuals with superior leadership ability and managerial
talent;
|
| · |
Ensure
that NEO compensation is aligned with our corporate strategies, business
objectives and the long-term interests of our stockholders;
and
|
| · |
Provide
an incentive to achieve key strategic and financial performance measures
by linking incentive award opportunities to the achievement of performance
goals in these areas.
|
Our
overall compensation program is structured to attract and retain highly
qualified executive officers by paying them competitively consistent with our
success. We believe that compensation should be structured to ensure that
a significant portion is directly related to our stock’s performance and other
factors that directly and indirectly influence stockholder value.
Accordingly, our approach to compensation is to provide a base salary, annual
performance-based compensation tied to goals that are intended to link NEO
compensation to our operating and financial performance, and long-term equity
grants intended to align NEO compensation with stockholder returns and to aid
in
retention.
Our
compensation programs provide compensation in the form of both cash and equity
to provide incentives to reward both our short-term and long-term
performance. The Compensation Committee allocates total compensation
between cash and equity-based on comparisons with other companies and the
judgment of the Committee members. The balance between cash and equity
compensation among NEOs and other members of the senior executive team is
evaluated annually. Historically, the Committee’s bias has favored equity
compensation over cash due to our overall compensation philosophy and objective
of ensuring that NEO compensation is aligned with our corporate strategies,
business objectives and the long-term interests of our
stockholders.
12
Approach
to Compensation
The
Compensation Committee has the primary authority for the consideration and
determination of the compensation we pay to our executive officers and
directors, including the amount of equity-based compensation. To aid the
Compensation Committee in making its determination, the Chief Executive Officer
meets with the Compensation Committee and provides recommendations annually
to
the Compensation Committee regarding the compensation of all executive officers,
other than himself. The Compensation Committee also holds executive
sessions not attended by any members of management or non-independent directors.
The Compensation Committee is not bound to follow the Chief Executive Officer’s
recommendations. The Compensation Committee also has the authority to engage
its
own independent advisors to assist it in carrying out its duties and has done
so.
In
determining the level of base salary, performance-based compensation and
long-term equity-based compensation paid to the named executive officers, the
Compensation Committee considered: (i) the compensation structure and
practices of a peer group of companies that we believe are our leading
competitors in the solid waste industry; (ii) a comparator group of
companies, most of which are non-solid waste companies, with comparable
financial profiles; and (iii) its own judgment as to an appropriate level
of compensation for a company of our size and financial performance. These
peer and comparator groups are identified and discussed below. While the
Compensation Committee uses compensation consultants from time to time, it
does
not engage consultants every year. In determining the amount of
compensation for the named executive officers, the Compensation Committee does
not take into account
amounts realized or realizable from prior equity-based compensation grants
because the Committee seeks to provide compensation that takes into account
the
cost of replacing the named executive officers on a market competitive basis
and
what is equitable based on our performance. To some extent, appreciation
in the amounts realized or realizable from prior equity-based compensation
grants confirms the Compensation Committee’s success in aligning compensation
with our stockholders’ interests, thus validating our compensation philosophy.
Transition
in Compensation Practices
In
2004,
the Compensation Committee reviewed our compensation philosophy primarily in
anticipation of the requirement that stock options be expensed, but also to
address the transition of the company from our early growth stage. In connection
with its review, the Compensation Committee engaged Pearl Meyer & Partners,
a nationally known compensation consulting firm, to assist it in the
determination of the key elements of the compensation program. Pearl Meyer
established a comparator group, provided an analysis of how the compensation
of
our named executive officers compares to that of named executive officers in
the
comparator group, advised the Compensation Committee on alternative forms of
compensation and made recommendations to the Committee. In addition, the
compensation consultant provided advice to the Compensation Committee with
respect to competitive practices and the amounts and nature of compensation
paid
to executive officers. The compensation consultant also advised on, among
other things, structuring our compensation programs and determining appropriate
levels of base salary, performance-based compensation and other awards.
Pearl
Meyer found that when compared to the comparator group of companies, our cash
compensation was near the bottom of the comparator group while our equity-based
compensation via option grants was at or near the top of the comparator group.
The compensation consultant recommended higher cash salaries for the NEOs,
increasing bonus targets as a percentage of base salary for all of the NEOs
other than the Chief Executive Officer, and reducing the level of option grants
and adding full value grants, such as performance shares or performance
contingent restricted stock or restricted stock units. The compensation
consultant endorsed our “light” approach to benefits and perquisites, but
recommended the implementation of a voluntary deferred compensation plan and
providing reimbursement subject to expense limits for financial planning.
Based in part on the compensation consultant’s recommendations, the Compensation
Committee commenced a multi-year plan to increase base salaries of the NEOs,
reduce the number of options granted and add restricted stock units to the
compensation mix. The Compensation Committee did not adopt the
consultant’s recommendation that restricted stock unit awards provide for
performance-based vesting, but chose instead to take performance-based factors
into account in determining the amount of the grant. The Compensation
Committee also implemented a voluntary deferred compensation plan, but did
not
provide for reimbursement for financial planning.
13
Compensation
Benchmarking
An
important component of setting and structuring compensation for our executive
officers is determining the compensation packages offered by leading waste
services companies, including Waste Management, Inc., Allied Waste Industries,
Inc. and Republic Services, Inc. While we do not specifically benchmark
our compensation to a peer group, we do periodically perform our own survey
of
the compensation practices of this peer group of companies to assess our
competitiveness. In doing so, we take into account factors such as the
relative financial performance of those companies and factors that differentiate
us from those companies. All of the companies in this peer group are
substantially larger than we are and the Compensation Committee takes this
into
account when comparing compensation.
In
2004,
Pearl Meyer, following discussions with management, established a comparator
group with comparable financial profiles consisting of the following companies:
Banta Corporation; Ceridian Corporation; Florida Rock Industries, Inc.; G &
K Services, Inc.; Global Payments, Inc.; Hubbell Inc.; Iron Mountain Inc.;
Krispy Kreme Doughnuts, Inc.; Martin Marietta Materials, Inc.; Pediatrix Medical
Group, Inc.; Republic Services, Inc.; Roper Industries, Inc.; Stericycle, Inc.;
Tetra Tech, Inc.; and West Corporation.
Due
to
our growth and development, Pearl Meyer, again following discussions with
management, updated the comparator group in 2006 to consist of the following
companies: Aaron Rents, Inc.; Covanta Holding Corporation; EMCOR Group, Inc.;
G
& K Services, Inc.; McGrath Rentcorp; Mobile Mini, Inc.; Pacar
International; Quanta Services, Inc.; Republic Services, Inc.; Rollins, Inc.;
ServiceMaster Company; Stericycle, Inc.; United Rentals, Inc.; and Williams
Scotsman International, Inc. Allied Waste Industries, Inc. and Waste
Management, Inc. were included as additional reference companies.
Determination
of Compensation Components
In
light
of the 2004 review, the Compensation Committee decided to implement a series
of
changes to our compensation philosophy for the named executive officers over
time beginning in 2004. Historically, our compensation packages for the
named executive officers have consisted of three main components:
(i) annual base salary; (ii) cash performance bonuses that depended on
individual performance and our success in meeting specified financial targets
and that were capped, with the Chief Executive Officer eligible to earn up
to
100% and each of the other named executive officers eligible to earn up to
50%
of his base salary; and (iii) equity-based compensation awards, which,
prior to 2006, consisted primarily of stock options. Our general approach
to compensation was to set cash-based compensation, such as base salary and
annual bonuses, at levels that were at the lower end of amounts paid by our
peer
group of competitors and by a group of comparator companies, and to set the
level of grants of stock options at the higher end of amounts granted by such
competitors and comparator companies. We used a similar approach in
compensating our other officers, and our non-officer management and
administrative level employees. We felt that this approach benefited our
stockholders by minimizing the effect of payments of cash compensation on
current earnings while aligning our named executive officers’ and other
managers’ interests with those of our stockholders by rewarding them for
performance that resulted in increases in our stock price. Moreover, use
of stock options minimized the effect of compensation on our cash flow, allowing
us to use cash flow for growth and in other ways that benefited our
stockholders, such as repurchasing common stock under our stock repurchase
program.
In
the
revision of the compensation policy with respect to the named executive officers
and other officers, we (i) increased base salary to more competitive levels
over a three year period through 2007; (ii) decreased equity-based
compensation as a percentage of total compensation for these individuals
relative to historic levels; and (iii) implemented a program to transition
the equity-based compensation of these individuals from stock options to
restricted stock unit awards. To this end, the Compensation Committee
implemented a series of base salary increases to the named executive officers
over the period from 2004 through 2007 with the objective of setting base
salaries of our named executive officers closer to the median of the comparator
group by 2007, before adjustment for inflation and geographic differences.
The Committee also set as a goal reducing equity-based compensation awards
over
time such that the income statement impact resulting from equity-based
compensation awards would not exceed approximately 5 to 6% of projected net
income at that time. These goals are based on estimates of future results
and actual results of compensation decisions could vary materially.
Moreover, the Compensation Committee reserves the right to alter compensation
goals and philosophies at any time.
14
Base
Salary. We
provide our NEOs with a base salary that is structured around the median of
the
comparator group. In 2006, we increased the base salary of our named
executive officers twice, on February 1 and October 1, in order to
gradually step-up their base salary levels to the levels targeted for
2007. Another increase was implemented on February 1, 2007, which
established the following base salaries for our NEOs for 2007:
|
Annual
Base
Salary
|
||||
|
Ronald
J. Mittelstaedt
|
$
|
520,000
|
||
|
Worthing
F. Jackman
|
$
|
310,000
|
||
|
Steven
F. Bouck
|
$
|
385,000
|
||
|
Darrell
W. Chambliss
|
$
|
335,000
|
||
|
Robert
D. Evans
|
$
|
315,000
|
||
The
base
salary levels of the named executive officers are now at the levels that the
Compensation Committee targeted in 2004.
Performance
Bonuses.
Our compensation program includes a performance bonus to reward executive
officers based on our performance and the individual executive’s contribution to
that performance. Annual performance bonuses reflect a policy of requiring
a certain level of financial and operational performance, generally based on
achieving target levels of (i) operating income before depreciation and
amortization, a non-GAAP number; and (ii) earnings per share, before any
cash bonuses are earned by the named executive officers. The Committee has
the
discretion to waive these goals, but has rarely done so. In general, the
Compensation Committee has tied maximum potential bonus compensation percentages
of base salary at levels that it believes make us competitive with our peer
group of competitors and the comparator group. While performance bonuses
are denominated in cash, in practice, we have paid performance bonuses in cash
to our executive officers only infrequently, choosing instead to use cash
performance bonuses otherwise earned by executive officers to supplement the
bonus pool for region and district level employees. Instead, the Compensation Committee has taken the absence
of a cash
bonus, even if earned, into account in determining the level of equity-based
compensation granted to our executive officers.
Equity-Based
Compensation.
As
discussed above, we believe that equity ownership in our company is important
to
tie the ultimate level of an executive officer’s compensation to the performance
of our stock and stockholder gains while creating an incentive for sustained
growth. To meet these objectives, our senior management team receives
equity-based compensation.
In
February 2006, the Compensation Committee began granting annual restricted
stock
unit awards to our named executive officers together with option grants in
reduced amounts as compared to prior years. The Compensation Committee
believes that the use of restricted stock unit awards will reduce the overall
compensation cost to us compared to the cost of granting options at levels
consistent with previous years, yet will offer our named executive officers
a
competitive and more stable level of equity-based compensation, providing them
the opportunity to be owners of and to share in the success of the
company. In light of the previously discussed transition to higher base
salaries, the Compensation Committee reduced equity-based compensation by
targeting the number of shares underlying equity-based compensation awards
it
granted in 2006 at approximately 85% of the level of 2005 as measured by the
number of options granted. For the named executive officers, the
allocation between grants of options and grants of restricted stock units in
2006 was as follows: one-half of the grant consisted of options and the
remainder consisted of restricted stock units. The number of restricted
stock units issued was determined by, in effect, converting the options that
would have been granted to the named executive officers into restricted stock
units by dividing the number of options that would have been granted by
approximately 5.25, an options exchange ratio the Compensation Committee arrived
at after consultations with two investment banks, each of which recommended
exchange ratios based on a variety of factors, including the volatility of
our
stock price, risk, historical appreciation, targeted future growth and the
historical holding period for our options. While these investment banks
suggested that the number of restricted stock units to be issued should be
determined by dividing the number of options by between 3.5 and 4.0, which
would
have resulted in a greater number of restricted stock units being granted,
the
Compensation Committee felt that 5.25 was the appropriate initial ratio for
2006.
15
Prior
to
2006, options issued to named executive officers generally vested in equal
increments over three years. Options granted to the named executive
officers in 2006 vest in equal increments over four years, and restricted stock
units issued to the named executive officers in 2006 vest in equal increments
over five years. On October 27, 2005, in advance of the effective
date of SFAS 123(R), our Board of Directors accelerated the vesting of
outstanding options previously awarded to all employees, including the
NEOs. Each of the named executive officers, other executive officers and
select corporate, regional and field employees entered into a Resale Restriction
Agreement that prohibits the sale of any shares acquired on the exercise of
an
accelerated option prior to the earlier of the original vesting date of the
option or termination of employment. As a result of the accelerated vesting
of
stock options, we incurred a non-cash charge of approximately $1.6 million,
or
$1.0 million net of taxes. We estimate that the acceleration eliminated $15.3
million, or $9.6 million net of taxes, in non-cash compensation expense that
would have been recognized under the provisions of SFAS 123(R) over the
three-year period of 2006 to 2008 as the stock options vested.
The
Compensation Committee has generally made broad-based annual grants of stock
options and other equity-based compensation to our executive officers and other
employees in late January or in February. This timing coincides with a
number of events that make that timing optimum from the Compensation Committee’s
standpoint: first, the Compensation Committee has available financial results
from the previous year; second, making the grants at this time allows management
to notify employees of the amount of their annual grant award at or around
the
same time that management notifies employees of the amount of their cash
performance bonus with respect to the previous year, which we typically pay
in
February. In addition, due to seasonal declines in our business and other market
factors, it is our experience that the market price of our stock tends to be
lower in the first quarter of each year. The Compensation Committee believes
that it is in our best interests and the best interests of our stockholders
to
confer the benefit of a lower exercise price on our employees, if possible,
in
order to mitigate the effect of our low salary structure, enhance employee
morale, and minimize the cost of equity-based compensation to the company.
Some
exceptions to this general practice have occurred in prior years primarily
due
to factors such as the lack of availability of shares under our equity plans
pending stockholder approval of new plans, promotions and new hires.
In
2006,
the Compensation Committee met on February 9th
and
authorized equity-based compensation, including options to the named executive
officers, to be granted at the closing price of our common stock on
February 14th,
the day
after our financial results for 2005 were released to the public. In 2007,
our equity-based compensation grants consisted only of restricted stock units,
and were authorized and effective on February 1, 2007. The
Compensation Committee intends to make future grants of restricted stock units
on or about the same date every year, although the Committee reserves the right
to change the annual grant date and the form of equity-based compensation grants
in its sole discretion.
New
Senior Management Incentive Plan
The
Compensation Committee has adopted a new Senior Management Incentive Plan
governing the annual performance bonuses and the annual long-term equity
incentive grants for 2007 and subsequent years to the NEOs and such other
executives and employees as may be determined by the Compensation
Committee.
Each
participant in the Plan will have an opportunity to earn an annual performance
bonus based on a targeted percentage of the participant’s annual base salary for
the year. The objective of the annual performance bonus is to provide
participants with an incentive to manage the company to achieve certain targeted
levels of financial performance based on budgeted revenue each year.
16
For
2007,
targeted annual performance bonuses as a percentage of each NEO’s annual base
salary are as follows:
|
Targeted
Bonus
|
||||
|
Ronald
J. Mittelstaedt
|
100%
|
|
||
|
Worthing
F. Jackman
|
50%
|
|
||
|
Steven
F. Bouck
|
50%
|
|
||
|
Darrell
W. Chambliss
|
50%
|
|
||
|
Robert
D. Evans
|
50%
|
|
||
Each
participant has the opportunity to earn up to 175% of the targeted bonus based
on our achievement of certain targeted levels of financial performance
established by the Compensation Committee and based on recommendations of the
Chief Executive Officer. Each targeted performance goal is weighted in
order to calculate an overall percentage achievement against targeted
performance goals and the resulting percentage of the annual performance bonus
earned.
The
performance goals for 2007 are based upon budgeted revenue and will be measured
against achievement of targeted levels of: (1) EBITDA, a non-GAAP number
weighted at 20%; (2) operating income, weighted at 20%; (3) operating
income as a percentage of revenue, weighted at 30%; and (4) net cash
provided by operating activities as a percentage of revenue, weighted at
30%. The Compensation Committee, in its complete and sole discretion, may
adjust the targeted performance goals if an acquisition or extraordinary event
results in a significant impact relative to the goals in order to exclude or
reduce the impact of that acquisition or event. For these purposes, the
Compensation Committee determines operating income by adjusting for any gains
or
losses on disposal of assets, and determines EBITDA by adding depreciation
and
amortization to operating income.
In
the
event certain threshold performance levels are exceeded, but applicable target
levels are not achieved, the NEOs will earn proportionate awards. Payments
under this program are contingent on continued employment at the time of payout,
subject to the terms of any applicable employment agreements.
In
lieu
of paying an annual performance bonus in cash, the Compensation Committee,
in
its complete and sole discretion, may choose to pay the annual performance
bonus
in restricted stock units issued under our Second Amended and Restated 2004
Equity Incentive Plan or any succeeding plan we adopt. If restricted stock
units are issued, their value, as determined by the Compensation Committee,
will
be at least 125% of the earned cash bonus to compensate for the risk and vesting
period associated with the underlying stock.
Each
participant in the Senior Management Incentive Plan will also receive an annual
long-term incentive grant of restricted stock units based on the performance
of
both the company and the individual, subject to a vesting schedule approved
by
the Compensation Committee. For 2007, the size of such grants will be
targeted between 125% and 150% of the participant’s base salary, as valued by
the Compensation Committee. The objective of the long-term incentive grant
is to supplement each participant’s base salary and annual performance bonus in
order to maintain total compensation at the Compensation Committee’s targeted
percentile of a comparator group.
Stock
Ownership Guidelines
To
encourage long-term stock ownership, each NEO is expected to retain at least
50%
of all after-tax shares of common stock received from long-term incentive grants
until such NEO meets and maintains the following stock ownership thresholds,
as
valued by the Compensation Committee:
| · |
For
the Chief Executive Officer and President, three times such participant’s
base salary; and
|
| · |
For
other NEOs, two and one-half times such participant’s base salary.
|
17
Non-Equity
Incentive Plan, Defined Contribution Plan, Nonqualified Deferred Compensation
Plan Compensation and Other Benefits
Other
than cash performance bonuses, we do not provide non-equity incentive plan
compensation, nor do we provide defined benefit retirement plans to our named
executive officers. The named executive officers are entitled to
participate in a company-sponsored 401(k) profit sharing plan on the same terms
as all employees. We make a matching contribution of $0.50 for each dollar
of an employee’s pre-tax contributions until the employee’s contributions equal
5% of the employee’s base salary, subject to certain limitations imposed by the
Employee Retirement Income Security Act of 1974, or ERISA. Employees are
eligible to participate in the 401(k) plan beginning on the June 1 or
December 1 first following completion of one full year of employment.
Our matching contributions vest over five years.
The
named
executive officers and certain other highly compensated employees are also
entitled to participate in the nonqualified deferred compensation plan, which
we
put in place to mitigate the impact of our officers and other highly compensated
employees being unable to make the maximum contribution permitted under the
401(k) plan due to certain limitations imposed by ERISA. The deferred
compensation plan allows a highly compensated employee to voluntarily defer
receipt of a portion of the employee’s earned base salary and all or a portion
of cash performance bonuses, if any. Earnings on contributions to the
deferred compensation plan are determined by reference to the returns on one
or
more select mutual funds (as determined by the participant) that are also
available for investment by the general public. We make a matching
contribution of $0.50 for each dollar of an employee’s pre-tax contributions
until the employee’s contributions equal 5% of the employee’s base salary, less
the amount of any match we make on behalf of the employee under the
company-sponsored 401(k) plan, and subject to the same limits that apply to
the
401(k) plan except that our matching contributions are 100% vested when
made. The earnings on these funds may exceed or fall short of market rate
returns, depending on the performance of the funds selected compared to the
markets in general.
We
also
offer a number of benefits to the NEOs pursuant to benefit programs that provide
for broad-based employee participation. In addition to the 401(k) plan described
above, the benefits include medical, prescription drugs, dental and vision
insurance, long-term disability insurance, life and accidental death and
dismemberment insurance, health and dependent flexible spending accounts, a
cafeteria plan and employee assistance benefits. These generally available
benefits do not specifically factor into decisions regarding an individual
executive’s total compensation or equity-based compensation package. These
benefits are designed to help us attract and retain employees as we compete
for
talented individuals in the marketplace, where such benefits are commonly
offered.
Perquisites
and Other Personal Benefits
The
material components of our named executive officers’ compensation are described
above. We do not provide our named executive officers extensive
perquisites. Those that are provided are summarized in the Summary
Compensation Table and accompanying footnotes. Perquisites are valued at
the incremental cost to the company.
We
make
available for business use to our named executive offices and others a private
aircraft, which we own. Our general policy is not to permit employees,
including the named executive officers, to use the aircraft for purely personal
use. Occasionally, employees or their relatives or spouses, including
relatives or spouses of the named executive officers, may derive personal
benefit from travel on our aircraft incidental to a business function, such
as
when a named executive officer’s spouse accompanies the officer to the location
of an event the officer is attending for business purposes. For purposes
of our Summary Compensation Table, we value the compensation benefit to the
officer at the incremental cost to us of conferring the benefit. In the
example given, the incremental cost, consisting of catering and additional
fuel,
would be nominal because the aircraft would have been used to travel to the
event, and the basic costs of the trip would have been incurred whether or
not
the named executive officer’s spouse accompanied the officer on the trip.
Our valuation of personal use of aircraft as set forth in this proxy statement
is calculated in accordance with SEC guidance, which may not be the same as
valuation under applicable tax regulations.
18
Tax
Deductibility Considerations
Within
our performance-based compensation program, we aim to compensate the NEOs in
a
manner that is tax effective, but we do not let tax considerations drive
compensation decisions. Section 162(m) of the Internal Revenue Code
generally disallows an income tax deduction to publicly-held corporations for
compensation in excess of $1,000,000 paid for any fiscal year to the
corporation’s Chief Executive Officer or to any of its four most highly
compensated officers. However, the statute exempts qualifying
performance-based compensation from the deduction limit if certain requirements
are met. The policy of the Compensation Committee in the past has been to
attempt to structure the compensation of our executive officers to avoid the
loss of the deductibility of any compensation, even though Section 162(m)
does not preclude the payment of compensation in excess of $1,000,000.
Certain option grants made under our equity plans were intended to be structured
so that any compensation deemed paid upon the exercise of those options will
qualify as performance-based compensation that is not subject to the $1,000,000
limitation.
In
certain situations, the Compensation Committee may approve compensation that
will not meet these requirements in order to assure competitive total
compensation for the NEOs. Compensation deemed paid with respect to stock option
awards, direct stock issuances and restricted stock unit awards under the
2004 Equity Incentive Plan may be subject to the $1,000,000 limitation,
unless considered “performance-based” compensation. In this regard, the
restricted stock unit awards granted in February 2006 to our NEOs do not qualify
as performance-based compensation, but the options granted in February 2006
were
intended to qualify as performance-based compensation under
Section 162(m).
Severance
and Change of Control Arrangements
The
provisions regarding severance and change in control contained in each named
executive officer’s employment agreement are described elsewhere in this proxy
statement. With slight variations, these agreements generally call for
severance payments under various conditions in an amount approximately equal
to
three times the named executive officer’s base salary and bonus, plus the
maximum bonus available for the year of termination under the officer’s
employment agreement. The Compensation Committee believes that this level
of severance is appropriate in light of what it understands is the level of
severance offered at peer companies, and because our relatively low base
salaries would result in payments comparable to those that peer companies would
pay given a lower multiple but higher base. The Compensation Committee
reserves the right to alter severance payment levels going forward.
In
2004,
the Compensation Committee and our Chief Executive Officer, Ronald Mittelstaedt,
agreed to modify certain provisions of his employment agreement relating to
the
severance payment payable to him in the event he is terminated without cause,
as
defined in the agreement, or if he terminates the agreement for good reason,
as
defined in the agreement. Previously, Mr. Mittelstaedt’s severance payment
would have been an amount equal to three times his total compensation, including
maximum bonus payable and other payments, for the twelve months preceding the
date of termination plus $5,000,000, payable in three equal installments on
the
date of termination and each of the first and second anniversaries of the date
of termination, subject to compliance with certain provisions of his employment
agreement. The modification resulted in the elimination of the $5,000,000
payment.
The
Compensation Committee of the Board of Directors has reviewed and discussed
with
management the Compensation Discussion and Analysis to be included in this
Proxy
Statement. Based on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this Proxy Statement.
This
report is submitted on behalf of the Compensation Committee.
William
J. Razzouk, Chairman
Michael
W. Harlan
Robert
H. Davis
19
The
following table summarizes the total compensation we paid to each of our named
executive officers in 2006.
|
Name
and Principal Position
|
Year
|
Salary
($)
(1)
|
Bonus
($)
|
Stock
Awards
($)
(2)
|
Option
Awards
($)
(3)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other Compensation
($)
(4)
|
Total
($)
|
|||||||||||||||||||
|
Ronald
J. Mittelstaedt
Chief
Executive Officer
and
Chairman
|
2006
|
444,288
|
—
|
103,411
|
74,419
|
—
|
—
|
23,690
|
(5)
|
645,808
|
||||||||||||||||||
|
Worthing
F. Jackman
Executive
Vice
President
and Chief
Financial
Officer
|
2006
|
259,808
|
—
|
45,623
|
41,860
|
—
|
—
|
—
|
347,291
|
|
||||||||||||||||||
|
Steven
F. Bouck
President
|
2006
|
334,288
|
—
|
55,964
|
51,163
|
—
|
—
|
4,030
|
445,445
|
|||||||||||||||||||
|
Darrell
W. Chambliss
Executive
Vice
President
and Chief
Operating
Officer
|
2006
|
290,327
|
—
|
46,839
|
41,860
|
—
|
—
|
325
|
379,351
|
|||||||||||||||||||
|
Robert
D. Evans
Executive
Vice
President,
General
Counsel
and Secretary
|
2006
|
280,846
|
—
|
46,839
|
41,860
|
—
|
—
|
20,072
|
(6)
|
389,617
|
||||||||||||||||||
|
(1)
|
|
Amounts
shown reflect salary earned by the named executive officers for 2006,
and
reflect increases that the named executive officers received on
February 1 and October 1 of that
year.
|
|
(2)
|
|
Stock
awards consist of restricted stock units granted under our Second
Amended
and Restated 2004 Equity Incentive Plan. Amounts shown do not
reflect compensation actually received by the named executive
officer. Instead, the amounts shown are the dollar amounts
recognized by us as compensation expense for financial reporting
purposes
in 2006 for stock awards pursuant to SFAS 123(R), excluding estimates
of forfeitures related to service-based vesting conditions. Although
the amounts shown do not reflect estimated forfeitures, the amounts
actually recognized in our financial statements are reduced for estimated
forfeitures pursuant to SFAS 123(R). These compensation expense amounts
reflect stock awards granted in 2006, the first year in which we
granted
stock awards to the named executive officers. The assumptions used
to calculate the value of stock awards are set forth under Note 1
of the
Notes to Consolidated Financial Statements included in our Annual
Report
on Form 10-K for the fiscal year ended December 31, 2006, filed with
the
SEC on February 13, 2007.
|
|
|
||
|
(3)
|
|
Amounts
shown do not reflect compensation actually received by the named
executive
officer. Instead, the amounts shown are the dollar amounts
recognized by us as compensation expense for financial reporting
purposes
in 2006 for option awards pursuant to SFAS 123(R), excluding
estimates of forfeitures related to service-based vesting
conditions. Although the amounts shown do not reflect estimated
forfeitures, the amounts actually recognized in our financial statements
are reduced for estimated forfeitures pursuant to SFAS 123(R). These
compensation expense amounts reflect option awards granted in 2006;
we
accelerated outstanding option awards granted to our employees, including
the named executive officers, prior to that year on October 27, 2005,
and
incurred a non-cash charge of approximately $1.6 million, or $1.0
million
net of taxes, associated with those accelerated option awards in
2005. The assumptions used to calculate the value of option awards
are set forth under Note 1 of the Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K for the fiscal
year
ended December 31, 2006, filed with the SEC on February 13, 2007.
|
20
|
(4)
|
|
We
make available for business use to our named executive offices and
others
a private aircraft, which we own. Our general policy is not to
permit employees, including the named executive officers, to use
the
aircraft for purely personal use. Occasionally, employees or their
relatives or spouses, including relatives or spouses of the named
executive officers, may derive personal benefit from travel on our
aircraft incidental to a business function, such as when a named
executive
officer’s spouse accompanies the officer to the location of an event the
officer is attending for business purposes. For purposes of our
Summary Compensation Table, we value the compensation benefit to
the
officer at the incremental cost to us of conferring the benefit,
which
consists of additional catering and fuel expenses. In the example
given,
the incremental cost would be nominal because the aircraft would
have been
used to travel to the event, and the basic costs of the trip would
have
been incurred, whether or not the named executive officer’s spouse
accompanied the officer on the trip. Our valuation of personal use
of
aircraft as set forth in this proxy statement is calculated in accordance
with SEC guidance, which may not be the same as valuation under applicable
tax regulations.
|
|
(5)
|
Includes
matching contributions by us to our 401(k) Plan on behalf of Mr.
Mittelstaedt and the following perquisites and other personal benefits:
(i) restoration matching contributions by the company to the Nonqualified
Deferred Compensation Plan for eligible employees on behalf of Mr.
Mittelstaedt; (ii) car allowance; (iii) health club membership; (iv)
personal use of corporate aircraft incidental to a business function
(see
footnote (4) above); and (v) professional association
dues.
|
|
|
(6)
|
Includes
matching contributions by us to our 401(k) Plan on behalf of Mr.
Evans and
the following perquisites and other personal benefits: (i) restoration
matching contributions by the company to the Nonqualified Deferred
Compensation Plan for eligible employees on behalf of Mr. Evans;
(ii)
corporate housing; (iii) personal use of corporate aircraft incidental
to
a business function (see footnote (4) above); and (iv) professional
association dues.
|
21
The
following table summarizes the grants of stock and option awards we made to
the
named executive officers in 2006. Shares and share prices discussed in this
proxy statement have been adjusted to reflect our three-for-two stock split,
in
the form of a 50% stock dividend, effective as of March 13, 2007.
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
Estimated
Future Payouts
Under
Equity Incentive
Plan
Awards
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)
(1)
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#) (2)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($)
(3)
|
||||||||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Approval
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|||||||||||||||||||||||||||||
|
Ronald
J. Mittelstaedt
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
25,500
|
—
|
—
|
590,920
|
|||||||||||||||||||||||||
|
Ronald
J. Mittelstaedt
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
60,000
|
23.17
|
340,199
|
|||||||||||||||||||||||||
|
Worthing
F. Jackman
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
11,250
|
—
|
—
|
260,700
|
|||||||||||||||||||||||||
|
Worthing
F. Jackman
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
33,750
|
23.17
|
191,362
|
|||||||||||||||||||||||||
|
Steven
F. Bouck
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
13,800
|
—
|
—
|
319,792
|
|||||||||||||||||||||||||
|
Steven
F. Bouck
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
23,994
|
23.17
|
136,046
|
|||||||||||||||||||||||||
|
Steven
F. Bouck
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
17,256
|
23.17
|
97,841
|
|||||||||||||||||||||||||
|
Darrell
W. Chambliss
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
11,550
|
—
|
—
|
267,652
|
|||||||||||||||||||||||||
|
Darrell
W. Chambliss
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
16,494
|
23.17
|
93,521
|
|||||||||||||||||||||||||
|
Darrell
W. Chambliss
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
17,256
|
23.17
|
97,841
|
|||||||||||||||||||||||||
|
Robert
D. Evans
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
11,550
|
—
|
—
|
267,652
|
|||||||||||||||||||||||||
|
Robert
D. Evans
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
16,494
|
23.17
|
93,521
|
|||||||||||||||||||||||||
|
Robert
D. Evans
|
2/14/06
|
2/9/06
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
17,256
|
23.17
|
97,841
|
|||||||||||||||||||||||||
|
(1)
|
|
Stock
awards consist of restricted stock units granted under our Second
Amended
and Restated 2004 Equity Incentive Plan. The units vest in equal,
annual installments over the five year period following the date
of grant,
beginning on the first anniversary of the date of grant.
|
|
(2)
|
Option
awards consist of nonqualified and, except in the cases of Messrs.
Mittelstaedt and Jackman, incentive stock options granted under our
2002
Senior Management Equity Incentive Plan. The options vest in equal,
annual installments over the four year period following the date
of grant,
beginning on the first anniversary of the date of grant.
|
|
|
(3)
|
The
value of a stock award or option award is based on the fair value
as of
the grant date of such award determined pursuant to SFAS 123(R), and
disregards estimates of forfeitures related to service-based vesting
conditions. The proceeds to be paid to the individual following an
exercise do not include the option exercise price, and the exercise
price
of option awards has not been deducted from the amounts indicated
above. Regardless of the value placed on an option award on the
grant date, the actual value of the option will depend on the market
value
of our common stock at such date in the future when the option is
exercised.
|
We
have
entered into employment agreements with each of our named executive officers.
The material terms of each of these employment agreements is discussed elsewhere
in this proxy statement, under “Potential Payments Upon Termination or Change in
Control.”
22
The
following table summarizes unexercised options, restricted stock units that
have
not vested and related information for each of our named executive officers
as
of December 31, 2006. Shares and share prices discussed in this proxy
statement have been adjusted to reflect our three-for-two stock split, in the
form of a 50% stock dividend, effective as of March 13, 2007.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised Options
Exercisable
(#)
(1)
|
Number
of Securities Underlying Unexercised Options
Unexercisable
(#) (2)
|
Equity
Incentive
Plan
Awards: Number of Securities Underlying Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)(3)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(4)
|
Equity
Incentive
Plan
Awards: Number of Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards: Market or
Payout
Value
of
Unearned Shares, Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|||||||||||||||||||
|
Ronald
J. Mittelstaedt
|
89,406
|
—
|
—
|
12.35
|
7/18/12
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
|
24,281
|
—
|
—
|
12.35
|
7/18/12
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
161,855
|
—
|
—
|
14.50
|
2/20/13
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
6,897
|
—
|
—
|
14.50
|
2/20/13
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
230,237
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
6,015
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
137,957
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
4,544
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
|
—
|
—
|
—
|
—
|
25,500
|
706,350
|
—
|
—
|
|||||||||||||||||||
|
—
|
60,000
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
Worthing
F. Jackman
|
56,250
|
—
|
—
|
14.35
|
4/24/13
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
|
116,958
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
18,044
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
107,955
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
4,545
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
|
—
|
—
|
—
|
—
|
—
|
11,250
|
311,625
|
—
|
—
|
|||||||||||||||||||
|
|
—
|
33,750
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
|
Steven
F. Bouck
|
112,500
|
—
|
—
|
11.14
|
1/29/11
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
|
152,813
|
—
|
—
|
10.63
|
2/1/12
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
164,105
|
—
|
—
|
14.50
|
2/20/13
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
162,737
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
6,015
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
115,457
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
4,544
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
—
|
—
|
—
|
—
|
13,800
|
382,260
|
—
|
—
|
||||||||||||||||||||
|
—
|
23,994
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
17,256
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
Darrell
W. Chambliss
|
41,855
|
—
|
—
|
14.50
|
2/20/13
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
|
91,485
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
85,457
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
—
|
—
|
—
|
—
|
11,550
|
319,935
|
—
|
—
|
||||||||||||||||||||
|
—
|
16,494
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
17,256
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
Robert
D. Evans
|
150,000
|
—
|
—
|
14.23
|
6/4/12
|
—
|
—
|
—
|
—
|
|||||||||||||||||||
|
148,062
|
—
|
—
|
14.50
|
2/20/13
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
19,940
|
—
|
—
|
14.50
|
2/20/13
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
146,250
|
—
|
—
|
16.62
|
2/3/14
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
90,000
|
—
|
—
|
22.01
|
2/23/15
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
—
|
—
|
—
|
—
|
11,550
|
319,935
|
—
|
—
|
||||||||||||||||||||
|
—
|
16,494
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
|
—
|
17,256
|
—
|
23.17
|
2/14/16
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
23
|
(1)
|
On
October 27, 2005, our Board of Directors accelerated the vesting of
outstanding options previously awarded to employees, including those
grants listed above as expiring on or before February 23, 2015, so
that
those options are now fully vested and exercisable as to all the
option
shares. However, to prevent unintended benefits to the company’s
executive officers and other selected corporate, regional and field
employees, restrictions were imposed on shares obtained upon the
exercise
of those accelerated options. Accordingly, the Resale Restriction
Agreement that the company entered into with each of these employees,
including each of the named executive officers, prevents the sale
of any
shares acquired from the exercise of an accelerated option prior
to the
earlier of the original vesting date of the option, or the individual’s
termination of employment.
|
|
(2)
|
The
options vest in equal, annual installments over the four year period
following the grant date of February 14, 2006.
|
|
|
(3)
|
The
restricted stock units vest in equal, annual installments over the
five
year period following the grant date of February 14,
2006.
|
|
|
(4)
|
|
Based
on the closing price of our common stock of $27.70 on the New York
Stock
Exchange on December 29, 2006.
|
The
following table summarizes each exercise of stock options, each vesting of
restricted stock units and related information for each of our named executive
officers on an aggregated basis during 2006. Shares and share prices
discussed in this proxy statement have been adjusted to reflect our
three-for-two stock split, in the form of a 50% stock dividend, effective as
of
March 13, 2007.
|
Option
Awards
|
Stock Awards
|
||||||||||||
|
Name
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
Value
Realized
on
Vesting
($)
|
|||||||||
|
Ronald
J. Mittelstaedt
|
—
|
—
|
—
|
—
|
|||||||||
|
Worthing
F. Jackman
|
—
|
—
|
—
|
—
|
|||||||||
|
Steven
F. Bouck
|
30,000
|
486,585
|
—
|
—
|
|||||||||
|
Darrell
W. Chambliss
|
—
|
—
|
—
|
—
|
|||||||||
|
Robert
D. Evans
|
52,500
|
801,119
|
—
|
—
|
|||||||||
The
following table summarizes the participation of our named executive officers
during 2006 in our Nonqualified Deferred Compensation Plan, which is our only
plan that provides for the deferral of compensation on a basis that is not
tax-qualified.
|
Name
|
Executive
Contributions
in
Last
Fiscal
Year
($) (1)
|
Registrant
Contributions
in
Last
Fiscal
Year
($) (1)
|
Aggregate
Earnings
in
Last
Fiscal
Year
($) (2)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at
Last
Fiscal
Year
End
($)
|
|||||||||||
|
Ronald
J. Mittelstaedt
|
20,214
|
3,664
|
4,809
|
—
|
55,801
|
|||||||||||
|
Worthing
F. Jackman
|
20,000
|
5,308
|
6,145
|
—
|
63,475
|
|||||||||||
|
Steven
F. Bouck
|
30,000
|
2,564
|
6,451
|
—
|
61,931
|
|||||||||||
|
Darrell
W. Chambliss
|
25,000
|
5,863
|
9,040
|
—
|
81,491
|
|||||||||||
|
Robert
D. Evans
|
8,425
|
2,612
|
1,626
|
—
|
18,809
|
|||||||||||
|
(1)
|
|
Amounts
in these columns represent the deferred portion of base salary and
our
annual matching contributions. Contributions by an NEO are reported
in the Summary Compensation Table elsewhere in this proxy
statement
|
24
| under “Salary” and matching contributions we make to an NEO’s account are reported in the Summary Compensation Table under “All Other Compensation.” | ||
|
(2)
|
Amounts
in this column have not been disclosed by us in previous years, and
are
not included in any other amounts disclosed in this proxy statement,
as
the amounts are not preferential earnings. Instead, earnings disclosed
are
determined by reference to the returns on one or more select mutual
funds,
as determined by the participant, that are also available for investment
by the general public.
|
The
named
executive officers and certain other highly compensated employees are entitled
to participate in the Nonqualified Deferred Compensation Plan, which we put
in
place to mitigate the impact of our officers and other highly compensated
employees being unable to make the maximum contribution permitted under our
401(k) plan due to certain limitations imposed by ERISA. The Nonqualified
Deferred Compensation Plan allows a highly compensated employee to voluntarily
defer receipt of a portion of the employee’s earned base salary and all or a
portion of cash performance bonuses, if any. Earnings on contributions to
the Nonqualified Deferred Compensation Plan are determined by reference to
the
returns on one or more select mutual funds, as determined by the participant,
that are also available for investment by the general public. We make a
matching contribution of $0.50 for each dollar of an employee’s pre-tax
contributions until the employee’s contributions equal 5% of the employee’s base
salary, less the amount of any match we make on behalf of the employee under
the
company-sponsored 401(k) plan, and subject to the same limits that apply to
the
401(k) plan except that our matching contributions are 100% vested when
made. The earnings on these funds may exceed or fall short of market rate
returns, depending on the performance of the funds selected compared to the
markets in general.
Distributions
from the Nonqualified Deferred Compensation Plan are automatically triggered
by
the occurrence of certain events. Upon retirement, as defined in the plan,
a
participant will receive a distribution from the plan in the form he previously
selected - either in a lump sum or in annual installments over any period
selected, up to fifteen years. Payments will commence within 60 days after
the
last day of the six-month period immediately following the retirement date.
Upon
termination of employment, a participant will receive a distribution from the
plan in a lump sum within 60 days after the last day of the six-month period
immediately following the termination date. If a participant becomes disabled,
he will receive his entire account balance in a lump sum within 60 days of
the
date on which he became disabled. Upon the death of a participant during
employment or while receiving his retirement benefits under the plan, his unpaid
account balance will be paid to his beneficiary in a lump sum within 60 days
of
the date the plan committee is notified of his death.
Participants
also elect whether to receive a distribution of their entire account balance
in
a lump sum upon a change in control of our company, as defined in the plan,
or
whether to have their account balance remain in the plan after a change in
control. In the absence of such an election, a participant will receive a
distribution after a change in control occurs. Participants may also choose
to
receive lump sum distributions of all or a portion of their account balances
upon optional, scheduled distribution dates or upon an unforeseeable financial
emergency. Optional distribution dates must be a January 1 that is at least
three years after the end of the plan year in which the deferral election is
made. Optional distributions may be postponed, subject to certain conditions
specified in the plan. Distributions upon an unforeseeable financial emergency
are also subject to certain restrictions specified in the plan.
25
The
following is a summary of all of our equity compensation plans and individual
arrangements that provide for the issuance of equity securities as compensation,
as of December 31, 2006. Shares and share prices discussed in this
proxy statement have been adjusted to reflect our three-for-two stock split,
in
the form of a 50% stock dividend, effective as of March 13, 2007.
|
(a)
|
(b)
|
(c)
|
||||||||||
|
Equity
Compensation Plan Category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and
rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
|||||||||
|
Approved
by stockholders(1)
|
|
5,326,661
|
(2)
|
$
|
18.34
|
(3)
|
|
2,851,410
|
(4)
|
|||
|
Not
approved by stockholders(5)
|
|
1,947,339
|
|
$
|
17.16
|
|
|
414,037
|
|
|||
|
Total
|
|
7,274,000
|
|
$
|
18.00
|
|
|
3,265,447
|
|
|||
|
(1)
|
|
Consists
of: (a) the Second Amended and Restated 2004 Equity Incentive
Plan (the “2004 Plan”); (b) the 2002 Senior Management Equity
Incentive Plan (the “Senior Incentive Plan”); and (c) the Second
Amended and Restated 1997 Stock Option Plan (the “1997 Plan”).
|
|
(2)
|
|
Includes
an aggregate of 522,805 restricted stock units.
|
|
(3)
|
|
Excludes
restricted stock units.
|
|
(4)
|
|
The
remaining 1,182,158 shares reserved for issuance under the
2004 Plan will be issuable upon the exercise of future stock option
grants or pursuant to future restricted stock or restricted stock
unit
awards that vest upon the attainment of prescribed performance milestones
or the completion of designated service periods. The remaining
1,588,652 shares reserved for issuance under the Senior Incentive
Plan and the remaining 80,600 shares reserved for issuance under the
1997 Plan will be issuable upon the exercise of future stock option
grants
made thereunder.
|
|
(5)
|
|
Consists
of the plans summarized below.
|
The
material features of our equity compensation plans not approved by stockholders
are described below.
2002
Stock Option Plan
In
2002,
our Board of Directors authorized the 2002 Stock Option Plan. Participation
in the 2002 Stock Option Plan is limited to consultants and employees,
other than officers and directors. Options granted under the 2002 Stock
Option Plan are nonqualified stock options and have a term of no longer than
10 years from the date they are granted. Options generally become
exercisable in installments pursuant to a vesting schedule set forth in each
option agreement. The Board of Directors authorizes the granting of
options and determines the employees and consultants to whom options are to
be
granted, the number of shares subject to each option, the exercise price, option
term, vesting schedule and other terms and conditions of the options.
Options granted under the plan shall have exercise prices per share as
determined by the Board of Directors at the time of grant.
2002
Restricted Stock Plan
In
2002,
our Board of Directors adopted the 2002 Restricted Stock Plan in which
selected employees, other than officers and directors, may participate.
Restricted stock awards under this plan may or may not require a cash payment
from a participant to whom an award is made. The awards become free of the
stated restrictions over periods determined at the date of the grant, subject
to
continuing employment, the achievement of particular performance goals and/or
the satisfaction of certain vesting provisions applicable to each award of
shares. The Board of Directors currently administers the Restricted Stock
Plan. The Board of Directors authorizes the grant of any stock awards and
determines the employees to whom shares are awarded, number of shares to be
awarded, award period and other terms and conditions of the awards. Shares
of restricted stock may be forfeited and revert to us
26
if
a plan
participant resigns from Waste Connections and its subsidiaries, is terminated
for cause or violates the terms of any non-competition or non-solicitation
agreements to which that plan participant is bound (if such plan participant
has
been terminated without cause).
2002
Consultant Incentive Plan
In
2002,
our Board of Directors authorized the 2002 Consultant Incentive Plan, under
which warrants to purchase our common stock may be issued to certain of our
consultants. Warrants awarded under the Consultant Incentive Plan are
subject to a vesting schedule set forth in each warrant agreement.
Historically, warrants issued have been fully vested and exercisable at the
date
of grant. The Board of Directors authorizes the issuance of warrants and
determines the consultants to whom warrants are to be issued, the number of
shares subject to each warrant, the purchase price, exercise date and period,
warrant term and other terms and conditions of the warrants. Warrants
granted under the plan have purchase prices per share as determined by the
Board
of Directors at the time of grant.
Non-Plan
Warrants
Prior
to
the Board of
Directors’ approval of the 2002 Consultant Incentive Plan, we issued
warrants to purchase our common stock on an individual basis to certain
consultants that assisted us in various capacities and certain employees.
Historically, these warrants were issued fully vested and were exercisable
at
the date of grant. The Board of Directors authorized the issuance of such
warrants and determined the consultants and employees to whom such warrants
were
issued, the number of shares subject to each warrant, the purchase price,
exercise date and period, warrant term and other terms and conditions of the
warrants.
We
have
entered into employment agreements with each of our named executive
officers. Each of these agreements provides for certain payments to the
named executive officer in the event of his termination, resignation, death
or
disability, or upon a change in control of our company.
We
may
terminate a named executive officer’s employment with or without cause.
Terminations for cause are subject to a sixty-day notice and right to cure
provision in each named executive officer’s employment agreement. “Cause”
is generally defined in each of these employment agreements as follows:
| · |
a
material breach of any of the terms of the agreement that is not
immediately corrected following written notice of default specifying
such
breach;
|
| · |
except
in Mr. Mittelstaedt’s case, a breach of any of the provisions of the
non-competition and non-solicitation provisions of the agreement;
|
| · |
repeated
intoxication with alcohol or drugs while on company premises during
its
regular business hours to such a degree that, in the reasonable judgment
of the other managers of the company, the employee is abusive or
incapable
of performing his duties and responsibilities under the agreement;
|
| · |
conviction
of a felony; or
|
| · |
misappropriation
of property belonging to the company and/or any of its affiliates.
|
In
the
event of the disability or death of a named executive officer, in addition
to
the payments listed in the tables below, the named executive officer may receive
benefits under our long-term disability insurance and our life and accidental
death and dismemberment insurance plans, which provide for broad-based employee
participation.
27
Each
named executive officer may terminate his employment for good reason or without
good reason. “Good Reason” is generally defined in each of these
employment agreements as follows:
| · |
assignment
to the employee of duties inconsistent with his responsibilities
as they
existed on the date of the agreement, a substantial alteration in
the
title(s) of the employee (so long as the existing corporate structure
of
the company is maintained) or a substantial alteration in the status
of
the employee in the company organization as it existed on the date
of the
agreement;
|
| · |
the
relocation of the company’s principal executive office to a location more
than fifty (50) miles from its present location;
|
| · |
a
reduction by the company in the employee’s base salary without the
employee’s prior approval;
|
| · |
a
failure by the company to continue in effect, without substantial
change,
any benefit plan or arrangement in which the employee was participating
or
the taking of any action by the company which would adversely affect
the
employee’s participation in or materially reduce his benefits under any
benefit plan (unless such changes apply equally to all other management
employees of company);
|
| · |
any
material breach by the company of any provision of the agreement
without
the employee having committed any material breach of his obligations
thereunder, which breach is not cured within twenty (20) days following
written notice thereof to the company of such breach; or
|
| · |
the
failure of the company to obtain the assumption of the agreement
by any
successor entity.
|
A
change
in control of Waste Connections is generally treated as a termination without
cause of the named executive officer, unless he elects in writing to waive
the
applicable provision of his employment agreement. Under each of these
employment agreements, a “Change in Control” is generally deemed to have
occurred if:
| · |
there
shall be consummated (a) any reorganization, liquidation or
consolidation of the company, or any merger or other business combination
of the company with any other corporation, other than any such merger
or
other combination that would result in the voting securities of the
company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%)
of the
total voting power represented by the voting securities of the company
or
such surviving entity outstanding immediately after such transaction;
or
(b) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all,
of the
assets of the company;
|
| · |
any
person (as defined in the agreement), shall become the beneficial
owner
(as defined in the agreement), directly or indirectly, of fifty percent
(50%) or more of the company’s outstanding voting securities; or
|
| · |
during
any period of two consecutive years, individuals who at the beginning
of
such period constituted the entire Board of Directors shall cease
for any
reason to constitute at least one-half of the membership thereof
unless
the election, or the nomination for election by the company’s
stockholders, of each new director was approved by a vote of at least
one-half (½) of the directors then still in office who were directors at
the beginning of the period.
|
In
addition to his severance payments described in the tables below, in the event
of a change in control after which any previously outstanding option, warrant
or
other right relating to our capital stock fails to remain outstanding, each
of
the named executive officers would be entitled to receive either:
(i) options to purchase that number of shares of stock of the acquiring
company that he would have received had he exercised his terminated Waste
Connections options, warrants or rights immediately prior to the acquisition
resulting in a change in control and received for the shares acquired on
exercise of such options shares of the acquiring company in the change in
control transaction (the aggregate exercise price for the shares covered by
such
options would be the aggregate exercise price for the terminated Waste
Connections options, warrants or rights); or (ii) a lump sum payment equal
on an after-tax basis to at least the net after-tax gain he would have realized
on exercise of such options of the acquiring company and sale of the underlying
shares.
28
The
following tables estimate the payments we would be obligated to make to each
of
our named executive officers as a result of his termination or resignation
or
because of a change in control of our company pursuant to the employment
agreements we have entered into with each of our named executive officers and
certain other arrangements noted in the tables. We have calculated these
estimated payments to meet SEC disclosure requirements. The estimated payments
are not necessarily indicative of the actual amounts any of our NEOs would
receive in such circumstances.
For
illustrative purposes only, the tables assume that: (a) a notice of
termination was received or tendered by the employee or a change in control
of
our company occurred on December 31, 2006, as applicable; (b) the
price per share of our common stock is $27.70, the closing price on December
29,
2006, the last business day of that year; and (c) the reason for a
termination for cause is not susceptible to the named executive officer’s 60-day
right to cure under his employment agreement.
In
addition to the amounts reflected in the tables,
on termination of a named executive officer’s employment agreement by us or by
him as provided in his agreement, all deferred compensation and other retirement
benefits payable to the employee under benefit plans in which he then
participated would be paid to him in accordance with the provisions of the
respective plans. These plans include our voluntary 401(k) plan and our
Deferred Compensation Plan.
29
Ronald
Mittelstaedt, Chairman
and Chief Executive Officer
In
the
event Mr. Mittelstaedt voluntarily terminates his employment without good reason
or his employment is terminated for cause, we have the option to make him
subject to the terms of the non-competition and non-solicitation provisions
of
his employment agreement for a period of 18 months from the date of
termination, referred to as the Optional Restricted Period, in which case he
would be entitled to the same severance benefits to which he would be entitled
in the event of a termination without cause.
Mr.
Mittelstaedt’s employment agreement defines the term “Total Compensation,” used
in the table below, to equal the sum of: (i) twelve months of his base
salary as of the termination date; (ii) the maximum bonus of 100% of such
base salary; and (iii) the amount of all vehicle allowance and
vehicle-related, telephone and facsimile reimbursements that were payable to
him
with respect to the twelve months preceding the termination date.
Mr.
Mittelstaedt’s employment agreement also defines the term “Health Insurance
Benefit,” used in the table below, as an amount equal to the excess of
(i) the premiums payable by him to cover himself, his wife and his children
for a three-year period beginning on the termination date under a health
insurance plan that provides benefits comparable to those available under our
health insurance plan then in effect, over (ii) the premiums that would be
payable by him if he were still employed by us to cover himself, his wife and
his children for that three-year period under our health insurance plan in
effect on the termination date. In the case of a termination on death, the
Health Insurance Benefit shall be calculated with respect to coverage only
for
Mr. Mittelstaedt’s wife and children. In both cases, for illustrative purposes
only, we have used the cost for an employee plus unlimited dependents that
Mr.
Mittelstaedt or his family would pay under the Consolidated Omnibus Budget
Reconciliation Act, or COBRA, if they elected to extend their health coverage
under our group health plan for the period indicated.
|
Termination
for
Cause
Not
Subject
to
Optional
Restricted
Period
|
Termination
for
Cause
Subject
to
Optional
Restricted
Period
|
Termination
Without
Cause
|
Termination
on
Disability
|
Termination
on
Death
|
Termination
by
Employee
For
Good
Reason
|
Termination
by Employee
Without
Good
Reason Not
Subject
to
Optional
Restricted
Period
|
Termination
by
Employee
Without
Good
Reason
Subject
to
Optional
Restricted
Period
|
Change
in
Control
|
||||||||||||||||||||
|
Base
Salary
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
$
|
1,420,963
|
(9)
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
$
|
—
|
(1)
|
|
|
Bonus
|
—
|
(2)
|
450,000
|
(6)
|
450,000
|
(6)
|
450,000
|
(6)
|
450,000
|
(6)
|
450,000
|
(6)
|
—
|
(2)
|
450,000
|
(6)
|
450,000
|
(6)
|
||||||||||
|
Severance
Payment
|
—
|
2,747,294
|
(7)
|
2,747,294
|
(7)
|
—
|
2,747,294
|
(7)
|
2,747,294
|
(7)
|
—
|
2,747,294
|
(7)
|
2,747,294
|
(7)
|
|||||||||||||
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in Company
|
—
|
(3)
|
978,150
|
(8)
|
978,150
|
(8)
|
978,150
|
(8)
|
978,150
|
(8)
|
978,150
|
(8)
|
—
|
(3)
|
978,150
|
(8)
|
978,150
|
(8)
|
||||||||||
|
Gross
Up Payment
|
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
||||||||
|
TOTAL
|
$
|
—
|
(5)
|
$
|
4,175,444
|
(5)
|
$
|
4,175,444
|
(5)
|
$
|
2,849,113
|
(5)
|
$
|
4,175,444
|
(5)
|
$
|
4,175,444
|
(5)
|
$
|
—
|
(5)
|
$
|
4,175,444
|
(5)
|
$
|
4,175,444
|
(5)
|
|
|
(1)
|
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
(2)
|
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
(3)
|
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled upon
such a
termination.
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after
the
Internal Revenue Service or any other taxing authority issues a notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to his
termination, subject to certain rights of the company to challenge
the
application of such tax.
|
|
(5)
|
|
The
resale restriction agreements we entered into with certain employees,
including each NEO, upon the October 27, 2005, acceleration of the
vesting
of our employees’ outstanding options prevent the sale of any shares
acquired from the exercise of an accelerated option prior to the
earlier
of the original vesting date of the option, or the individual’s
termination of employment. One third of Mr. Mittelstaedt’s 2004 option
awards and two-thirds of his 2005 option awards were still subject
to
these resale restrictions as of December 31, 2006. A termination
of his
employment on that date would have resulted in the lapse of resale
restrictions on 173,748 shares underlying vested options worth $1,413,089
upon exercise and sale. This amount is not included in the table
above.
|
30
|
(6)
|
|
Reflects
a lump sum payment of the prorated portion of the maximum bonus available
to the employee under his employment agreement for the year in which
the
termination occurs, which is 100% of his base salary at the time
of
termination.
|
|
(7)
|
Reflects
a lump sum payment equal to the sum of: (i) an amount equal to
three times the employee’s Total Compensation and (ii) the employee’s
Health Insurance Benefit.
|
|
|
(8)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the company’s
capital stock as of the date of termination. The term of any such
stock options and other rights, together with all vested options
and
rights held by the employee, will be extended to the fifth anniversary
of
the date of termination.
|
|
|
(9)
|
Reflects
a lump sum payment equal to the base salary payable to employee through
the end of the term of his employment agreement, which for Mr.
Mittelstaedt is extended by one year on each anniversary of his employment
agreement, thus extending the term to three years. The term of Mr.
Mittelstaedt’s employment agreement currently expires on February 28,
2010.
|
Worthing
Jackman, Executive Vice President and Chief Financial Officer
|
Termination
for
Cause
|
Termination
Without
Cause
|
Termination
on
Disability
|
Termination
on
Death
|
Termination
by
Employee
For
Good
Reason
|
Termination
by
Employee
Without
Good
Reason
|
Change
in
Control
|
||||||||||||||||
|
Base
Salary
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
$
|
613,574
|
(10)
|
$
|
—
|
(6)
|
$
|
—
|
(6)
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
|
|
Bonus
|
—
|
(2)
|
132,500
|
(7)
|
132,500
|
(11)
|
132,500
|
(7)
|
132,500
|
(7)
|
—
|
(2)
|
132,500
|
(7)
|
||||||||
|
Severance
Payment
|
—
|
1,192,500
|
(8)
|
—
|
1,192,500
|
(8)
|
1,192,500
|
(8)
|
—
|
1,192,500
|
(8)
|
|||||||||||
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in Company
|
—
|
(3)
|
464,513
|
(9)
|
464,513
|
(9)
|
464,513
|
(9)
|
464,513
|
(9)
|
—
|
(3)
|
464,513
|
(9)
|
||||||||
|
Gross
Up Payment
|
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
|
—
|
(4)
|
—
|
(4)
|
||||||
|
TOTAL
|
$
|
—
|
(5)
|
$
|
1,789,513
|
(5)
|
$
|
1,210,587
|
(5)
|
$
|
1,789,513
|
(5)
|
$
|
1,789,513
|
(5)
|
$
|
—
|
(5)
|
$
|
1,789,513
|
(5)
|
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled
upon such a
termination.
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after
the
Internal Revenue Service or any other taxing authority issues a
notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to
his
termination, subject to certain rights of the company to challenge
the
application of such tax.
|
|
(5)
|
The
resale restriction agreements we entered into with certain employees,
including each NEO, upon the October 27, 2005, acceleration of
the vesting
of our employees’ outstanding options prevent the sale of any shares
acquired from the exercise of an accelerated option prior to the
earlier
of the original vesting date of the option, or the individual’s
termination of employment. One third of Mr. Jackman’s 2004 option awards
and two-thirds of his 2005 option awards were still subject to
these
resale restrictions as of December 31, 2006. A termination of his
employment on that date would have resulted in the lapse of resale
restrictions on 120,000 shares underlying vested options worth
$925,350
upon exercise and sale. This amount is not included in the table
above.
|
|
(6)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (8)
for payment terms.
|
|
(7)
|
Reflects
the full (not prorated) maximum bonus available to the employee
under his
employment agreement for the year in which the termination occurs,
which
is 50% of his base salary at the time of termination. See
footnote (8) for payment terms.
|
|
(8)
|
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available
to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (6) and (7), this
amount will be paid as follows: one-third on date of termination
and,
provided employee has complied with the up to
three-year non-competition and three-year non-solicitation provisions
of his employment
|
31
| agreement, one-third on each of the first and second anniversaries of the date of termination; except in the event of a change in control, deemed a termination without cause unless the employee elects in writing otherwise, in which case such payments will be made in a lump sum on the date of termination. | |
|
(9)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the
company’s
capital stock as of the date of termination. The term of any such
stock
options and other rights, together with all vested options and
rights held
by the employee, will be extended to the third anniversary of the
date of
termination.
|
|
(10)
|
Reflects
base salary payable to the employee through the end of the term
of his
employment agreement, which for Mr. Jackman is extended by one
year on
each anniversary of his employment agreement, thus extending the
term to
three years. The term of Mr. Jackman’s employment agreement currently
expires on April 25, 2009. See footnote (11) for payment terms.
|
|
(11)
|
Reflects
the prorated portion of the maximum bonus available to the employee
under
his employment agreement for the year in which the termination
occurs,
which is 50% of his base salary at the time of termination. Together
with
the payment under footnote (10), this amount will be paid in a lump
sum. For purposes of a termination on disability only, the termination
date will be deemed to be thirty days after notice of termination
is given
under the employment agreement.
|
Steven
Bouck, President
|
Termination
for
Cause
|
Termination
Without
Cause
|
Termination
on
Disability
|
Termination
on
Death
|
Termination
by
Employee
For
Good
Reason
|
Termination
by
Employee
Without
Good
Reason
|
Change
in
Control
|
||||||||||||||||
|
Base
Salary
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
$
|
934,998
|
(10)
|
$
|
—
|
(6)
|
$
|
—
|
(6)
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
|
|
Bonus
|
—
|
(2)
|
170,000
|
(7)
|
170,000
|
(11)
|
170,000
|
(7)
|
170,000
|
(7)
|
—
|
(2)
|
170,000
|
(7)
|
||||||||
|
Severance
Payment
|
—
|
1,530,000
|
(8)
|
—
|
1,530,000
|
(8)
|
1,530,000
|
(8)
|
—
|
1,530,000
|
(8)
|
|||||||||||
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in Company
|
—
|
(3)
|
569,123
|
(9)
|
569,123
|
(9)
|
569,123
|
(9)
|
569,123
|
(9)
|
—
|
(3)
|
569,123
|
(9)
|
||||||||
|
Gross
Up Payment
|
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
|
—
|
(4)
|
—
|
(4)
|
||||||
|
TOTAL
|
$
|
—
|
(5)
|
$
|
2,269,123
|
(5)
|
$
|
1,674,121
|
(5)
|
$
|
2,269,123
|
(5)
|
$
|
2,269,123
|
(5)
|
$
|
—
|
(5)
|
$
|
2,269,123
|
(5)
|
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled
upon such a
termination.
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after
the
Internal Revenue Service or any other taxing authority issues a
notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to
his
termination, subject to certain rights of the company to challenge
the
application of such tax.
|
|
(5)
|
The
resale restriction agreements we entered into with certain employees,
including each NEO, upon the October 27, 2005, acceleration of
the vesting
of our employees’ outstanding options prevent the sale of any shares
acquired from the exercise of an accelerated option prior to the
earlier
of the original vesting date of the option, or the individual’s
termination of employment. One third of Mr. Bouck’s 2004 option awards and
two-thirds of his 2005 option awards were still subject to these
resale
restrictions as of December 31, 2006. A termination of his employment
on
that date would have resulted in the lapse of resale restrictions
on
136,248 shares underlying vested options worth $1,078,439 upon
exercise
and sale. This amount is not included in the table
above.
|
32
|
(6)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (8)
for payment terms.
|
|
(7)
|
Reflects
the full (not prorated) maximum bonus available to the employee
under his
employment agreement for the year in which the termination occurs,
which
is 50% of his base salary at the time of termination. See
footnote (8) for payment terms.
|
|
(8)
|
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available
to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (6) and (7), this
amount will be paid as follows: one-third on date of termination
and,
provided employee has complied with the up to three-year non-competition
and three-year non-solicitation provisions of his employment agreement,
one-third on each of the first and second anniversaries of the
date of
termination; except in the event of a change in control, deemed
a
termination without cause unless the employee elects in writing
otherwise,
in which case such payments will be made in a lump sum on the date
of
termination.
|
|
(9)
|
Reflects
the immediate vesting of all of the employee’s outstanding but unvested
stock options, restricted stock units and other rights related
to the
company’s capital stock as of the date of termination. The term of any
such stock options and other rights (together with all vested options
and
rights held by the employee) will be extended to the third anniversary
of
the date of termination.
|
|
(10)
|
Reflects
base salary payable to employee through the end of the term of
his
employment agreement, which for Mr. Bouck is extended by one year
on each
anniversary of his employment agreement, thus extending the term
to three
years. The term of Mr. Bouck’s employment agreement currently expires on
September 30, 2009. See footnote (11) for payment terms.
|
|
(11)
|
Reflects
the prorated portion of the maximum bonus available to the employee
under
his employment agreement for the year in which the termination
occurs,
which is 50% of his base salary at the time of termination. Together
with
the payment under footnote (10), this amount will be paid in a lump
sum. For purposes of a termination on disability only, the termination
date will be deemed to be thirty days after notice of termination
is given
under the employment agreement.
|
Darrell
W. Chambliss, Executive Vice President and Chief Operating
Officer
|
Termination
for
Cause
|
Termination
Without
Cause
|
Termination
on
Disability
|
Termination
on
Death
|
Termination
by
Employee
For
Good
Reason
|
Termination
by
Employee
Without
Good
Reason
|
Change
in
Control
|
||||||||||||||||
|
Base
Salary
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
$
|
711,406
|
(10)
|
$
|
—
|
(6)
|
$
|
—
|
(6)
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
|
|
Bonus
|
—
|
(2)
|
147,500
|
(7)
|
147,500
|
(11)
|
147,500
|
(7)
|
147,500
|
(7)
|
—
|
(2)
|
147,500
|
(7)
|
||||||||
|
Severance
Payment
|
—
|
1,327,500
|
(8)
|
—
|
1,327,500
|
(8)
|
1,327,500
|
(8)
|
—
|
1,327,500
|
(8)
|
|||||||||||
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in Company
|
—
|
(3)
|
472,823
|
(9)
|
472,823
|
(9)
|
472,823
|
(9)
|
472,823
|
(9)
|
—
|
(3)
|
472,823
|
(9)
|
||||||||
|
Gross
Up Payment
|
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
|
—
|
(4)
|
—
|
(4)
|
||||||
|
TOTAL
|
$
|
—
|
(5)
|
$
|
1,947,823
|
(5)
|
$
|
1,331,729
|
(5)
|
$
|
1,947,823
|
(5)
|
$
|
1,947,823
|
(5)
|
$
|
—
|
(5)
|
$
|
1,947,823
|
(5)
|
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled
upon such a
termination.
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after
the
Internal Revenue Service or any other taxing authority issues a
notice
stating that an excise tax, as defined in employee’s
employment
|
33
| agreement, is due with respect to the payments made to employee related to his termination, subject to certain rights of the company to challenge the application of such tax. | |
|
(5)
|
The
resale restriction agreements we entered into with certain employees,
including each NEO, upon the October 27, 2005, acceleration of
the vesting
of our employees’ outstanding options prevent the sale of any shares
acquired from the exercise of an accelerated option prior to the
earlier
of the original vesting date of the option, or the individual’s
termination of employment. One third of Mr. Chambliss’ 2004 option awards
and two-thirds of his 2005 option awards were still subject to
these
resale restrictions as of December 31, 2006. A termination of his
employment on that date would have resulted in the lapse of resale
restrictions on 108,748 shares underlying vested options (5,033
of which
had already been exercised but not sold as of that date) worth
$981,508
upon exercise and/or sale. This amount is not included in the table
above.
|
|
(6)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (8)
for payment terms.
|
|
(7)
|
Reflects
the full (not prorated) maximum bonus available to the employee
under his
employment agreement for the year in which the termination occurs,
which
is 50% of his base salary at the time of termination. See
footnote (8) for payment terms.
|
|
(8)
|
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available
to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (6) and (7), this
amount will be paid as follows: one-third on date of termination
and,
provided employee has complied with the up to three-year non-competition
and three-year non-solicitation provisions of his employment agreement,
one-third on each of the first and second anniversaries of the
date of
termination; except in the event of a change in control, deemed
a
termination without cause unless the employee elects in writing
otherwise,
in which case such payments will be made in a lump sum on the date
of
termination.
|
|
(9)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the
company’s
capital stock as of the date of termination. The term of any such
stock
options and other rights, together with all vested options and
rights held
by the employee, will be extended to the third anniversary of the
date of
termination.
|
|
(10)
|
Reflects
base salary payable to employee through the end of the term of
his
employment agreement, which for Mr. Chambliss is extended by one
year on
each anniversary of his employment agreement, thus extending the
term to
three years. The term of Mr. Chambliss’ employment agreement currently
expires on May 31, 2009. See footnote (11) for payment terms.
|
|
(11)
|
Reflects
the prorated portion of the maximum bonus available to the employee
under
his employment agreement for the year in which the termination
occurs,
which is 50% of his base salary at the time of termination. Together
with
the payment under footnote (10), this amount will be paid in a lump
sum. For purposes of a termination on disability only, the termination
date will be deemed to be thirty days after notice of termination
is given
under the employment agreement.
|
34
Robert
D. Evans, Executive Vice President, General Counsel and
Secretary
|
Termination
for
Cause
|
Termination
Without
Cause
|
Termination
on
Disability
|
Termination
on
Death
|
Termination
by
Employee
For
Good
Reason
|
Termination
by
Employee
Without
Good
Reason
|
Change
in
Control
|
||||||||||||||||
|
Base
Salary
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
$
|
687,289
|
(10)
|
$
|
—
|
(6)
|
$
|
—
|
(6)
|
$
|
—
|
(1)
|
$
|
—
|
(6)
|
|
|
Bonus
|
—
|
(2)
|
142,500
|
(7)
|
142,500
|
(11)
|
142,500
|
(7)
|
142,500
|
(7)
|
—
|
(2)
|
142,500
|
(7)
|
||||||||
|
Severance
Payment
|
—
|
1,282,500
|
(8)
|
—
|
1,282,500
|
(8)
|
1,282,500
|
(8)
|
—
|
1,282,500
|
(8)
|
|||||||||||
|
Unvested
Stock Options, Restricted Stock Units and Other Equity in Company
|
—
|
(3)
|
472,823
|
(9)
|
472,823
|
(9)
|
472,823
|
(9)
|
472,823
|
(9)
|
—
|
(3)
|
472,823
|
(9)
|
||||||||
|
Gross
Up Payment
|
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
—
|
(4)
|
|
—
|
(4)
|
—
|
(4)
|
||||||
|
TOTAL
|
$
|
—
|
(5)
|
$
|
1,897,823
|
(5)
|
$
|
1,302,612
|
(5)
|
$
|
1,897,823
|
(5)
|
$
|
1,897,823
|
(5)
|
$
|
—
|
(5)
|
$
|
1,897,823
|
(5)
|
|
|
(1)
|
Reflects
the employee’s base salary to the date of termination, paid in a lump sum,
which is assumed to have been paid in full.
|
|
(2)
|
Employee
will forfeit his bonus for the year in which such a termination
occurs.
|
|
(3)
|
All
of employee’s unvested options, restricted stock units and other equity
relating to the capital stock of the company will be cancelled
upon such a
termination.
|
|
(4)
|
Reflects
a gross up payment to the employee to be paid within ten days after
the
Internal Revenue Service or any other taxing authority issues a
notice
stating that an excise tax, as defined in employee’s employment agreement,
is due with respect to the payments made to employee related to
his
termination, subject to certain rights of the company to challenge
the
application of such tax.
|
|
(5)
|
The
resale restriction agreements we entered into with certain employees,
including each NEO, upon the October 27, 2005, acceleration of
the vesting
of our employees’ outstanding options prevent the sale of any shares
acquired from the exercise of an accelerated option prior to the
earlier
of the original vesting date of the option, or the individual’s
termination of employment. One third of Mr. Evans’ 2004 option award and
two-thirds of his 2005 option award were still subject to these
resale
restrictions as of December 31, 2006. A termination of his employment
on
that date would have resulted in the lapse of resale restrictions
on
108,750 shares underlying vested options worth $881,550 upon exercise.
This amount is not included in the table
above.
|
|
(6)
|
Reflects
the employee’s base salary to the date of termination, which is assumed to
have been paid in full for purposes of this table. See footnote (8)
for payment terms.
|
|
(7)
|
Reflects
the full (not prorated) maximum bonus available to the employee under
his
employment agreement for the year in which the termination occurs,
which
is 50% of his base salary at the time of termination. See
footnote (8) for payment terms.
|
|
(8)
|
Reflects
an amount equal to three times the employee’s annual base salary at the
time of his termination plus three times the maximum bonus available
to
him under his employment agreement for the year in which the termination
occurs. Together with the payments under footnotes (6) and (7), this
amount will be paid as follows: one-third on date of termination
and,
provided employee has complied with the up to three-year non-competition
and three-year non-solicitation provisions of his employment agreement,
one-third on each of the first and second anniversaries of the date
of
termination; except in the event of a change in control, deemed a
termination without cause unless the employee elects in writing otherwise,
in which case such payments will be made in a lump sum on the date
of
termination.
|
|
(9)
|
Reflects
the immediate vesting of all of employee’s outstanding but unvested stock
options, restricted stock units and other rights related to the company’s
capital stock as of the date of termination. The term of any such
stock
options and other rights, together with all vested options and rights
held
by the employee, will be extended to the third anniversary of the
date of
termination.
|
35
|
(10)
|
Reflects
base salary payable to employee through the end of the term of his
employment agreement, which for Mr. Evans is extended by one year
on each
anniversary of his employment agreement, thus extending the term
to three
years. The term of Mr. Evans’ employment agreement currently expires on
May 31, 2009. See footnote (11) for payment
terms.
|
|
(11)
|
Reflects
the prorated portion of the maximum bonus available to the employee
under
his employment agreement for the year in which the termination occurs,
which is 50% of his base salary at the time of termination. Together
with
the payment under footnote (10), this amount will be paid in a lump
sum. For purposes of a termination on disability only, the termination
date will be deemed to be thirty days after notice of termination
is given
under the employment
agreement.
|
Since
January 20, 2005, Namen Chambliss, the brother of Darrell Chambliss, has
held the position of Network Manager for the company. Previously, Mr.
N. Chambliss held the position of Systems Operations Supervisor for the
Eastern Region, and was based in our regional office in Memphis, Tennessee.
The
total salary and bonus compensation we paid to Mr. N. Chambliss in 2006 was
$106,274. In addition, Mr. N. Chambliss realized a gain of $61,000 in 2006
on the sale of common stock received on exercise of options granted to him
in
previous years. In 2006, we granted Mr. N. Chambliss 1,500 restricted stock
units. The units were granted on the same general terms and conditions as units
granted to other employees at the same management level. As Network Manager,
Mr.
N. Chambliss’ annual salary is $90,000 as of January 22, 2007. He
received a hiring bonus equal to $1,250 each month over the two years following
his promotion to his current position, which was paid to him in lieu of cash
performance bonuses of 15% of his base salary to which he otherwise might be
entitled for those years.
The
charter of our Board of
Directors’ Nominating and Corporate Governance Committee provides that among the
Committee’s responsibilities is the review and approval of any material
transaction between us and any of our directors or executive officers or any
entity affiliated with such a person, including assessing whether the
transaction is fair and in our interests, why we should enter into it with
a
related rather than an unrelated party, and whether public disclosure is
required.
In
addition, the Nominating and Corporate Governance Committee developed and the
Board of Directors approved our Corporate Governance Guidelines and our Code
of
Conduct and Ethics, including a Code of Ethics for the Chief Executive Officer
and Senior Financial Officers, as required by Section 406 of the
Sarbanes-Oxley Act. The Committee reviews the Guidelines and Code on an annual
basis, or more frequently if appropriate, and recommends to the Board of
Directors changes as necessary.
In
addressing conflicts of interest, Section 1 of the Code provides that no
officer, director or employee may be subject to influences, interests or
relationships that conflict with the best interests of the company. It states
that a conflict of interest exists when a person is in a position to influence
a
decision that may personally benefit that person or a person he or she is
related to by blood or marriage as a result of the company’s business dealings.
The Code provides that each officer, director and employee of the company must
avoid any investment, interest or association that interferes or might interfere
with that person’s independent exercise of judgment in the company’s best
interests, and that service to the company should never be subordinated to
personal gain or advantage.
In
an
effort to help avoid these and other conflicts of interest, the Code sets forth
certain rules the company has adopted, including rules that: (a) prohibit
officers, directors, any employees who buy or sell goods or services or have
responsibility connected to buying and selling for or on behalf of the company
and members of their respective families from having certain economic interests
in business concerns that transact business with the company or are in
competition with it; (b) prohibit officers, directors or employees or
members of their respective families from giving or accepting certain gifts
to
or from any person soliciting or doing business with the company;
(c) prohibit officers or employees of the company from serving as a
director of any other company that is organized for profit without the written
approval of the Nominating and Corporate Governance Committee; and
(d) prohibit officers, directors or employees from having any material
interest in a business that deprives the company of any business opportunity
or
is in any way detrimental to the company.
36
Each
officer and director must report all actual or potential conflicts of interest
to the Nominating and Corporate Governance Committee. Directors must also comply
with the conflict provisions relating to directors set forth in our Corporate
Governance Guidelines. The Nominating and Corporate Governance Committee will
resolve all conflicts of interest involving officers or directors. If a conflict
involves a member of the Nominating and Corporate Governance Committee, that
Committee will resolve the conflict only if there are two disinterested
directors remaining on that Committee. Otherwise, the matter will be resolved
by
the entire Board of Directors. If a significant conflict exists involving a
director that cannot be resolved and cannot be waived, the director must resign.
The
Nominating and Corporate Governance Committee has the sole authority to waive
provisions of our Code of Conduct and Ethics with respect to executive officers
and directors in specific circumstances where the Committee determines that
such
waiver is appropriate, subject to compliance with applicable laws and
regulations. Any such waivers will be promptly disclosed to our stockholders
to
the extent required by applicable laws and regulations.
37
The
Audit
Committee has prepared the following report for Waste Connections’ stockholders.
The
Audit
Committee, whose chairman is Mr. Harlan and whose other current members are
Mr.
Razzouk and Mr. Davis, met twelve times in 2006. The Audit Committee operates
under a written charter adopted by the Board of Directors.
Management
is responsible for Waste Connections’ internal controls and the financial
reporting process. The company’s independent registered public accounting firm
is responsible for: (i) auditing management’s assessment that Waste
Connections maintained effective internal control over financial reporting
and
issuing a report thereon and on the effectiveness of the company’s internal
control over financial reporting based on its audit; and (ii) performing an
independent audit of the company’s consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee’s responsibilities are to review the company’s
internal controls and the objectivity of its financial reporting, and to meet
with appropriate financial personnel and the company’s independent registered
public accounting firm in connection with these reviews. The Audit Committee
also reviews the professional services provided by the company’s independent
registered public accounting firm and reviews such other matters concerning
Waste Connections’ accounting principles and financial and operating policies,
controls and practices, its public financial reporting policies and practices,
and the results of its annual audit as the Committee may find appropriate or
as
may be brought to the Committee’s attention.
In
this
context, the Audit Committee has met and held discussions with Waste
Connections’ management and its independent registered public accounting firm.
Management represented to the Audit Committee that Waste Connections’
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee discussed
with the independent registered public accounting firm matters required to
be
discussed by the Statement on Auditing Standards No. 61 (Communication with
Audit Committee), as amended.
The
independent registered public accounting firm also provided to the Audit
Committee the written disclosures and letter required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees). The
Audit Committee discussed with the independent registered public accounting
firm
that firm’s independence and considered the compatibility of non-audit services
with the auditors’ independence.
Based
on
the Audit Committee’s discussions with management and the independent registered
public accounting firm and its review of the representations of management
and
the report of the independent registered public accounting firm, the Audit
Committee recommended that the Board of Directors include the audited
consolidated financial statements in Waste Connections’ Annual Report on
Form 10-K for the fiscal year ended December 31, 2006, filed with the
Securities and Exchange Commission.
This
report is submitted on behalf of the Audit Committee.
|
Michael
W. Harlan, Chairman
William
J. Razzouk
Robert
H. Davis
|
||
38
INCORPORATION
TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Our
Amended and Restated Certificate of Incorporation currently authorizes
100,000,000 shares of common stock and 7,500,000 shares of preferred stock,
all
with a par value of $0.01 per share. At our annual stockholders meeting in
2004,
our stockholders approved an amendment to our certificate of incorporation
that
increased the authorized number of shares of common stock from 50,000,000 to
100,000,000. That increase allowed us to complete our first 3-for-2 split of
our
common stock, in the form of a 50% stock dividend, on June 24, 2004. Pursuant
to
that stock split, our issued and outstanding common stock as of June 10,
2004, the record date of that split, increased from 31,957,596 shares to
47,936,394 shares, in addition to the increase in shares reserved for issuance
upon conversion or exercise of outstanding securities or reserved for future
issuance under our various equity incentive plans.
On
March 13, 2007, we completed our second 3-for-2 split of our common stock,
in the form of a 50% stock dividend. Our issued and outstanding common stock
as
of February 27, 2007, the record date of that split, increased from
45,755,363 shares to 68,633,044 shares, in addition to the increase in shares
reserved for issuance upon conversion or exercise of outstanding securities
or
reserved for future issuance under our various equity incentive plans. As of
March 20, 2007, 84,611,377 shares of our common stock were either issued
and outstanding, reserved for issuance upon conversion or exercise of
outstanding securities, or reserved for future issuance under our various equity
incentive plans.
At
the
annual meeting, our stockholders will be asked to consider and act on an
amendment to our Amended and Restated Certificate of Incorporation to increase
the authorized number of shares of common stock from 100,000,000 to 150,000,000
shares. The Board of Directors approved this amendment to the Amended and
Restated Certificate of Incorporation on February 6, 2007.
Waste
Connections has grown significantly since its inception in 1997. Our Board
of
Directors believes that the increase in authorized shares is necessary to enable
us to reserve a sufficient number of shares to meet all known requirements
and
provide flexibility in the future for general corporate purposes such as stock
dividends or splits, acquisitions, equity and convertible security financings,
and issuances under stock option, restricted stock, warrant or other employee
equity incentive plans.
The
proposed amendment would increase the number of shares of common stock that
we
are authorized to issue from 100,000,000 to 150,000,000. The additional
50,000,000 shares would be part of the existing class of common stock, and,
if
and when issued, would have the same rights and privileges as the shares of
common stock currently issued and outstanding. The common stock does not and
will not have any preemptive rights to purchase newly issued shares.
Unless
deemed advisable by the Board of Directors, no further stockholder authorization
would be sought for the issuance of additional shares of common stock. The
Board
of Directors has no immediate plans, intentions or commitments to issue
additional shares of common stock for any purpose, including rendering more
difficult or discouraging a merger, tender offer, proxy contest or other change
in control of Waste Connections.
If
the
amendment is approved, Article V, Section A of Waste Connections’
Amended and Restated Certificate of Incorporation would be amended and restated
to read as follows:
“The
Corporation is authorized to issue two classes of stock to be designated,
respectively, “Common Stock” and “Preferred Stock.” The amount of the total
authorized capital stock of the Corporation is 157,500,000 shares, divided
into
(a) 150,000,000 shares of Common Stock, par value $0.01 per share, and
(b) 7,500,000 shares of Preferred Stock, par value $0.01 per share.”
If
the
amendment is approved by the stockholders, we expect to file with the Delaware
Secretary of State, promptly after the annual meeting, an Amended and Restated
Certificate of Incorporation to become effective on May 17, 2007.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE PROPOSAL TO AMEND THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK FROM 100,000,000 TO
150,000,000 SHARES.
39
PUBLIC
ACCOUNTING FIRM
At
a
meeting held on March 16, 2005, the Audit Committee of the Board of
Directors approved the dismissal of the firm Ernst & Young LLP as our
independent registered public accounting firm. Ernst & Young audited our
consolidated financial statements for the fiscal year 2004. The Audit Committee
subsequently concluded a proposal process for a new independent registered
public accounting firm, and, at a meeting held on March 21, 2005, the Audit
Committee appointed PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the fiscal year 2005.
Ernst
& Young’s report on the company’s consolidated financial statements for the
fiscal year ended December 31, 2004, did not contain an adverse opinion or
a disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
During
our fiscal year ended December 31, 2004, and the interim period from
January 1, 2005 through March 16, 2005, there were no disagreements
with Ernst & Young on any matters of accounting principle or practices,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of Ernst & Young, would have caused Ernst &
Young to make reference to the matter in its reports. During the period
described in the preceding sentence, there were no “reportable events” (as
defined in Item 304(a)(1)(v) of Regulation S-K).
PricewaterhouseCoopers
LLP audited our consolidated financial statements for the fiscal year 2006.
The
Audit Committee of the Board of Directors requests that stockholders ratify
its
selection of PricewaterhouseCoopers LLP to serve as the company’s independent
registered public accounting firm for fiscal year 2007. We expect
representatives of PricewaterhouseCoopers to be present at the annual meeting.
They will have an opportunity to make a statement if they desire to do so and
will be available to answer appropriate questions. Ratification by stockholders
is not required by law, our Amended and Restated Certificate of Incorporation
or
our Amended and Restated Bylaws for the Audit Committee to appoint an
independent registered public accounting firm, but the appointment is submitted
to you by the Audit Committee in order to give stockholders a voice in the
appointment of the company’s independent registered public accounting firm. If
the stockholders should fail to ratify the appointment of
PricewaterhouseCoopers, the Audit Committee would reconsider the appointment.
Even if stockholders approve the appointment, the Audit Committee in its
discretion may direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines that such
a
change would be in the best interests of the company and our stockholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2007.
The
following table sets forth fees billed for professional services rendered in
2006 and 2005 by PricewaterhouseCoopers LLP.
|
2006
|
2005
|
||||||
|
Audit
Fees
|
$
|
1,807,447
|
$
|
1,447,928
|
|||
|
Audit-Related
Fees
|
—
|
—
|
|||||
|
Tax
Fees
|
—
|
—
|
|||||
|
All
Other Fees
|
3,000
|
3,000
|
|||||
|
Total
|
$
|
1,810,447
|
$
|
1,450,928
|
|||
Audit
Fees
consist
of fees associated with both the audit of our consolidated financial statements
and the audit of our internal control over financial reporting for fiscal years
2006 and 2005, reviews of the consolidated financial statements included in
our
quarterly reports on Form 10-Q, comfort letters, consents, assistance with
review of documents filed with the SEC, and accounting consultations.
All
Other Fees
consist
of a license fee for an online guidance service.
The
Audit
Committee considers the services provided by PricewaterhouseCoopers LLP
described under “All Other Fees” to be compatible with PricewaterhouseCoopers’
independence during the periods covered.
40
The
Audit
Committee has adopted a policy that requires advance approval of all audit,
audit-related, tax services and other services performed by the independent
registered public accounting firm. The policy provides for pre-approval by
the
Audit Committee of specifically defined audit and non-audit services. Unless
the
specific service has been previously pre-approved with respect to that year,
the
Audit Committee must approve the permitted service before the independent
registered public accounting firm is engaged to perform it. The Audit Committee
has delegated to the chairman of the Audit Committee authority to approve
permitted services, provided that the chairman reports all approvals to the
Committee at its next meeting. All of the services described above under “Audit
Fees” were approved by the Audit Committee.
Based
solely upon a review of reports on Forms 3, 4 and 5, and amendments to
those reports, furnished to us during and with respect to fiscal year 2006
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended,
and written representations from the executive officers and directors that
no
other reports were required, we believe that no executive officers or directors
were late in filing such reports during 2006.
Legal
Proceedings
On
October 25, 2006, a purported shareholder derivative complaint was filed in
the United States District Court for the Eastern District of California,
naming
certain of our directors and officers as defendants, and naming us as a
nominal
defendant. The suit, captioned Travis
v. Mittelstaedt, et al.,
alleges
violations of various federal and California securities laws, breach of
fiduciary duty, and related claims in connection with the timing of certain
stock option grants. On October 30, 2006, we were served with another
purported shareholder derivative complaint, naming us as a nominal defendant
and
naming certain of our current and former directors and officers as
defendants. The suit, captioned
Nichols v. Mittelstaedt et al.
and
filed in the Superior Court of California, County of Sacramento, contains
allegations substantially similar to the Travis
suit.
On January 30, 2007, a third purported derivative action was filed in the
same federal court as the
Travis case.
This case is captioned
Pierce and Banister v. Mittelstaedt et al.,
and is
substantively identical to the Travis
case but
also alleges violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934. The Travis
and
Pierce
and Banister
cases
have been consolidated, and the plaintiffs will file an amended consolidated
complaint on or about April 23, 2007. As is typical in this type of
litigation, additional suits containing substantially similar allegations
may be
filed in the future. The lawsuits are in the preliminary stages, and the
company and the individual defendants have yet to respond to any of the
operative complaints.
We
have
completed a review of our historical stock option granting practices, including
all option grants since our initial public offering in May 1998, and reported
the results of the review to the Audit Committee of our Board of
Directors. The review identified a small number of immaterial exceptions
to non-cash compensation expense attributable to administrative and clerical
errors. These exceptions are not material to our current and historical
financial statements, and the Audit Committee concluded that no further
action
was necessary. As with any litigation proceeding, we cannot predict with
certainty the eventual outcome of this pending litigation.
Stockholder
Proposals for 2008 Annual Meeting
To
be
considered for inclusion in next year’s proxy materials, stockholder proposals
to be presented at the company’s 2008 Annual Meeting of Stockholders must be in
writing and be received by the Secretary of Waste Connections, at the address
set forth on the first page of this proxy statement, no later than the
close of
business (Pacific time) on December 6, 2007. Stockholder proposals
submitted after that date will be considered untimely, within the meaning
of
Rules 14a-5(e)(2) and 14a-4(c)(1) under the Securities Exchange Act of
1934, unless received as set forth above no later than the close of business
(Pacific time) on the 90th
day
prior to the date of the 2008 Annual Meeting of Stockholders.
41
Annual
Report to Stockholders and Form 10-K
Waste
Connections’ 2006 Annual Report to Stockholders, including our Annual Report on
Form 10-K filed with the SEC, which includes our financial statements for
fiscal
year 2006, is enclosed with this proxy statement. Our Annual Report on
Form 10-K, and the exhibits filed with it, are available on our web site at
www.wasteconnections.com.
Upon request by any stockholder to the Secretary of Waste Connections,
at the
address set forth on the first page of this proxy statement, a copy of
our 2006
Form 10-K, without exhibits, will be furnished without charge, and a copy
of any or all exhibits to our 2006 Form 10-K will be furnished for a fee
which will not exceed our reasonable expenses in furnishing the
exhibits.
The
Board
of Directors knows of no other matters that will be presented for consideration
at the annual meeting. It is important that the proxies are returned promptly
and that your shares are represented. Stockholders are urged to mark, date,
execute and promptly return the accompanying proxy card in the enclosed
envelope.
|
By
Order of the Board of Directors,
|
||
| |
|
|
|
Robert
D. Evans
Secretary
|
||
April 4,
2007
42
PROXY
WASTE
CONNECTIONS, INC.
ANNUAL
MEETING OF STOCKHOLDERS
Wednesday,
May 16, 2007
10:00
A.M., Pacific Time
SHERATON
GRAND SACRAMENTO
1230
J
Street
Sacramento,
CA 95814
|
Waste
Connections, Inc.
35
Iron Point Circle, Suite 200
Folsom,
California 95630
|
|
|
proxy
|
|
|
This
proxy is solicited on behalf of the Board of Directors for use at the Annual
Meeting on May 16, 2007.
The
undersigned holder of Common Stock of Waste Connections, Inc. (“WCI”)
acknowledges receipt of WCI’s Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated April 4, 2007, and Annual Report to Stockholders for
fiscal year 2006. The undersigned revokes all prior proxies and appoints Ronald
J. Mittelstaedt and Worthing F. Jackman, and each of them, individually and
with
full powers of substitution and resubstitution, proxies for the undersigned
to
vote all shares of WCI Common Stock that the undersigned would be entitled
to
vote at the Annual Meeting of Stockholders to be held on Wednesday, May 16,
2007
at 10:00 a.m., Pacific Time, at the Sheraton Grand Sacramento,
1230 J Street, Sacramento, California 95814, and any adjournment
thereof, as designated on the reverse side of this Proxy Card.
THIS
PROXY WILL BE VOTED ACCORDING TO THE SPECIFICATIONS YOU MAKE ON THE REVERSE
SIDE. IF YOU DO NOT SPECIFY ON THE REVERSE SIDE BUT YOU DO SIGN AND DATE THIS
PROXY CARD, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 REFERRED TO
ON THE REVERSE SIDE.
PLEASE
MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
See
reverse for voting instructions.
Please
detach here
The
Board of Directors Recommends a Vote FOR Proposals 1, 2 and 3.
| 1. |
Election
of Directors:
|
01
Ronald
J. Mittelstaedt
02
Edward
E. “Ned” Guillet
|
¨
Vote FOR all nominees
(except
as marked)
|
¨
Vote WITHHELD from all
nominees
|
(Instructions:
To withhold authority to vote for any indicated nominee, write the number(s)
of
the nominee(s) in the box provided to the right.)
2.
Approval
of the proposal to amend WCI's Amended and Restated Certificate of Incorporation
to increase the authorized number of shares of common stock from 100,000,000
to
150,000,000 shares.
|
¨
For
|
¨
Against
|
¨
Abstain
|
3.
Ratification of appointment of PricewaterhouseCoopers LLP as WCI’s independent
registered public accounting firm for the fiscal year ending December 31,
2007.
|
¨
For
|
¨
Against
|
¨
Abstain
|
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS
GIVEN, WILL BE VOTED FOR
EACH PROPOSAL.
Address
Change? Mark Box
¨
Indicate
changes below:
If
you
plan to attend the Annual Meeting of Stockholders, please mark the following
box. ¨
Date:
_________________________, 2007
|
|
Signature(s)
in Box
Please
sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all
persons should sign. Trustees, administrators, etc., should include title and
authority. Corporations should provide full name of corporation and title of
authorized officer signing the proxy.