def14a
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
Filed by a Party other than the
Registrant o
Check the
appropriate box:
o Preliminary
Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-12
REPUBLIC SERVICES, INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the
appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per
Exchange Act
Rules 14a-6(i)(4)
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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(2)
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Aggregate number of securities to
which transaction applies:
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(3)
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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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o
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Fee paid previously with
preliminary materials:
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o
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Check box if any part of the fee
is offset as provided by Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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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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April 1, 2011
Dear Stockholder:
We invite you to attend the 2011 Annual Meeting of Stockholders
of Republic Services, Inc., which we will hold at
10:30 a.m., local time, on Thursday, May 12, 2011 at
the Scottsdale Marriott at McDowell Mountains, 16770 North
Perimeter Drive, Scottsdale, Arizona 85260.
We are pleased to take advantage of Securities and Exchange
Commission rules that allow us to furnish these proxy materials
and our annual report to stockholders on the Internet. We
believe that posting these materials on the Internet enables us
to provide you with the information you need more quickly, while
lowering our costs of printing and delivery and reducing the
environmental impact of our Annual Meeting. On or about
April 1, 2011, we are mailing to our stockholders a Notice
of Internet Availability of Proxy Materials containing
instructions on how to access our proxy materials and annual
report and vote electronically via the Internet. The Notice of
Internet Availability of Proxy Materials also contains
instructions on how to receive a paper copy of these materials.
We will not mail the Notice of Internet Availability of Proxy
Materials to stockholders who previously elected to receive a
paper copy of the materials.
Whether or not you plan to attend in person, it is important
that you have your shares represented at the Annual Meeting.
We urge you to vote and to submit your proxy as promptly as
possible. If you are a registered stockholder and attend the
meeting, you may revoke your proxy and vote your shares in
person. If you hold your shares through a bank or broker and you
want to vote your shares in person at the meeting, please
contact your bank or broker to obtain a legal proxy. Thank
you.
Sincerely,
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James E. OConnor
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Donald W. Slager
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Chairman of the Board
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President & Chief Executive Officer
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TABLE OF
CONTENTS
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REPUBLIC
SERVICES, INC.
18500 NORTH ALLIED WAY
PHOENIX, ARIZONA 85054
NOTICE OF THE
2011 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 2011
To the Stockholders of Republic Services, Inc.:
The Annual Meeting of stockholders (the Annual
Meeting) of Republic Services, Inc., a Delaware
corporation (Republic, the company,
we, us or our), will be held
at the Scottsdale Marriott at McDowell Mountains, 16770 North
Perimeter Drive, Scottsdale, Arizona 85260, on May 12, 2011
at 10:30 a.m., local time, for the following purposes:
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(1)
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To elect 11 directors to a term of office until the 2012
Annual Meeting of stockholders or until their respective
successors are duly elected and qualified;
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(2)
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To hold an advisory vote on executive compensation;
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(3)
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To hold an advisory vote on the frequency of the advisory vote
on executive compensation;
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(4)
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To approve the Amended and Restated 2007 Stock Incentive Plan;
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(5)
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To ratify the appointment of Ernst & Young LLP as our
independent registered public accountants (independent
auditors) for 2011;
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(6)
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To consider a stockholder proposal regarding payments upon the
death of a senior executive, if presented at the Annual
Meeting; and
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(7)
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To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
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Only stockholders of record at the close of business on
March 15, 2011 (the Record Date) are entitled
to notice of and to vote at the Annual Meeting or any
adjournment of it. A list of such stockholders will be available
commencing April 5, 2011, and may be examined prior to the
Annual Meeting at our corporate headquarters during normal
business hours.
We are pleased to take advantage of Securities and Exchange
Commission rules that allow us to furnish these proxy materials
and our annual report on the Internet. Stockholders of record
have been mailed a Notice of Internet Availability of Proxy
Materials, which provides stockholders with instructions on how
to access the proxy materials and our annual report on the
Internet and, if they prefer, how to request paper copies of
these materials. We believe that posting these materials on the
Internet enables us to provide stockholders with the information
they need more quickly, while lowering our costs of printing and
delivery and reducing the environmental impact of our Annual
Meeting.
Your participation at our Annual Meeting is important. To ensure
your representation, if you do not expect to be present at the
meeting, at your earliest convenience, please vote your shares
as instructed in your Notice of Internet Availability of Proxy
Materials, proxy card or voting instruction card. The prompt
return of proxies will ensure a quorum and save us the expense
of further solicitation.
By Order of the Board of Directors,
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James E. OConnor
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Donald W. Slager
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Chairman of the Board
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President & Chief Executive Officer
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Phoenix, AZ
April 1, 2011
REPUBLIC
SERVICES, INC.
18500 NORTH ALLIED WAY
PHOENIX, ARIZONA 85054
PROXY STATEMENT
REGARDING
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 2011
This proxy statement is being provided to stockholders in
connection with the solicitation by the Board of Directors (the
Board) of Republic Services, Inc., a Delaware
corporation (Republic, the company,
we, us or our), of proxies
to be voted at the annual meeting of stockholders to be held in
Scottsdale, Arizona on May 12, 2011 (the Annual
Meeting), and at any adjournment, for the purposes set
forth in the accompanying notice.
The Securities and Exchange Commission (SEC) allows
us to deliver a single Notice of Internet Availability of Proxy
Materials to one address shared by two or more stockholders.
This delivery method is referred to as householding
and can result in savings for us. To take advantage of this
opportunity, we deliver a single Notice of Internet Availability
of Proxy Materials to multiple stockholders who share an
address. If you prefer to receive separate copies of the Notice
of Internet Availability of Proxy Materials, either now or in
the future, or if you currently are a stockholder sharing an
address with another stockholder and wish to receive only one
copy of future Notices of Internet Availability of Proxy
Materials for your household, please send us your request in
writing at the following address: Republic Services, Inc., Attn:
Investor Relations Department, 18500 North Allied Way, Phoenix,
Arizona 85054.
As permitted by the notice and access rules adopted
by the SEC, we are making our proxy statement and our 2010
Annual Report to Stockholders (which includes our Annual Report
on
Form 10-K)
available electronically via the Internet. On or about
April 1, 2011, we are mailing to our stockholders a Notice
of Internet Availability of Proxy Materials containing the
instructions on how to access this proxy statement and our 2010
Annual Report to Stockholders and how to vote online.
Stockholders who receive the notice will not receive a printed
copy of the proxy materials in the mail. If you would like to
receive a printed copy, please follow the instructions included
in the Notice of Internet Availability of Proxy Materials.
QUESTIONS AND
ANSWERS ABOUT THE ANNUAL MEETING
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What is the record date and who may vote at the Annual
Meeting? |
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Our only voting stock currently outstanding is our common stock.
You may vote if you were a holder of record of our common stock
as of the close of business on March 15, 2011 (the
Record Date). |
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The trustee of our 401(k) Plan will vote shares held in each
participants account in accordance with instructions
provided by the participant on a completed proxy card. If a
participant does not provide a completed proxy card, the trustee
of the 401(k) Plan will vote the shares in a participants
account in the same proportion that it votes shares for which it
received valid and timely proxy cards from other participants or
as otherwise required by applicable law. |
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What will I be voting on? |
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The following proposals will be considered at the Annual Meeting: |
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Election of directors
(Proposal 1).
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Advisory vote on executive
compensation (Proposal 2).
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Advisory vote on the
frequency of the advisory vote on executive compensation
(Proposal 3).
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Approval of the Amended and
Restated 2007 Stock Incentive Plan (Proposal 4).
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Ratification of the
appointment of Ernst & Young LLP as our independent
auditors for 2011 (Proposal 5).
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A stockholder proposal
regarding payments upon the death of a senior executive, if it
is presented at the Annual Meeting (Proposal 6).
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How many votes do I have? |
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You will have one vote for every share of our common stock you
owned on March 15, 2011. |
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What constitutes a quorum for the Annual Meeting? |
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As of March 15, 2011, there were issued, outstanding and
entitled to vote 380,372,262 shares of our common stock. A
quorum is at least a majority of the voting power represented by
the shares of our common stock, or 190,186,132 shares.
Abstentions and broker shares, which are shares held in street
name, that are voted as to any matter at the meeting will be
included in determining the number of shares present or
represented at the Annual Meeting. Broker shares that are not
voted on any matter at the Annual Meeting will not be included
in determining the number of shares present or represented at
the Annual Meeting. A quorum must be present or represented at
the Annual Meeting for any action to be taken. If a quorum is
not present or represented at the Annual Meeting, the holders of
a majority of the shares entitled to vote at the meeting who are
present in person or represented by proxy, or the chairman of
the meeting, may adjourn the meeting until a quorum is present
or represented. The time and place of the adjourned meeting will
be announced at the time the adjournment is taken, and no other
notice will be given. |
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How many votes are required to approve the proposals,
assuming a quorum? |
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The affirmative vote of the majority of votes cast with respect
to that directors election at the Annual Meeting is
required for the election of each director (Proposal 1).
The affirmative vote of the holders of a majority of the voting
power of the shares of common stock present or represented by
proxy and entitled to vote is required for approval of
Proposals 2, 4, 5 and 6. For Proposal 3, the choice of
every one year, two years or three
years that receives the greatest number of votes will be
considered the frequency recommended by our stockholders. |
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How do I vote? |
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To vote, you may: |
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vote in person
we will pass out written ballots at the Annual
Meeting to stockholders of record and beneficial owners who hold
their shares in street name and who have obtained a valid proxy
from their broker, bank or other nominee;
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vote electronically via
the Internet or by telephone to do so, please
follow the instructions shown on your Notice of Internet
Availability of Proxy Materials, proxy card or voting
instruction card; or
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vote by mail
if you received a paper proxy card or voting
instruction card by mail, simply complete, sign, date and return
it in the envelope provided so that it is received before the
Annual Meeting.
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The Internet and telephone voting procedures have been designed
to verify stockholders identities and allow stockholders
to confirm that their voting instructions have been properly
recorded. Stockholders whose shares are held for them by other
nominees should follow the instructions provided by such
nominees. |
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Submitting your proxy or voting instructions, whether
electronically via the Internet, by telephone or by mail, will
not affect your right to vote in person if you decide to attend
the Annual Meeting. If, however, you hold your shares in street
name, you must request a valid proxy from your broker, bank or
other nominee to vote in person at the Annual Meeting. |
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Your vote is very important. Whether or not you plan to attend
the Annual Meeting, please ensure that your vote is counted. |
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What if I do not give specific voting instructions? |
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Stockholders of Record. If you are a stockholder of
record and you: |
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indicate when voting
electronically via the Internet or by telephone that you wish to
vote as recommended by our Board; or
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return a signed proxy card
but do not indicate how you wish to vote on a particular matter,
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then your shares will be voted in accordance with the
Boards recommendations on all matters presented in this
proxy statement and as the proxy holders may determine in their
discretion regarding any other matters properly presented for a
vote at the Annual Meeting. If you indicate a choice with
respect to any matter to be acted upon on your proxy card, the
shares will be voted in accordance with your instructions. |
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Beneficial Owners. If you are a beneficial owner and hold
your shares in street name and do not provide your broker, bank
or other nominee with voting instructions, the broker, bank or
other nominee will determine if it has the discretionary
authority to vote on the particular matter. Under applicable
rules, brokers have the discretion to vote on
routine matters, such as the ratification of the
selection of accounting firms, but do not have discretion to
vote on non-routine matters. The ratification of the
appointment of Ernst & Young LLP as our independent
auditors for 2011 (Proposal 5) is a matter considered
routine under applicable rules. On the other hand, the election
of directors (Proposal 1), the advisory vote on executive
compensation (Proposal 2), the advisory vote on the
frequency of the advisory vote on executive compensation
(Proposal 3), the amendment and restatement of our 2007
Stock Incentive Plan (Proposal 4) and the stockholder
proposal (Proposal 6) are matters considered
non-routine under applicable rules. A broker or other nominee
cannot vote without instructions on non-routine matters, and
therefore there may be broker non-votes on Proposals 1, 2,
3, 4 and 6. |
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What are broker non-votes? |
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The New York Stock Exchange (NYSE) permits brokers
to vote their customers shares on routine matters when the
brokers have not received voting instructions from their
customers. The ratification of independent auditors is an
example of a routine matter on which brokers may vote in this
way. Brokers may not vote their customers shares on
non-routine matters unless they have received voting
instructions from their customers. Non-voted shares on
non-routine matters are broker non-votes. |
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How are broker non-votes and abstentions counted? |
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Abstentions and broker non-votes will have no effect on
Proposal 1, as the election is determined by reference to
the votes actually cast where abstentions and broker non-votes
are not treated as votes cast. For Proposals 2, 4, 5 and 6,
where the vote required is a majority of votes present and
entitled to vote, abstentions are equivalent to a vote cast
against the proposal and broker non-votes will have no effect.
For Proposal 3, where the vote required is the greatest
number of votes cast for a choice, neither abstentions nor
broker non-votes will have any effect. |
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Can I change my vote? |
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Yes, you can change your vote at any time. If you have voted by
sending in your proxy card, by phone or by Internet, you can
change your vote in one of three ways. First, you can send us a
written notice stating that you would like to revoke your proxy.
Second, you can complete and submit a new proxy card, or cast a
new vote by phone or Internet. Third, you can attend the meeting
and vote in person. Your attendance alone, however, will not
revoke your proxy. If you have instructed a broker to vote your
shares, you must follow the procedure provided by your broker to
change these instructions. |
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Do I need to attend the Annual Meeting in person? |
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No. Although you are welcome to attend, it is not necessary
for you to attend the Annual Meeting to vote your shares. |
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How does the Board recommend I vote on the proposals? |
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The Board recommends you vote: |
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FOR the election of the 11
nominees to the Board (Proposal 1);
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FOR approval of our
executive compensation program (Proposal 2);
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FOR a frequency of every
THREE YEARS for future advisory votes on executive compensation
(Proposal 3);
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FOR the approval of the
Amended and Restated 2007 Stock Incentive Plan (Proposal 4);
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FOR the ratification of the
appointment of Ernst & Young LLP as our independent
auditors for 2011 (Proposal 5); and
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AGAINST the stockholder
proposal (Proposal 6).
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Where can I find more information about Republic? |
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We file reports and other information with the SEC. You may read
and copy this information at the SECs public reference
facilities. Please call the SEC at
1-800-SEC-0330
for information about these facilities. This information is also
available at our website at
http://www.republicservices.com
and at the website maintained by the SEC at
http://www.sec.gov. |
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Who can help answer my questions? |
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If you have questions about the Annual Meeting or the proposals
after reading this proxy statement, or require assistance voting
your shares, you can call Georgeson Inc., which is assisting us,
toll-free at
1-800-248-3170. |
4
PROPOSAL 1
ELECTION OF DIRECTORS
We are electing 11 directors at the Annual Meeting, with
each director to hold office until our next Annual Meeting or
until his respective successor is elected and qualified (the
Nominees). The Nominees have been nominated by the
Board based on the recommendation of the Boards Nominating
and Corporate Governance Committee. Each Nominee has consented
to be named in this proxy statement and has agreed to serve as a
director if elected. If any Nominee should become unavailable
for election, the proxy may be voted for a substitute nominee
selected by the persons named in the proxy or the size of the
Board may be reduced accordingly. The Board is not aware of any
existing circumstances likely to render any Nominee unavailable.
The Nominees who receive a majority of the votes cast by the
holders of our common stock represented at the Annual Meeting,
without giving effect to abstentions, will be duly elected
directors. Republic is a Delaware corporation and, under
Delaware law, if an incumbent director is not elected, that
director remains in office until the directors successor
is duly elected and qualified or until the directors
death, resignation or retirement. To address this potential
outcome, in December 2008 the Board also adopted a director
resignation policy in our bylaws. Under this policy, the Board
will nominate for further service on the Board only those
incumbent candidates who tender, in advance, irrevocable
resignations, and the Board has obtained such conditional
resignations from the Nominees. The irrevocable resignations are
contingent on the failure to receive the required vote at any
annual meeting at which they are nominated for re-election and
Board acceptance of the resignation. The Nominating and
Corporate Governance Committee will recommend to the Board
whether to accept or reject the tendered resignation. The Board
will publicly disclose its decision within 90 days
following certification of the election results. If the Board
does not accept the resignation, the director will continue to
serve until the next annual meeting and until his or her
successor is duly elected, or until his or her earlier
resignation or removal. If the Board accepts the resignation,
then the Board, in its sole discretion, may fill any resulting
vacancy.
Pursuant to our bylaws, the number of directors is fixed from
time to time by resolution of the Board and shall be not more
than 13 members (the majority of which must be independent of
Republic for purposes of the rules of the NYSE). Our Board
currently consists of 13 directors, but
Mr. OConnor (our current Chairman of the Board) and
Mr. Foley are not standing for re-election at the Annual
Meeting. The Board decreased the fixed number of directors to 11
effective upon the election of directors at the Annual Meeting.
Proxies cannot be voted for a greater number of persons than the
number of Nominees named in this proxy statement.
The Board recommends a vote FOR the election of
all 11 Nominees to our Board.
BIOGRAPHICAL
INFORMATION REGARDING DIRECTORS/NOMINEES AND EXECUTIVE
OFFICERS
Director Changes
in 2011
James E. OConnor retired from his position as Chief
Executive Officer effective January 1, 2011, after leading
Republic for 12 years. Mr. OConnor will continue
to serve as a director and as the Chairman of the Board until
the Annual Meeting, but is not standing for re-election. Under
Mr. OConnors leadership we merged with Allied
Waste Industries, Inc. (Allied), creating an even
stronger operating platform that will allow us to continue to
provide quality service to our customers and superior returns to
our stockholders. Mr. OConnor served on the Board of
Swisher Hygiene, Inc., as Chairman of its Compensation Committee
and as a member of its Nominating and Corporate Governance
Committee from November 2010 through January 2011.
David I. Foley is not standing for re-election to the
Board, but will continue to serve as a director until the Annual
Meeting. Mr. Foley, a member of the Compensation Committee
and the Integration Committee, has served as an independent
member of our Board since the close of the merger between
Republic and Allied in December 2008. Prior to the merger,
Mr. Foley served as a director of Allied from March 2006
until December 2008.
5
Director
Nominees
Information about each of the Nominees to our Board is set forth
below:
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Director Name
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Position Held
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Age
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Director Since
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James W. Crownover
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Director and Chairman-Elect
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67
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2008
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John W. Croghan
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Director
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80
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1998
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William J. Flynn
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Director
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57
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2008
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Michael Larson
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Director
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51
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2009
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Nolan Lehmann
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Director
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66
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2008
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W. Lee Nutter
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Director
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67
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2004
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Ramon A. Rodriguez
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Director
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65
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1999
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Donald W. Slager
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Director and Chief Executive Officer
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49
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2010
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Allan C. Sorensen
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Director
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72
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1998
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John M. Trani
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Director
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66
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2008
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Michael W. Wickham
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Director
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2004
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James W. Crownover. In January 2011, our Board
unanimously selected Mr. Crownover to serve a two-year term
as our non-executive Chairman of the Board commencing
immediately after the Annual Meeting, provided that he is
re-elected as a director by the stockholders. Mr. Crownover
was named a director in December 2008 upon the close of the
merger between Republic and Allied Waste Industries, Inc.
(Allied). Prior to the merger, Mr. Crownover
served as a director of Allied from December 2002 until December
2008. Mr. Crownover completed a
30-year
career with McKinsey & Company, Inc.
(McKinsey) when he retired in 1998. He led
McKinseys Southwest practice for many years, and also
co-headed the firms worldwide energy practice. In
addition, he served as a member of McKinseys Board of
Directors. Mr. Crownover also currently serves as a
director of Chemtura Corporation, Weingarten Realty Investors,
and FTI Consulting, Inc. In the past, he served on the boards of
Unocal Corporation from 1998 to 2003 and Great Lakes Chemical
Company from 2000 to 2006. Mr. Crownover also chairs the
Board of Trustees of Rice University.
Mr. Crownover brings a wealth of management experience and
business understanding to our Board, to the Audit and
Integration Committees, and to his upcoming role as Chairman of
the Board. Mr. Crownovers 30 years in the
management consulting industry have given him front-line
exposure to many of the issues facing public companies,
particularly on the strategic, operational and financial fronts.
At Weingarten, he serves as chair of the Governance Committee
and is a member of the Compensation Committee. At FTI, he serves
as chair of the Compensation Committee and is a member of the
Nominating and Corporate Governance Committee. At Chemtura, he
chairs the Environmental Safety Committee and is a member of the
Nominating and Corporate Governance Committee and the
Compensation Committee. We believe his experience on the boards
of directors and board committees of several major public
companies, as well as his service as a director of McKinsey and
his leadership of its Southwest practice and his co-heading of
its worldwide energy practice, give him an abundance of relevant
experience to serve as a director and as our Chairman of the
Board.
John W. Croghan was named a director in July 1998. Since
April 2002, Mr. Croghan has served as Chairman of
Rail-Splitter Capital Management, LLC, an investment management
firm. He was a founder and, from 1967 through December 2000, the
Chairman of Lincoln Capital Management, an investment management
firm. Mr. Croghan is also a former director of Blockbuster
Entertainment Corp., Chicago Mercantile Exchange, Lindsay
Manufacturing Co., St. Paul Bancorp, and Morgan Stanley
Closed-End Funds. Effective January 2011, he became a director
of Evanston Capital Management Co., an SEC regulated hedge fund.
Mr. Croghan is a Chartered Financial Analyst. He is also a
trustee and member of the investment committees for Northwestern
University, the Chicago History Museum and the Archdiocese of
Chicago Finance Council and is Chairman of the Archdiocese of
Chicago School Board.
Mr. Croghan is well-positioned to serve as a director and
member of our Audit Committee and Chairman of our Nominating and
Corporate Governance Committee. His career in investment
management gives him valuable insight on the impact of general
economic and market conditions and a keen understanding of key
financial and
6
accounting issues. In addition, he brings to our board the
perspective he has gained through his substantial experience as
a director of a diverse group of companies such as Blockbuster
and the Chicago Mercantile Exchange. For many years in the
1990s, Mr. Croghan was a director and Chairman of the
Audit Committee of St. Paul Bancorp, a publicly traded bank,
before its acquisition by Charter One. This experience gives him
a deep understanding of corporate governance and the role of a
director.
William J. Flynn was named a director in December 2008
upon the close of the merger between Republic and Allied. Prior
to the merger, Mr. Flynn served as a director of Allied
from February 2007 until December 2008. Mr. Flynn is the
President and Chief Executive Officer of Atlas Air Worldwide
Holdings, Inc. (Atlas). Prior to joining Atlas in
2006, Mr. Flynn served as President and Chief Executive
Officer of GeoLogistics Corporation from 2002 until its sale to
PWC Logistics in 2005. Mr. Flynn was a Senior Vice
President with CSX Corporation from 2000 to 2002 and held
various positions of increasing responsibility with
Sea-Land
Service Inc. from 1977 to 1999. Mr. Flynn also currently
serves as a director of Atlas and Horizon Lines, Inc. and a
director of the Air Transport Association.
Mr. Flynn is well-positioned to serve as a director,
Chairman of our Compensation Committee and member of the
Nominating and Corporate Governance Committee. With his years of
experience as Chief Executive Officer of AtlasAir and
GeoLogistics, Mr. Flynn brings to the board proven
leadership and managerial experience at the most senior level
and, with that, a keen appreciation of the financial,
operational, compensation and other issues faced by public and
private companies. His
31-year
career in international supply chain management and freight
transportation also gives him particular awareness of issues
faced by companies such as ours. Mr. Flynn also has
experience as both an inside and independent director, giving
him perspective that he brings to his service on the Board.
Michael Larson was named a director in October 2009.
Mr. Larson is the chief investment officer to William H.
Gates III and is responsible for Mr. Gates
non-Microsoft investments as well as the investments of the
Bill & Melinda Gates Foundation Trust. Prior to
working for Mr. Gates, Mr. Larson was at Harris
Investment Management, Putnam Management Company and ARCO.
Mr. Larson currently serves on the board of directors and
the Compensation Committee of AutoNation, Inc. and serves on the
board of directors of Grupo Televisa, S.A.B. In addition, he is
Chairman of the Board of Trustees for Western Asset/Claymore
Inflation-Linked Securities & Income Fund and Western
Asset/Claymore Inflation-Linked Opportunities & Income
Fund, and sits on their Audit Committees and Governance and
Nominating Committees. Mr. Larson is a Trustee and Chairman
of the Investment Committees at Claremont McKenna College and
Lakeside School. Mr. Larson also serves on the investment
committees for the University of Washington and the UNCF Gates
Millennium Scholars Program. Mr. Larson served as a
director of Pan American Silver Corp. from November 1999 through
December 2010.
Mr. Larson has 30 years of investment experience,
giving him a broad understanding of the capital markets,
business cycles, capital investment and allocation, and an
appreciation of the interests of long term stockholders.
Mr. Larsons service on our Board, as well as our
Compensation Committee and our Nominating and Corporate
Governance Committees, offers the perspective of our largest
stockholder, Mr. Gates Cascade Investment, L.L.C.
Nolan Lehmann was named a director in December 2008 upon
the close of the merger between Republic and Allied. Prior to
the merger, Mr. Lehmann served as a director of Allied from
October 1990 until December 2008, and was the Lead Director of
Allied from February 2007 until its merger with Republic. Since
April 2007, Mr. Lehmann has been a Managing Director of
Altazano Management, LLC, a private wealth management advisory
firm. From 1983 until June 2005, Mr. Lehmann was President
of Equus Capital Management Corporation, a registered investment
advisor, and from 1991 to June 30, 2005, he was President
and a director of Equus II Incorporated, a registered
public investment company. Mr. Lehmann is a certified
public accountant. Mr. Lehmann also currently serves as a
director of several private corporations. In the past five
years, Mr. Lehmann served as a director and member of the
Audit and Compensation Committees of Synagro Technologies, Inc.
Mr. Lehmann has a long history with Allied, serving as a
director for more than 19 years, including roles as Lead
Director and Chairman of the Audit and Compensation Committees
at different times during such period. As such, he offers our
Board invaluable insight from experience gained being involved
in the major, transformative
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changes Allied experienced over that period and a deep
understanding of the issues faced by a waste management company.
As a certified public accountant and with prior service on audit
committees of five other public companies, Mr. Lehmann is
well-positioned to serve on our Audit Committee.
Mr. Lehmann also serves as member of our Nominating and
Corporate Governance Committee. His career in asset management
gives him valuable insight on the impact of general economic and
market conditions and a keen understanding of key financial and
accounting issues.
W. Lee Nutter was named a director in February 2004, and
served as our Presiding Director from October 2006 through
January 1, 2011. In January 2011, the Presiding Director
role was eliminated due to our decision to have a separate
Chairman of the Board and Chief Executive Officer. Prior to his
retirement in 2007, Mr. Nutter was Chairman, President and
Chief Executive Officer of Rayonier, Inc., a leading
international forest products company primarily engaged in
activities associated with timberland management, the sale and
entitlement of real estate, and the production and sale of high
value specialty cellulose fibers. Mr. Nutter also served as
a director of Rayonier, Inc. from 1996 to 2007 and the North
Florida Regional Board of SunTrust from 2004 to 2009. He
continues to serve as a director of NiSource Inc. and a
non-executive chairman of J.M. Huber Corporation.
Mr. Nutter is a member of the University of Washington
Foster School of Business Advisory Board.
Mr. Nutter was with Rayonier, Inc. for over 40 years,
ultimately as its Chairman, President and Chief Executive
Officer. As a result of this experience, Mr. Nutter has a
thorough knowledge and understanding of the financial,
operational, compensation and other issues faced by large public
companies. Based on his experience and expertise in the global
forest products industry with its focus on environmental
compliance objectives similar to those of our business, we
believe Mr. Nutter also brings a unique and valuable
perspective to our Boards consideration of environmental
compliance. Mr. Nutters appreciation of the role of
directors through his experience as both an inside and
independent director of other companies positions him well to
serve as a director.
Ramon A. Rodriguez was named a director in March 1999.
Mr. Rodriguez served as President and Chief Executive
Officer of Madsen, Sapp, Mena, Rodriguez & Co., P.A.,
a firm of certified public accountants, from 1981 through 2006
when the firm was acquired by Crowe Horwath LLP. He is a past
Chairman of the Florida Board of Accountancy and was also
President of the Florida Institute of Certified Public
Accountants. Mr. Rodriguez serves as a director of Bank of
Florida Corporation, a bank holding company, and as a director
and the Audit Committee Chairman of Alico, Inc., a company
involved in the agriculture business. Mr. Rodriguez served
on the Board of Swisher Hygiene, Inc., as Chairman of its Audit
Committee and as a member of its Compensation Committee from
November 2010 through January 2011. In 1975 he was a founder and
Treasurer of DME Corporation, a company involved in aerospace
and defense.
Mr. Rodriguez is an experienced financial leader with the
skills necessary to serve as the Chairman of our Audit Committee
and as a member of our Integration Committee. In his
37-year
career in public accounting, Mr. Rodriguez developed vast
accounting and financial experience and particular insight
regarding the external and internal audit functions for a
multitude of companies. He combines this expertise with
experience as a public company director through his board
memberships at Bank of Florida and at Alico. Mr. Rodriguez
also provides substantial management experience gained from his
years as an executive of DME Corporation and as Chief Executive
Officer of Madsen, Sapp, Mena, Rodriguez & Co., P.A.
Donald W. Slager was named a director in June 2010.
Mr. Slager became our Chief Executive Officer and President
on January 1, 2011, after having served as our President
and Chief Operating Officer from the close of our merger with
Allied in December 2008 until becoming our Chief Executive
Officer and President. Prior to that, Mr. Slager served as
President and Chief Operating Officer of Allied from January
2005 through December 2008 and as Executive Vice President and
Chief Operating Officer of Allied from June 2003 through
December 2004. Mr. Slager was Senior Vice President
Operations of Allied from December 2001 to June 2003.
Previously, Mr. Slager served as Vice President
Operations of Allied from February 1998 to December 2001, as
Assistant Vice President Operations of Allied from
June 1997 to February 1998, and as Regional Vice President of
the Western Region of Allied from June 1996 to June 1997.
Mr. Slager also served as District Manager for the Chicago
Metro District of Allied from 1992 to 1996. Before Allieds
acquisition of National Waste Services in 1992, he served at
National Waste Services as General Manager from 1990 to 1992 and
in other management positions with that company beginning in
1985. Mr. Slager also serves on the board of directors of
UTi Worldwide,
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Inc. and as a member of its Compensation Committee, Nominating
and Corporate Governance Committee, and Risk Committee.
Mr. Slager brings to our Board more than 30 years of
experience in the waste and recycling industry, including
25 years with Republic or Allied. He has served as Chief
Operating Officer of Republic or Allied since 2003.
Mr. Slagers proven track record as a leader and
extensive experience in the industry position him well to serve
as a director and as our Chief Executive Officer and President.
Allan C. Sorensen was named a director in November 1998.
Mr. Sorensen is a co-founder of Interim Health Care, Inc.,
which Interim Services, Inc., now known as Spherion Corporation,
spun off in October 1997. From October 1997 through the present,
Mr. Sorensen served as Interim Health Cares Vice
Chairman. From February 2004 through February 2007,
Mr. Sorensen also served as Interim Healthcares Chief
Executive Officer and President. Before the spin-off,
Mr. Sorensen served as a director and in various capacities
as either President, Chief Executive Officer or Chairman of
Interim Services from 1967 to 1997. He also was a member of the
Board of Directors of H&R Block, Inc. from 1979 until 1993.
In 1994, Mr. Sorensen became a minority owner and director
of privately owned Lets Talk Cellular &
Wireless, Inc. The company completed an initial public offering
in November 1997 and was purchased by Nextel Retail Stores, Inc.
in 2001. In October 1999, Mr. Sorensen was elected to the
Board of Directors of Corporate Staffing Resources, Inc.
representing investors Wm. E. Simon & Sons, LLC and
Mellon Ventures, L.P. The following year Mr. Sorensen was
elected Chairperson and the company was sold in 2001.
Mr. Sorensen was elected to the Board of Directors of Cape
Success LLC, representing investor Deutsche Bank, in January
2003 and served until late 2007 when the company was sold.
Mr. Sorensen is also a five-term Chairman of the Home
Health Services and Staffing Association and a past president
and 14-year
board member of the National Association of Temporary Staffing
Services (now known as the American Staffing Association) and
recipient of their 1992 Industry Leadership Award.
Mr. Sorensen is a demonstrated leader with a particular
appreciation of staffing and personnel-related issues. Based on
his years of experience as Chief Executive Officer of both
Interim Health Care and Interim Services, during which time
those companies accomplished the successful acquisition,
integration and divestiture of a number of businesses,
Mr. Sorensen is well-positioned to serve as Chairman of our
Integration Committee and a member of our Compensation
Committee. He also has served as both an inside and independent
director of a public company, which allows him to offer valuable
perspective on our Board.
John M. Trani was named a director in December 2008 upon
the close of the merger between Republic and Allied. Prior to
the merger, Mr. Trani served as a director of Allied from
February 2007 until December 2008. Mr. Trani was Chairman
of Accretive Commerce (formerly New Roads) from February 2004
until it was acquired in September 2007. Prior to that,
Mr. Trani was Chairman and Chief Executive Officer of the
Stanley Works from 1997 until his retirement in 2003. Prior to
joining Stanley, Mr. Trani served in various positions of
increasing responsibility with General Electric Company
(GE) from 1978 to 1996. Mr. Trani was a Senior
Vice President of GE and President and Chief Executive Officer
of its Medical Systems Group from 1986 to 1996. Mr. Trani
also currently serves as a director of Arise Inc. and is a
Special Advisor to Young America Corporation.
Mr. Tranis extensive business experience in senior
operational roles at both Stanley Works and GE make him a
significant contributor to our Board. As Chairman and Chief
Executive Officer of Stanley Works, Mr. Trani gained a keen
awareness of the financial, compensation, accounting and other
issues that face a large public company. His service as both an
inside and independent director further position him well to
serve on our Board and our Audit and Nominating and Corporate
Governance Committees.
Michael W. Wickham was named a director in October 2004.
From 1996 to 2003, Mr. Wickham served as President and
Chief Executive Officer of Roadway Corporation. He also served
as Chairman of Roadway from 1998, and as a director from 1989,
until his planned retirement in December 2003. He served as
President of Roadway from July 1990 through March 1998.
Mr. Wickham also serves as a director of C.H. Robinson
Worldwide, Inc., a transportation, logistics and sourcing
company, director and non-executive Chairman of Douglas
Dynamics, Inc., a manufacturer of snow and ice control equipment
for light trucks, and a director of several private companies.
Mr. Wickham brings to our Board his vast experience in the
freight services industry, which is of particular relevance to a
company such as ours. He is a proven leader, having served as
the Chief Executive Officer of a
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large public company and as the non-executive Chairman of
Douglas Dynamics, Inc. He currently serves as the Chairman of
the Compensation Committee of C.H. Robinson Worldwide and as a
member of the Audit Committee, Compensation Committee and
Nominating and Governance Committee of Douglas Dynamics, Inc. We
believe these experiences have given him significant governance-
and compensation-related expertise and position him well to
serve as a director and as a member of our Compensation and
Integration Committees.
See the section under the heading Executive
Officers, which is incorporated herein by reference, for
biographical information on our
non-director
executive officers.
BOARD OF
DIRECTORS AND CORPORATE GOVERNANCE MATTERS
Separation of
Chairman of the Board and Chief Executive Officer
Roles
Our Board previously created the position of Presiding Director
to serve as the Boards lead non-employee director. The
Presiding Director position was in effect until January 2011 and
at all times was held by an independent director, as
that term is defined from time to time by the listing standards
of the NYSE and as determined by the Board in accordance with
its Corporate Governance Guidelines.
The Presiding Director had, in addition to the powers and
authorities of any member of our Board, the power and authority
to: (a) preside at and set agendas and procedures for all
meetings of non-employee directors when they meet in executive
session without the participation of management;
(b) coordinate with non-employee directors in the review,
revision, addition or deletion of proposed agenda items for any
Board meeting; (c) request access to any of our employees
at any time; and (d) retain independent outside financial,
legal or other advisors on behalf of any Board committee or
subcommittee.
Effective January 1, 2011, James E. OConnor retired
from his position as Chief Executive Officer, after leading
Republic for 12 years. Mr. OConnor will continue
to serve as a director and as the Chairman of the Board until
the Annual Meeting, but is not standing for re-election.
Effective January 1, 2011, Mr. OConnor was
replaced as Chief Executive Officer by Donald W. Slager, who
also became a director in June 2010 when this transition was
announced. Mr. Slagers appointment as our Chief
Executive Officer and as a director was the result of a
succession planning process led by our Board.
As a result of this transition, since January 1, 2011 our
Chairman of the Board and Chief Executive Officer roles have
been separated and the position of Presiding Director has been
eliminated. Further, following Mr. OConnors
retirement effective upon the conclusion of the Annual Meeting,
we will have a non-executive, independent Chairman of the Board.
The Board unanimously selected James W. Crownover to serve as
Chairman of the Board for a two-year term commencing at the
conclusion of the Annual Meeting, provided that he is re-elected
as a director by the stockholders.
The Board believes that designating a non-executive, independent
director to act as Chairman of the Board serves the best
interests of Republic and its stockholders because it
strengthens the Boards independence and allows the Chief
Executive Officer to focus his talents and attention on managing
our business. The Chairmans role is to provide leadership
to the Board, and the Chairmans responsibilities include:
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Setting the agenda and procedures for Board meetings in
collaboration with the Chief Executive Officer;
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Presiding over all meetings of the Board and stockholders;
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Supervising the circulation of information to the directors;
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After consulting with the Chief Executive Officer and other
directors, providing input to the Nominating and Corporate
Governance Committee regarding revisions to our Corporate
Governance Guidelines and the appointment of chairs and members
of the Boards committees;
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Coordinating periodic review of senior managements
strategic plan;
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Consulting with committee chairs about the retention of advisors
and experts; and
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Performing such other duties and services as the Board may
require.
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10
The Chairman also has the authority to request access to any of
our employees at any time.
Board of
Directors and Board Committees
The Board currently has 13 directors, but the Board has
decided to reduce the size of the Board to 11 directors
when Messrs. OConnor and Foley end their service at
the conclusion of the Annual Meeting. The Board develops our
business strategy, establishes our overall policies and
standards, and reviews the performance of management in
executing our business strategy and implementing our policies
and standards. We keep directors informed of our operations at
meetings and through reports and analyses presented to the Board
and Board committees. Significant communications between the
directors and management also occur apart from Board and
committee meetings.
The Board has established four standing committees: the Audit
Committee, the Compensation Committee, the Nominating and
Corporate Governance Committee, and the Integration Committee.
Committee member appointments are evaluated annually.
The Board held nine meetings and took three actions by unanimous
written consent during 2010. Each incumbent director attended at
least 75% of the total number of Board meetings and the total
number of meetings of all Board committees on which he served
held during his term of service. The non-employee directors meet
regularly in executive sessions.
Our directors and executive officers will continue to attend
seminars and continuing education programs relating to corporate
governance, audit and compensation matters. In addition, site
visits and external and in-house presentations are scheduled as
part of the directors continuing education.
Information regarding each of the current standing committees
follows.
Audit
Committee
The Audit Committee currently consists of Messrs. Rodriguez
(Chairman), Croghan, Crownover, Lehmann and Trani. The five
members of the Audit Committee meet the independence, education
and experience requirements of the listing standards of the NYSE
and the rules and regulations of the SEC. Further, our Board has
determined that Messrs. Rodriguez and Croghan each qualify
as an audit committee financial expert within the
meaning of Item 407 of
Regulation S-K
under the Securities Act of 1933.
The Audit Committee assists the Board in monitoring (a) the
integrity of our financial statements, (b) our compliance
with legal and regulatory requirements, and (c) the
independence and performance of our internal and external
auditors. Further, the Audit Committee has the ultimate
authority and responsibility to select, evaluate and, where
appropriate, terminate and replace the independent auditors. The
Audit Committee operates under a written charter adopted by the
Board in accordance with NYSE rules and all other applicable
laws. The Audit Committee reviews its charter at least annually.
The Audit Committee held four meetings, took two actions by
unanimous written consent and met regularly in executive
sessions during 2010. The Audit Committee Report is on
page 20.
Compensation
Committee
The Compensation Committee currently consists of
Messrs. Flynn (Chairman), Foley, Larson, Sorensen and
Wickham. Prior to July 28, 2010, Mr. Wickham was the
Chairman. The five members of the Compensation Committee are
independent as that term is defined under the listing standards
of the NYSE.
The Compensation Committee establishes and regularly reviews our
compensation philosophy and programs, exercises authority with
respect to the determination and payment of salaries and
incentive compensation to executive officers, and administers
our stock incentive plan. For further information on the
Compensation Committees processes and procedures for
consideration and determination of executive compensation, see
the Compensation Discussion and Analysis section of
this proxy statement. The Compensation Committee operates under
a written charter adopted by our Board in accordance with NYSE
rules and all other applicable laws. The Compensation Committee
may form and delegate authority to
sub-committees
when appropriate, provided that any such
sub-committee
must be composed entirely of independent directors and have a
published committee
11
charter. The Compensation Committee reviews its charter at least
annually. This charter can be found on our website at
www.republicservices.com. The Compensation Committee held seven
meetings, took one action by unanimous written consent and met
regularly in executive sessions during 2010.
Nominating and
Corporate Governance Committee
The Nominating and Corporate Governance Committee currently
consists of Messrs. Croghan (Chairman), Flynn, Larson,
Lehmann and Trani. The five members of the Nominating and
Corporate Governance Committee are independent as that term is
defined under the listing standards of the NYSE.
The Nominating and Corporate Governance Committee identifies
director candidates that it recommends to our Board for
selection as the director nominees for the next Annual Meeting
or to fill vacancies. It also identifies candidates that it
recommends to our Board for selection as the Chairman of the
Board. The Nominating and Corporate Governance Committee also is
responsible for developing and recommending our corporate
governance principles and reviewing and providing oversight of
the effectiveness of our governance practices. This committee
also oversees the annual evaluation of the Board and its
committees, discharges the Boards responsibilities related
to the compensation of non-employee directors and monitors the
succession management program. The Nominating and Corporate
Governance Committee operates under a written charter adopted by
the Board in accordance with the NYSE rules and all other
applicable laws. The Nominating and Corporate Governance
Committee reviews its charter at least annually. The Nominating
and Corporate Governance Committee will consider nominations for
the Board from stockholders that are entitled to vote for the
election of directors, as described under the Stockholder
Director Recommendation Policy below. The Nominating and
Corporate Governance Committee held five meetings, took one
action by unanimous written consent and met regularly in
executive session during 2010.
Integration
Committee
The Integration Committee currently consists of
Messrs. Sorensen (Chairman), Crownover, Foley, Rodriguez
and Wickham. The Integration Committee is responsible for
assisting our Board in overseeing the implementation, and
assessing the effectiveness, of a comprehensive integration
program designed to combine the business, operations and
organizational cultures of Republic and Allied as a result of
the merger in December 2008. The Integration Committee meets
regularly with the management integration team. The Integration
Committee operates under a formal charter that was approved by
the Board. The Integration Committee held four regular quarterly
meetings during 2010.
Director
Nomination Procedures
The Nominating and Corporate Governance Committee is generally
responsible for soliciting recommendations for candidates for
the Board, developing and reviewing background information for
such candidates, and making recommendations to the Board with
respect to candidates for directors proposed by stockholders. In
evaluating candidates for potential director nomination, the
Nominating and Corporate Governance Committee will consider,
among other things, candidates who are independent, if required,
who possess personal and professional integrity, who have good
business judgment, who have relevant business and industry
experience, education and skills, and who would be effective as
directors in collectively serving the long-term interests of our
stockholders in light of the needs and challenges facing the
Board at the time.
Although we have no formal policy regarding diversity relating
to Board candidacy, our Corporate Governance Guidelines include
a statement that directors should be selected in the context of
assessing the Boards needs at the time and with the
objective of ensuring diversity in the background, experience
and viewpoints of Board members. The Board and Nominating and
Corporate Governance Committee value diversity as a factor in
selecting Board members and believe that the diversity of
opinions, perspectives, personal and professional experiences
and backgrounds reflected on our Board provides us significant
benefits.
When assessing the independence of a current director or
prospective director candidate, the Nominating and Corporate
Governance Committee considers the per se
disqualifications to director independence in accordance with
the NYSE rules. In addition, the Board, based upon the
recommendation of the Nominating and Corporate
12
Governance Committee, has adopted categorical standards, which
state that certain relationships would not be considered to be
material relationships that would bar a directors
independence. These categorical standards are detailed under
Director Independence. All candidates will be
reviewed in the same manner, regardless of the source of
recommendation. Mr. Slager is nominated for election to our
Board at each Annual Meeting of stockholders pursuant to the
terms of his employment agreement with us. See Employment
Agreements and Post-Employment Compensation.
Stockholder
Director Recommendation Policy
The Nominating and Corporate Governance Committee will consider
director candidates recommended by our stockholders. In
accordance with our bylaws, a stockholder wanting to propose a
nominee to serve as a director before a meeting of stockholders
must give timely written notice. Such notice requirement will be
deemed satisfied if in compliance with our bylaws, and must
include (A) as to each person whom such stockholder
proposes to nominate for election or re-election as a director,
(i) all information relating to such person that is
required to be disclosed in solicitations of proxies for
election of directors under the Securities Exchange Act of 1934
(the Exchange Act), including such persons
written consent to being named in the proxy statement as a
nominee and to serving as a director if elected, (ii) a
description of all direct and indirect compensation and other
material monetary arrangements during the past three years and
any other material relationships between such stockholder,
beneficial owner and their respective affiliates and associates,
on the one hand, and each proposed nominee and his respective
affiliates and associates, on the other hand, and (iii) a
completed and signed questionnaire, representation and agreement
required by Section 2.13 of our bylaws; and (B) as to
such stockholder giving notice and the beneficial owner, if any,
on whose behalf the nomination is made, (i) the name and
address, as they appear on our books, of such stockholder and
beneficial owner, (ii) (a) the class and number of shares
of our stock which are owned beneficially and of record by such
stockholder and beneficial owner, (b) any instrument
derived in whole or part from the value of any class or series
of shares of our stock beneficially owned by such stockholder,
(c) any proxy, understanding or relationship pursuant to
which such stockholder has a right to vote any shares of any of
our securities, (d) any short interest in any of our
securities, (e) any rights to dividends on our shares
beneficially owned by such stockholder that are separated or
separable from the underlying shares, (f) any proportionate
interest in our shares or derivative instruments held directly
or indirectly by a general or limited partnership in which such
stockholder is a general partner or beneficially owns an
interest in a general partner, and (g) any
performance-related fees (other than an asset-based fee) that
such stockholder is entitled to based on any increase or
decrease in the value of our shares or derivative instruments,
including interests held by members of the stockholders
immediate family, and (iii) any other information relating
to such stockholder and beneficial owner, if any, that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies
for the election of directors under the Exchange Act.
The Nominating and Corporate Governance Committee will determine
the eligibility of a proposed nominee to serve as a director,
and may reasonably require additional information to determine
such eligibility. Director candidates proposed by stockholders
are evaluated on the same basis as all other director candidates
as discussed above. The Nominating and Corporate Governance
Committee may, in its discretion, interview any director
candidate proposed by a stockholder.
Stockholders wishing to recommend director candidates for
consideration by the Nominating and Corporate Governance
Committee may do so by giving the required information as
described above in writing to: Attention: Office of the
Corporate Secretary, Republic Services, Inc., 18500 North Allied
Way, Phoenix, Arizona 85054. To consider a candidate for
nomination at the 2012 Annual Meeting, we must receive the
stockholders written notice not later than 90 days
and not earlier than 120 days prior to the anniversary date
of this years Annual Meeting. Refer to our bylaws for
additional information and notice requirements.
13
Director
Independence
Our common stock is listed on the NYSE, which requires that a
majority of our Board must be independent directors
according to independence standards established by the NYSE.
Following is a list of our independent directors as of the date
of this proxy statement:
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John W. Croghan
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David I. Foley
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W. Lee Nutter
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John M. Trani
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James W. Crownover
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Michael Larson
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Ramon A. Rodriguez
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Michael W. Wickham
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William J. Flynn
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Nolan Lehmann
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Allan C. Sorensen
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When assessing the independence of a current director or nominee
for director, the Nominating and Corporate Governance Committee
considers the per se disqualifications from director
independence in accordance with the NYSE rules. In addition,
based upon the recommendation of the Nominating and Corporate
Governance Committee, our Board adopted categorical standards,
which provide that the following are not material relationships
that would bar a directors independence:
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If any of our directors is an executive officer of another
company that is indebted to us, or to which we are indebted, and
the total amount of either companys indebtedness to the
other is less than 1% of our consolidated assets and of the
company for which the director serves as an executive officer.
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If any of our directors or a member of the directors
immediate family serves as an officer, director or trustee of a
charitable organization, and our discretionary charitable
contributions to the organization are less than 2% of that
organizations total annual charitable receipts.
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A passive investment by any of our directors, or member of the
directors immediate family, in a stockholder that owns
less than 45% of our outstanding common stock, as long as the
passive investment does not exceed 5% of the directors net
worth.
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Affiliation or employment by any of our directors, or a member
of the directors immediate family, with an entity that
beneficially owns up to 45% of our outstanding common stock.
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The Board undertook a review of director independence and
considered relationships between each of the directors and their
immediate family members and Republic and its subsidiaries, both
in the aggregate and individually. Mr. Slager and
Mr. OConnor are not independent directors
under the NYSE listing standards because each is, or was within
the last three years, an employee of Republic. The Board
determined that the 11 remaining directors meet the standards
for independence set by the NYSE and the categorical standards
adopted by our Board, and have no material relationships with us
that impaired their independence from us. These individuals
therefore are independent directors under the NYSE
listing standards. In making its determination, the Board
considered, in the case of Mr. Foley, the matters described
under Certain Relationships and Related Transactions
and, in the case of Mr. Larson, his status as business
manager of Cascade Investment, L.L.C., our largest stockholder.
Corporate
Governance
We operate within a comprehensive plan of corporate governance
for the purpose of defining responsibilities, setting high
standards of professional and personal conduct, and assuring
compliance with such responsibilities and standards. We
continuously monitor developments and best practices in the area
of corporate governance and modify our plan as warranted.
Corporate Governance Guidelines. We have adopted a
set of Corporate Governance Guidelines, including specifications
for director qualification and responsibility.
Personal Loans to Executive Officers and
Directors. We comply with legislation prohibiting
extensions of credit in the form of personal loans to or for our
directors or executive officers.
Code of Business Conduct and Ethics (Code of
Ethics). We have adopted a Code of Ethics that
complies with all applicable laws and outlines the general
standards of business conduct that all of our employees,
officers, and directors are required to follow. If we make any
substantive amendments to the Code of Ethics or grant any waiver
from a provision of the Code of Ethics that applies to our Chief
Executive Officer, Chief Financial Officer,
14
Controller, or Chief Accounting Officer, we will disclose the
nature of such amendment or waiver on our website or in a report
on
Form 8-K.
Political Contributions Policy. To further our
responsibility as a good corporate citizen to participate in the
political process in a lawful, prudent and ethical manner, we
have adopted a Political Contributions Policy and related
procedures intended to ensure that our employees and other
company representatives participate in the political process in
compliance with all applicable laws and regulations governing
corporate political contributions and regulating corporate
participation in public and governmental affairs.
Stock Ownership Guidelines. To align the interests
of the Board and senior management with the interest of our
other stockholders and to demonstrate to the investing public
and our employees the Boards and senior managements
commitment to Republic, we require our directors and senior
management to hold our securities. See Security Ownership
of the Board of Directors and Management Security
Ownership and Hedging Policies.
The current charters for the Audit, Compensation, and Nominating
and Corporate Governance committees, our Corporate Governance
Guidelines, our Code of Ethics and our Political Contributions
Policy can be obtained, free of charge, by written request to:
Attention: Office of the Corporate Secretary, Republic Services,
Inc., 18500 North Allied Way, Phoenix, Arizona 85054. These
documents are also available on our website at
www.republicservices.com.
Board Leadership
Structure and Role in Risk Oversight
Board Leadership Structure. As described above,
since January 1, 2011 our Chairman of the Board and Chief
Executive Officer positions have been separated. Further,
following Mr. OConnors retirement effective
upon the conclusion of the Annual Meeting, we will have a
non-executive, independent Chairman of the Board. Please see
above under the heading Separation of Chairman of the
Board and Chief Executive Officer Roles for further
details on this transition and for a description of the roles
and responsibilities of the Chairman of the Board.
Our Board has four standing committees Audit,
Compensation, Integration, and Nominating and Corporate
Governance the responsibilities and authority of
which are described above. Each of these committees consists
solely of independent directors and has its own Chairman who is
responsible for directing the committees work in
fulfilling its responsibilities.
Our Board believes this leadership structure is in the best
interests of Republic and its stockholders. The Board believes
that designating an independent director to act as the
non-executive Chairman of the Board will serve the best
interests of Republic and its stockholders because it
strengthens the Boards independence and allows the Chief
Executive Officer to focus his talents and attention on managing
our business. The non-executive Chairman of the Board also will
serve as a valuable bridge between the Board and our management.
We have effective and active oversight by experienced
independent directors, we will have a non-executive, independent
Chairman of the Board upon the conclusion of the Annual Meeting,
and we have independent committee chairs. Our system provides
appropriate checks and balances to protect stockholder value.
Risk Oversight. We face a variety of risks,
including credit and liquidity risk, operational risk,
environmental risk, litigation risk, compliance risk and
compensation risk. In accordance with NYSE requirements, our
Audit Committee charter requires the Audit Committee to, among
other things:
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meet periodically with management and our independent auditors
to review our major financial risk exposures and the steps
management has taken to monitor and control them;
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discuss guidelines and policies with respect to risk assessment
and risk management;
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advise the Board with respect to our policies and procedures
regarding compliance with applicable laws and regulations and
with our Code of Conduct;
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15
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review with our General Counsel legal matters that may have a
material impact on our financial statements, our compliance
policies, and any material reports or inquiries received from
regulators or governmental agencies; and
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at least annually, and otherwise as necessary, provide new and
existing Audit Committee members an overview of our key
financial risks and our legal and regulatory requirements.
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Our Audit Committee meets at least quarterly and takes various
steps to assist it in fulfilling its risk oversight function.
For example, the agenda for our Audit Committee meetings
typically includes a report by each of our General Counsel and
our Vice President of Internal Audit. Before each meeting, our
General Counsel provides the Audit Committee a comprehensive
report describing our most significant pending litigation,
environmental, regulatory and compliance matters, and
information regarding our AWARE Line activity. The AWARE Line is
an integral part of our compliance program and provides a way
for our employees to provide information to us confidentially
regarding concerns they may have with respect to compliance with
policies, ethical requirements and legal requirements. Likewise,
before each meeting, our Vice President of Internal Audit
provides to the Audit Committee a comprehensive report on
internal audit matters, including Sarbanes-Oxley Act testing
results and environmental, health and safety findings. At the
meeting, the General Counsel and the Vice President of Internal
Audit supplement their advance written reports with oral
presentations and respond to questions from the directors.
Further, the Chairman of the Audit Committee has reviewed,
discussed with our Vice President of Internal Audit and
concurred in a program for field audits whereby each field audit
includes a finance review, an operations review and a compliance
review. In addition, our Treasurer and Risk Manager periodically
brief the Audit Committee or the Board on our insurance coverage
programs and related risks.
Our Board and other Board committees also are actively involved
in risk oversight. For example:
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the Audit Committee provides regular reports to the Board on
risk issues and our independent auditors report to the Board
annually on business and financial risk considerations;
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the agendas for our Board meetings include regular reports from
our Executive Vice President and Chief Financial Officer, and
from our Treasurer, regarding the financial, credit and
liquidity risks we face, including hedging issues;
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our management regularly discuss with the Board various
operational risks, including pricing risk, customer defection
risk, commodity price risk, safety risk, and capital expenditure
and fleet risk;
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the Compensation Committee addresses risks that may be
implicated by our executive compensation programs; and
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the Board and individual Board members engage in periodic
discussions with management regarding risk as they deem
appropriate.
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While the Board and its committees provide risk oversight,
management is responsible for the
day-to-day
risk management processes. We believe our Boards role is
to satisfy itself that:
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the risk management processes designed and implemented by
management are adapted to the Boards corporate strategy;
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those processes are functioning effectively;
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management communicates material risks to the Board or the Audit
Committee; and
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necessary actions are being taken to foster a culture of
compliance and risk-adjusted decision making throughout Republic.
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We further believe that the Board and committee leadership
structure we have implemented and the division of
responsibilities described above is the most effective approach
to address the risks we face.
Communications
with the Board of Directors
Any stockholder or other interested party who wishes to
communicate with the Board, a Board committee, the Chairman of
the Board, or the non-management directors (as a group or
individually), may send correspondence
16
to: Attention: Office of the Corporate Secretary, Republic
Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054.
The Corporate Secretary will compile and submit on a periodic
basis such correspondence to the entire Board, or, if and as
designated in the communication, to the appropriate Board
committee, the Chairman of the Board, or the non-management
directors (as a group or the appropriate individual member). The
independent directors have approved this process.
Attendance at
Annual Meetings Policy
We do not have a formal policy requiring our directors to attend
the Annual Meeting. Messrs. OConnor and Nutter
attended our 2010 Annual Meeting. Mr. Slager also attended
our 2010 Annual Meeting, which was held prior to his election as
a director.
Derivative Claim
Against Our Directors
In late 2009, a stockholder sued us in Federal court in Delaware
challenging our disclosures in our 2009 proxy statement with
respect to the Executive Incentive Plan (EIP) that
was approved by our stockholders at the 2009 annual meeting. The
lawsuit is styled as a combined proxy disclosure claim and
derivative action. We are a defendant only with respect to the
proxy disclosure claim, which seeks only to require us to make
additional disclosures regarding the EIP and to hold a new
stockholder vote prior to making any payments under the EIP. The
derivative claim is purportedly brought on behalf of Republic
against all of our directors and the individuals who were
executive officers at the time of the 2009 annual meeting and
alleges, among other things, breach of fiduciary duty. That
claim also seeks injunctive relief and seeks to recoup on behalf
of Republic an unspecified amount of the incentive compensation
that may be paid to our executives under the EIP, as well as the
amount of any tax deductions that may be lost if the EIP does
not comply with Section 162(m) of the Internal Revenue
Code. Defendants motions to dismiss plaintiffs
complaint have been fully briefed. We believe the lawsuit is
without merit and is not material and intend to vigorously
defend against the plaintiffs allegations.
17
DIRECTOR
COMPENSATION
When establishing and reviewing the compensation paid to our
directors, we consider the level of work and involvement the
directors have with our business. We also consider compensation
packages available to directors in the marketplace, with
particular emphasis placed on the compensation packages
available to directors at our peer group companies.
We compensate our directors as follows: (i) we pay each
non-employee director other than Mr. OConnor an
annual retainer of $80,000, (ii) we pay each committee
chairman and paid the Presiding Director an annual fee of
$20,000 (which Presiding Director fee was eliminated effective
January 1, 2011 when we eliminated the Presiding Director
position), (iii) we pay each non-employee director other
than Mr. OConnor $1,500 for each board or committee
meeting attended, except with respect to the Integration
Committee for which we pay each member $1,500 per quarter as
meeting fees, and (iv) we annually grant each non-employee
director other than Mr. OConnor 7,500 restricted
stock units (in place of deferred stock units) that are vested
but not settled until the directors termination of service
as a member of our Board. For any non-employee director first
elected after July 29, 2009 the Board, as recommended by
the Nominating and Corporate Governance Committee, approved a
one-time award of restricted stock units having a face value of
$250,000 (divided by the closing price per share of
Republics stock as of the date of grant to determine the
number of restricted stock units) that will vest in three equal
annual installments commencing one year from the date of the
award plus a pro-rated grant of fully vested restricted stock
units in the amount of 7,500 units pro-rated to the
remaining days during the year. These restricted stock units are
not settled until the directors termination of service as
a member of our Board. Restricted stock units are settled
through the issuance of shares of our common stock. At the end
of any quarter in which dividends are distributed to
stockholders, the non-employee directors receive additional
restricted stock units with a value (based on the closing price
of Republic stock on the dividend payment date) equal to the
value of dividends they would have received on the shares of
stock underlying all restricted stock units held by them on the
dividend record date. We intend to pay our independent,
non-Executive Chairman of the Board who will take office after
the Annual Meeting an annual retainer of $125,000 (prorated in
2011) in addition to the annual non-employee director
retainer, applicable meeting fees, and the annual equity grants
discussed above.
All compensation paid by us during 2010 to our non-employee
directors is detailed below. The compensation of
Messrs. OConnor and Slager is reflected in the
executive compensation tables contained in this proxy statement,
and they received no additional compensation from us for their
duties as directors.
Director
Compensation in 2010
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Fees Earned
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or Paid in Cash
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Stock Awards
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Name
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($)(1)
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($)(2)(3)
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Total ($)
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John W. Croghan
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127,000
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215,100
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342,100
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James W. Crownover
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105,500
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215,100
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320,600
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William J. Flynn
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119,833
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215,100
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334,933
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David I. Foley(4)
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110,000
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215,100
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325,100
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Michael Larson
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111,500
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215,100
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326,600
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Nolan Lehmann
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107,000
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215,100
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322,100
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W. Lee Nutter
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113,500
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215,100
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328,600
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Ramon A. Rodriguez
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125,500
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215,100
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340,600
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Allan C. Sorensen
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130,000
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215,100
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345,100
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John M. Trani
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107,000
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215,100
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322,100
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Michael W. Wickham
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121,667
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215,100
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336,767
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(1)
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Fees Earned or Paid in Cash includes an annual cash
retainer, committee chairmanship and Presiding Director
retainers and meeting fees for the board and its committees
earned during 2010.
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(2)
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The amounts shown in this column represent the grant date fair
value of restricted stock units granted in 2010 calculated in
accordance with FASB ASC Topic 718. This does not include the
value of additional restricted stock units received in lieu of
dividends. Each non-employee director received a grant on
January 4, 2010 with a grant date fair value of $28.68 per
share, which was the closing price of our stock on
January 4, 2010. The grant was an annual grant of 7,500
restricted stock units to each director which was fully vested
upon the grant but will
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not be settled until his
termination of service as a member of our Board. Each of our
non-employee directors, except for Mr. Larson, had 15,877
unvested restricted stock units (including dividends in the form
of additional restricted stock units) and 23,568 vested, but
unsettled, restricted stock units (including dividends in the
form of additional restricted stock units) as of
December 31, 2010. Mr. Larson had 6,504 unvested
restricted stock units (including dividends in the form of
additional restricted stock units) and 12,294 vested, but
unsettled, restricted stock units (including dividends in the
form of additional restricted stock units) as of
December 31, 2010 due to his joining the Board during 2009.
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(3)
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See Note 11 to our Consolidated Financial Statement
included in our
Form 10-K
for the year ended December 31, 2010, for a discussion of
the relevant assumptions used in calculating grant date fair
value pursuant to FASB ASC Topic 718. The following table sets
forth the aggregate number of vested stock options held by each
of our non-employee directors as of December 31, 2010.
There were no unvested stock options held by our non-employee
directors as of December 31, 2010.
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(4)
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Cash compensation payable to Mr. Foley was paid directly to
Blackstone Management Partners III L.L.C.
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Number of Securities
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Underlying Unexercised
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Option Exercise
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Option Expiration
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Name
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Options Exercisable
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Price ($)
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Date
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John W. Croghan
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15,000
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11.60
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1/31/2012
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15,000
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12.82
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2/5/2013
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James W. Crownover
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11,250
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22.64
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12/12/2012
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4,500
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19.62
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5/21/2013
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4,500
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28.00
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5/21/2014
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William J. Flynn
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David I. Foley(a)
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Michael Larson
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Nolan Lehmann
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4,500
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37.80
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5/23/2011
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4,500
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24.62
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5/29/2012
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4,500
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19.62
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5/21/2013
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4,500
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28.00
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5/21/2014
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W. Lee Nutter
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Ramon A. Rodriguez(b)
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15,000
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11.60
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1/31/2012
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15,000
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12.82
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2/5/2013
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Allan C. Sorensen
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15,000
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11.60
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1/31/2012
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|
15,000
|
|
|
|
12.82
|
|
|
|
2/5/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Trani
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Wickham
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Outstanding options to purchase
31,500 shares were held by the Blackstone Entities as of
December 31, 2010. Mr. Foley is a Senior Managing
Director of Blackstone Associates and disclaims beneficial
ownership of these equity awards.
|
|
(b)
|
|
All outstanding options granted to
Mr. Rodriguez are held by Crombet LLLP, a limited liability
limited partnership of which the general partner is an entity
controlled by Mr. Rodriguez and his spouse.
|
19
AUDIT COMMITTEE
REPORT
The following statement made by the Audit Committee shall not be
deemed incorporated by reference into any filing under the
Securities Act of 1933 or the Exchange Act and shall not
otherwise be deemed filed under either of these acts.
Management is responsible for our internal controls, financial
reporting processes, and compliance with laws and regulations
and ethical business standards. The independent auditors are
responsible for performing an independent audit of our
consolidated financial statements in accordance with generally
accepted auditing standards and issuing a report thereon. The
Audit Committees responsibility is to monitor and oversee
these processes on the Boards behalf.
In this context, the Audit Committee has reviewed and discussed
the audited financial statements with management and the
independent auditors. The Audit Committee has discussed with the
independent auditors the matters required to be discussed by
Codification of Statements on Auditing Standards, AU
§ 380 regarding communication with the audit committee.
In addition, the Audit Committee has received from the
independent auditors the written disclosures and the letter
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
auditors communications with the audit committee
concerning independence, and has discussed with the independent
auditors the independent auditors independence. The Audit
Committee has considered whether the independent auditors
provision of audit-related and other non-audit services to us is
compatible with maintaining the auditors independence.
Finally, the Audit Committee has evaluated the independent
auditors role in performing an independent audit of our
financial statements in accordance with generally accepted
auditing standards and applicable professional and firm auditing
standards, including quality control standards. The Audit
Committee has received assurances from the independent auditors
that the audit was subject to its quality control system for its
accounting and auditing practice in the United States. The
independent auditors have further assured the Audit Committee
that its engagement was conducted in compliance with
professional standards and that there was appropriate continuity
of personnel working on the audit and availability of national
office consultation to conduct the relevant portions of the
audit.
In reliance on the reviews, discussions and evaluations referred
to above, the Audit Committee recommended to the Board that the
audited financial statements be included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 for filing with
the SEC. By recommending to the Board that the audited financial
statements be so included, the Audit Committee is not opining on
the accuracy, completeness or presentation of the information
contained in the audited financial statements.
Submitted by the Audit Committee:
Ramon A. Rodriguez, Chairman
John W. Croghan
James W. Crownover
Nolan Lehmann
John M. Trani
20
AUDIT AND RELATED
FEES
Independent
Auditor Fee Information
The following table presents the aggregate fees billed to us by
Ernst & Young LLP for the audit of our annual
financial statements for the fiscal years ended
December 31, 2010 and 2009 and other services provided
during those periods:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit Fees
|
|
$
|
2,178,630
|
|
|
$
|
3,039,249
|
|
Audit-Related Fees
|
|
|
2,483
|
|
|
|
46,000
|
|
Tax Fees
|
|
|
162,285
|
|
|
|
272,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
2,343,398
|
|
|
$
|
3,357,249
|
|
|
|
|
|
|
|
|
|
|
Audit fees include fees associated with the annual audit and
Form 10-K,
the review of our reports on
Form 10-Q
and comfort letters. Audit fees also include amounts related to
Ernst & Young LLPs report on our internal
controls in accordance with the Sarbanes-Oxley Act of 2002. In
2010, audit-related fees consisted primarily of audits of
employee benefit plans and tax fees consisted primarily of tax
consulting services for various tax matters, including federal
and state tax planning and credits screening. In 2009,
audit-related fees consisted primarily of fees associated with
the audits of our employee benefit plans and tax fees consisted
of fees billed for professional services rendered for tax
compliance.
Pre-Approval
Policies and Procedures
Our Audit Committee pre-approves all fees to be paid to our
independent public accountants in accordance with the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in accordance therewith.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of (1) Forms 3 and 4 and
amendments to each form furnished to us pursuant to
Rule 16a-3(e)
under the Exchange Act, during our fiscal year ended
December 31, 2010, (2) any Forms 5 and amendments
to the forms furnished to us with respect to our fiscal year
ended December 31, 2010, and (3) any written
representations referred to us in subparagraph (b)(1) of
Item 405 of
Regulation S-K
under the Exchange Act, no person who at any time during the
fiscal year ended December 31, 2010 was a director,
Section 16(a) officer or, to our knowledge, a beneficial
owner of more than 10% of our common stock failed to file on a
timely basis reports required by Section 16(a) of the
Exchange Act during the fiscal year ended December 31, 2010.
SECURITY
OWNERSHIP OF FIVE PERCENT STOCKHOLDERS
The following table shows certain information as of
March 15, 2011 with respect to the beneficial ownership of
common stock by each of our stockholders who is known by us to
be a beneficial owner of more than 5% of our outstanding common
stock.
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned
|
Name of Beneficial Owner
|
|
Number
|
|
Percent(1)
|
|
Cascade Investment, L.L.C., William H. Gates III
|
|
|
58,754,169
|
(2)
|
|
|
15.4
|
%
|
2365 Carillon Point, Kirkland, WA 98033
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated in accordance with
Rule 13d-3
under the Exchange Act, based on 380,372,262 shares issued
and outstanding at the close of business on March 15, 2011.
|
|
(2)
|
|
Based on Form 4 filings with
the Securities and Exchange Commission by Cascade Investment,
L.L.C. (Cascade) for transactions that occurred on
December 8, 2010 through December 10, 2010. Of the
shares reported above, Cascade holds 57,404,169 shares
(15.0%), which may be deemed beneficially owned by William H.
Gates III as the sole member of Cascade. Of the shares
reported above, the Bill & Melinda Gates Foundation
Trust (the Trust) holds 1,350,000 shares
(0.4%), which may be deemed to be beneficially owned by
Mr. Gates and Ms. Melinda French Gates as Co-Trustees
of the Trust. Michael Larson, the business manager of Cascade,
disclaims any beneficial ownership of the common stock
beneficially owned by Cascade or Mr. Gates.
Mr. Gates address is One Microsoft Way, Redmond, WA
98052.
|
21
SECURITY
OWNERSHIP OF THE BOARD OF DIRECTORS AND MANAGEMENT
Security Ownership Guidelines and Hedging
Policies. We require our directors and executive
officers to hold our securities. Our Board believes that
security ownership by the Board and senior management is
important to align the interests of the Board and senior
management with the interests of our other stockholders and to
demonstrate to the investing public and our employees the
Boards and senior managements commitment to Republic.
Our Corporate Governance Guidelines state the Boards
belief that directors should be stockholders and have a
financial stake in the Company. While the Board does not believe
it appropriate to specify the level of share ownership an
individual director should hold, it anticipates that each
director will develop a meaningful ownership position in the
Company over time, depending upon individual circumstances.
Further, we pay directors a significant portion of their income
as directors in the form of restricted stock units. These
restricted stock units are not settled until the directors
termination of service as a member of our Board, and then they
are settled through the issuance of shares of our common stock.
See Director Compensation. Thus, they are required
to retain their equity position in the company until they are no
longer on the Board.
We maintain stock ownership guidelines for our named executive
officers. The stock ownership guidelines for these individuals
were previously equal to three times their salary and allowed
each individual 36 months from their appointment to reach
the specified ownership level. Each of the named executive
officers who has been appointed as such for longer than
36 months satisfied these guidelines. In October 2010, our
Board adopted expanded stock ownership guidelines that include
the following requirements: (1) Chief Executive
Officer five times salary; (2) Chief Operating
Officer, Chief Financial Officer and General Counsel
three times salary; and (3) Executive Vice Presidents and
Senior Vice Presidents two times salary. Each member
of senior management has a five-year period to meet the
applicable guideline, and interim progress is expected.
Our insider trading policy prohibits all directors, officers and
employees and their immediate family members from engaging in
the following transactions relating to Republic securities or
derivatives thereof: purchasing or selling puts or calls, short
sales, placing standing orders (other than under 10b5-1 plans),
engaging in short-term or
in-and-out
trading, and holding Republic securities or derivatives thereof
in a margin account or pledging them.
Security
Ownership of the Board and Management
The following table shows certain information as of
March 15, 2011 with respect to the beneficial ownership of
common stock by (1) our current directors, (2) each of
the executive officers listed in the Summary Compensation Table
and (3) all of our current directors and executive officers
as a group. We have adjusted share amounts and percentages shown
for each individual in the table to give effect to shares of
common stock that are not outstanding but which the individual
may acquire upon exercise of all options exercisable within
60 days of March 15, 2011. However, we do not deem
these shares of common stock to be outstanding for the purpose
of computing the percentage of outstanding shares beneficially
owned by any other individual listed on the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned(a)
|
|
|
Name of Beneficial Owner
|
|
Number(b)
|
|
Percent(c)
|
|
Republic Stock Units(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. OConnor
|
|
|
622,136(1
|
)
|
|
|
|
|
|
|
90,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Croghan
|
|
|
180,000(2
|
)
|
|
|
|
|
|
|
47,255
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W. Crownover
|
|
|
35,736(3
|
)
|
|
|
|
|
|
|
47,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Flynn
|
|
|
10,058(4
|
)
|
|
|
|
|
|
|
47,255
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David I. Foley
|
|
|
321,058(5
|
)
|
|
|
|
|
|
|
47,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Larson
|
|
|
|
|
|
|
|
|
|
|
26,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nolan Lehmann
|
|
|
62,439(6
|
)
|
|
|
|
|
|
|
47,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Lee Nutter
|
|
|
7,832(7
|
)
|
|
|
|
|
|
|
47,255
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ramon A. Rodriguez
|
|
|
30,000(8
|
)
|
|
|
|
|
|
|
47,255
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
625,575(9
|
)
|
|
|
|
|
|
|
44,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allan C. Sorensen
|
|
|
30,000(10
|
)
|
|
|
|
|
|
|
47,255
|
*
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned(a)
|
|
|
Name of Beneficial Owner
|
|
Number(b)
|
|
Percent(c)
|
|
Republic Stock Units(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Trani
|
|
|
10,058(11
|
)
|
|
|
|
|
|
|
47,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Wickham
|
|
|
|
|
|
|
|
|
|
|
47,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
144,075(12
|
)
|
|
|
|
|
|
|
86,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
36,629(13
|
)
|
|
|
|
|
|
|
30,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin C. Walbridge
|
|
|
84,423(14
|
)
|
|
|
|
|
|
|
32,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (16 persons)
|
|
|
2,200,019(15
|
)
|
|
|
0.6
|
%
|
|
|
783,264
|
|
|
|
|
(a)
|
|
Excludes the units in the last
column of this table.
|
|
(b)
|
|
All share numbers have been rounded
to the nearest whole share number.
|
|
(c)
|
|
Calculated in accordance with
Rule 13d-3
under the Exchange Act, and based on 380,372,262 shares
issued and outstanding at the close of business on
March 15, 2011. Each of our directors and executive
officers beneficially owns less than 1% of our outstanding
common stock.
|
|
(d)
|
|
Except in the case of
Mr. Walbridge, the numbers in this column represent
outstanding restricted stock units, both vested and unvested.
Restricted stock units are settled through the issuance of
shares of our common stock and they receive dividend
equivalents, in the form of additional restricted stock units,
each time a dividend is paid on our common stock. For further
discussion of restricted stock units refer to Director
Compensation and Executive Compensation.
Restricted stock units noted with an asterisk (*) are held under
a family trust or limited liability partnership rather than
directly by the beneficial owner.
|
|
|
|
With respect to Mr. Walbridge,
the number shown represents 32,031 units in the Republic
Services Stock Investment Fund and 966 units in the
Republic Services Stock Unit Fund. Mr. Walbridge holds
these units pursuant to his elections under our Deferred
Compensation Plan (DCP). The Republic Services Stock
Investment Fund is a measurement fund under which units are
equal in value to shares of our common stock and are settled in
cash. The Republic Services Stock Unit Fund allows an executive
to defer a restricted stock unit award into the DCP. All of
Mr. Walbridges units receive dividend equivalents, in
the form of additional units, each time a dividend is paid on
our common stock.
|
|
|
|
The restricted stock units and
Mr. Walbridges units under the DCP are not considered
common stock that is beneficially owned for SEC disclosure
purposes. We have included them in this table because they are
similar to or track our common stock, they ultimately are
settled in common stock (except for Mr. Walbridges
units in the Republic Services Stock Investment Fund), and they
represent an investment risk in the performance of our common
stock.
|
|
(1)
|
|
The aggregate amount of common
stock beneficially owned by Mr. OConnor consists of
162,076 shares owned directly by him and exercisable
options to purchase 460,060 shares.
|
|
(2)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Croghan consists of
150,000 shares owned directly by him and exercisable
options to purchase 30,000 shares.
|
|
(3)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Crownover consists of
15,486 shares owned directly by him and exercisable options
to purchase 20,250 shares.
|
|
(4)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Flynn consists of
10,058 shares owned directly by him.
|
|
(5)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Foley includes all shares
held by the Blackstone Entities. This consists of
289,558 shares held directly by the Blackstone Entities and
exercisable options held by the Blackstone Entities to purchase
31,500 shares. Mr. Foley is a Senior Managing Director
of Blackstone Associates and disclaims beneficial ownership of
the shares owned by the Blackstone Entities. The number of
shares held has been provided to us by the Blackstone Entities.
|
|
(6)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Lehmann consists of
44,439 shares owned directly by him and exercisable options
to purchase 18,000 shares.
|
|
(7)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Nutter consists of
7,832 shares owned directly by him.
|
|
(8)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Rodriguez consists of
exercisable options to purchase 30,000 shares which were
transferred to Crombet, LLLP, a limited liability limited
partnership of which the general partner is an entity controlled
by Mr. Rodriguez and his spouse. Mr. Rodriguez
disclaims beneficial ownership of the shares owned by Crombet,
LLLP.
|
|
(9)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Slager consists of
156,443 shares owned directly by him, 130,909 shares
of restricted stock, exercisable options to purchase
338,019 shares and 204 shares owned through our 401(k)
Plan.
|
|
(10)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Sorensen consists of
exercisable options to purchase 30,000 shares.
|
|
(11)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Trani consists of
10,058 shares owned directly by him.
|
|
(12)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Holmes consists of
53,663 shares owned directly by him, 21,277 shares of
restricted stock, exercisable options to purchase
63,772 shares, 2,931 shares owned through our 401(k)
Plan, and 2,432 shares owned through our Employee Stock
Purchase Plan.
|
|
(13)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Rissman consists of
4,303 shares owned directly by him, 1,150 shares owned
by his spouse, and exercisable options to purchase
31,176 shares.
|
|
(14)
|
|
The aggregate amount of common
stock beneficially owned by Mr. Walbridge consists of
exercisable options to purchase 79,825 shares,
1,794 shares owned through our 401(k) Plan, and
2,804 shares owned through our Employee Stock Purchase Plan.
|
|
(15)
|
|
The aggregate amount of common
stock beneficially owned by all current directors, director
nominees and executive officers as a group consists of
(a) 903,916 shares owned directly,
(b) 152,186 shares of restricted stock,
(c) 1,150 shares indirectly owned by a spouse,
(d) exercisable options to purchase 1,132,602 shares,
(e) 4,929 shares owned through our 401(k) Plan, and
(f) 5,236 shares owned through our Employee Stock
Purchase Plan.
|
23
EXECUTIVE
OFFICERS
Our executive officers serve at the Boards pleasure and
are subject to annual appointment by the Board. Following is a
list of our current executive officers. Biographical information
about each of our current executive officers follows the table.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position Held
|
|
Donald W. Slager
|
|
|
49
|
|
|
Chief Executive Officer and President
|
Tod C. Holmes
|
|
|
62
|
|
|
Executive Vice President and Chief Financial Officer
|
Michael P. Rissman
|
|
|
50
|
|
|
Executive Vice President, General Counsel and Corporate Secretary
|
Kevin C. Walbridge
|
|
|
50
|
|
|
Executive Vice President - Operations
|
See Election of Directors Biographical
Information Regarding Director/Nominees and Executive
Officers for biographical information about
Mr. Slager, who was named our Chief Executive Officer in
January 2011.
Tod C. Holmes was named Executive Vice President and
Chief Financial Officer in December 2008. Prior to that,
Mr. Holmes served as our Senior Vice President and Chief
Financial Officer from August 1998 to December 2008.
Mr. Holmes served as our Vice President Finance
from June 1998 until August 1998 and as Vice President of
Finance of our former parent companys Solid Waste Group
from January 1998 until June 1998. From 1987 to 1998,
Mr. Holmes served in various positions with Browning-Ferris
Industries, Inc., including Vice President, Investor Relations
from 1996 to 1998, Divisional Vice President, Collection
Operations from 1995 to 1996, Divisional Vice President and
Regional Controller Northern Region from 1993 to
1995, and Divisional Vice President and Assistant Corporate
Controller from 1991 to 1993.
Michael P. Rissman was named Executive Vice President,
General Counsel and Corporate Secretary in August 2009. Prior to
that, Mr. Rissman had served as acting General Counsel and
Corporate Secretary from March 2009. Mr. Rissman joined
Allied as Vice President and Deputy General Counsel in July 2007
and continued in these same positions at Republic after our
merger with Allied in December 2008. Prior to joining Allied,
Mr. Rissman was a partner at Mayer, Brown, Rowe &
Maw, LLP, in Chicago. Mr. Rissman was at Mayer Brown from
1990 until coming to Allied in 2007.
Kevin C. Walbridge was named Executive Vice
President Operations in October 2010. Prior to that,
Mr. Walbridge served as our Senior Vice President of
Midwestern Operations from December 2008, and served as our
Central Region Vice President from the time he joined us in June
1997 through December 2008. Before joining us,
Mr. Walbridge served as the Vice President
Operations/Co-Owner of National Serv-All from 1996 to 1997, the
President of Waste Management of Alameda County from 1993 to
1996, and the Division President of Empire Waste Management
from 1985 to 1993.
Information about our former Chief Executive Officer, who
retired from his position as Chief Executive Officer effective
January 1, 2011, is set forth below:
James E. OConnor was named Chairman of the Board of
Directors in January 2003. He has served as a director since
December 1998, and served as our Chief Executive Officer from
December 1998 until his retirement on January 1, 2011. From
1972 to 1978 and from 1982 to 1998, Mr. OConnor
served in various positions with Waste Management, Inc., an
integrated solid waste service company, including Senior Vice
President from 1997 to 1998, Area President of Waste Management
of Florida, Inc. from 1992 to 1997, Senior Vice President of
Waste Management North America from 1991 to 1992 and
Vice President Southeastern Region from 1987 to
1991. Mr. OConnor served on the Board of Swisher
Hygiene, Inc., as Chairman of its Compensation Committee and as
a member of its Nominating and Corporate Governance Committee
from November 2010 through January 2011.
24
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
We are the second largest provider of services in the domestic
non-hazardous solid waste industry, as measured by revenue. We
provide non-hazardous solid waste collection services for
commercial, industrial, municipal and residential customers
through 348 collection companies in 40 states and Puerto
Rico. We own or operate 204 transfer stations, 193 active solid
waste landfills and 76 recycling facilities. We also operate
73 landfill gas and renewable energy projects. We completed
our acquisition of Allied in December 2008. We believe this
acquisition creates a strong operating platform that will allow
us to continue to provide quality service to our customers and
superior returns to our stockholders.
Despite the challenging economic environment, our business
performed well during 2010 due in large part to the
indispensable nature of our services and the scalability of our
business. Excluding certain divested revenue, core revenue for
the year ended December 31, 2010 was unchanged from 2009.
During 2010, we completed the integration of Allied operations
resulting in approximately $190 million of annual run-rate
synergy savings, exceeding our original estimate of
approximately $150 million by 26.7%. Since the Allied
acquisition, we have repaid $1.3 billion of net borrowings
and have refinanced $1.5 billion of senior notes and
$677.4 million of tax-exempt financings at lower interest
rates. Free cash flow generated from operations allowed us to
increase our regular quarterly dividend 5% in the third quarter
of 2010, and in November 2010, our Board approved a share
repurchase program pursuant to which we may repurchase up to
$400 million of our outstanding shares of common stock.
From a compensation perspective, we seek to closely align the
interests of our named executive officers with the interests of
our stockholders. You should note that for the past three years,
we put programs into place and took actions with respect to
outstanding awards that occurred as a result of our transaction
with Allied and the continuing transition following the
transaction, and that these programs and practices do not
necessarily reflect our general annual compensation practices.
Generally, our compensation programs are designed to reward our
named executive officers for achieving short-term and long-term
strategic and operational goals, including: (i) earnings
per share, (ii) return on invested capital and
(iii) free cash flow, while at the same time avoiding
encouraging unnecessary or excessive risk-taking. Our named
executive officers total compensation is comprised of a
mix of base salary, annual cash incentive awards and long-term
incentive awards that include both cash and equity awards.
Compensation
Decisions for 2010
Our 2009 financial performance, including our performance
relative to our peers, along with the individual performance of
our executive officers, served as key factors in determining
compensation for 2010, including as follows:
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For 2010 we followed our general practice of having short-term
and long-term incentive compensation make up the majority of the
compensation for each of our named executive officers. Long-term
incentive compensation is comprised of cash awards determined by
metrics that differ from our annual incentive compensation
program and equity awards that have value that is closely linked
to our total stockholder return.
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In light of our expected performance for 2010 amidst continuing
concerns about the economy, the Compensation Committee
determined to make no changes in base salary, target annual cash
incentive compensation or target long-term incentive cash
compensation for our named executive officers for 2010. In
mid-2010 in connection with the decision to promote
Mr. Slager to Chief Executive Officer effective
January 1, 2011 and to promote Mr. Walbridge to
Executive Vice President Operations effective
October 1, 2010, we decided to increase their compensation
effective as of such dates.
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Adjusted earnings per share and adjusted free cash flow are the
key metrics for our named executive officers annual cash
incentive awards. These metrics provide for a balanced approach
to measuring
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annual performance. Our performance with respect to each of
these metrics was above target in 2010, and therefore resulted
in the payment of annual cash incentive awards at approximately
120% of target levels for our named executive officers.
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Corporate
Governance
We seek to maintain compensation programs that support good
governance and our overall
pay-for-performance
philosophy, which are demonstrated by the following:
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We maintain security ownership guidelines, which we made more
demanding in 2010.
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We have limited executive perquisites.
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We have a policy that prohibits our directors, named executive
officers, and other key officers from hedging the economic
interest in the Company securities that they hold.
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We have a policy prohibiting our personnel, including the named
executive officers, from engaging in any short-term, speculative
securities transactions, including purchasing securities on
margin, engaging in short sales, buying or selling put or call
options, and trading in options (other than those granted by the
Company).
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The Compensation Committee engages an independent compensation
consultant that does not provide any services to management and
that had no prior relationship with management prior to the
engagement.
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We have a strong risk management program, which includes our
Compensation Committees significant oversight of the
ongoing evaluation of the relationship between our compensation
programs and risk.
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We encourage you to read this Compensation Discussion and
Analysis for a detailed discussion and analysis of our executive
compensation program, including information about the 2010
compensation of the named executive officers.
Compensation
Program Objectives and Philosophy
Our executive compensation program is designed to attract and
retain our officers and to motivate them to increase stockholder
value on both an annual and a longer-term basis primarily by
improving our earnings and return on invested capital and
generating increasing levels of free cash flow.
The Compensation Committee structures compensation packages that
are primarily weighted toward incentive forms of compensation to
ensure that each officers interests are aligned with the
interests of our stockholders. Our incentive forms of
compensation do not focus on individual goals or individual
performance, but instead focus on organization-wide strategic
goals and objectives. We believe that stockholder interests are
best served and that our officers interests
are best aligned with those of our stockholders by
establishing, working toward and achieving team-oriented
strategic goals and objectives that affect our entire
organization. The relationship between our ability to improve
earnings and return on invested capital and to generate free
cash flow is closely tied to the financial rewards received by
our stockholders. Consequently, the success of our officers in
improving earnings and return on invested capital and generating
free cash flow is closely linked to the financial rewards they
receive.
In early 2001 our Compensation Committee adopted a long-term
cash incentive plan to reward our named executive officers
ability to achieve our strategic objectives by generating
increasing amounts of free cash flow and improving our return on
invested capital over an extended time horizon.
Compensation
Process and Advisors
Beginning in late 2003 and continuing to the present, the
Compensation Committee retained the services of Pearl
Meyer & Partners (Pearl Meyer) to assist
the Compensation Committee with its review of compensation for
our senior executives, including our named executive officers.
In addition, Pearl Meyer was asked to conduct an annual market
comparison analysis and also has been utilized as a regular
advisor to the Compensation
26
Committee regarding ongoing compensation issues. The
Compensation Committee retains Pearl Meyer directly, supervises
all work assignments performed by them, and reviews and approves
all work invoices received from Pearl Meyer for payment.
Nevertheless, there are instances when Pearl Meyer must work
with our management to obtain compensation information and data
to perform its tasks. Our Nominating and Corporate Governance
Committee also retains Pearl Meyer from time to time in
connection with reviewing and establishing director compensation
and related matters. Other than as described above, Pearl Meyer
was not asked to perform any other services for us. Pearl Meyer
is considered independent for SEC purposes.
In addition to Pearl Meyer, the Compensation Committee has the
ability to retain any other advisors it deems necessary or
desirable in order for it to discharge its duties. In 2008 and
early 2009, the Compensation Committee retained the law firm of
Fried, Frank, Harris, Shriver & Jacobson LLP to assist
in the development of restated employment agreements for the
named executive officers. The Compensation Committee has sole
authority to terminate the retention of any consultant or
advisor it has retained.
When making decisions regarding the compensation of named
executive officers, the Compensation Committee considers data
and analyses prepared by Pearl Meyer that include our prior
performance and historical pay to the named executive officers
and the appropriateness of such compensation compared to that of
our peer group companies. General compensation surveys compiled
by other consulting firms are also reviewed and considered by
the Compensation Committee in determining the appropriateness of
executive compensation. Finally, the Compensation Committee also
considers the compensation recommendations set forth by the
Chief Executive Officer for executive officers other than
himself, but the Compensation Committee ultimately makes all
decisions regarding executive officer compensation. In
considering compensation matters generally, and the compensation
packages of the named executive officers in particular, the
Compensation Committee routinely meets in executive session
outside the presence of the named executive officers or any of
our other employees.
Elements of
Compensation
For 2010 our compensation program for named executive officers
consisted of the following components:
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Base salaries
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Annual cash incentive awards
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Long-term incentive compensation
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Long-term cash incentive
awards
Equity compensation
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Synergy incentive awards
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Other benefits
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Each of these components is reflected in the Summary
Compensation Table and is discussed in detail below.
Why Each Element
of Compensation is Paid and How the Amount of Each Element of
Compensation is Determined
As mentioned above, our compensation packages are primarily
weighted toward incentive compensation, although we do not
adhere to a precise mathematical allocation between salary and
incentive compensation. Nevertheless, a significant portion of
our named executive officers total compensation is placed
at risk through annual and long-term incentive cash and equity
compensation.
Salaries. During 2010, the annual cash salaries for
Messrs. OConnor, Slager, Holmes, Rissman and
Walbridge were $1,100,000, $875,000, $575,000, $400,000 and
$418,750, respectively. These salaries reflected no increase
from their 2009 ending salaries, except with respect to
Mr. Walbridge, whose annual salary at the beginning of 2010
was $400,000 and which increased to $475,000 upon his promotion
to Executive Vice President Operations effective
October 1, 2010. Effective January 1, 2011 when
Mr. Slager became our Chief Executive Officer, his salary
increased to $1,000,000 per year and Mr. OConnor
ceased receiving salary.
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Annual Incentive Compensation. The annual cash
incentive program provides our named executive officers with an
opportunity to receive an annual cash award based on our
achievement of certain objectives. Annual incentive compensation
for each of our named executive officers is governed by our
Executive Incentive Plan which was approved by our stockholders
at our 2009 Annual Meeting. Under this plan, each of our named
executive officers is eligible to receive annual incentive
compensation upon achieving predetermined levels of
(a) components of earnings per share (the EPS
Measure) and (b) components of free cash flow (the
FCF Measure), both of which are approved by the
Compensation Committee at the beginning of each year following
approval by the Board of our annual budget.
For 2010, we defined the FCF Measure, which is not a measure
determined in accordance with U.S. GAAP, as cash provided
by operating activities, less purchases of property and
equipment received in 2010, plus proceeds from sales of property
and equipment as presented in our consolidated statements of
cash flows, adjusted to remove the impact of:
(1) expenditures related to our merger with Allied, net of
tax; (2) legacy Allied tax payments relating to
Browning-Ferris Industries, Inc. risk management companies;
(3) the loss on extinguishment of debt; and (4) other
non-operational items not reflected in our budget, including
proceeds or expenditures from business unit divestitures and
taxes thereon, other legacy Allied tax payments or reversals,
and costs associated with withdrawal from or termination of
multi-employer pension plans.
We define the EPS Measure, which is not a measure determined in
accordance with U.S. GAAP, as our reported earnings per
share adjusted to remove the impact of: (1) restructuring
charges attributable to the merger with Allied and costs to
achieve synergies; (2) the loss on extinguishment of debt;
and (3) other non-operational items not reflected in our
budget, including gains or losses from divestitures net of tax
and costs associated with withdrawal from or termination of
multi-employer pension plans.
For 2010, if the FCF Measure target and the EPS Measure target
were both met, but not exceeded, the percentage of Annual
Incentive Target Payout amount to each named executive officer
was calculated as a percentage of his salary as follows:
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Annual Incentive Target Payout
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Named Executive Officer
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Percentage of Salary
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Mr. OConnor
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130%
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Mr. Slager
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120%
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Mr. Holmes
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100%
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Mr. Rissman
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80%
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Mr. Walbridge
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80%
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If the FCF Measure target was met or exceeded, and the EPS
Measure target was exceeded, the targeted payout amount to each
named executive officer would increase. That increase was
approximately 4.17% of the targeted payout amount for each $0.01
by which we exceeded the EPS Measure target, up to a maximum of
$0.24 per share, resulting in a possible maximum payout equal to
200% of the targeted payout amount calculated pursuant to the
table above. There would have been no increase in the targeted
payout amount to the named executive officers if the FCF Measure
target was met or exceeded, but the EPS Measure target was not
exceeded. If either target was not met, the annual incentive
would have been paid at an amount below target if the FCF
Measure threshold was met or the EPS Measure threshold was
exceeded.
For 2010, the FCF Measure target was $721.0 million and the
EPS Measure target was $1.66 per share. Actual results were FCF
Measure of $776.3 million and EPS Measure of $1.71 per
share, resulting in a payout at 120.8% of the targeted payout
amount. Payments for the 2010 annual incentive are reflected in
the Summary Compensation Table in the column titled Non-Equity
Incentive Plan Compensation. These annual incentive payments to
the named executive officers averaged approximately 133% of
salary.
For 2011, the annual incentive design remains similar to 2010
with the measures again consisting of the FCF Measure and the
EPS Measure. For 2011, if our targets for the FCF Measure and
the EPS Measure are both met but not exceeded, the percentage of
Annual Incentive Target Payout amount to each named executive
officer will be the same percentage of his salary as set forth
above for 2010, except that Mr. Slagers target is
125% for 2011 and Mr. OConnor will not be eligible
for an annual incentive award in 2011. One-half of the targeted
payout amount will be attributable to each measure. If the FCF
Measure target is met or exceeded, and the EPS
28
Measure target is exceeded, the targeted payout amount to each
named executive officer will increase. That increase is
approximately 6.25% of the targeted payout amount for each $0.01
by which we exceed the EPS Measure target, up to a maximum of
$0.16 per share, resulting in a possible maximum payout equal to
200% of the targeted payout amount calculated pursuant to the
table above. There is no increase in the targeted payout amount
to the named executive officers if the FCF Measure target is met
or exceeded, but the EPS Measure target is not exceeded. If
either target is not met, bonus will be paid at an amount below
target if the FCF Measure threshold is met or the EPS Measure
threshold is exceeded.
Long-Term Incentive Compensation. For 2010,
long-term incentive compensation included a mix of a long-term
cash program, restricted stock units and stock options.
Long-term incentive compensation is intended to further align
named executive officer compensation with the interests of our
stockholders by motivating them to promote Republics
long-term health and growth.
Long-Term Cash Incentive Compensation. Similar to
annual incentive payments, long-term cash incentive payments are
based on achieving pre-established performance goals which are
set under our Executive Incentive Plan.
Long-term cash incentive awards are based on rolling periods of
three years each. A new performance period begins on January 1
of each year, and payouts with respect to each performance
period are scheduled to occur following the end of the
applicable three-year period. The payouts of the long-term
awards are based upon achieving pre-determined levels of
(a) cash flow value creation (CFVC), which we
define as net income plus after-tax interest expense plus
depreciation, depletion, amortization and accretion less capital
charges (net average assets multiplied by our weighted average
cost of capital), and (b) return on invested capital
(ROIC), both of which are approved by the
Compensation Committee at the beginning of each three-year
performance cycle. We believe that our stockholders are
primarily concerned with our ability to generate free cash flow
and provide them with a reasonable return on their investment.
As such, we also believe that using these variables serves to
closely align managements interests with our
stockholders interests. In addition, we believe that these
variables tie long-term incentive compensation more directly to
our and our officers actual performance rather than
measures subject to the volatility of the stock market.
The Compensation Committee, with the advice of its initial
compensation consultant, established targeted levels of CFVC and
ROIC for our initial performance period of 2001 to 2003. These
targets were the same for all participants in the plan and have
been revised since that time for each subsequent performance
period based on our actual performance, as well as business and
financial projections of our future performance. Additionally,
also with the advice of its initial compensation consultant, the
Compensation Committee established dollar-based long-term
incentive compensation payout targets for our initial
performance period of 2001 to 2003. From then through early
2009, the Compensation Committee generally increased these
payout targets in the range of 5% to 10% per performance period.
The Compensation Committee currently sets target awards under
the long-term incentive plan for the named executive officers at
approximately 25% to 50% of the total long-term compensation
target award, with the percentages varying based on the extent
to which each named executive officer also receives restricted
stock units.
If the CFVC or ROIC targets are exceeded during any performance
period, the payout to named executive officers and other
participants can be increased upward to a maximum of 150% of the
targeted payout amount. On an annual basis, both the proposed
targets for CFVC and ROIC and the proposed payout targets to
participants have been reviewed by the compensation consulting
firm then engaged by the Compensation Committee. Since 2004,
Pearl Meyer has conducted this review.
During 2008, the long-term incentive payouts for the 2006 to
2008, 2007 to 2009 and 2008 to 2010 performance periods were
accelerated and paid at target as a result of a change in
control provision in the plan. The amounts of long-term
incentive compensation paid to the named executive officers for
the 2006 to 2008, 2007 to 2009, and 2008 to 2010 performance
periods are reflected in the Summary Compensation Table in the
column titled Non-Equity Incentive Plan Compensation. These
long-term incentive plan payments to named executive officers in
2008 averaged 231% of salary and, when combined with annual
incentive payments, averaged 328% of salary. Due to the
acceleration of the payments, no long-term incentive payouts
under the plan were made in 2009 or 2010.
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In 2009, the Compensation Committee established the long-term
incentive payout targets for the 2009 to 2011 performance
period, based on CFVC and ROIC over the period. If our CFVC and
ROIC targets are both met but not exceeded, the target awards
payable in 2012 under this plan to Messrs. OConnor,
Slager, Holmes, Rissman and Walbridge were established at
$1,250,000, $650,000, $500,000, $50,000 and $200,000,
respectively. If our CFVC and ROIC each exceed their target by
15% or more, then the awards will be a maximum of 150% of the
target awards stated above. If we achieve CFVC and ROIC at the
threshold of 85% of target, awards will be 50% of the target
awards stated above. Results between threshold and target, and
results between target and maximum, will be interpolated. Each
of the two measures, CFVC and ROIC, is weighted equally. If
neither threshold is reached, no award will be paid for the 2009
to 2011 performance period. Due to his retirement as Chief
Executive Officer effective January 1, 2011,
Mr. OConnor will be paid the target long-term
incentive award for the 2009 to 2011 performance period, with
such award payable no sooner than July 1, 2011 and no later
than December 31, 2011.
In 2010, the Compensation Committee established the long-term
incentive payout targets for the 2010 to 2012 performance
period, based on targeted CFVC and ROIC over the period. If our
CFVC and ROIC targets are both met but not exceeded, the target
awards payable in 2013 under this plan to
Messrs. OConnor, Slager, Holmes, Rissman and
Walbridge were established at $1,250,000, $650,000, $500,000,
$250,000 and $220,000, respectively. If our CFVC and ROIC each
exceed their target by 15% or more, then the awards will be a
maximum of 150% of the target awards stated above. If we achieve
CFVC and ROIC at the threshold of 85% of target, awards will be
50% of the target awards stated above. Results between threshold
and target, and results between target and maximum, will be
interpolated. Each of the two measures, CFVC and ROIC, is
weighted equally. If neither threshold is reached, no award will
be paid for the 2010 to 2012 performance period. Due to his
retirement as Chief Executive Officer effective January 1,
2011, Mr. OConnor will be paid one-third of the
long-term incentive for the 2010 to 2012 performance period that
he would have earned had he remained employed through the end of
2012, with such award payable within 60 days after the end
of 2012.
In 2011, the Compensation Committee established the long-term
incentive payout targets for the 2011 to 2013 performance
period, based on targeted CFVC and ROIC over the period. If our
CFVC and ROIC targets are both met but not exceeded, the target
awards payable in 2014 under this plan to Messrs. Slager,
Holmes, Rissman and Walbridge will be $900,000, $500,000,
$250,000 and $250,000, respectively. If our CFVC and ROIC each
exceed their target by 15% or more, then the awards will be a
maximum of 150% of the target awards stated above. If we achieve
CFVC and ROIC at the threshold of 85% of target, awards will be
50% of the target awards stated above. Results between threshold
and target, and results between target and maximum, will be
interpolated. Each of the two measures, CFVC and ROIC, is
weighted equally. If neither threshold is reached, no award will
be paid for the 2011 to 2013 performance period.
Mr. OConnor will not be eligible for a long-term
incentive award for the 2011 to 2013 performance period.
Equity Compensation. Our executives also are
eligible to participate in a long-term equity incentive program
each year, which is administered under our Stock Incentive Plan.
The long-term equity incentive component of our compensation
program is used to balance the short-term focus of the annual
cash incentive program by linking the ultimate value of the
equity awards to our long-term performance. The Compensation
Committee believes that long-term stock-based incentive
compensation enhances our ability to attract and retain high
quality talent and provides the motivation to improve our
long-term financial performance and increase stockholder value.
The Compensation Committee has determined that it is appropriate
to provide equity awards to our executive officers (in the form
of restricted stock, restricted stock units,
and/or stock
options), as they align the interests of our executives with our
stockholders. Restricted stock and restricted stock units
encourage both the preservation of value already generated and
growth in our future value. Stock options align the interests of
our executives with new stockholders whose basis in our stock is
at current share price and for whom growth in value from this
point forward is of critical interest.
Historically, we made regular annual equity awards at the first
Compensation Committee meeting of each year. We granted equity
awards upon the closing of our merger with Allied in December
2008. Accordingly, we did not grant any regular annual equity
awards for 2009. As described, below, however, we did grant
equity awards during 2009 in connection with the amendment of
certain of our executives employment agreements.
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In 2010 we returned to a schedule of providing regular annual
grants of equity awards. Grants for our executive officers were
approved in October 2009 and became effective in January 2010.
We believe that equity awards offer significant motivation to
our officers and other employees and serve to align their
interests with those of our stockholders. While the Compensation
Committee will continually evaluate the use of equity
compensation types and amounts, it intends to continue to use
such awards as part of our overall compensation program.
In 2009, Messrs. OConnor, Slager and Holmes received
grants of restricted stock upon the signing of their new
employment agreements. Messrs. OConnor, Slager and
Holmes received restricted stock grants equal to 88,535, 38,670
and 22,134 shares, respectively. The restricted stock
granted to Messrs. OConnor and Holmes vested one year
from their grant date. The restricted stock granted to
Mr. Slager vests three years from the grant date.
In January 2010, Messrs. OConnor, Slager, Holmes and
Rissman were granted 87,169, 56,950, 43,585 and 17,434
restricted stock units, respectively. These restricted stock
units vest in equal annual installments over four years and will
be settled in common stock promptly after vesting (if not
deferred into the Deferred Compensation Plan). In January 2010,
Messrs. OConnor, Slager, Holmes and Rissman were also
granted 222,420, 115,658, 88,968 and 44,484 stock options,
respectively. These stock options vest in equal annual
installments over four years or as provided in their agreements.
In February 2010, Mr. Walbridge was granted 23,000 stock
options. These stock options also vest in equal annual
installments over four years or as provided in the agreement.
In June 2010, Mr. Slager entered into an amended and
restated employment agreement, which provided for
Mr. Slager to become our Chief Executive Officer and
continue as President when Mr. OConnor retired as
Chief Executive Officer on January 1, 2011. Pursuant to the
agreement, Mr. Slager received shares of restricted stock
with a value of $2,000,000 on June 25, 2010, which will
vest 25% on each anniversary thereof, provided Mr. Slager
is employed by us on such date, and which was in lieu of a
discretionary annual grant of restricted stock for 2011.
In January 2011, Messrs. Holmes and Rissman were granted
41,597 and 16,639 restricted stock units, respectively. These
restricted stock units vest in equal annual installments over
four years and will be settled in common stock promptly after
vesting (if not deferred into the Deferred Compensation Plan).
In January 2011, Messrs. Slager, Holmes, Rissman and
Walbridge also were granted 185,874, 92,937, 46,468 and 34,572
stock options, respectively. These stock options vest in equal
annual installments over four years or as provided in their
agreements.
Synergy Incentive Plan. The Synergy Incentive Plan
provides a cash bonus for achieving measurable annual
integration cost savings of between $100 million and
$150 million. The implementation period for specific
actions designed to achieve these savings is 2009 and 2010. The
savings to be rewarded will be measured and subject to
verification during 2011. We have worked with Deloitte
Consulting LLC to develop: 1) a list of specific actions
that will be implemented; 2) a rigorous process for
tracking and measuring the cost savings and the cost to
implement; and 3) a reporting process for management and
the Board. An Integration Committee of the Board (as described
under the section entitled Board of Directors and
Corporate Governance Matters Integration
Committee) has been created to oversee the implementation
of the cost savings initiatives. Management has and will
continue to report at least quarterly to the Integration
Committee on specific progress on implementing these actions and
realizing the associated savings. The Integration Committee will
review and approve any proposed modifications to the overall
integration plan on an ongoing basis. The Compensation
Committee, in cooperation with the Integration Committee, will
approve awards to be made upon completion of the measurement
period.
Under the Synergy Incentive Plan, the Compensation Committee
approved for Messrs. OConnor, Slager, Holmes and
Walbridge maximum potential payouts of $15,000,000, $10,000,000,
$8,000,000 and $1,000,000, respectively. Mr. Rissman was
promoted in August 2009 and his total award under the Synergy
Incentive Plan will be prorated between his periods of
employment as Vice President and Deputy General Counsel and
Executive Vice President, General Counsel and Corporate
Secretary. The prorated maximum for Mr. Rissman is
$533,333. Mr. Walbridge was promoted in October 2010 and
his total maximum remains $1,000,000.
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Awards under the Synergy Incentive Plan are presented as a
maximum cash award. Maximum awards will pay out if 100% of the
goal is achieved. Payout will be at 25% of maximum if the
threshold goal is achieved. Achievement between threshold and
maximum would result in a payout interpolated between the
threshold and maximum payout. Based on our synergy savings
during 2009 and 2010, we expect payouts under the Synergy
Incentive Plan to be made in early 2012 at the maximum amounts.
Other Benefits and Perquisites. Our executive
compensation program includes other benefits and perquisites as
more fully shown in the All Other Compensation
table. These benefits and perquisites are reviewed annually by
the Compensation Committee with respect to amounts and
appropriateness. For 2010, the benefits and perquisites to named
executive officers fall primarily into the following general
categories (a) matching contributions by us to 401(k) and
deferred compensation accounts, (b) retirement
contributions to deferred compensation accounts, and
(c) value attributable to life insurance we afford our
named executive officers beyond that which is offered to our
employee population generally.
Matching Contributions. For all of our employees,
including our named executive officers, we match a portion of
contributions made by them into our 401(k) Plan. This match
equals 100% of the first three percent of pay contributed and
50% of the next two percent of pay contributed by an employee.
In addition, because our named executive officers are limited by
federal law as to the amount they are permitted to contribute to
our 401(k), which in 2010 was generally limited to $16,500 per
year or $22,000 for persons 50 years old or older, we have
established a Deferred Compensation Plan that permits them to
defer additional amounts of their compensation to better provide
for their retirement. Under the Deferred Compensation Plan, some
participants are also eligible for matching contributions. The
matching contribution under the Deferred Compensation Plan is
equal to the lesser of two percent of the participants
plan compensation over established 401(k) limits or 50% of the
amount the participant has deferred.
Retirement Contributions. During 2005, we began
making a retirement contribution to our senior executives
deferred compensation accounts, including the accounts of our
named executive officers. This contribution is reviewed
annually, is discretionary on the part of the Compensation
Committee, and may be deferred or discontinued at any time. The
contribution amount is a fixed dollar amount and is dependent on
the participants title and position in the organization.
In determining the level of retirement contributions for
participants, we began by conducting an actuarial analysis that
established a benchmark against which any plan that was
ultimately adopted could be compared. Following the
establishment of this actuarial benchmark, we decided upon a
reduced fixed dollar amount that has remained constant for
participants over time. Retirement contribution amounts vest
unless otherwise specified in one of four ways. First, the
amounts vest upon an officer satisfying the age, service and, in
certain instances, notice requirements necessary to qualify for
retirement. Second, in the event of death or disability, the
retirement contributions vest immediately. Third, if an
officers employment is terminated without
cause, the retirement contributions vest immediately but
are not available to the officer until the fifth anniversary of
the termination date. Fourth, if we complete a transaction that
is deemed a change in control, all retirement contributions vest
immediately and may be paid out depending upon the original
election of the participant. Per their employment agreements
effective May 2009, Messrs. OConnor and Holmes were
credited $2,250,000 and $1,000,000, respectively, in their
deferred compensation account in January 2010. These amounts
were immediately vested on the grant date and will be paid in
accordance with the terms of the plan. Mr. Rissman received
a $65,000 contribution to his deferred compensation account in
each of February 2010 and February 2011. Mr. Rissmans
contribution will vest under the terms of the Executive Deferred
Compensation Plan, as described above. Under his employment
agreement, Mr. Slager is entitled to a similar benefit.
This benefit, which was preserved in his new employment
agreement from his prior agreement with Allied, requires us to
pay Mr. Slager a specified amount after termination of his
employment for any reason other than his actions or omissions
that constitute dishonesty. This payment per his agreement is an
amount equal to $2,287,972, increased at an annual rate of 6%,
compounded annually from the effective time of the merger until
the date of termination. Mr. Walbridge received a $65,000
contribution to his deferred compensation account in each of
February 2009, February 2010 and February 2011.
Mr. Walbridges contribution will vest under the terms
of the Executive Deferred Compensation Plan, as described above.
32
Relocation. We provided Messrs. OConnor
and Holmes certain relocation benefits in 2009, reflecting our
belief that it was in our best interests to maintain the
leadership of Messrs. OConnor and Holmes by
encouraging their moves to our new corporate headquarters in
Arizona.
Supplemental Life Insurance. We provide life
insurance equal to one times salary for all of our full-time,
non-probationary employees. Under their employment agreements,
however, we provide life insurance equal to two times salary for
Mr. Holmes and we provided life insurance equal to two
times salary for Mr. OConnor until his retirement.
Historically, proceeds under this life insurance policy were
used to mitigate any payment we made to the estate of our named
executive officers under their respective employment agreements.
Under the terms of his amended and restated employment agreement
effective May 2009, the proceeds under Mr. Holmes
life insurance policy are no longer used to mitigate any
payments under the terms of his agreement. Under the terms of
his amended and restated employment agreement effective May
2009, and until the date of his retirement, the proceeds under
Mr. OConnors life insurance policy were no
longer used to mitigate any payments under the terms of his
agreement. The proceeds would be additional payments made to
their estate or other designated beneficiary.
Airplane Use. Our Chief Executive Officer is
permitted to use our airplane for personal travel.
Mr. OConnor was permitted to use our airplane for
personal travel prior to his retirement on January 1, 2011,
and Mr. Slager has been permitted to use the airplane for
personal travel since January 1, 2011. The amount reflected
in the All Other Compensation table as Aircraft
Usage represents the incremental cost of providing our
aircraft to Mr. OConnor for personal travel. At each
quarterly meeting of our Compensation Committee, our Chief
Executive Officers personal use of our airplane for the
immediately preceding quarter is reviewed for reasonableness.
Dividends. Our executives have received grants of
restricted stock and restricted stock units. Following the date
that the restricted stock or restricted stock units are granted
to them, they receive any dividends we declare on our common
stock. For restricted stock units, the dividends are in the form
of additional restricted stock units with a value (based on the
closing price of Republic stock on the dividend payment date)
equal to the value of dividends they would have received on the
shares of stock underlying all restricted stock units held by
them on the dividend record date. Because we grant restricted
stock and restricted stock units to align these
individuals interests with those of our stockholders,
which includes the economic rewards and risks attendant with
share ownership, we believe that permitting the officers to
receive dividends on awards not yet vested is appropriate.
How Each
Compensation Element Fits into the Overall Compensation
Objectives and Affects Decisions Regarding Other
Elements
In establishing compensation packages for our named executive
officers, we consider numerous factors, including the particular
executives experience, expertise and performance, our
overall performance, and compensation packages available in the
marketplace for similar positions. As noted above, greater
emphasis is placed on forms of incentive compensation than on
salary.
When considering the marketplace, we place particular emphasis
upon compensation packages available at a targeted universe of
peer group companies. The Compensation Committee has
consistently worked to establish a meaningful set of peer group
companies. We use this set of peer group companies as a
reference only and do not target a specific percentile
positioning for compensation amounts.
As noted above, the Compensation Committee selects and works
with independent compensation consultants to evaluate our
executive compensation program in light of the marketplace to
make sure the program is competitive. In consultation with Pearl
Meyer, the Compensation Committee revised our peer group in the
fall of 2008 as part of the post-merger compensation planning to
reflect the new and significantly larger dimensions of our
company, and again in July 2009 taking into consideration
comparable revenue size, market capitalization and industry or
business complexity. The Compensation Committee, in consultation
with Pearl Meyer, evaluated the peer group in November 2010 and
made no changes. Our peer group since July 2009 consists of the
following companies:
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Con-Way, Inc.
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CSX Corporation
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33
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Ecolab Inc.
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FedEx Corporation
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J.B. Hunt Transport Services, Inc.
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Norfolk Southern Corporation
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Old Dominion Freight Line, Inc.
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Ryder System, Inc.
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Sysco Corporation
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Waste Connections, Inc.
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Waste Management, Inc.
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W.W. Grainger, Inc.
|
The Compensation Committee considered the compensation programs
of these peer group companies as context in establishing the
structure and levels of compensation for our named executive
officers for 2011.
Executive
Separation Policy
In February 2010, the Compensation Committee adopted the
Republic Services, Inc. Executive Separation Policy to ensure
that Republic is well-positioned to attract and retain the most
qualified and capable professionals to serve in key executive
positions to maximize the value of Republic for the benefit of
our stockholders. The Compensation Committee also established
the policy to enable the Compensation Committee to cover
executives under the policy who may be hired or promoted in the
future rather than entering into individualized employment
agreements with those executives. The policy describes the
separation benefits that we will provide the executives under
certain circumstances if their employment ends. The policy will
be in effect for any Chief Executive Officer, President, Chief
Operating Officer, Chief Financial Officer, General Counsel,
Executive Vice President, Senior Vice President, Vice President
or Area President (collectively, the Covered
Executives) who does not have an employment agreement with
us. Currently, Mr. Rissman is the only named executive
officer who does not have an employment agreement and is thus
covered under the policy.
Under the policy, Covered Executives (other than those who have
employment agreements) will receive severance benefits if we
terminate their employment without cause (as defined in the
policy). The policy also provides for enhanced severance
benefits for a termination without cause or a resignation for
good reason (as defined in the policy) within one year following
a change in control (as defined in the policy). Severance
benefits under the policy are payable only if the employee signs
the appropriate form of our Non-Competition, Non-Solicitation,
Confidentiality and Arbitration Agreement and signs a separation
agreement containing a waiver and release of legal claims. The
Compensation Committee may modify or terminate the policy prior
to a change in control for all Covered Executives who have not
had a termination of employment prior to the modification or
termination as long as the modification applies to all Covered
Executives in the same category.
Employment
Agreements
We maintain employment agreements with some of our senior
executives to clarify their employment rights and
responsibilities and to impose certain post-employment
limitations on their rights to compete with us or to solicit our
customers or employees. For information regarding these
agreements, see Executive Compensation
Employment Agreements and Post-Employment Compensation.
Deductibility of
Executive Compensation
Our compensation programs are structured to support organization
goals and priorities and stockholder interests.
Section 162(m) of the Internal Revenue Code currently
limits the deductibility for federal income tax purposes of
compensation in excess of $1.0 million paid to each of any
publicly held corporations chief executive officer and
three other most highly compensated executive officers
(excluding the Chief Financial Officer). We may deduct
34
certain types of compensation paid to any of these individuals
only to the extent that such compensation during any year does
not exceed $1.0 million. Qualifying performance-based
compensation is not subject to the deduction limits if certain
requirements are met. We do not have a policy that requires all
of our compensation to be deductible for purposes of
Section 162(m). We consider accounting treatment when
making compensation determinations, but it is not fully
determinative.
The options we grant to our executive officers are intended to
qualify as performance-based compensation that is not subject to
deduction limits. The restricted stock and restricted stock
units we grant to our executive officers do not so qualify
because they vest over time rather than based on performance.
Payments under the Executive Incentive Plan approved by
stockholders at the May 2009 Annual Meeting, including annual,
long-term and synergy payments, are intended to qualify as
performance-based compensation that complies with
Section 162(m). However, due to his promotion more than
90 days after the commencement of the relevant performance
periods, some or all of the amount paid to Mr. Rissman
under the synergy award or for the 2009 to 2011 long-term
incentive award may not be deductible under Section 162(m).
Compensation
Committee Interlocks and Insider Participation
Messrs. Flynn, Foley, Larson, Sorensen, and Wickham served
as members of the Compensation Committee during 2010. No member
of the Compensation Committee was an officer or employee of
Republic during the prior year or was formerly an officer of
Republic. During the year ended December 31, 2010, none of
our executive officers served on the compensation committee or
board of any other entity, any of whose executive officers
served either on our Board or on our Compensation Committee.
Compensation
Committee Report
The following statement made by the Compensation Committee shall
not be deemed incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act and shall not
otherwise be deemed filed under either of these acts.
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K.
Based on such review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and
Analysis be included in this proxy statement.
Submitted by the Compensation Committee:
William J. Flynn, Chairperson
David I. Foley
Michael Larson
Allan C. Sorensen
Michael W. Wickham
35
Compensation
Program as It Relates to Risk Management
We do not believe our compensation program for either our named
executive officers or our other employees encourages excessive
or inappropriate risk-taking or creates risks that would be
reasonably likely to have a material adverse effect on us. We
believe our compensation program effectively aligns our
corporate and field management teams with our overall goals by
motivating them to increase stockholder value on both an annual
and a longer-term basis, primarily by improving our earnings and
return on invested capital and generating increasing levels of
free cash flow. We achieve this by using simple and measurable
metrics to determine incentive pay.
Our annual incentives for executives and corporate and region
managers are based on achieving free cash flow and earnings per
share goals established by the Compensation Committee. Our
long-term incentive plan (LTIP) compensation for
executives and senior managers is based on achieving ROIC and
cumulative CFVC goals established by the Compensation Committee.
We also provide executives and senior managers equity awards as
approved by the Compensation Committee to reinforce each
managers commitment to stockholder return.
Area Presidents and their key managers participate in the LTIP
and equity incentive plan. Their short-term incentive
compensation is tied to corporate financial results, plus the
financial and operating metric results in the area they manage.
Their primary financial performance measure is area incentive
operating income. Key area operating metrics include safety,
pricing and net sales growth.
General Managers in our field organizations receive stock
options as their long-term incentive to align them with our
stockholders. General Managers and their teams also receive
salary and short-term incentive compensation tied to achieving
incentive operating income and operating metrics defined during
our budget process. Operating metrics could include any
combination of price increases, productivity improvements,
safety, net sales growth, environmental compliance and capital
budget management, depending on the current year priorities as
set by their senior managers.
We compensate our field sales organization with salary and sales
commissions tied to selling or retaining profitable business.
All of our cash incentive plans contain maximum payout limits to
ensure that windfall gains in business outcomes do not lead to
exaggerated compensation results or to inappropriate risk-taking.
In addition, we maintain stock ownership guidelines for
executive officers, along with anti-hedging policies, both of
which encourage long-term performance rather than short-term
windfalls.
36
Summary
Compensation Table
The following table sets forth compensation information
regarding (a) our Chief Executive Officer in 2010,
(b) our Chief Financial Officer in 2010, and (c) our
other executive officers whose reportable compensation for 2010
was in excess of $100,000. We refer collectively to these five
individuals as our named executive officers. Positions listed
are as of December 31, 2010.
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|
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Non-Equity
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Stock
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Option
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|
Incentive Plan
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All Other
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|
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|
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Salary
|
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Bonus
|
|
Awards
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|
Awards
|
|
Compensation
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Compensation
|
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Total
|
Name and Principal Position
|
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Year
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($)
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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)(5)
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($)
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James E. OConnor
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2010
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1,100,000
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2,500,007
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1,250,000
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1,727,440
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2,424,312
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9,001,759
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(Chairman and Chief Executive Officer)
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2009
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1,121,154
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2,000,006
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|
|
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2,383,900
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171,560
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5,676,620
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|
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|
2008
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|
|
|
925,634
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|
|
|
|
|
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|
5,100,458
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|
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|
962,442
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|
3,108,000
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|
|
|
525,103
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|
|
|
10,621,637
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|
|
|
|
|
|
|
|
|
|
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Donald W. Slager(6)
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2010
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|
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875,000
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|
|
|
|
|
|
|
3,633,338
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|
|
|
649,998
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|
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1,268,400
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|
|
|
163,266
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|
|
|
6,590,002
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|
(President and Chief Operating Officer)
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|
|
2009
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|
|
|
858,173
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|
|
|
|
|
|
|
1,000,006
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|
|
|
|
|
|
|
1,750,400
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|
|
|
152,213
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|
|
|
3,760,792
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|
|
|
|
2008
|
|
|
|
52,500
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|
|
|
|
|
|
|
1,313,273
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|
|
|
500,459
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|
|
|
|
|
|
|
|
|
|
|
1,866,232
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|
|
|
|
|
|
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|
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Tod C. Holmes
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2010
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|
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|
575,000
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|
|
|
|
|
|
|
1,250,018
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|
|
|
500,000
|
|
|
|
694,600
|
|
|
|
1,045,152
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|
|
|
4,064,770
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|
(Executive Vice President and Chief
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|
|
2009
|
|
|
|
575,000
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|
|
|
|
|
|
|
500,007
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|
|
|
|
|
|
|
958,600
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|
|
|
63,999
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|
|
|
2,097,606
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|
Financial Officer)
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|
|
2008
|
|
|
|
441,369
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|
|
|
|
|
|
|
2,070,472
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|
|
|
384,993
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|
|
|
1,660,000
|
|
|
|
191,237
|
|
|
|
4,748,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Michael P. Rissman(7)
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2010
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|
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|
400,000
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|
|
|
|
|
|
|
500,007
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|
|
|
250,000
|
|
|
|
386,560
|
|
|
|
76,373
|
|
|
|
1,612,940
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|
(Executive Vice President, General
|
|
|
2009
|
|
|
|
319,353
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
367,900
|
|
|
|
75,164
|
|
|
|
812,417
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|
Counsel and Corporate Secretary)
|
|
|
2008
|
|
|
|
16,254
|
|
|
|
|
|
|
|
|
|
|
|
38,516
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|
|
|
|
|
|
|
127
|
|
|
|
54,897
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
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Kevin Walbridge
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|
2010
|
|
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|
408,462
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|
|
|
|
|
|
|
|
|
|
|
118,910
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|
|
|
404,680
|
|
|
|
94,813
|
|
|
|
1,026,865
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|
(Executive Vice President
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|
|
2009
|
|
|
|
407,692
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
533,500
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|
|
|
79,317
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|
|
|
1,020,509
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|
Operations)
|
|
|
2008
|
|
|
|
301,731
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|
|
|
|
|
|
|
|
|
|
|
243,008
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|
|
|
686,700
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|
|
|
101,894
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|
|
|
1,333,333
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|
|
|
(1)
|
Mr. Rissman served as Acting General Counsel and Corporate
Secretary from March 2009 until being promoted to Executive Vice
President, General Counsel and Corporate Secretary in August
2009. During his service as Acting General Counsel,
Mr. Rissman received a bonus to compensate him for the
additional responsibilities he assumed.
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(2)
|
Represents the grant date fair value of restricted stock with
respect to grants received in 2010, 2009 and 2008, calculated in
accordance with FASB ASC Topic 718. See Note 11 to our
Consolidated Financial Statements included in our
Form 10-K
for the year ended December 31, 2010, for a discussion of
the relevant assumptions used in calculating grant date fair
value pursuant to FASB ASC Topic 718. The amounts shown in the
table above reflect the grant date fair value and do not
correspond to the actual value that will be recognized by the
named executive officers.
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(3)
|
Represents the grant date fair value of stock options with
respect to grants granted during the year, as determined
pursuant to FASB ASC Topic 718. See Note 11 to our
Consolidated Financial Statements included in our
Form 10-K
for the year ended December 31, 2010, for a discussion of
the relevant assumptions used in calculating grant date fair
value pursuant to FASB ASC Topic 718.
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(4)
|
Reflects both annual and long-term incentives payable under the
Executive Incentive Plan. The amounts in this column for 2010
and 2009 were earned during 2010 and 2009 but were paid to the
named executive officers during the first quarter of the
following years. In 2008, the 2008 annual and long-term cash
incentive compensation (including for the 2006 to 2008, 2007 to
2009 and 2008 to 2010 performance periods) were paid out at
target due to the completion of the merger with Allied. All
amounts paid in 2008 under the Executive Incentive Plan as a
result of the merger are included in 2008.
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(5)
|
See the All Other Compensation table set forth below for an
itemized breakdown of All Other Compensation for
each named executive officer.
|
|
(6)
|
Mr. Slager became the President and Chief Operating Officer
of Republic on December 5, 2008 as a result of the merger
between Republic and Allied. Prior to that date he served as the
President and Chief Operating Officer of Allied. This table
reflects only compensation earned by him as an employee of
Republic. Effective as of January 1, 2011, Mr. Slager
became our Chief Executive Officer.
|
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(7)
|
Mr. Rissman became the Executive Vice President, General
Counsel and Corporate Secretary of Republic in August 2009. He
joined Republic on December 5, 2008 as a result of the
merger between Republic and Allied as Vice President and Deputy
General Counsel. Prior to that date he served as a Vice
President and Deputy General Counsel of Allied. This table
reflects only compensation earned by him as an employee of
Republic.
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37
All Other
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
Matching
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matching
|
|
Contribution
|
|
Contribution
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution
|
|
to Deferred
|
|
to Deferred
|
|
Supplemental
|
|
Aircraft
|
|
Other
|
|
|
|
Total All Other
|
|
|
|
|
to 401(k)
|
|
Compensation
|
|
Compensation
|
|
Life Insurance
|
|
Usage
|
|
Taxable
|
|
Relocation
|
|
Compensation
|
Name
|
|
Year
|
|
Plan($)(1)
|
|
Plan($)(2)
|
|
Plan ($)
|
|
Premiums ($)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
($)
|
|
James E. OConnor
|
|
|
2010
|
|
|
|
9,800
|
|
|
|
64,778
|
|
|
|
2,250,000
|
|
|
|
15,642
|
|
|
|
72,790
|
|
|
|
11,302
|
|
|
|
|
|
|
|
2,424,312
|
|
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
|
|
|
|
|
|
|
|
13,794
|
|
|
|
62,542
|
|
|
|
784
|
|
|
|
84,640
|
|
|
|
171,560
|
|
|
|
|
2008
|
|
|
|
9,200
|
|
|
|
116,823
|
|
|
|
336,000
|
|
|
|
7,998
|
|
|
|
55,082
|
|
|
|
|
|
|
|
|
|
|
|
525,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
2010
|
|
|
|
9,800
|
|
|
|
|
|
|
|
146,223
|
(5)
|
|
|
1,183
|
|
|
|
|
|
|
|
6,060
|
|
|
|
|
|
|
|
163,266
|
|
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
|
|
|
|
137,947
|
(5)
|
|
|
|
|
|
|
|
|
|
|
4,466
|
|
|
|
|
|
|
|
152,213
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
2010
|
|
|
|
9,800
|
|
|
|
25,772
|
|
|
|
1,000,000
|
|
|
|
9,292
|
|
|
|
|
|
|
|
288
|
|
|
|
|
|
|
|
1,045,152
|
|
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
6,600
|
|
|
|
|
|
|
|
8,405
|
|
|
|
|
|
|
|
82
|
|
|
|
39,112
|
|
|
|
63,999
|
|
|
|
|
2008
|
|
|
|
9,200
|
|
|
|
55,606
|
|
|
|
120,000
|
|
|
|
6,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
2010
|
|
|
|
9,800
|
|
|
|
|
|
|
|
65,000
|
|
|
|
953
|
|
|
|
|
|
|
|
620
|
|
|
|
|
|
|
|
76,373
|
|
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
364
|
|
|
|
|
|
|
|
75,164
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
2010
|
|
|
|
9,800
|
|
|
|
13,939
|
|
|
|
65,000
|
|
|
|
3,342
|
|
|
|
|
|
|
|
2,732
|
|
|
|
|
|
|
|
94,813
|
|
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
|
|
|
|
65,000
|
|
|
|
1,032
|
|
|
|
|
|
|
|
3,485
|
|
|
|
|
|
|
|
79,317
|
|
|
|
|
2008
|
|
|
|
9,200
|
|
|
|
22,210
|
|
|
|
65,000
|
|
|
|
449
|
|
|
|
|
|
|
|
5,035
|
|
|
|
|
|
|
|
101,894
|
|
|
|
(1)
|
Reflects matching contributions we made attributable to
participant contributions in our 401(k) Plan.
|
|
(2)
|
Reflects matching contributions by us made in 2011, 2010, and
2009 attributable to participant contributions to the Deferred
Compensation Plan in 2010, 2009, and 2008, respectively.
|
|
(3)
|
These amounts reflect the incremental cost of providing
company-owned aircraft for personal travel. This valuation is
calculated in accordance with SEC guidance and differs from the
valuation under applicable tax guidelines. For tax purposes,
aircraft usage for Messrs. OConnor, Slager, and
Holmes equals $28,435, $1,338 and $6,826 for 2010.
Messrs. Slager and Holmes never used the company-owned
aircraft for their personal travel, but they did have family
members accompany them on flights taken for business purposes.
While this generates taxable income, no additional operating
cost was incurred in these situations and the amounts included
in the table are therefore zero.
|
|
(4)
|
Amounts in this column include taxable income for auto
allowance, Chairmans Club travel, financial services,
tickets to sporting events and health club dues.
|
|
(5)
|
Under his employment agreement, Mr. Slager is entitled to a
supplemental benefit, payable to him within six months following
termination of his employment for any reason other than his
actions or omissions that constitute dishonesty. This payment
per his agreement is an amount equal to $2,287,972, increased at
an annual rate of 6%, compounded annually from the effective
time of our merger with Allied until the date of termination.
The amount set forth in the table above reflects the annual
increases on this payment.
|
38
Grants of
Plan-Based Awards in 2010
The following table sets forth information concerning each grant
of an award we made to a named executive officer during the year
ended December 31, 2010 under our Executive Incentive Plan
and 2007 Stock Incentive Plan. Information regarding our awards
under these plans is included in our Compensation Discussion and
Analysis under the headings Annual Incentive Compensation,
Long-Term Cash Incentive Compensation, Synergy Incentive
Compensation and Equity Compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Shares of
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
|
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
|
|
Stock or
|
|
Options
|
|
Awards
|
|
Awards
|
|
|
Name
|
|
Type of Grant(1)
|
|
Date
|
|
($)(2)
|
|
($)
|
|
Maximum ($)(3)
|
|
Units (#)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
|
|
James E. OConnor
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,169
|
(4)
|
|
|
|
|
|
|
|
|
|
|
2,500,007
|
|
|
|
|
|
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,420
|
(5)
|
|
|
28.68
|
|
|
|
1,250,000
|
|
|
|
|
|
|
|
Long-Term Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
312,500
|
|
|
|
1,250,000
|
|
|
|
1,875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
357,500
|
|
|
|
1,430,000
|
|
|
|
2,860,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,950
|
(4)
|
|
|
|
|
|
|
|
|
|
|
1,633,326
|
|
|
|
|
|
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,658
|
(5)
|
|
|
28.68
|
|
|
|
649,998
|
|
|
|
|
|
|
|
Long-Term Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
162,500
|
|
|
|
650,000
|
|
|
|
975,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
262,500
|
|
|
|
1,050,000
|
|
|
|
2,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation
|
|
|
6/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,579
|
(6)
|
|
|
|
|
|
|
|
|
|
|
2,000,012
|
|
|
|
|
|
Tod C. Holmes
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,585
|
(4)
|
|
|
|
|
|
|
|
|
|
|
1,250,018
|
|
|
|
|
|
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,968
|
(5)
|
|
|
28.68
|
|
|
|
500,000
|
|
|
|
|
|
|
|
Long-Term Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
125,000
|
|
|
|
500,000
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
143,750
|
|
|
|
575,000
|
|
|
|
1,150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,434
|
(4)
|
|
|
|
|
|
|
|
|
|
|
500,007
|
|
|
|
|
|
|
|
Equity Compensation
|
|
|
1/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,484
|
(5)
|
|
|
28.68
|
|
|
|
250,000
|
|
|
|
|
|
|
|
Long-Term Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
62,500
|
|
|
|
250,000
|
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
80,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
Equity Compensation
|
|
|
2/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000
|
(5)
|
|
|
27.02
|
|
|
|
118,910
|
|
|
|
|
|
|
|
Long-Term Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
55,000
|
|
|
|
220,000
|
|
|
|
330,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive Compensation
|
|
|
2/10/2010
|
|
|
|
83,750
|
|
|
|
335,000
|
|
|
|
670,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All equity awards granted in 2010 were granted under the 2007
Stock Incentive Plan. Annual and long-term-cash incentive
compensation is granted under our Executive Incentive Plan. See
the Executive Compensation Compensation
Discussion and Analysis section of this proxy statement
for further details regarding this annual and long-term, cash
incentive compensation.
|
|
(2)
|
This is the threshold at which payouts under the respective
incentive plans begin. If no threshold goals are achieved, no
payouts will be made.
|
|
(3)
|
For long-term incentives, the maximum payout equals 150% of
target and relates to the 2010 to 2012 performance period. For
annual incentives, the maximum payout equals 200% of target.
|
|
(4)
|
Consists of shares of restricted stock units which are scheduled
to vest in equal annual installments over four years.
|
|
(5)
|
Consists of stock options which are scheduled to vest in equal
annual installments over four years.
|
|
(6)
|
Consists of shares of restricted stock which are scheduled to
vest in equal annual installments over four years.
|
39
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information concerning
unexercised options and unvested restricted stock outstanding
for each of our named executive officers at December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
of Shares
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
or Units
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
Stock
|
|
of Stock
|
|
|
Options
|
|
Options
|
|
Option
|
|
Option
|
|
That Have
|
|
That Have
|
|
|
Exercisable
|
|
Unexercisable
|
|
Exercise
|
|
Expiration
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
(#)
|
|
(#)
|
|
Price ($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
James E. OConnor
|
|
|
118,820
|
|
|
|
118,820
|
(2)
|
|
|
23.74
|
|
|
|
1/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,420
|
(3)
|
|
|
28.68
|
|
|
|
1/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,192
|
(2)
|
|
|
1,588,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,420
|
(3)
|
|
|
2,670,081
|
|
Donald W. Slager
|
|
|
59,850
|
|
|
|
|
|
|
|
19.42
|
|
|
|
12/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
74,970
|
|
|
|
|
|
|
|
28.69
|
|
|
|
12/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
112,500
|
|
|
|
|
|
|
|
25.51
|
|
|
|
12/11/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
61,785
|
|
|
|
61,785
|
(2)
|
|
|
23.74
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,658
|
(3)
|
|
|
28.68
|
|
|
|
1/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,660
|
(2)
|
|
|
825,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,670
|
(4)
|
|
|
1,154,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,421
|
(3)
|
|
|
1,744,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,579
|
(5)
|
|
|
1,928,329
|
|
Tod C. Holmes
|
|
|
41,530
|
|
|
|
47,530
|
(2)
|
|
|
23.74
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,968
|
(3)
|
|
|
28.68
|
|
|
|
1/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,277
|
(2)
|
|
|
635,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,711
|
(3)
|
|
|
1,335,070
|
|
Michael P. Rissman
|
|
|
9,000
|
|
|
|
|
|
|
|
28.00
|
|
|
|
7/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
6,300
|
|
|
|
|
|
|
|
25.51
|
|
|
|
12/11/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
4,755
|
|
|
|
4,755
|
(2)
|
|
|
23.74
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,484
|
(3)
|
|
|
28.68
|
|
|
|
1/4/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,885
|
(3)
|
|
|
534,046
|
|
Kevin Walbridge
|
|
|
18,750
|
|
|
|
|
|
|
|
26.01
|
|
|
|
2/8/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
29.31
|
|
|
|
2/5/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
31.07
|
|
|
|
2/7/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
17,825
|
|
|
|
17,825
|
(2)
|
|
|
23.74
|
|
|
|
12/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000
|
(6)
|
|
|
27.02
|
|
|
|
2/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Equity valued at a December 31, 2010 closing price of
$29.86.
|
|
(2)
|
Options and restricted stock granted to the executives on
December 9, 2008 vest ratably (25% per year) over four
years with the first vesting on the first anniversary of the
grant date. Due to his retirement, Mr. OConnors
options and restricted stock vested on 1/1/2011.
|
|
(3)
|
Options and restricted stock units granted to the executives on
January 4, 2010 vest ratably (25% per year) over four years
with the first vesting on the first anniversary of the grant
date. Due to his retirement, Mr. OConnors
options and restricted stock units vested on 1/1/2011.
|
|
(4)
|
Restricted stock granted to Mr. Slager on January 31,
2009 vests entirely on the third anniversary of the date of
grant.
|
|
(5)
|
Restricted stock granted to Mr. Slager on June 25,
2010 vests ratably (25% per year) over four years with the first
vesting on the first anniversary of the grant date.
|
|
(6)
|
Options granted to Mr. Walbridge on February 16, 2010
vest ratably (25% per year) over four years with the first
vesting on the first anniversary of the grant date.
|
40
Option Exercises
and Stock Vested
The following table sets forth information concerning each
exercise of stock options and each vesting of restricted stock
during the year ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
Value Realized
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on
|
|
on Vesting
|
Name
|
|
Exercise (#)
|
|
Exercise ($)
|
|
Vesting (#)(1)
|
|
($)(2)
|
|
James E. OConnor
|
|
|
|
|
|
|
|
|
|
|
115,131
|
|
|
|
3,406,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
101,250
|
|
|
|
794,055
|
|
|
|
13,830
|
|
|
|
409,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
66,000
|
|
|
|
1,197,978
|
|
|
|
32,772
|
|
|
|
969,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
25,000
|
|
|
|
292,855
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts represent the total number of shares of restricted stock
vested for each of the executives during 2010. Actual shares
retained may have been lower due to the withholding of some
shares to pay taxes.
|
|
(2)
|
Amounts shown represent the fair market value on the vesting
dates of restricted stock granted to the executives. Amounts are
calculated as the shares vesting multiplied by the closing price
of our stock on each vesting date.
|
Nonqualified
Deferred Compensation
The following table sets forth information concerning the
participation of our named executive officers in our
nonqualified deferred compensation plan for the year ended
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
|
|
|
|
|
|
|
Contribution in
|
|
Contributions in
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate Balance
|
|
|
Last Fiscal
|
|
Last Fiscal
|
|
Earnings in Last
|
|
Withdrawals/
|
|
at Last Fiscal Year
|
Name
|
|
Year ($)(1)
|
|
Year ($)(2)
|
|
Fiscal Year ($)
|
|
Distributions ($)
|
|
End ($)
|
|
James E. OConnor
|
|
|
770,170
|
|
|
|
2,250,000
|
|
|
|
416,284
|
|
|
|
|
|
|
|
3,446,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager(3)
|
|
|
|
|
|
|
146,223
|
|
|
|
|
|
|
|
|
|
|
|
2,583,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
1,863,458
|
|
|
|
1,006,600
|
|
|
|
406,232
|
|
|
|
|
|
|
|
3,416,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
|
|
|
|
65,000
|
|
|
|
4,968
|
|
|
|
|
|
|
|
135,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
282,588
|
|
|
|
65,000
|
|
|
|
318,631
|
|
|
|
|
|
|
|
2,531,220
|
|
|
|
(1)
|
Executive contributions in the last fiscal year include an
amount included in base salary and non-equity incentive
compensation in the Summary Compensation Table for
Messrs. OConnor and Walbridge. For Mr. Holmes,
they include an amount included in base salary, non-equity
incentive compensation and restricted stock awards in the
Summary Compensation Table.
|
|
(2)
|
Amounts reflected in this column include retirement
contributions made by Republic to Messrs. OConnor,
Holmes, Rissman and Walbridge in the amounts of $2,250,000,
$1,000,000, $65,000 and $65,000 respectively. These amounts vest
in accordance with the terms of the plan as described above. All
other amounts in this column relate to matching contributions
actually made by Republic during 2010 that are attributable to
2009 executive contributions.
|
|
(3)
|
Under his employment agreement, Mr. Slager is entitled to a
supplemental benefit, payable to him within six months following
termination of his employment for any reason other than his
actions or omissions that constitute dishonesty. This payment
per his agreement is an amount equal to $2,287,972, increased at
an annual rate of 6%.
|
Employment
Agreements and Post-Employment Compensation
We have employment agreements with Messrs. OConnor,
Slager, Holmes and Walbridge. The agreements with these
executives contain provisions regarding consideration payable to
them upon termination of employment, as described below.
Mr. OConnor retired as our Chief Executive Officer on
January 1, 2011. Consideration paid or payable to
Mr. OConnor under his employment agreement, as
amended by his retirement agreement, is outlined below.
Each of the employment agreements with
Messrs. OConnor, Slager, Holmes and Walbridge
contains post-termination restrictive covenants, including a
covenant not to compete and non-solicitation covenants. The
post-termination restrictive covenants last three years for
Mr. OConnor and two years for Messrs. Holmes and
Walbridge, except that Mr. Holmes restrictions last
three years if his employment is terminated by us without
41
cause or he has a termination for good reason within two years
after a change in control. Mr. Slagers restrictions
last two years, except that if his employment is terminated by
us without cause or he has a termination for good reason within
six months before or two years after a change in control his
restrictions last three years. Each of the agreements with these
named executive officers provides for a minimum base salary and
that the executives are eligible to participate in our annual
and long-term incentive plans. The employment agreements also
provide for accelerated vesting of equity-based awards in
certain circumstances.
Mr. Rissman does not have an employment agreement with us.
Instead, he participates in our Executive Separation Policy, and
certain other of our benefit plans, as described below.
Severance benefits under the Executive Separation Policy are
payable only if Mr. Rissman: (1) signs our
Non-Solicitation, Confidentiality, and Arbitration Agreement;
(2) executes a separation agreement in such form as
provided by Republic containing a full release of legal claims;
(3) refrains from disparaging Republic post employment; and
(4) provides reasonable cooperation and assistance
concerning legal or business matters as requested by Republic
post employment. The Executive Separation Policy also provides
for accelerated vesting of equity-based awards in certain
circumstances.
Mr. OConnor. Mr. OConnors
employment agreement was amended and restated effective
May 14, 2009. The term of Mr. OConnors
agreement was for rolling three-year periods, such that there
were always three years remaining in the employment period.
Mr. OConnors base salary for 2010 under the
agreement was $1,100,000 and his target annual incentive
compensation was 130% of salary, with a range of 0% to 260% of
salary. In addition, pursuant to Mr. OConnors
agreement, we credited $2,250,000 to his deferred compensation
account on January 1, 2010 and Mr. OConnor
received shares of restricted stock with a value of $2,000,000
upon the effective date of his agreement. The deferred
compensation vested immediately and the restricted stock vests
on the first anniversary of the grant date.
On June 25, 2010, we entered into a retirement agreement
with Mr. OConnor setting forth his and the
Companys rights and obligations upon his retirement as our
Chief Executive Officer on January 1, 2011. The retirement
agreement provides that Mr. OConnors amended
and restated employment agreement remained in effect until his
retirement on January 1, 2011, and waived the requirement
of the employment agreement that Mr. OConnor provide
one years notice prior to his retirement. Pursuant to the
retirement agreement, we will provide Mr. OConnor
with the compensation and benefits that he is entitled to under
his employment agreement for a termination of employment on
account of retirement, extend his continued health benefits from
three years until the earliest of his 65th birthday, his death,
or his eligibility for comparable health coverage through
another employer, and pay him an additional $1,800,000 in
recognition, among other things, of his long and valued service
to the Company. The retirement agreement provides that
Mr. OConnor will provide the Company with a general
release of claims.
Consideration paid or payable to Mr. OConnor by us
upon termination of employment under the amended and restated
employment agreement and, with respect to termination upon his
retirement on January 1, 2011, under the retirement
agreement, is as follows. Please note that the terms described
below under the headings other than retirement are no longer
applicable given Mr. OConnors retirement, but
are described pursuant to SEC regulations.
|
|
|
|
|
Death or Disability
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
lump sum within 60 days following death or disability
|
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans for up to three
years
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
For annual and long-term cash incentive awards not determined to
be earned, payment of amounts he would have received had he
remained employed by us during such periods, as if all
performance goals had been met at 100% of target, payable in
lump sum not later than six months following death or disability
|
42
|
|
|
|
|
|
|
|
|
For annual and long-term cash incentive awards determined to be
earned, payout would be the actual earned amount of the award
payable within
21/2
months after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $5,200,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Lump sum payment of $4,800,000, payable not later than six
months after termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
Without Cause by the Company or for Good Reason by the
Executive
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
lump sum within 60 days following termination
|
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans for up to three
years
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
Prorated annual incentive award at an amount determined by the
Compensation Committee based on actual results, payable not
later than 60 days after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at the maximum level for performance periods
beginning on or before January 1, 2009 and at an amount
determined by the Compensation Committee based on actual results
for performance periods beginning after January 1, 2009, payable
not later than 60 days after the end of the year in which
the award period ends
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $5,200,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Lump sum severance payment of $4,800,000, payable not later than
six months after termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
Without Cause by the Company or for Good Reason by the
Executive within Two Years of Change in Control (other than the
merger with Allied)
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
lump sum within 60 days following termination
Continued coverage under certain welfare plans for up to three
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
43
|
|
|
|
|
|
|
|
|
Prorated annual incentive award at an amount determined by the
Compensation Committee based on actual results, payable not
later than 60 days after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at the maximum level for performance periods
beginning on or before January 1, 2009 and at an amount
determined by the Compensation Committee based on actual results
for performance periods beginning after January 1, 2009, payable
not later than 60 days after the end of the year in which
the award period ends
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $5,200,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount at the maximum
level, to be paid 10 days after the change in control
|
|
|
|
|
|
|
|
|
|
Lump sum severance payment of $4,800,000, payable not later than
six months after termination
|
|
|
|
|
|
|
|
|
|
Three times target annual and long-term cash incentive awards,
for the year in which the termination occurs, payable in lump
sum not later than six months following termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
Retirement
|
|
|
|
Base salary earned but not paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
Continued health benefits for him and his family until earlier
of (a) 65th birthday, (b) death, or (c) coverage under a
comparable plan by a subsequent employer
|
|
|
|
|
|
|
|
|
|
Lump sum payment of $4,800,000, payable no sooner than July 1,
2011 and no later than December 31, 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $5,200,000, payable no sooner than July 1, 2011 and
no later than December 31, 2011
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Payment of the 2010 annual bonus the Compensation Committee
determines is payable based upon actual 2010 results, payable
not later than 60 days after the end of 2010
|
|
|
|
|
|
|
|
|
|
Payment of the target long-term incentive for 2009-2011, payable
no sooner than July 1, 2011 and no later than December 31, 2011
|
|
|
|
|
|
|
|
|
|
Payment of one-third of the long-term incentive for 2010-2012
that the Compensation Committee determines would be payable had
he remained employed through the end of 2012 based upon actual
results within 60 days after the end of 2012
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
44
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
|
|
|
|
Payment of a lump sum cash retirement payment of $1,800,000 as a
reward for long service to Republic, payable no sooner than July
1, 2011 and no later than December 31, 2011
|
|
|
|
|
|
For Cause by the Company or Without Good Reason by the
Executive
|
|
|
|
Base salary earned but not yet paid and unused vacation time
For termination (other than for cause) on or after January 1,
2011, payment of the actual Synergy Incentive Plan amount he
would have received had he remained employed by us until the end
of 2011, payable to him within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
Mr. Slager. Mr. Slagers employment
agreement was amended and restated effective June 25, 2010
in conjunction with his promotion to Chief Executive Officer
effective January 1, 2011. The term of
Mr. Slagers agreement is for rolling two-year
periods, such that there are always two years remaining in the
employment period. Mr. Slagers base salary for 2010
and 2011 under the agreement was and is $875,000 and $1,000,000,
respectively. His target annual incentive compensation for 2010
was 120% of salary, with a range of 0% to 240% of salary, and
for 2011 is 125% of salary, with a range of 0% to 250% of
salary. Pursuant to the terms of his agreement, Mr. Slager
received shares of restricted stock with a value of $2,000,000
upon execution of the agreement in lieu of a discretionary
annual grant of restricted stock for 2011, which will vest 25%
on each anniversary thereafter, provided that Mr. Slager is
employed by us on such date or as provided in the agreement. In
addition, Mr. Slager is entitled to a supplemental
retirement benefit, which is preserved from his agreement with
Allied, within six months following termination of employment if
Mr. Slager has a termination of employment for any reason
other than due to his actions or omissions that constitute
dishonesty. This payment, which was carried over from his prior
agreement with Allied, is $2,287,972, increased at an annual
rate of 6%, compounded annually from the effective time of the
merger until the date of termination. Pursuant to the terms of
his prior January 2009 agreement, Mr. Slager received
shares of restricted stock (the Special Restricted Stock
Award) with a value of $1,000,000 upon execution of the
agreement, which will vest three years thereafter, provided that
Mr. Slager is employed by us on such date.
Consideration payable to Mr. Slager by us upon termination
of employment is as follows:
|
|
|
|
|
Death or Disability
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
a lump sum within 60 days following death or disability
|
|
|
|
|
|
|
|
|
|
Base salary for three years, payable in accordance with our
standard payroll practices, mitigated, in the case of disability
only, to the extent payments are made to him pursuant to any
disability insurance policies paid for by us
|
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans until he becomes
eligible for benefits from another employer or the government
|
|
|
|
|
|
|
|
|
|
Immediate vesting of (a) all unvested stock option, restricted
stock and restricted stock unit awards and (b) the Special
Restricted Stock Award
|
|
|
|
|
|
|
|
|
|
All annual incentive awards shall vest and be payable on a pro
rata basis at an amount determined by the Compensation Committee
based on actual results, payable not later than 60 days
after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at an amount determined by the Compensation
Committee based on actual results, payable not later than
60 days after the end of the year in which the award period
ends
|
45
|
|
|
|
|
|
|
|
|
Payment as of the date of death or disability of the balance of
amounts credited or eligible to be credited to his deferred
compensation account, payable not later than six months after
termination
|
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|
|
|
|
|
|
|
|
Continued director and officer liability insurance for ten years
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Payment of Special Supplemental Retirement Payment, payable not
later than six months following termination of his employment
|
|
|
|
|
|
Without Cause by the Company or for Good Reason by the
Executive
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
a lump sum within 60 days following termination
|
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|
|
|
|
|
|
|
|
Base salary for three years, payable in accordance with our
standard payroll practices
|
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans until he becomes
eligible for benefits from another employer or the government
|
|
|
|
|
|
|
|
|
|
Immediate vesting of (a) all unvested stock option, restricted
stock and restricted stock unit awards that will become vested
during the year of termination and (b) the Special Restricted
Stock Award
|
|
|
|
|
|
|
|
|
|
All annual incentive awards shall vest and be payable on a pro
rata basis at an amount determined by the Compensation Committee
based on actual results, payable not later than 60 days
after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at an amount determined by the Compensation
Committee based on actual results, payable not later than
60 days after the end of the year in which the award period
ends
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Payment as of the termination date of the balance of amounts
credited or eligible to be credited to his deferred compensation
account, payable not later than six months after termination,
except for any portion attributable to amounts credited by us
which is payable on the fifth anniversary of termination
|
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|
|
|
|
|
|
|
|
Continued director and officer liability insurance for ten years
|
|
|
|
|
|
|
|
|
|
Outplacement services for up to one year, up to $50,000
|
|
|
|
|
|
|
|
|
|
Payment of Special Supplemental Retirement Payment, payable not
later than six months following termination of his employment
|
|
|
|
|
|
Without Cause by the Company or for Good Reason by the
Executive within Six Months Before or Two Years After a Change
in Control
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
a lump sum within 60 days following termination
Three times (a) base salary, plus (b) target annual and
long-term awards, for the performance period ending in the year
prior to termination, payable in a lump sum not later than six
months following termination
|
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|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans until he becomes
eligible for benefits from another employer or the government
|
46
|
|
|
|
|
|
|
|
|
Immediate vesting of (a) all unvested stock option, restricted
stock and restricted stock unit awards that will become vested
during the year of termination and (b) the Special Restricted
Stock Award
|
|
|
|
|
|
|
|
|
|
All annual incentive awards shall vest and be payable on a pro
rata basis at an amount determined by the Compensation Committee
based on actual results, payable not later than 60 days
after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at an amount determined by the Compensation
Committee based on actual results, payable not later than
60 days after the end of the year in which the award period
ends
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the maximum level, to
be paid 10 days after the change in control
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, payable not later than six months
after termination, except for any portion attributable to
amounts credited by us which is payable on the fifth anniversary
of termination
|
|
|
|
|
|
|
|
|
|
Continued director and officer liability insurance for ten years
|
|
|
|
|
|
|
|
|
|
Outplacement services for up to one year, up to $50,000
|
|
|
|
|
|
|
|
|
|
Payment of Special Supplemental Retirement Payment, payable not
later than six months following termination of his employment
|
|
|
|
|
|
|
|
|
|
Subject to certain restrictions, gross-up payment for any excise
taxes
|
|
|
|
|
|
Retirement (upon satisfying the definition of
retirement age and notice provisions)
|
|
|
|
Base salary earned but not paid and unused vacation
For retirement on or after January 1, 2011, payment of the
Synergy Incentive Plan at the amount Mr. Slager would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
For all award periods under the annual and long-term cash
incentive plans, a prorated payment at an amount determined by
the Compensation Committee based on actual results, payable not
later than 60 days after the end of the year in which the
award period ends
|
|
|
|
|
|
|
|
|
|
Immediate vesting of (a) all unvested stock option, restricted
stock and restricted stock unit awards and (b) the Special
Restricted Stock Award
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, payable not later than six months
after termination
|
|
|
|
|
|
|
|
|
|
Payment of Special Supplemental Retirement Payment, payable to
him not later than six months following termination of his
employment
|
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans until he becomes
eligible for benefits from another employer or the government
|
|
|
|
|
|
For Cause by the Company or Without Good Reason by the
Executive
|
|
|
|
Base salary earned but not yet paid and unused vacation time
Payment of the Special Supplemental Retirement Payment, payable
not later than six months following termination of his
employment for any reason other than his actions or omissions
that constitute dishonesty
|
47
|
|
|
|
|
|
|
|
|
For termination (other than for cause) on or after January 1,
2011, payment of the actual Synergy Incentive Plan amount Mr.
Slager would have received had he remained employed by us until
the end of 2011, payable to him within 90 days after the
end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account ,
payable not later than six months after termination, except for
any portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
|
|
|
|
|
|
|
|
|
For termination other than for acts or omissions that constitute
dishonesty, continued coverage under certain welfare plans until
the executive becomes eligible for benefits from another
employer or the government
|
|
|
|
|
|
|
|
|
|
|
Mr. Holmes. Mr. Holmes employment
agreement was amended and restated effective May 14, 2009.
The term of Mr. Holmes current amended and restated
agreement is for rolling two-year periods, such that there are
always two years remaining in the employment period.
Mr. Holmes base salary for 2010 and 2011 under the
agreement is $575,000 and his target annual incentive
compensation is 100% of salary, with a range of 0% to 200% of
salary. In addition, pursuant to Mr. Holmes
agreement, we credited $1,000,000 to his deferred compensation
account on January 1, 2010 and Mr. Holmes received
shares of restricted stock with a value of $500,000 upon the
effective date of his agreement. The deferred compensation
vested immediately and the restricted stock vested on the first
anniversary of the grant date.
Consideration payable to Mr. Holmes by us upon termination
of employment is as follows:
|
|
|
|
|
Death or Disability
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
lump sum within 60 days following death or disability
|
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans for up to two
years
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
For all annual and long-term cash incentive awards not
determined to be earned, payment of amounts he would have
received had he remained employed by us during such periods, as
if all performance goals had been met at 100% of target, payable
in lump sum not later than six months following death or
disability
|
|
|
|
|
|
|
|
|
|
For annual and long-term cash incentive awards determined to be
earned, payout would be the actual earned amount of the award,
payable within
21/2
months after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $3,100,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Lump sum payment of $1,900,000, payable not later than six
months after termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
Without Cause by the Company or for Good Reason by the
Executive
|
|
|
|
Base salary earned but not yet paid and unused vacation, payable
in lump sum within 60 days following termination
|
48
|
|
|
|
|
|
|
|
|
Continued coverage under certain welfare plans for up to two
years
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
Prorated annual incentive award at an amount determined by the
Compensation Committee based on actual results, payable not
later than 60 days after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at the maximum level for performance periods
beginning on or before January 1, 2009 and at an amount
determined by the Compensation Committee based on actual results
for performance periods beginning after January 1, 2009, payable
not later than 60 days after the end of the year in which
the award period ends
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $3,100,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
Outplacement services for up to one year, not to exceed $50,000
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Lump sum severance payment of $1,900,000, payable not later than
six months after termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
Without Cause by the Company or for Good Reason by the
Executive within Two Years of Change in Control (other than the
merger with Allied)
|
|
|
|
Base salary earned but not paid and unused vacation, payable in
lump sum within 60 days following termination Continued
coverage under certain welfare plans for up to two years
Immediate vesting of all stock option, restricted stock and
restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
Prorated annual incentive award at an amount determined by the
Compensation Committee based on actual results, payable not
later than 60 days after the end of the year
|
|
|
|
|
|
|
|
|
|
All long-term cash incentive awards shall vest and be payable on
a pro rata basis at the maximum level for performance periods
beginning on or before January 1, 2009 and at an amount
determined by the Compensation Committee based on actual results
for performance periods beginning after January 1, 2009, payable
not later than 60 days after the end of the year in which
the award period ends
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $3,100,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the maximum level, to
be paid 10 days after the change in control
|
|
|
|
|
|
|
|
|
|
Lump sum severance payment of $1,900,000, payable not later than
six months after termination
|
49
|
|
|
|
|
|
|
|
|
Three times target annual and long-term cash incentive awards,
for the year in which the termination occurs, payable in lump
sum not later than six months following termination
|
|
|
|
|
|
|
|
|
|
Outplacement services for up to one year, not to exceed $50,000
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
Retirement (upon satisfying the definition of
retirement age and notice provisions)
|
|
|
|
Base salary earned but not paid and unused vacation
Continued coverage under certain welfare plans for up to two
years
|
|
|
|
|
|
|
|
|
|
Lump sum payment of $1,900,000, payable not later than six
months after termination
|
|
|
|
|
|
|
|
|
|
Balance of amounts credited or eligible to be credited to his
deferred compensation account, plus, for all such amounts
credited or eligible to be credited to such account based upon
our performance on or before December 31, 2006, a gross up
payment of $3,100,000, payable not later than six months after
termination
|
|
|
|
|
|
|
|
|
|
For retirement on or after January 1, 2011, payment of the
Synergy Incentive Plan amount he would have received had he
remained employed by us until the end of 2011, to be paid within
90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
For all annual and long-term cash incentive awards not
determined to be earned that began on or before January 1, 2009,
payment of amounts he would have received had he remained
employed by us during such periods, as if all performance goals
had been met at 100% of target, payable in lump sum not later
than six months following retirement
|
|
|
|
|
|
|
|
|
|
For all annual and long-term cash incentive awards not
determined to be earned that began after January 1, 2009, a
prorated payment at an amount determined by the Compensation
Committee based on actual results, payable not later than
60 days after the end of the year in which the award period
ends
|
|
|
|
|
|
|
|
|
|
For annual and long-term cash incentive awards determined to be
earned, payout would be the actual earned amount of the award,
payable within
21/2 months
after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
|
|
|
|
|
For Cause by the Company or Without Good Reason by the
Executive
|
|
|
|
Base salary earned but not yet paid and unused vacation time
For termination (other than for cause) on or after January 1,
2011, payment of the actual Synergy Incentive Plan amount he
would have received had he remained employed by us until the end
of 2011, payable to him within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination
|
|
|
|
|
|
|
|
|
|
A gross up payment for any excise taxes relating to our merger
with Allied
|
Mr. Rissman. Prior to his promotion to General
Counsel, Mr. Rissman had an employment agreement with us.
In connection with his promotion, Mr. Rissman agreed to the
termination and cancellation of his former employment agreement
in return for his participation in our Executive Separation
Policy. Mr. Rissmans base salary for 2010 and 2011 is
$400,000 and his target annual incentive compensation is 80% of
salary, with a range of 0% to 160%
50
of salary. In addition, Mr. Rissman received credits to his
deferred compensation account in both 2009 and 2010. Under the
Executive Separation Policy and the terms of various incentive
plans and awards, consideration payable to Mr. Rissman by
us upon termination of employment is as follows:
|
|
|
|
|
Death or Disability
|
|
|
|
Base salary earned but not yet paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
In the case of death, annual and long-term cash incentive awards
not determined to be earned shall vest and be payable at target
within 30 days after termination
|
|
|
|
|
|
|
|
|
|
In the case of death, for annual and long-term cash incentive
awards determined to be earned, payout would be the actual
earned amount of the award, payable within
21/2 months
after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
In the case of disability, annual and long-term cash incentive
awards shall vest and be payable pro rata based on actual
results within
21/2
months after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the amount he would
have received had he remained employed by us until the end of
2011, to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination
|
|
|
|
|
|
Without Cause by the Company
|
|
|
|
Base salary earned but not yet paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
24 months of continued base salary
|
|
|
|
|
|
|
|
|
|
An amount equal to a pro-rated annual bonus based upon actual
performance for the year of termination, payable within
21/2
months after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the amount he would
have received had he remained employed by us until the end of
2011, to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Continued vesting of stock options and other equity awards for a
one-year period following the termination date
|
|
|
|
|
|
|
|
|
|
Continued medical benefits for up to 24 months from the
termination date
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination, except for
any portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
|
|
|
|
|
Without Cause by the Company or For Good Reason by the
Executive Within One Year After a Change in Control
|
|
|
|
Base salary earned but not yet paid and unused vacation time
Lump sum severance amount equal to two times his then current
base salary and two times his target annual bonus, payable not
later than six months after termination
|
|
|
|
|
|
|
|
|
|
Immediate vesting of stock options and other equity awards
|
|
|
|
|
|
|
|
|
|
Continued medical for up to two years following the termination
date
|
|
|
|
|
|
|
|
|
|
Payment of long-term incentives at targeted amounts, payable
within
21/2
months after the end of the applicable performance period
|
51
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the maximum level, to
be paid 10 days after the change in control
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination, except for
any portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
|
|
|
|
|
Retirement (upon satisfying the definition of
retirement age and notice provisions)
|
|
|
|
Base salary earned but not yet paid and unused vacation time
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
Annual and long-term cash incentive awards shall vest and be
payable pro rata based on actual results within
21/2
months after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
For retirement on or after January 1, 2011, payment of the
Synergy Incentive Plan at the amount he would have received had
he remained employed by us until the end of 2011, to be paid
within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination
|
|
|
|
|
|
For Cause by the Company or Voluntarily by the Executive
|
|
|
|
Base salary earned but not yet paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
For voluntary termination on or after January 1, 2011, payment
of the Synergy Incentive Plan at the amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination, except for
any portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
Mr. Walbridge. Mr. Walbridge entered into
an employment agreement in December 2008 to be effective as of
the effective time of the merger with Allied.
Mr. Walbridges employment agreement was amended in
June 2010 in conjunction with his promotion to Executive Vice
President Operations effective October 1, 2010,
at which time his annual salary increased from $400,000 to
$475,000. Mr. Walbridges target annual incentive
compensation is 80% of salary, with a range of 0% to 160% of
salary. The agreement also provided for Mr. Walbridge to be
eligible for an equity award in early 2011, valued at $186,500,
and for us to make a contribution of $65,000 in 2011 to his
deferred compensation account.
Consideration payable to Mr. Walbridge by us upon
termination of employment:
|
|
|
|
|
Death or Disability
|
|
|
|
Base salary earned but not yet paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
In the case of death, annual and long-term cash incentive awards
not determined to be earned shall vest and be payable at target
within 30 days after termination
|
|
|
|
|
|
|
|
|
|
In the case of death, for annual and long-term cash incentive
awards determined to be earned, payout would be the actual
earned amount of the award, payable within
21/2 months
after the end of the applicable performance period
|
52
|
|
|
|
|
|
|
|
|
In the case of disability, annual and long-term cash incentive
awards shall vest and be payable pro rata based on actual
results within
21/2
months after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the amount Mr.
Walbridge would have received had he remained employed by us
until the end of 2011, to be paid within 90 days after the
end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination
|
|
|
|
|
|
Without Cause by the Company
|
|
|
|
Base salary earned but not yet paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
12 months of continued base salary
|
|
|
|
|
|
|
|
|
|
An amount equal to a pro-rated annual bonus based upon actual
performance for the year of termination, payable within
21/2 months
after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the amount Mr.
Walbridge would have received had he remained employed by us
until the end of 2011, to be paid within 90 days after the
end of 2011
|
|
|
|
|
|
|
|
|
|
Continued vesting of stock options and other equity awards for a
one-year period following the termination date
|
|
|
|
|
|
|
|
|
|
Continued medical benefits for up to 12 months from the
termination date
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account
payable not later than six months after termination, except for
any portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
|
|
|
|
|
Without Cause by the Company or For Good Reason by the
Executive Within One Year After a Change in Control
|
|
|
|
Base salary earned but not yet paid and unused vacation time
Lump sum severance amount equal to two times his then current
base salary and two times his target annual bonus, payable not
later than six months after termination
|
|
|
|
|
|
|
|
|
|
Immediate vesting of stock options and other equity awards
|
|
|
|
|
|
|
|
|
|
Continued medical for up to one year following the termination
date
|
|
|
|
|
|
|
|
|
|
Payment of long-term incentives at targeted amounts, payable
within
21/2 months
after the end of the applicable performance period
|
|
|
|
|
|
|
|
|
|
Payment of the Synergy Incentive Plan at the maximum level, to
be paid 10 days after the change in control
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination, except for
any portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
|
|
|
|
|
Retirement (upon satisfying the companys definition of
retirement age and notice provisions)
|
|
|
|
Base salary earned but not yet paid and unused vacation time
Immediate vesting of all unvested stock option, restricted stock
and restricted stock unit awards
|
|
|
|
|
|
|
|
|
|
Annual and long-term cash incentive awards shall vest and be
payable pro rata based on actual results within
21/2 months
after the end of the applicable performance period
|
53
|
|
|
|
|
|
|
|
|
For retirement on or after January 1, 2011, payment of the
Synergy Incentive Plan at the amount Mr. Walbridge would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination
|
|
|
|
|
|
For Cause by the Company or Voluntarily by the Executive
|
|
|
|
Base salary earned but not yet paid and unused vacation time
|
|
|
|
|
|
|
|
|
|
For voluntary termination on or after January 1, 2011, payment
of the Synergy Incentive Plan at the amount he would have
received had he remained employed by us until the end of 2011,
to be paid within 90 days after the end of 2011
|
|
|
|
|
|
|
|
|
|
Balance of amounts vested in his deferred compensation account,
payable not later than six months after termination, except for
the portion attributable to amounts credited by us which is
payable on the fifth anniversary of termination
|
The tables on the following pages provide information regarding
benefits payable to our named executive officers upon the
occurrence of certain events of termination, assuming the
specified event occurred on December 31, 2010 but under the
terms of current benefit plans and employment agreements or, in
the case of Mr. Rissman, our Executive Separation Policy.
We have not quantified the estimated welfare benefits payable
because we do not believe any estimates would be meaningful. We
have, however, quantified the amounts payable to
Messrs. OConnor, Slager, Holmes, Rissman and
Walbridge upon the occurrence of the following events:
(a) death, (b) disability, (c) termination without
cause (as determined under the applicable employment agreement
or the Executive Separation Policy) by us or, in the case of
Messrs. OConnor, Slager and Holmes, for good reason
by the executive, (d) termination without cause by us or
for good reason by the executive following a change in control
and (e) retirement.
We can terminate an executives employment without cause at
any time. In general, Messrs. Slager and Holmes can
terminate their employment for good reason at any time if
(a) we have materially reduced the executives duties
and responsibilities, (b) we have breached the employment
agreement and not timely cured the breach, (c) we reduce
the executives salary by more than ten percent from the
prior year (except for Mr. Slagers agreement),
(d) we have terminated or reduced the executives
participation in one or more company-sponsored benefit plans and
such termination or reduction does not apply to the other named
executive officers, (e) we terminate and do not substitute
a bonus plan in which the executive participates (except for
Mr. Slagers agreement), (f) the executives
office is relocated outside of Maricopa County, Arizona, or
(g) the continuation of the executives rolling
employment period is terminated. Messrs. Rissman and
Walbridge can terminate their employment for good reason during
the one year period following a change in control if we reduce
their salary, bonus opportunity or title.
Post-Employment
Compensation Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
|
|
|
|
Salary
|
|
|
Severance
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total Compensation
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
Payment ($)(6)
|
|
|
Payable ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. OConnor
|
|
|
|
|
|
|
4,800,000
|
|
|
|
4,258,394
|
|
|
|
989,634
|
|
|
|
19,227,440
|
|
|
|
8,646,454
|
|
|
|
37,921,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
2,625,000
|
|
|
|
|
|
|
|
5,653,394
|
|
|
|
514,601
|
|
|
|
11,918,400
|
|
|
|
2,583,279
|
|
|
|
23,294,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
|
|
|
|
1,900,000
|
|
|
|
1,970,402
|
|
|
|
395,866
|
|
|
|
9,694,600
|
|
|
|
5,181,495
|
|
|
|
19,142,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
|
|
|
|
|
|
|
|
534,046
|
|
|
|
81,592
|
|
|
|
1,219,893
|
|
|
|
135,037
|
|
|
|
1,970,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,409
|
|
|
|
1,824,680
|
|
|
|
2,531,220
|
|
|
|
4,530,309
|
|
|
|
(1) |
For Mr. Slager this amount is equal to three times base
salary on his date of death.
|
54
|
|
|
(2)
|
|
For each of
Messrs. OConnor and Holmes this amount is a set
severance amount per the terms of his employment agreement.
|
|
(3)
|
|
All outstanding restricted stock
and restricted stock unit awards vest upon death per the terms
of the award agreements. Mr. Walbridge had no restricted
stock or restricted stock units outstanding at December 31,
2010. For purposes of this table, shares are valued at $29.86
per share, the closing price on December 31, 2010.
|
|
(4)
|
|
All unvested stock options vest
upon death per the terms of the award agreements. For purposes
of this table, options are valued at the incremental
compensation value to the executive using $29.86 per share, the
closing price on December 31, 2010.
|
|
(5)
|
|
For Messrs. OConnor and
Holmes, this amount represents, for all open awards under the
annual and long-term cash incentive plans, payment of amounts
they would have received had they remained employed by us during
such periods, as if all performance goals had been met at 100%
of target, as well as payment under the Synergy Incentive Plan
at the amount they would have been paid had they remained
employed by us until the end of 2011. As of December 31,
2010, the 2010 annual incentive was deemed earned and the amount
included for Messrs. OConnor and Holmes is therefore
the actual 2010 annual incentive. The
2009-2011
LTIP and the
2010-2012
LTIP are considered still open as of December 31, 2010 and
are therefore included at target. The Synergy Incentive Plan
payout is included at the maximum award. For Mr. Slager,
the amount payable per his employment agreement would be the pro
rata portion of the open periods under the annual and long-term
cash incentive plans at an amount based on actual results and
the amount he would have received under the Synergy Incentive
Plan based on actual results. As of December 31, 2010, the
2010 annual incentive was deemed earned and the amount included
for Mr. Slager is the actual 2010 annual incentive. The
2009-2011
and
2010-2012
LTIP amounts included for Mr. Slager are the pro rata
targets. The Synergy Incentive Plan payout included for
Mr. Slager is the maximum amount. Amounts included for
Messrs. Rissman and Walbridge are the actual 2010 annual
incentive payout, target LTIP and the Synergy Incentive Plan
payout at the maximum amount per the terms of the individual
plans.
|
|
(6)
|
|
For Messrs. OConnor and
Holmes, this amount includes the current balance that would be
payable in each account and an amount per their employment
agreement meant as an income tax
gross-up
payment on the deferred compensation distributions they received
as a result of the merger with Allied in December 2008. The
balances in deferred compensation for Messrs. OConnor
and Holmes as of December 31, 2010 were $3,446,454 and
$2,081,495, respectively. These balances for
Messrs. OConnor and Holmes include $2,250,000 and
$1,000,000, respectively for credits we made to their account on
January 1, 2010. In addition, the amounts in this table
include tax
gross-up
amounts of $5,200,000 and $3,100,000, respectively, as described
above. For Mr. Slager, this amount equals the balance of
his special supplemental retirement payment. For
Messrs. Rissman and Walbridge, this amount equals the
balance in their deferred compensation plan accounts, which
includes credits made by the company to their accounts.
Mr. Rissman received a credit of $65,000 in each of 2010
and 2009. Mr. Walbridge received a credit of $65,000 in
each of 2010, 2009 and 2008.
|
Post-Employment
Compensation Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
|
|
|
|
Salary
|
|
|
Severance
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total Compensation
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
Payment ($)(6)
|
|
|
Payable ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. OConnor
|
|
|
|
|
|
|
4,800,000
|
|
|
|
4,258,394
|
|
|
|
989,634
|
|
|
|
19,227,440
|
|
|
|
8,646,454
|
|
|
|
37,921,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
2,625,000
|
|
|
|
|
|
|
|
5,653,394
|
|
|
|
514,601
|
|
|
|
11,918,400
|
|
|
|
2,583,279
|
|
|
|
23,294,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
|
|
|
|
1,900,000
|
|
|
|
1,970,402
|
|
|
|
395,866
|
|
|
|
9,694,600
|
|
|
|
5,181,495
|
|
|
|
19,142,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
|
|
|
|
|
|
|
|
534,046
|
|
|
|
81,592
|
|
|
|
1,036,560
|
|
|
|
135,037
|
|
|
|
1,787,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,409
|
|
|
|
1,611,347
|
|
|
|
2,531,220
|
|
|
|
4,316,976
|
|
|
|
|
(1)
|
|
For Mr. Slager this amount is
equal to three times base salary on the date of termination.
|
|
(2)
|
|
For each of
Messrs. OConnor and Holmes this amount is a set
severance amount per the terms of his employment agreement. We
maintain disability insurance on each of these individuals. In
the event of disability, payments made to these individuals
pursuant to a company-maintained insurance policy mitigate any
salary payments reflected in this column.
|
|
(3)
|
|
All outstanding restricted stock
and restricted stock unit awards vest upon disability per the
terms of the award agreements. Mr. Walbridge had no
restricted stock or restricted stock units outstanding at
December 31, 2010. For purposes of this table, shares are
valued at $29.86 per share, the closing price on
December 31, 2010.
|
|
(4)
|
|
All unvested stock options vest
upon disability per the terms of the award agreements. For
purposes of this table, options are valued at the incremental
compensation value to the executive using $29.86 per share, the
closing price on December 31, 2010.
|
|
(5)
|
|
For Messrs. OConnor and
Holmes, this amount represents, for all open awards under the
annual and long-term cash incentive plans, payment of amounts
they would have received had they remained employed by us during
such periods, as if all performance goals had been met at 100%
of target, as well as payment of the Synergy Incentive Plan at
the amount they would have been paid had they remained employed
by us until the end of 2011. As of December 31, 2010, the
2010 annual incentive was deemed earned and the amount included
for Messrs. OConnor and Holmes is therefore the
actual 2010 annual incentive. The
2009-2011
LTIP and the
2010-2012
LTIP are considered still open as of December 31, 2010 and
are therefore included at target. The Synergy Incentive Plan
payout is included at the maximum award. For Mr. Slager,
the amount payable per his employment agreement would be the pro
rata portion of the open periods under the annual and long-term
cash incentive plans at an amount based on actual results and
the Synergy Incentive Plan based on actual results. As of
December 31, 2010, the 2010 annual incentive was deemed
earned and the amount included for Mr. Slager is therefore
the actual 2010 annual incentive. The
2009-2011
and
2010-2012
LTIP amounts included for Mr. Slager are the pro rata
targets. The Synergy Incentive Plan payout included for
Mr. Slager is the maximum amount. Amounts included for
Messrs. Rissman and Walbridge are the actual 2010 annual
incentive payout, pro rata target LTIP and the Synergy Incentive
Plan payout at the maximum amount per the terms of the
individual plans.
|
|
(6)
|
|
For Messrs. OConnor and
Holmes, this amount includes the current balance that would be
payable in each account, amounts they were eligible to be
credited (even if the grant date had not yet occurred) and an
amount per their employment agreement meant as an income tax
|
55
|
|
|
|
|
gross-up
payment on the deferred compensation distributions they received
as a result of the merger with Allied in December 2008. The
balances in deferred compensation for Messrs. OConnor
and Holmes as of December 31, 2010 were $3,446,454 and
$2,081,495 respectively. These balances for
Messrs. OConnor and Holmes include $2,250,000 and
$1,000,000, respectively, for credits we made to their account
on January 1, 2010 per their agreements. In addition, the
amounts in this table include tax
gross-up
amounts of $5,200,000 and $3,100,000, respectively as described
above. For Mr. Slager, this amount equals the balance off
his special supplemental retirement payment. For
Messrs. Rissman and Walbridge, this amount equals the
balance in their deferred compensation plan accounts, which
includes credits made by the company to their accounts.
Mr. Rissman received a credit of $65,000 in each of 2010
and 2009. Mr. Walbridge received a credit of $65,000 in
each of 2010, 2009 and 2008.
|
Post-Employment
Compensation Termination Without Cause by the
Company
or for Good Reason by the Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
|
|
|
Total
|
|
|
|
Salary
|
|
|
Severance
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Outplacement
|
|
|
Compensation
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
Payment ($)(6)
|
|
|
Services ($)
|
|
|
Payable ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. OConnor
|
|
|
|
|
|
|
4,800,000
|
|
|
|
4,258,394
|
|
|
|
989,634
|
|
|
|
18,602,440
|
|
|
|
8,646,454
|
|
|
|
|
|
|
|
37,296,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
2,625,000
|
|
|
|
|
|
|
|
1,154,686
|
|
|
|
|
|
|
|
11,918,400
|
|
|
|
2,583,279
|
|
|
|
50,000
|
|
|
|
18,331,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
|
|
|
|
1,900,000
|
|
|
|
1,970,402
|
|
|
|
395,866
|
|
|
|
9,444,600
|
|
|
|
5,181,495
|
|
|
|
50,000
|
|
|
|
18,942,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman(7)
|
|
|
800,000
|
|
|
|
|
|
|
|
133,504
|
|
|
|
27,670
|
|
|
|
919,893
|
|
|
|
135,037
|
|
|
|
|
|
|
|
2,016,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
475,000
|
|
|
|
|
|
|
|
|
|
|
|
70,871
|
|
|
|
1,404,680
|
|
|
|
2,531,220
|
|
|
|
|
|
|
|
4,481,771
|
|
|
|
|
(1)
|
|
For Messrs. Slager, Rissman
and Walbridge, this amount is equal to three times, two times
and one times base salary, respectively, on the date of
termination. For Mr. Rissman, this amount is established
according to the terms of the Executive Separation Policy for a
termination without cause. Messrs. Rissman and Walbridge
are not eligible for post-employment compensation if they resign
their employment with us for any reason absent a change in
control.
|
|
(2)
|
|
For each of
Messrs. OConnor and Holmes this amount is a set
severance amount per the terms of his employment agreement.
|
|
(3)
|
|
For Messrs. OConnor and
Holmes, all unvested restricted stock and restricted stock unit
awards vest upon termination for good reason or without cause.
For Mr. Slager, restricted stock and restricted stock unit
awards that would have become vested during the year of
termination and his January 31, 2009 restricted stock award
vest upon termination for good reason or without cause. For
Messrs. Rissman and Walbridge, stock options and other
equity awards would continue to vest for one year following
termination without cause. For purposes of this table, shares
are valued at $29.86 per share, the closing price on
December 31, 2010. Mr. Walbridge had no restricted
stock or restricted stock units outstanding as of
December 31, 2010.
|
|
(4)
|
|
For Messrs. OConnor and
Holmes, all unvested stock options vest upon termination for
good reason or without cause. For Mr. Slager, stock options
that would have become vested during the year of termination
vest upon termination for good reason or without cause. For
Messrs. Rissman and Walbridge, stock options and other
equity awards would continue to vest for one year following
termination without cause. For purposes of this table, options
are valued at the incremental compensation value to the
executive using $29.86 per share, the closing price on
December 31, 2010.
|
|
(5)
|
|
For Messrs. OConnor and
Holmes, this amount represents the annual incentive award based
on actual results and, for long-term cash incentive plans
beginning on or before January 1, 2009, the pro rata
maximum award, as well as payment under the Synergy Incentive
Plan at the amount they would have been paid had they remained
employed by us until the end of 2011. For
Messrs. OConnor and Holmes long-term cash incentive
plans beginning after January 1, 2009 will be payable at
pro rata actual. For Messrs. OConnor and Holmes, this
table reflects 2010 annual incentive at actual, the
2009-2011
LTIP at the pro rata maximum and the
2010-2012
LTIP at pro rata target. The Synergy Incentive Plan payout is
included at the maximum award. For Mr. Slager, the amount
payable would be the pro rata portion of the open periods under
the annual and long-term cash incentive and synergy plans at an
amount based on actual results. As of December 31, 2010,
the 2010 annual incentive was deemed earned and the amount
included for Mr. Slager is therefore the actual 2010 annual
incentive. The
2009-2011
LTIP and
2010-2012
LTIP amounts included for Mr. Slager are the pro rata
targets. The Synergy Incentive Plan amount included for
Mr. Slager is the maximum. For Messrs. Rissman and
Walbridge, the amount payable would be the pro rata annual
incentive based upon actual performance for the year of
termination. As of December 31, 2010, the 2010 annual
incentive was deemed earned and the amount included for
Messrs. Rissman and Walbridge is therefore the actual 2010
annual incentive. Under the terms of the Synergy Incentive Plan,
Messrs. Rissman and Walbridge would be eligible to receive
payment of the actual earned amounts. The Synergy Plan Incentive
amount included for Messrs. Rissman and Walbridge is the
maximum.
|
|
(6)
|
|
For Messrs. OConnor and
Holmes, this amount includes the current balance that would be
payable in each account, amounts they were eligible to be
credited (even if the grant date had not yet occurred) and an
amount per their employment agreement meant as an income tax
gross-up
payment on the deferred compensation distributions they received
as a result of the merger with Allied in December 2008. The
balances in deferred compensation for Messrs. OConnor
and Holmes as of December 31, 2010 were $3,446,454 and
$2,081,495 respectively. These balances for
Messrs. OConnor and Holmes include $2,250,000 and
$1,000,000, respectively, for credits we made to their account
on January 1, 2010 per their agreements. In addition, the
amounts in this table include tax
gross-up
amounts of $5,200,000 and $3,100,000, respectively as described
above. For Mr. Slager, this amount equals the balance of
his special supplemental retirement payment. For
Messrs. Rissman and Walbridge, this amount equals the
balance in their deferred compensation plan accounts, which
includes credits made by the company to their accounts.
Mr. Rissman received credits of $65,000 in both 2010 and
2009. Mr. Walbridge received credits of $65,000 in 2010,
2009 and 2008.
|
|
(7)
|
|
Unlike Messrs. OConnor,
Slager and Holmes, Messrs. Rissman and Walbridge are not
entitled to compensation if they voluntarily terminate without a
change of control. However, in the event of such a voluntary
termination as of December 31, 2010, under the terms of the
Executive Incentive Plan they would be entitled to payment of
their actual 2010 annual incentive since it was considered
earned December 31, 2010 and under the terms of the Synergy
Plan would be entitled to payment of the actual earned amount.
|
56
Post-Employment
Compensation Termination Without Cause by the
Company
or for Good Reason by the Executive Following a
Change in Control(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
|
|
|
Section 280g
|
|
|
Total
|
|
|
|
Salary
|
|
|
Compensation
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Outplacement
|
|
|
Excise Tax
|
|
|
Compensation
|
|
Name
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
Payment ($)(7)
|
|
|
Services ($)
|
|
|
Payment ($)(8)
|
|
|
Payable ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. OConnor
|
|
|
4,800,000
|
|
|
|
8,040,000
|
|
|
|
4,258,394
|
|
|
|
989,634
|
|
|
|
18,602,440
|
|
|
|
8,646,454
|
|
|
|
|
|
|
|
|
|
|
|
45,336,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Slager
|
|
|
2,625,000
|
|
|
|
5,100,000
|
|
|
|
1,154,686
|
|
|
|
|
|
|
|
11,918,400
|
|
|
|
2,583,279
|
|
|
|
50,000
|
|
|
|
3,938,687
|
|
|
|
27,370,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tod C. Holmes
|
|
|
1,900,000
|
|
|
|
3,225,000
|
|
|
|
1,970,402
|
|
|
|
395,866
|
|
|
|
9,444,600
|
|
|
|
5,181,495
|
|
|
|
50,000
|
|
|
|
|
|
|
|
22,167,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rissman
|
|
|
800,000
|
|
|
|
640,000
|
|
|
|
534,046
|
|
|
|
81,592
|
|
|
|
1,219,893
|
|
|
|
135,037
|
|
|
|
|
|
|
|
|
|
|
|
3,410,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Walbridge
|
|
|
950,000
|
|
|
|
760,000
|
|
|
|
|
|
|
|
174,409
|
|
|
|
1,824,680
|
|
|
|
2,531,220
|
|
|
|
|
|
|
|
|
|
|
|
6,240,309
|
|
|
|
|
(1)
|
|
The payments set forth above apply
in the case of termination without cause by us or a termination
for good reason by the executive if the termination occurs
within two years following a change in control, for
Messrs. OConnor, Slager and Holmes, and one year
following a change in control, for Messrs. Rissman and
Walbridge.
|
|
(2)
|
|
For each of
Messrs. OConnor and Holmes this amount is a set
severance amount per the terms of his employment agreement. For
Messrs. Slager, Rissman and Walbridge, this amount is equal
to three times, two times and two times their base salary,
respectively, on the date of termination.
|
|
(3)
|
|
For Messrs. OConnor and
Holmes, this amount is equal to three times target annual and
long-term cash incentive awards for the year in which the
termination is assumed to have occurred. For Mr. Slager,
this amount is equal to three times his target annual and
long-term award, for the performance period ending prior to the
year in which the termination occurs. For Messrs. Rissman
and Walbridge, this amount is equal to two times their target
annual awards.
|
|
(4)
|
|
For Messrs. OConnor and
Holmes, all outstanding restricted stock and restricted stock
unit awards vest upon termination for good reason or without
cause within two years following a change in control. For
Mr. Slager, only his January 31, 2009 restricted stock
award and restricted stock and restricted stock unit awards that
would have become vested during the year of termination would
vest upon termination for good reason or without cause within
six months prior to or two years following a change in control.
For Messrs. Rissman and Walbridge, all outstanding
restricted stock and restricted stock unit awards vest upon
termination for good reason or without cause within one year
following a change in control. For purposes of this table,
shares are valued at $29.86 per share, the closing price on
December 31, 2010.
|
|
(5)
|
|
For Messrs. OConnor and
Holmes, all unvested stock options vest upon termination for
good reason or without cause within two years following a change
in control. For Mr. Slager, stock options that would have
become vested during the year of termination vest upon
termination for good reason or without cause within six months
prior to or two years following a change in control. For
Messrs. Rissman and Walbridge, all unvested stock options
would vest immediately following termination for good reason or
without cause within one year following a change in control. For
purposes of this table, options are valued at the incremental
compensation value to the executive using $29.86 per share, the
closing price on December 31, 2010.
|
|
(6)
|
|
For Messrs. OConnor and
Holmes, this amount represents the annual incentive award based
on actual results and, for long-term cash incentive plans
beginning on or before January 1, 2009, the pro rata
maximum, as well as payment of the Synergy Incentive Plan at the
maximum amount. For Messrs. OConnor and Holmes,
long-term cash incentive plans beginning after January 1,
2009 will be payable at pro rata actual. For
Messrs. OConnor and Holmes, this table reflects 2010
annual incentive at actual, the
2009-2011
LTIP at the pro rata maximum and the
2010-2012
LTIP at pro rata target. For Mr. Slager, the amount payable
would be the pro rata portion of the open periods under the
annual and long-term cash incentive plans at an amount based on
actual results. As of December 31, 2010, the 2010 annual
incentive was deemed earned and the amount included for
Mr. Slager is therefore the actual 2010 annual incentive.
The
2009-2011
LTIP and the
2010-2012
LTIP amounts included for Mr. Slager are the pro rata
targets. For Messrs. Rissman and Walbridge, the amount
payable would be the long-term incentive at target. As of
December 31, 2010, the 2010 annual incentive was deemed
earned and the amount included for Messrs. Rissman and
Walbridge is therefore the actual 2010 annual incentive. The
2009-2011
LTIP and
2010-2012
LTIP are included at target. Per the terms of the Synergy
Incentive Plan, the plan would be paid out at 100% of maximum
upon a change in control. Therefore, the Synergy Plan Incentive
amount included for each of Messrs. OConnor, Slager,
Holmes, Rissman and Walbridge is the full maximum.
|
|
(7)
|
|
For Messrs. OConnor and
Holmes, this amount includes the current balance that would be
payable in each account, amounts they were eligible to be
credited (even if the grant date had not yet occurred) and an
amount per their employment agreement meant as an income tax
gross-up
payment on the deferred compensation distributions they received
as a result of the merger with Allied in December 2008. The
balances in deferred compensation for Messrs. OConnor
and Holmes as of December 31, 2010 were $3,446,454 and
$2,081,495 respectively. These balances for
Messrs. OConnor and Holmes include $2,250,000 and
$1,000,000, respectively, for credits we made to their account
on January 1, 2010 per their agreements. In addition, the
amounts in this table include tax
gross-up
amounts of $5,200,000 and $3,100,000, respectively as described
above. For Mr. Slager, this amount equals the balance of
his supplemental special retirement payment. For
Messrs. Rissman and Walbridge, this amount equals the
balance in their deferred compensation plan accounts, which
includes credits made by the company to their accounts.
Mr. Rissman received a credit of $65,000 in each of 2010
and 2009. Mr. Walbridge received a credit of $65,000 in
each of 2010, 2009 and 2008.
|
|
(8)
|
|
Mr. Slager is entitled under
his employment agreement to a gross up payment subject to
certain restrictions for any excise taxes that may be due on
account of a change in control. The amount reflected above
assumes that a change in control occurred on December 31,
2010, that Mr. Slager was terminated without cause on
December 31, 2010 and that all restrictions on the payment
were satisfied.
|
57
Post-Employment
Compensation Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
Total Compensation
|
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
Compensation ($)(3)
|
|
|
Payment ($)(4)
|
|
|
Payable ($)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
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James E. OConnor
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4,800,000
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4,258,394
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989,634
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3,394,107
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8,646,454
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22,088,589
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Donald W. Slager
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5,653,394
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514,601
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1,918,400
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2,583,279
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10,669,674
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Tod C. Holmes
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1,900,000
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1,970,402
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395,866
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1,361,267
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5,181,495
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10,809,030
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Michael P. Rissman
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534,046
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81,592
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503,227
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135,037
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1,253,902
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Kevin Walbridge
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174,409
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611,347
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2,531,220
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3,316,976
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(1)
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All outstanding restricted stock
and restricted stock unit awards vest upon retirement per the
terms of the award agreements. For purposes of this table,
shares are valued at $29.86 per share, the closing price on
December 31, 2010.
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(2)
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All unvested stock options vest
upon retirement per the terms of the award agreements. For
purposes of this table, options are valued at the incremental
compensation value to the executive using $29.86 per share, the
closing price on December 31, 2010.
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(3)
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For Messrs. OConnor and
Holmes, this amount represents the target annual incentive award
and long-term cash incentive plan award for all plans beginning
on or before January 1, 2009 as if they had remained
employed by us during such periods. For annual and long-term
cash incentive plans deemed earned, payout would be the actual
earned amount of the award. For Messrs. OConnor and
Holmes annual and long-term cash incentive plans beginning after
January 1, 2009 will be payable at pro rata actual. For
Messrs. OConnor and Holmes, this table reflects 2010
annual incentive at actual, the
2009-2011
LTIP at full target award and the
2010-2012
LTIP at pro rata target. For Messrs. Slager, Rissman and
Walbridge, payout would be a prorated payment under the annual
and long-term cash incentive plans based on actual results. For
Messrs. Slager, Rissman and Walbridge, this table shows the
2010 annual incentive at actual and the
2009-2011
LTIP and
2010-2012
LTIP at pro rata target.
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(4)
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For Messrs. OConnor and
Holmes, this amount includes the current balance that would be
payable in each account, amounts they were eligible to be
credited (even if the grant date had not yet occurred) and an
amount per their employment agreement meant as an income tax
gross-up
payment on the deferred compensation distributions they received
as a result of the merger with Allied in December 2008. The
balances in deferred compensation for Messrs. OConnor
and Holmes as of December 31, 2010 were $3,446,454 and
$2,081,495 respectively. These balances for
Messrs. OConnor and Holmes include $2,250,000 and
$1,000,000, respectively, for credits we made to their account
on January 1, 2010 per their agreements. In addition, the
amounts in this table include tax
gross-up
amounts of $5,200,000 and $3,100,000, respectively as described
above. For Mr. Slager, this amount equals the balance of
his special supplemental retirement payment. For
Messrs. Rissman and Walbridge, this amount equals the
balance in their deferred compensation plan accounts, which
includes credits made by the company to their accounts.
Mr. Rissman received a credit of $65,000 in each of 2010
and 2009. Mr. Walbridge received a credit of $65,000 in
each of 2010, 2009 and 2008.
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(5)
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As of December 31, 2010,
Messrs. Slager, Rissman and Walbridge would not qualify for
retirement. Amounts shown are estimates of amounts payable had
they qualified as of December 31, 2010.
Messrs. OConnor and Holmes would have met the
retirement qualifications under their contracts if they had
given twelve months of notice to us. The amounts shown above
assume they would have given notice of retirement to meet the
qualifications. For Mr. OConnor, the amount reflected
above is an estimate of the amount payable per the terms of his
employment agreement. See Employment Agreements and
Post-Employment Compensation for a description of the
terms of Mr. OConnors retirement agreement.
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Messrs. OConnor and Holmes are entitled under their
employment agreements to a gross up payment for any excise taxes
that may be due as a result of our merger with Allied. While we
believe that any future payments under their contracts should
not be subject to excise taxes, if it is subsequently determined
that some or all of their payments are contingent on our merger
with Allied and are not reasonable compensation for their
services, they would be entitled to a gross up payment not to
exceed $7,296,096 for Mr. OConnor and $3,639,503 for
Mr. Holmes.
58
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We have a written Related Party Transactions Policy. This policy
requires that any transaction for which disclosure is required
under Item 404 of
Regulation S-K
(an S-K Transaction) be approved by both our Chief
Executive Officer and the Boards Audit Committee. Under
this policy, the related party must disclose in writing to the
General Counsel the material facts of the proposed S-K
Transaction and the General Counsel (or designee) will then
submit the written disclosure to the Audit Committee for
approval. If the proposed S-K Transaction involves the General
Counsel, the written disclosure must be provided to the Chief
Executive Officer. As part of its due diligence, the Audit
Committee will review and determine, with the advice and
assistance of such advisors as it deems appropriate, whether the
S-K Transaction would present an improper conflict of interest.
The Audit Committee may consider the following factors, among
others: (1) whether the transaction terms are at least as
favorable to us as those that could be obtained in a transaction
between us and an unrelated party; (2) whether there are
any compelling business reasons for us to enter into the
transaction; and (3) whether the transaction would impair
the independence of an otherwise independent director.
On December 2, 2008, we entered into a Letter Agreement
with certain of the Blackstone Entities that grants the
Blackstone Entities certain registration rights with respect to
the shares of Republic received by the Blackstone Entities in
the merger.
As part of the merger with Allied, we acquired a five-year
participation agreement (Participation Agreement)
with CoreTrust Purchasing Group LLC (CPG)
designating CPG as exclusive agent for our purchase of certain
goods and services. This agreement was originally entered into
on June 20, 2006. CPG is a group purchasing
organization which, on behalf of its various participants
in its group purchasing program, secures from vendors pricing
terms for goods and services on a more favorable basis than
participants could obtain for themselves on an individual basis.
Goods and services included under this Participation Agreement
include equipment, products, supplies and services available
pursuant to vendor contracts between vendors and CPG. In
connection with purchases by its participants (including us),
CPG receives a commission from each vendor based on the amount
of products and services purchased. Under the Participation
Agreement, we must purchase 80% of specified goods and services
for certain of our office locations through CPG. In 2010,
approximately $66.25 million worth of goods and services
were purchased through CPG.
CPG will remit at least half of the commissions received from
vendors in respect of our purchases under the Participation
Agreement to Blackstone GPO L.L.C. or one of its affiliates
(Blackstone GPO) in consideration for Blackstone
GPOs facilitating our participation with CPG and
monitoring the services that CPG provides to us. Blackstone GPO
is an affiliate of Blackstone Management Associates II, L.L.C.,
the founding member of which was a more than 5% beneficial owner
of our stock (through his control of the Blackstone Entities)
and which has one representative on our Board.
Effective January 31, 2011, none of the Blackstone Entities
or their founding member is a 5% beneficial owner of our stock.
Their representative on our Board, Mr. Foley, is not
standing for re-election at the Annual Meeting and will no
longer be a Board member immediately following the Annual
Meeting.
As of March 15, 2011, Cascade Investment, L.L.C.
(Cascade) and the Bill & Melinda Gates
Foundation Trust (the Trust) owned an aggregate of
58,754,169 shares of our common stock. On November 3,
2010, we entered into a standstill agreement (the
Standstill Agreement) with Cascade and the Trust,
under which each of Cascade and the Trust agreed that from
November 3, 2010 until the Standstill Agreement is
terminated (the Standstill Period), and subject to
certain exceptions, it shall not, and shall cause its current
and future affiliates not to (the Trust, Cascade and such
affiliates collectively, the Prohibited Persons),
directly or indirectly, without the prior written approval of
the Board:
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acquire, propose or agree to acquire, by purchase or otherwise,
shares of our common stock if such acquisition would result in
the Prohibited Persons collectively having beneficial ownership
of 25% or more of the then outstanding shares of common stock
(the Percentage Limitation), subject to exceptions
for acquisitions by way of stock dividends or other
distributions by our company and for certain permitted
acquisition transactions that are recommended by the Board and
supported by a fairness opinion of an investment banking firm;
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59
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form or join any group with respect to our common stock other
than a group, if any, consisting solely of Mr. Gates, the
Trust, Cascade
and/or any
of their subsidiaries;
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deposit any of our common stock in a voting trust or subject any
of our common stock to any voting agreement or similar
arrangement;
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become a participant in any solicitation of proxies or to seek
to influence any person with respect to the voting of our common
stock, except in accordance with matters recommended by the
Board; or
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take any action, alone or in concert with any other person or
group, to seek control of our company or otherwise seek to
circumvent the limitations of the provisions of the Standstill
Agreement.
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The Standstill Agreement will remain in effect until the
earliest to occur of the following (as a result of which the
Standstill Agreement shall immediately terminate):
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termination by the written agreement of each of Republic, the
Trust and Cascade;
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upon written notice by the Trust and Cascade to us, any time
after a third party other than the Trust or Cascade or any of
their respective subsidiaries or affiliates (i) commences a
tender offer or exchange offer for at least 50% of our
outstanding common stock or (ii) enters into a definitive
agreement with our company contemplating the acquisition (by way
of merger, tender offer, consolidation, business combination or
otherwise) of at least 50% of our outstanding common stock or
all or any material portion of the consolidated assets of our
company;
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upon written notice by the Trust and Cascade to us, any time
after the Trust and Cascade in the aggregate have acquired
beneficial ownership of 15% or more of our outstanding common
stock but thereafter have disposed of shares of our common stock
such that their aggregate beneficial ownership at such time is
less than 15% of our then outstanding common stock;
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November 3, 2013; or
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on February 9, 2011, if Cascade and the Trust are not as of
such date the beneficial owners in the aggregate of 15% or more
of our outstanding common stock (which event will not occur as
Cascade and the Trust went over 15% in December 2010).
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On December 3, 2010, we purchased approximately
50 acres of real property adjacent to our National Serv-All
Landfill in Ft. Wayne, Indiana. We purchased this land for
approximately $3.5 million from Southwest Development
Group, Ltd. (Southwest), an entity in which Greg
Walbridge, the brother of our Executive Vice
President Operations, Kevin Walbridge, has an
ownership interest. Based on his percentage ownership interest
in Southwest, Greg Walbridge had an approximately
$1.4 million interest in this transaction. This transaction
received all required approvals under our Levels of Authority
Policy, and also was approved by our Audit Committee that is
comprised solely of independent directors.
60
PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the
Exchange Act (which was added by the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the Dodd-Frank
Act)) and the related rules of the SEC, we are asking our
stockholders to cast an advisory, non-binding vote on the
compensation of our named executive officers. This proposal,
commonly referred to as a
say-on-pay
proposal, gives stockholders the opportunity to endorse, not
endorse or abstain from voting on our executive compensation
programs and policies. This vote is not intended to address any
specific item of compensation, but rather the overall
compensation of our named executive officers and the
compensation principles, policies and practices described in
this proxy statement. The Dodd-Frank Act requires that we submit
a proposal to stockholders similar to this proposal at least
every three years.
In considering their vote, stockholders may wish to review with
care the information regarding our named executive
officers compensation appearing under the caption
Executive Compensation on pages 25 through 58
of this proxy statement, including the Compensation
Discussion and Analysis beginning on page 25.
Our executive compensation program is designed to attract and
retain our executives and to motivate them to increase
stockholder value on both an annual and a longer-term basis
primarily by improving our earnings and return on invested
capital and generating increasing levels of free cash flow. The
Compensation Committee believes that our executive compensation
program reflects a strong
pay-for-performance
philosophy and drives the alignment of stockholder and
management interests. Highlights of the program include the
following:
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Compensation for our executives is weighted primarily toward
incentive forms of compensation, including annual and long-term
performance-based cash compensation and equity compensation.
This places a significant amount of their total compensation at
risk.
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Our regular cash incentive compensation program rewards
executives and other management employees for achieving annual
corporate goals relating to earnings per share and free cash
flow and three-year corporate goals relating to free cash flow
and return on invested capital, all of which are closely tied to
the financial rewards received by our stockholders.
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To drive our successful integration with Allied following our
2008 merger, we established a one-time cash incentive program
that rewards executives and other management employees based on
our realization of cost savings synergies in connection with the
merger. This has produced outstanding results. Accomplishing the
first successful large-scale merger in the solid waste industry,
management has realized approximately $190 million of
annual run-rate integration synergies, which is $40 million
higher than the target set at the time of the merger.
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We make annual equity awards to our executives and other
management employees that include a mix of restricted
stock/restricted stock units and stock options. These awards
vest over four years to further align long-term management and
stockholder interests and to promote executive retention.
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We require all of our executives and other senior level
management employees to hold a significant amount of our stock.
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Our Compensation Committee is advised by an independent
compensation consultant that does not perform any work for
management.
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The Compensation Committee believes that the compensation of our
named executive officers has been effective in driving
outstanding financial performance and superior returns to
stockholders. Our current compensation structure dates back to
2001, when our Compensation Committee adopted a long-term cash
incentive plan designed to reward our executives ability
to generate increasing amounts of free cash flow and improving
returns on invested capital over extended periods of time. Over
the last ten years, the compound annual growth rate of our stock
(which includes stock price appreciation and assumes the
reinvestment of dividends) has been 11.7%, compared to the 1.4%
compound annual growth rate of the S&P 500 Index during the
same period.
61
Accordingly, we are submitting the following resolution for
stockholder vote at the Annual Meeting:
RESOLVED, that the stockholders of Republic
approve, on an advisory basis, the compensation of
Republics named executive officers as disclosed in the
Proxy Statement for the 2011 Annual Meeting under the heading
Executive Compensation, including the Compensation
Discussion and Analysis, the Summary Compensation Table, and the
other tables and narrative disclosures set forth
thereunder.
This vote is an advisory vote, and therefore the result will not
be binding on us. Although the vote is non-binding, the
Compensation Committee, which is comprised of independent
directors and is responsible for designing and administering our
executive compensation program, values the opinions expressed by
stockholders. Accordingly, the Compensation Committee will
review the results of voting on this proposal, seek to determine
the cause or causes of any significant negative voting results
and take these matters into consideration when making future
compensation decisions for named executive officers.
The Board
recommends a vote FOR approval of the compensation
of our named executive officers.
62
PROPOSAL 3
ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE
COMPENSATION
In accordance with the requirements of Section 14A of the
Exchange Act (which was added by the Dodd-Frank Act) and the
related rules of the SEC, we are asking our stockholders to cast
an advisory, non-binding vote on whether the advisory vote on
our executive compensation should be held every one, two or
three years. Stockholders may also abstain from voting on this
proposal. The Dodd-Frank Act requires that we submit a proposal
to stockholders similar to this proposal at least every six
years.
After careful consideration, the Board recommends that future
advisory votes on executive compensation occur every three
years. The Board believes that conducting the advisory vote on
executive compensation every three years is optimal for a number
of reasons, including:
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Our executive compensation program is designed to support
long-term value creation. As described under Compensation
Discussion and Analysis beginning on page 25, a
significant portion of our executives compensation is
weighted toward cash incentive compensation that is earned over
a three-year performance period and equity compensation that
vests over a four-year service period. A vote every three years
will allow the stockholders to evaluate our compensation program
over a multi-year horizon.
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As described under Executive Compensation
Compensation Program as It Relates to Risk Management, our
executive compensation program does not encourage risk taking
that could be a concern to our stockholders.
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Historically, our compensation program has not changed
significantly from year to year. An exception to this general
rule is the Synergy Incentive Plan, which was specifically
designed to incentivize management to achieve cost savings in
connection with our merger with Allied. This Synergy Incentive
Plan was part of the Executive Incentive Plan submitted to and
approved by stockholders at our Annual Meeting in 2009.
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An advisory vote every three years reflects the appropriate time
frame for our Compensation Committee to evaluate the results of
the most recent advisory vote on executive compensation, to
discuss the implications of that vote with stockholders to the
extent needed, to develop and implement any adjustments to our
executive compensation program that may be appropriate in light
of a past advisory vote on executive compensation, and for
stockholders to see and evaluate the result of the Compensation
Committees actions.
|
We encourage stockholders who have concerns about executive
compensation during the interval between
say-on-pay
votes to bring their specific concerns to the attention of the
Board or the Compensation Committee. Please refer to Board
of Directors and Corporate Governance Matters
Communications with the Board of Directors in this proxy
statement for information about communicating with the Board and
its committees. We regularly and actively engage in discussions
with our stockholders regarding a variety of topics. The
advisory vote on executive compensation is an additional, but
non-exclusive method for stockholders to communicate their views
regarding our executive compensation program and policies.
This vote is an advisory vote, and therefore the result will not
be binding on us. Although the vote is non-binding, the Board
and the Compensation Committee value the opinions expressed by
stockholders in their vote on this proposal and will consider
the outcome of the vote when considering the frequency of future
advisory votes on executive compensation.
The Board
recommends that you vote to recommend that we conduct future
advisory votes on executive compensation every three
years.
63
PROPOSAL 4
APPROVAL OF THE AMENDED AND RESTATED 2007 STOCK INCENTIVE
PLAN
Republic seeks stockholder approval of an amendment and
restatement to the Republic Services, Inc. 2007 Stock Incentive
Plan (the 2007 Plan). Our stockholders approved the
2007 Plan four years ago. Fewer than 1,000,000 shares
currently remain available for grant under the 2007 Plan. As is
set forth more fully below, we seek stockholder approval to
amend and restate the 2007 Plan to increase the number of shares
available for grant and to modernize the plan in light of
current market practices, among other reasons. The Board
recommends a vote FOR the approval of the proposed
Amended and Restated Republic Services, Inc. 2007 Stock
Incentive Plan (the Amended and Restated Plan).
Background
In February 2007, our Board adopted the 2007 Plan, subject to
approval by our stockholders, which was obtained on May 17,
2007. Effective as of January 1, 2009, the Board amended
the 2007 Plan. As of December 31, 2010, we had issued a
total of 667,378 shares of common stock under the 2007
Plan, and a total of 7,193,474 shares were issuable
pursuant to outstanding options and other awards under the 2007
Plan.
On March 23, 2011, the Board adopted the Amended and
Restated Plan, subject to approval by our stockholders. If
approved, the Amended and Restated Plan (described in detail
below) will become effective as of the date of approval by our
stockholders, and will remain in effect until March 23,
2021, unless terminated by our Board at an earlier date. If the
Amended and Restated Plan is not approved by our stockholders,
the 2007 Plan will continue in existence in its current state.
As of March 23, 2011, we had 942,768 shares available
for grant under the 2007 Plan and 15,349,619 shares
available for grant under the Republic Services, Inc. 2006
Incentive Plan (f/k/a Allied Waste Industries, Inc. 2006
Incentive Plan) (the 2006 Plan). As of
March 23, 2011, there were no shares available for grant
under the Republic Services, Inc. 2005 Non-Employee Director
Equity Compensation Plan (f/k/a Allied Waste Industries, Inc.
2005 Non-Employee Director Equity Compensation Plan). The number
of options outstanding under all plans as of March 23, 2011
was 15,963,906 with a weighted average exercise price of $25.87
per share and weighted average remaining term of
4.81 years. The number of restricted stock or restricted
stock unit awards outstanding was 934,374 as of March 23,
2011.
The number of shares of common stock available for issuance
under the Amended and Restated Plan on or after the date the
stockholders approve the Amended and Restated Plan, referred to
in this Proposal 4 as the effective date, is 21,000,000 new
shares, plus any shares available for issuance under the 2007
Plan as of the effective date. In addition to the 21,000,000 new
shares, and the carryover of the remaining shares from the 2007
Plan as of the effective date, any shares of common stock
covered by an award (or portion of an award) granted under the
Amended and Restated Plan or the 2007 Plan that is forfeited,
expires or otherwise terminated or settled in cash without
delivery of shares, will be available for award under the
Amended and Restated Plan. Any shares tendered or withheld to
pay the exercise price or withholding tax liability for any
option or any award and any shares purchased by us on the open
market using proceeds from the exercise of options under the
2007 Plan or the Amended and Restated Plan after the effective
date (plus the tax benefit that could be realized by us as a
result of such exercise), will also be available for awards
under the Amended and Restated Plan. As of March 23, 2011,
there were 10,052,680 shares issuable pursuant to
outstanding options and other awards under the 2007 Plan, any of
which might be available for awards under the Amended and
Restated Plan as described above. No further awards will be made
under the 2006 Plan after the effective date of the Amended and
Restated Plan.
Rationale for the
Changes
The Board believes that the Amended and Restated Plan will
advance our long-term success by encouraging stock ownership
among key employees and members of our Board who are not
employees. In addition, the Board believes that a fundamental
objective of a long-term incentive compensation program is the
alignment of management and stockholders interests. The Amended
and Restated Plan allows for several forms of awards based on
the value of our common stock and for the utilization of
performance-based vesting targets that measure operational and
financial performance improvements relevant to stockholder value.
64
As part of the changes to the 2007 Plan, the Amended and
Restated Plan increases, subject to stockholder approval, the
number of shares of common stock available for issuance on or
after the effective date of the Amended and Restated Plan to
21,000,000 new shares, plus any shares available for issuance
under the 2007 Plan as of the effective date, and makes other
changes. Most of the other changes to the 2007 Plan are intended
to modernize the plan in light of current market practices. The
remainder of the changes to the 2007 Plan reflect certain
technical or administrative modifications and conforming changes
in light of the substantive amendments.
Section 162(m) of the Internal Revenue Code (the
Code) requires certain provisions of the 2007 Plan
to be periodically resubmitted to, and reapproved by, our
stockholders to qualify for an exemption from the
$1 million limit that otherwise applies to tax-deductible
compensation to covered employees. Stockholder
approval of the Amended and Restated Plan is intended to comply
with that requirement.
Principal Changes
to the 2007 Plan
The principal changes to the 2007 Plan accomplished by the
Amended and Restated Plan for which we are seeking your approval
are to:
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increase the total number of shares of common stock authorized
for issuance on or after the effective date of the Amended and
Restated Plan to 21,000,000 new shares, plus any shares
available for issuance under the 2007 Plan as of the effective
date and any shares that may become available for issuance due
to forfeited awards and other events, and limit the maximum
number of shares available for issuance under incentive stock
options granted under the Amended and Restated Plan to
21,000,000;
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count only the net shares issued to a participant for purposes
of determining the number of shares available for grant under
the Amended and Restated Plan, if shares are tendered or
withheld to pay the exercise price or withholding tax
liabilities of any option or other award;
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allow shares acquired by the Company in the open market using
proceeds from the exercise after the effective date of options
granted under the 2007 Plan or the Amended and Restated Plan and
the tax benefits that could be realized by the Company as a
result of the exercise of options to be available for awards
under the plan;
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provide that substitute awards, and shares which are available
under any pre-existing plans acquired in a business combination
and used for awards, will not reduce the shares available for
grant under the Amended and Restated Plan;
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discontinue the use of our 2006 Incentive Stock Plan (which was
the Allied equity incentive plan in effect at the time of our
merger with Allied) and our 2005 Non-Employee Director Equity
Compensation
Plan (f/k/a
Allied Waste Industries, Inc. 2005 Non-Employee Director Equity
Compensation Plan);
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extend the term of the 2007 Plan to March 23, 2021;
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subject to limited exceptions, provide that awards to employees
of restricted stock and restricted stock units that are not
subject to performance-based vesting vest over a period of not
less than three years and provide that those which are subject
to performance-based vesting vest over a period of not less than
one year, except that such limitation will not apply for up to a
total of 1,000,000 shares available under the Amended and
Restated Plan;
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provide that dividends payable on restricted stock that is
subject to performance-based vesting will be held in escrow by
the Company until the restrictions on the restricted stock have
lapsed;
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provide that dividend equivalents payable on restricted stock
units that are subject to performance-based vesting will be
deferred until the restrictions on such units have lapsed;
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provide that the performance period for performance shares and
performance units will not be shorter than 12 months nor
longer than 5 years;
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authorize the Compensation Committee of the Board to grant
shares as a bonus, or to grant shares or other awards under the
Amended and Restated Plan in lieu of obligations to make other
payments under plans or compensatory arrangements;
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authorize the Compensation Committee to grant dividend
equivalents on a free-standing basis or in connection with
another award;
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amend the definition of change in control to mirror the
definition set forth in our Executive Incentive Plan (which was
approved by stockholders in 2009) and our Executive
Separation Policy; and
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subject to limited exceptions, prohibit single
trigger vesting in the event of a change in control so
that an award may not accelerate if the surviving entity
maintains or substitutes for the award and the participant does
not have a termination within 24 months after the change in
control.
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Description of
the Plan
A copy of the Amended and Restated Plan, marked to show the
changes from the 2007 Plan, as amended prior to the amendment
and restatement, is attached hereto as Appendix A
and is hereby incorporated into this proxy statement by
reference. The following summary of key provisions of the
Amended and Restated Plan, as well as the other summaries and
descriptions relating to the plan contained elsewhere in this
Proposal 4, are each qualified in their entirety by
reference to the full text of the Amended and Restated Plan.
Purpose of the
Plan
The purpose of the Amended and Restated Plan is to align
stockholder and management interests through stock and
performance-based awards linked to stockholder value and to give
us a competitive advantage in attracting and retaining key
employees and directors.
Eligibility and
Participation
Officers, directors, and employees (including prospective
employees) of our Company, its subsidiaries and affiliates will
be eligible to participate in the Amended and Restated Plan, as
determined by the Board or a committee of the Board. As of
December 31, 2010, there were approximately
30,000 employees, of which five were named executive
officers, and eleven non-employee directors that are eligible to
participate in the Amended and Restated Plan.
Administration of
the Plan
With respect to officers and employees, the Amended and Restated
Plan will be administered by the Compensation Committee,
comprised exclusively of independent non-employee directors in
accordance with NYSE listing requirements,
Rule 16b-3
under the Exchange Act and Section 162(m) of the Code. The
Compensation Committee will have full authority to administer
the Amended and Restated Plan, including the authority to
determine who will receive awards, to establish the specific
terms that will govern awards as will be set forth in individual
award agreements and to interpret awards and Amended and
Restated Plan provisions.
The Compensation Committee is permitted to delegate the
performance of certain functions, including administrative
functions, of the Amended and Restated Plan to our officers or
managers, or committees of them. The delegation is required to
be accomplished in a manner that does not result in the loss of
an exemption under
Rule 16b-3
under the Exchange Act for awards or cause awards to
covered employees that are intended to qualify as
performance-based compensation under
Section 162(m) of the Code to fail to so qualify.
If no such committee of the Board exists, or for any other
reason determined by the Board, then the Board will administer
the plan, except that any awards to a covered
employee may only be made by a committee of the Board.
With respect to awards to non-employee directors, the Amended
and Restated Plan will be administered by the Board, which is
considered the committee for purposes of the plan.
As used in this Proposal 4, the term Compensation
Committee means the applicable committee under
the Amended and Restated Plan, whether it be a committee or
sub-committee
of the Board, or the Board itself.
Shares Reserved
for Plan Awards
If this Proposal 4 is approved by the stockholders, the
number of shares of common stock available for issuance on or
after the effective date of the Amended and Restated Plan will
be 21,000,000 new shares, plus any shares
66
available for issuance under the 2007 Plan as of the effective
date. In addition, if awards granted under the 2007 Plan or the
Amended and Restated Plan are forfeited, expire or otherwise
terminate without delivery of shares, the shares reserved for
issuance pursuant to any such forfeited, expired, or terminated
award will remain available for future awards. Awards that are
valued by reference to our common stock but settled in cash will
not be subject to the foregoing share limitations.
In the event that shares are tendered or withheld by us to pay
the exercise price or tax withholding obligation for stock
options or other awards, only the number of shares of common
stock issued net of the shares of common stock tendered or
withheld shall be counted for purposes of determining the
maximum number of shares of our common stock available for grant
under the Amended and Restated Plan.
Shares acquired by us in the open market using proceeds from the
exercise after the effective date of options granted under the
2007 Plan or the Amended and Restated Plan and the tax benefits
that could be realized by the Company as a result of the
exercise of options will be available for awards under the plan.
Substitute awards, and shares which are available under any
pre-existing plans acquired in a business combination and used
for awards, will not reduce the shares available for grant under
the Amended and Restated Plan.
Individual Award
Limits
The maximum number of shares subject to stock options or stock
appreciation rights that may be granted to an individual
participant in any one year is 2,500,000. The maximum number of
shares subject to performance shares, restricted stock,
restricted stock units or common stock awards that may be
granted to an individual participant in any one year is
1,250,000. In addition, no individual participant may be granted
performance units having a grant date fair value greater than
$4,000,000 in any one year.
The aggregate fair market value of our common stock on the date
of grant underlying incentive stock options that can be
exercisable by any individual for the first time during any year
cannot exceed $100,000 (or such other amount as specified in
Section 422 of the Code). Any excess will be treated as a
non-qualified stock option.
The maximum number of shares that may be delivered under the
Amended and Restated Plan as a result of the exercise of
incentive stock options is 21,000,000 shares, subject to
certain adjustments.
Stock
Appreciation Rights and Stock Options
The Amended and Restated Plan provides for awards of stock
appreciation rights, non-qualified stock options and incentive
stock options intended to comply with Section 422 of the
Code. The Amended and Restated Plan specifically prohibits:
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the granting of stock appreciation rights and stock options with
an exercise price less than the fair market value of our common
stock on the date of grant (or, in the case of an incentive
stock option granted to a 10% stockholder, 110% of fair market
value); and
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without stockholder approval, except in the event of a stock
split, certain other recapitalizations and a change in control:
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the re-pricing of stock appreciation and stock option awards;
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the cancellation of such awards in exchange for new awards
(other than substitute awards) with a lower exercise
price; or
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the repurchase of such awards with an exercise price higher than
current fair market value.
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As of March 23, 2011, the market price of our common stock
was $29.16 per share, as reported on the NYSE.
A stock appreciation right entitles the holder to receive shares
of our common stock or cash equal in value to the difference
between the fair market value of our common stock on the
exercise date and the value of our common stock on the grant
date. Except for substitute awards, stock appreciation rights
and stock options will have a maximum term of seven years (or
five years in the case of an incentive stock option granted to a
10% stockholder). Subject to certain exceptions, stock
appreciation rights and options that are subject only to a
future
67
service requirement shall have a vesting period of no less than
1 year. However, options and stock appreciation rights
granted to non-employee directors are not subject to any minimum
vesting schedule.
Restricted Stock,
Performance Share, Restricted Stock Unit and Performance Unit
Awards
A restricted stock award is an award of shares of our common
stock subject to a restriction on transferability and vesting
requirements. A restricted stock unit is a right to receive a
fixed number of shares of our common stock, or the cash
equivalent, subject to a restriction on transferability and
vesting requirements. The restriction on transferability and the
vesting requirements will lapse following a stated period of
time, upon attainment of specified performance targets or some
combination thereof. A performance share award is a right to
receive a fixed number of shares of our common stock, or the
cash equivalent, which is contingent on the achievement of
certain performance goals during a performance period.
Generally, awards subject only to a future service requirement
shall have a vesting period of no less than three years and
awards subject to performance goals shall have a vesting period
of no less than one year. However, awards to non-employee
directors are not subject to any minimum vesting schedule. A
recipient of a restricted stock or performance share award will
have all of the rights of a holder of our common stock with
respect to the underlying shares except for the restriction on
transferability and vesting requirements, including the right to
vote the shares and receive dividends. A performance unit is a
right to receive a designated dollar value, or shares of our
common stock of the equivalent value, which is contingent on the
achievement of performance goals. The holder of a restricted
stock unit or performance unit award is generally not entitled
to the rights of a holder of our common stock. Dividend
equivalents with respect to restricted stock unit awards subject
to performance-based vesting are deferred and automatically
reinvested until all restrictions on the restricted stock units
have lapsed.
Dividend equivalents with respect to restricted stock unit
awards not subject to performance-based vesting may either be
deferred and automatically reinvested or paid in cash or shares
of common stock on the dividend payment date. Restricted stock
units and performance units will be settled by delivery of
shares of our common stock or cash, as specified in the award
agreement.
Bonus Stock and
Awards in Lieu of Obligations
The Amended and Restated Plan authorizes the Compensation
Committee to grant shares of our common stock as a bonus, or to
grant shares of our common stock or other awards under the
Amended and Restated Plan in lieu of obligations to pay cash or
deliver other property under the Amended and Restated Plan or
under other plans or compensatory arrangements.
Change in Control
and Other Events
The Amended and Restated Plan provides the Compensation
Committee with discretion to take certain actions with respect
to outstanding awards in the event of a change in control (as
defined in the Amended and Restated Plan) or certain other
material events that affect our capital structure or the number
of shares of our common stock outstanding. In the event of a
recapitalization, reclassification, reorganization, stock split,
reverse stock split, share combination, exchange of shares,
stock dividend or other similar distribution, increase or
decrease in our shares, the Compensation Committee will make
appropriate and proportionate adjustments to the number and kind
of shares available under the plan, the various share
limitations set forth in the Amended and Restated Plan, the
number and kind of shares subject to outstanding awards and the
exercise price of outstanding options or stock appreciation
rights, and other adjustments as may be applicable.
Upon a change in control, if and to the extent provided in any
employment or other agreement between a participant and us, or
in our executive separation policy or any award agreement, or to
the extent otherwise determined by the Compensation Committee in
its sole discretion: (1) options and stock appreciation
rights will become immediately vested and exercisable,
(2) any restrictions, deferral of settlement, and
forfeiture conditions applicable to restricted stock or
restricted stock units subject only to future service
requirements granted under the plan will lapse and such awards
shall be deemed vested, and (3) awards subject to
achievement of performance goals and conditions may, in the sole
discretion of the Compensation Committee, be deemed met.
68
Notwithstanding the foregoing, unless the Compensation Committee
otherwise determines, or as is provided in any employment or
other agreement between a participant and our Company or our
executive separation policy, such acceleration described in the
preceding paragraph will not occur if our Company is the
surviving entity of the change in control and the award
continues to be outstanding or the successor company assumes or
substitutes for the applicable award. Nevertheless, on such
terms as may be contained in an award agreement, in the event of
a termination of a participants employment in such
successor company (other than for cause, as defined in the
Amended and Restated Plan) within 24 months following such
change in control, each award held by such participant at the
time of the change in control will be accelerated as described
in the preceding paragraph.
In the event of any merger, consolidation or other
reorganization in which our Company does not survive or in the
event of any change in control, any outstanding awards under the
Amended and Restated Plan may be dealt with as follows, without
the consent of any participant, as determined by the agreement
effectuating the transaction or if not so determined, then as
determined by the Compensation Committee: (a) the
continuation of the outstanding awards by our Company, if it is
a surviving entity, (b) the assumption or substitution for
the outstanding awards by the surviving entity or its parent or
subsidiary, (c) full exercisability or vesting and
accelerated expiration of the outstanding awards, or
(d) settlement of the value of the outstanding awards in
cash or cash equivalents or other property followed by
cancellation of such awards.
Qualified
Performance-Based Awards
The Amended and Restated Plan provides a mechanism for the
Compensation Committee to grant stock options, stock
appreciation rights, performance shares, performance units and
other performance-based awards in a way that is intended to
comply with the exemption from the limitation on deductible
compensation imposed by Section 162(m) of the Code. The
Compensation Committee is responsible for certifying to the
achievement of applicable performance targets, except that such
targets may be waived in the event of a change in control. The
Amended and Restated Plan provides that performance-based
compensation awards to any covered employee will be
subject to vesting on the basis of targets set by the
Compensation Committee for one or more of the following
performance measures:
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Enterprise value or value creation;
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After-tax or pre-tax profits, or a component thereof;
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Operational cash flow or working capital, or a component thereof;
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Operational costs, or a component thereof;
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Level of bank debt or other long- or short-term debt or other
similar financial obligations;
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Earnings per share or earnings from continuing operations, or a
component thereof;
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Net sales, revenue, net income or earnings before income tax or
other exclusions;
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Return on capital;
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Return on stockholder equity;
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Fair market value of our common stock;
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Value of an investment in our common stock; and
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EBITDA (earnings before interest, taxes, depreciation,
depletion, amortization, and accretion).
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Performance-based compensation awards for other eligible
individuals will be subject to vesting and any other criteria
determined by the Compensation Committee in its discretion in
accordance with the plan.
Section 409A
Awards
Any award that the Compensation Committee reasonably determines
constitutes a nonqualified deferred compensation plan under
Section 409A of the Code will be construed in a manner
consistent with the applicable requirements of Section 409A
and shall be subject to certain timing and other requirements in
order to comply
69
with Section 409A. The Compensation Committee, in its sole
discretion, may amend the award agreement for any award if and
to the extent that the Compensation Committee determines that
such amendment is necessary or appropriate to comply with the
requirements of Section 409A.
Effective Date
and Term
The Amended and Restated Plan will be effective upon approval of
the stockholders of the amendment and restatement of the 2007
Plan pursuant to this Proposal 4. The Amended and Restated
Plan will expire upon the earlier of the date that all shares
reserved for issuance have been awarded or March 23, 2021.
Amendments
The Amended and Restated Plan may be amended by the Board
provided that no amendment may materially alter or impair the
rights or obligations of award recipients (without their
consent) with respect to existing awards, and no amendment shall
be made without approval of our stockholders to:
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Change the class of individuals eligible to receive awards under
the Amended and Restated Plan;
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Increase the number of shares that may be issued under the
Amended and Restated Plan;
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Amend the Amended and Restated Plan in a manner that requires
stockholder approval under state or federal law or the rules of
the NYSE;
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Eliminate a requirement that stockholders approve an action
under the Amended and Restated Plan.
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The Amended and Restated Plan prohibits the re-pricing of stock
appreciation and stock option awards without stockholder
approval, except in the event of a stock split, certain other
recapitalizations or a change in control.
Transferability
Awards granted under the Amended and Restated Plan are
transferable only by the participants will, the applicable
laws of descent and distribution and, in the discretion of the
Compensation Committee, to certain of the participants
family members.
Federal Income
Tax Consequences
The following discussion is intended only as a brief summary of
the material U.S. Federal income tax rules that are
generally relevant to Amended and Restated Plan awards and does
not purport to be complete. The laws governing the tax aspects
of awards are highly technical and such laws are subject to
change. Moreover, because the tax consequences to any recipient
may depend on his or her particular situation, each recipient
should consult his or her tax adviser as to the federal, state,
local and other tax consequences of the grant or exercise of an
award or the disposition of stock acquired as a result of an
award.
Upon the exercise of a stock appreciation right, an award
recipient will be subject to ordinary income tax on an amount
equal to the excess of the fair market value of our common stock
on the exercise date over the fair market value of our common
stock on the date of grant. If the recipient is an employee,
such amounts will be subject to withholding for income and
employment taxes. We will generally be entitled to a
corresponding tax deduction equal to the amount of ordinary
income that the recipient recognizes. Upon the sale of common
stock acquired upon exercise of a stock appreciation right, the
recipient will recognize long-or short-term capital gain or
loss, depending on whether the recipient held the stock for more
than one year from the date of exercise.
A recipient is not taxable upon the grant of a non-qualified
option. Upon the exercise of a non-qualified option, the excess
of the fair market value of the shares acquired on the exercise
of the option over the exercise price paid will constitute
compensation taxable to the recipient as ordinary income. If the
recipient is an employee, such amounts will be subject to
withholding for income and employment taxes. The
recipients tax basis in those shares acquired pursuant to
the exercise of a non-qualified option will be equal to their
fair market value on the date of exercise of the non-qualified
option, and his or her holding period for those shares will
begin on that date. We will generally be entitled to a
corresponding deduction equal to the amount of ordinary income
recognized by the recipient.
70
A recipient will not recognize taxable income upon the grant or
exercise of an incentive stock option (an ISO). In
addition, if the recipient holds a share received on exercise of
an ISO for at least two years from the date the option was
granted and at least one year from the date the option was
exercised, which we refer to as the required holding
period, the difference, if any, between the amount
realized on a sale or other taxable disposition of that share
and the recipients tax basis in that share will be
long-term capital gain or loss. If, however, a recipient
disposes of a share acquired on exercise of an ISO before the
end of the required holding period, which we refer to as a
disqualifying disposition, the recipient generally
will recognize ordinary income in the year of the disqualifying
disposition equal to the excess, if any, of the fair market
value of the share on the date the ISO was exercised over the
exercise price. If, however, the disqualifying disposition is a
sale or exchange on which a loss, if realized, would be
recognized for Federal income tax purposes, and if the sales
proceeds are less than the fair market value of the share on the
date of exercise of the option, the amount of ordinary income
recognized by the recipient will not exceed the gain, if any,
realized on the sale. If the amount realized on a disqualifying
disposition exceeds the fair market value of the share on the
date of exercise of the option, that excess will be short-term
or long-term capital gain, depending on whether the holding
period for the share exceeds one year.
For purposes of the alternative minimum tax, the amount by which
the fair market value of a share acquired on exercise of an ISO
exceeds the exercise price of that option generally will be an
adjustment included in the recipients alternative minimum
taxable income for the year in which the option is exercised.
If, however, there is a disqualifying disposition of the share
in the year in which the option is exercised, there will be no
adjustment with respect to that share. If there is a
disqualifying disposition in a later year, no income with
respect to the disqualifying disposition is included in the
recipients alternative minimum taxable income for that
year. In computing alternative minimum taxable income, the tax
basis of a share acquired on exercise of an ISO is increased by
the amount of the adjustment taken into account with respect to
that share for alternative minimum tax purposes in the year the
option is exercised.
We will not receive a tax deduction with respect to the grant or
exercise of an ISO or the disposition of a share acquired on
exercise of an ISO after the required holding period. However,
if there is a disqualifying disposition of a share, we generally
will be allowed a deduction in an amount equal to the ordinary
income includible in income by the recipient.
The recipient of a performance share, performance unit,
restricted stock, restricted stock unit, or other stock-based or
performance-based award will not recognize taxable income at the
time of grant as long as the award is subject to a substantial
risk of forfeiture as a result of performance-based vesting
targets, continued service requirements or other conditions that
must be satisfied before payment or delivery of shares can
occur. A recipient of shares of restricted stock may file an
election with the Internal Revenue Service, within 30 days
of his or her receipt of the restricted stock award, to
recognize ordinary compensation income, as of the date the
recipient receives the award, equal to the excess, if any, of
the fair market value of the stock on the date the award is
granted over any amount paid by the recipient in exchange for
the stock. In the absence of such an election, however, the
recipient will generally recognize ordinary income, and, if the
recipient is an employee, be subject to withholding for income
and employment taxes, when the substantial risk of forfeiture
expires or is removed unless the cash to be paid or shares to be
delivered are deferred until a date subsequent to the vesting
date, in accordance with Section 409A of the Internal
Revenue Code. We will generally be entitled to a corresponding
deduction equal to the amount of income the recipient
recognizes. The recipients basis for the determination of
gain or loss upon the subsequent disposition of shares acquired
pursuant to performance share, performance unit, restricted
stock, restricted stock unit, or other stock-based or
performance-based awards will be the amount paid for such
shares, if any, plus any ordinary income recognized either when
the stock is received or when the stock becomes vested. Upon the
disposition of any such stock received, the difference between
the sale price and the recipients basis in the shares will
be treated as a capital gain or loss and generally will be
characterized as long-term capital gain or loss if the shares
have been held for more than one year from the date as of which
he or she would be required to recognize any compensation income.
Generally, the recipient of a dividend equivalent award will be
subject to ordinary income tax on any amount received as a
dividend equivalent and if the recipient is an employee, such
amounts will be subject to withholding for income and employment
taxes. We will generally be entitled to a corresponding
deduction equal to the amount of income the recipient recognizes.
71
Section 162(m) of the Code generally disallows a public
companys tax deduction for compensation to covered
employees in excess of $1 million in any tax year. However,
compensation that qualifies as performance based
compensation is excluded from the $1 million
deductibility cap. Generally, we intend for some but not all
awards granted under our Amended and Restated Plan to covered
employees (or persons who we believe will be covered employees
at the time the deduction with respect to the compensation
arises) to satisfy the requirements for performance-based
compensation under Section 162(m). Future changes in
Section 162(m) or applicable guidance thereunder may
adversely affect our ability or desire to ensure that awards
under the Amended and Restated Plan will qualify as
performance-based compensation under
Section 162(m).
In addition, some awards may be covered by Section 409A of
the Code. We normally would attempt to design and administer
such an award in a manner that would avoid adverse federal
income tax consequences under Section 409A to any affected
participant. Notwithstanding the foregoing, the plan expressly
provides that we do not represent to any participant that any
award is exempt from or in compliance with the requirements of
Section 409A.
Foreign Employees
and Foreign Law Considerations
The Compensation Committee may grant awards to individuals who
are foreign nationals and are located outside of the United
States. With respect to such individuals, the Compensation
Committee is authorized to modify provisions to applicable award
agreements and establish
sub-plans
for the purpose of complying with legal or regulatory provisions
of countries outside the United States.
New Plan
Benefits
We cannot currently determine the benefits or exact number of
shares subject to awards that may be granted in the future to
executive officers, directors and employees under the Amended
and Restated Plan. The following table sets forth information
about awards granted under the 2007 Plan during the year ended
December 31, 2010 to our named executive officers, both
individually and as a group, all non-employee directors as a
group and all non-executive employees as a group.
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Number of Shares of
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Number of Securities
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Exercise or Base Price of
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Name and Position
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Stock or Units (#)
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Underlying Options (#)
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Option Awards ($/Shr)
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James E. OConnor
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87,169
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222,420
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$
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28.68
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Donald W. Slager
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121,529
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115,658
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$
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28.68
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Tod C. Holmes
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43,585
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88,968
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$
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28.68
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Michael P. Rissman
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17,434
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44,484
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$
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28.68
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Kevin Walbridge
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23,000
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$
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27.02
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Executive Group
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269,717
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494,530
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$
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28.60
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Non-Employee Director Group
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82,500
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Non-Executive Officer Employee Group
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2,595,300
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$
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27.26
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For additional information concerning our compensation
practices, please see the information under the headings
Director Compensation and Executive
Compensation contained elsewhere in this proxy statement.
The Board
recommends a vote FOR the approval of the proposed
Amended and Restated Republic Services, Inc. 2007 Stock
Incentive Plan.
72
PROPOSAL 5
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our Audit Committee has selected the firm of Ernst &
Young LLP as independent registered public accountants of
Republic and its subsidiaries for the year ending
December 31, 2011. This selection will be presented to the
stockholders for ratification at the Annual Meeting.
Ernst & Young has been serving us in this capacity
since June 2002. If the stockholders do not ratify the
appointment of Ernst & Young, the selection of
independent public accountants may be reconsidered by our Audit
Committee. Representatives of Ernst & Young are
expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.
The Board
recommends a vote FOR ratification of the
appointment of Ernst & Young LLP as our independent
public accountants for 2011.
73
PROPOSAL 6
STOCKHOLDER PROPOSAL REGARDING PAYMENTS
UPON THE DEATH OF A SENIOR EXECUTIVE
On or about October 15, 2010, we received the following
proposal from the International Brotherhood of Teamsters General
Fund (Teamsters), 25 Louisiana Avenue, NW,
Washington, DC 20001, beneficial owners of 356 shares of
our stock. In accordance with SEC rules, we are reprinting the
proposal and supporting statement (the Teamsters
Proposal) in this proxy statement as they were submitted
to us:
RESOLVED: The shareholders of Republic Services,
Inc., (the Company) urge the Board of Directors to
adopt a policy of obtaining shareholder approval for any future
agreements and corporate policies that could obligate the
Company to make payments, grants or awards following the death
of a senior executive in the form of unearned salary or bonuses;
accelerated vesting of awards or benefits or the continuation of
unvested equity grants; perquisites; and, other payments or
awards in lieu of compensation. This policy would not affect
compensation that the executive earns and chooses to defer
during his or her lifetime. As used herein, future
agreements include modifications, amendments or extensions
of existing agreements.
SUPPORTING STATEMENT: As shareholders, we support a
compensation philosophy that motivates and retains talented
executives and ties their pay to the long-term performance of
the Company. We believe that such a
pay-for-performance
approach is needed to align the interests of executives with
those of shareholders.
In our view, golden coffin agreements, which can
require a company to make significant payments or awards after
an executives death, are inconsistent with that approach
and provide payments without performance.
Senior executives are highly compensated and have ample
opportunities while they are alive to provide for their estates
by contributing to a retirement fund, purchasing life insurance
and voluntarily deferring compensation or through other estate
planning strategies. We see no reason to saddle shareholders
with payments or awards when shareholders are receiving no
services in return.
In its 2010 proxy, Republic Services estimated that if it had
been required to make a payment at the end of 2009 upon the
death of Chairman and CEO James OConnor, the cost would
have been over $29 million. This includes a cash payment of
$4.8 million; the accelerated vesting of restricted stock
awards and stock options values at $5.6 million; and,
payment of $18.6 million for open awards under the annual
and long-term cash incentive plans. This does not include over
$7.4 million Mr. OConnors heirs would
receive in deferred compensation payments, $5.2 million of
which is a tax
gross-up
payment.
We agree with Peter Gleason, CFO of the National Association of
Corporate Directors, who was quoted in Financial Week as
calling golden coffin packages a bad
idea. We disagree that such agreements enhance executive
retention, as an executive who is deceased cannot be
retained.
Accordingly, we ask Republic Services to provide for a
shareholder role on this issue. We believe that the existence of
such a shareholder approval requirement may induce restraint
when parties negotiate such agreements. The proposal does not
require prior shareholder approval, which may not always be
practical to obtain; there is thus flexibility to seek
shareholder approval after material terms of an agreement are
agreed upon.
We urge shareholders to vote FOR this proposal.
Boards
Statement Recommending a Vote AGAINST the Teamsters
Proposal
The Board of Directors recommends a vote AGAINST the Teamsters
Proposal because the Board believes it would impede our ability
to attract and retain top talent, discourage our senior
executives from focusing on our long-term results and undermine
the effectiveness of our Compensation Committee.
74
The Board
believes the Teamsters Proposal would limit our ability to
attract and retain top talent.
Our success is highly dependent on cultivating and retaining top
executive talent namely individuals who are familiar
with our overall business strategy and our industry and who are
uniquely capable of implementing our strategic business
initiatives. In the highly competitive executive employment
market, we must be able to offer creative and attractive
compensation packages, including with respect to benefits
payable upon an executives death. Under the Teamsters
Proposal, stockholders would be required to approve the
extension of any benefits payable upon the death of a senior
executive. This would effectively eliminate our ability to offer
this type of benefit to potential executives, as it is
unrealistic to expect that a potential executive would be
willing to wait for a stockholder vote to determine his or her
final compensation package. We would be unable to offer a
compensation benefit that other companies competing for talent
can and do offer, which could easily be the deciding factor for
an executive choosing between us and another company. We believe
it is imperative that we have the flexibility to provide
compensation packages that meet the demands of the marketplace
for talent and allow us to compete effectively.
The proposal
discourages the benefits that ensure senior executives are
committed to our long-term success.
To maximize the incentive value of long-term benefits, employees
must know that payments will not be lost upon their death but
will continue for their beneficiaries. Such long-term benefits
are a strong incentive for long-term performance. We believe
they increase retention, encourage life-long dedication to
Republic and discourage short-term risk taking. Providing
benefits payable upon the death of an executive is the ultimate
form of long-term incentive, discouraging short-term risk-taking
and maximizing incentives for long-term performance and
retention throughout the executives careers with us. The
Board opposes the Teamsters Proposal because it would restrict
us from offering benefits that instill lifetime loyalty in
executives and maximize our long-term success.
Further, the Board disagrees with the Teamsters assertion
that our compensation programs saddle shareholders with
payments or awards when shareholders are receiving no services
in return. The majority of the payments made by us
following an executives death would be in connection with
services performed prior to his or her death (such as amounts
payable under deferred compensation plans and amounts payable
upon the vesting of long-term equity incentive awards granted
during service). Moreover, the provisions relating to death
benefits under our non-equity incentive plan, which was approved
by stockholders in 2009, apply equally to senior executives and
all other participants.
The
independent directors comprising the Compensation Committee
ensure that compensation packages serve the best interests of
Republic and its stockholders.
Our Board believes that, to do its job well, our Compensation
Committee, composed exclusively of independent directors, must
have the flexibility to determine, after careful consideration
of all relevant factors and circumstances, which compensation
packages serve the best interests of Republic and its
stockholders. The Compensation Committee has determined, based
on the reasons described above, that benefits payable after an
executives death can, in appropriate circumstances, be
essential to recruiting and retaining the top talent that drives
our long-term success. The Compensation Committee also has the
perspective to consider an entire compensation package to an
executive and how that package fits within the Companys
overall compensation structure. The Teamsters Proposal would
limit the Compensation Committees ability to structure our
compensation programs by subjecting these benefits to a
cumbersome stockholder approval process. The members of our
Compensation Committee have a deep understanding of our industry
and our people and how to best attract, retain and incentivize
top talent, and should be empowered to continue to make
decisions that are in the best interests of our stockholders
without being constrained by the Teamsters Proposal.
75
Conclusion
The Board believes that our compensation practices have been and
will continue to be a key factor in our ability to deliver
strong results. The Board believes that the requirements of the
Teamsters Proposal would put us at a competitive disadvantage in
recruiting and retaining executive talent and that it is in the
best interests of Republic and its stockholders that our
Compensation Committee retain the flexibility to design and
administer competitive compensation programs. Our Compensation
Committee is in the best position to determine the appropriate
amount and type of compensation to attract, retain and
incentivize top talent.
The Board
recommends a vote AGAINST the Teamsters
Proposal.
76
EXPENSES OF
SOLICITATIONS
The cost of soliciting proxies will be borne by Republic. In
addition to solicitations by mail, our regular employees may, if
necessary to assure the presence of a quorum, solicit proxies in
person or by telephone without additional compensation. We will
pay all costs of solicitation, including certain expenses of
brokers and nominees who mail proxy materials to their customers
or principals. Also, we have engaged Georgeson Inc. to help in
the solicitation of proxies for a fee of approximately $10,000
plus associated costs and expenses.
MISCELLANEOUS
MATTERS
Our annual report to stockholders covering the fiscal year ended
December 31, 2010 is included with this proxy statement.
Our annual report contains financial and other information about
us, but is not incorporated into this proxy statement and is not
to be considered a part of these proxy soliciting materials or
subject to Regulations 14A or 14C or to the liabilities of
Section 18 of the Exchange Act. The information contained
in the Compensation Committee Report and the
Report of the Audit Committee shall not be deemed
filed with the SEC or subject to Regulations 14A or
14C or to the liabilities of Section 18 of the Exchange Act.
We will provide upon written request, without charge to each
stockholder of record as of the Record Date, a copy of our
annual report on
Form 10-K
for the fiscal year ended December 31, 2010, as filed with
the SEC. Any exhibits listed in the
Form 10-K
report also will be furnished upon request at the actual expense
we incur by us in furnishing such exhibits. Any such requests
should be directed to Attention: Office of the Corporate
Secretary, Republic Services, Inc., 18500 North Allied Way,
Phoenix, Arizona 85054. Our annual report on
Form 10-K
and exhibits thereto are also available on our website at
www.republicservices.com or at the SECs website at
www.sec.gov.
Any stockholder who wishes to present a proposal for action at
our next annual meeting of stockholders, presently scheduled for
May, 2012, or who wishes to nominate a candidate for our Board,
must submit such proposal or nomination in writing to:
Attention: Office of the Corporate Secretary, Republic Services,
Inc., 18500 North Allied Way, Phoenix, Arizona 85054. The
proposal or nomination should comply with the time period and
information requirements as set forth in our bylaws relating to
stockholder business or stockholder nominations, respectively.
Stockholders interested in submitting a proposal for inclusion
in the Proxy Statement for the 2012 Annual Meeting of
stockholders may do so by following the procedures prescribed in
our bylaws and in accordance with the applicable rules under the
Exchange Act. Stockholder proposals must be received by our
Corporate Secretary at the above address:
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No later than December 1, 2011 if the proposal is submitted
for inclusion in our proxy materials pursuant to
Rule 14a-8
under the Exchange Act.
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Between January 13, 2012 and February 12, 2012 if the
proposal is submitted under our bylaws, in which case we are not
required to include the proposal in our proxy materials.
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You are again invited to attend the Annual Meeting at which our
management will present a review of our progress and operations.
We will hold the Annual Meeting at 10:30 a.m., local time,
on Thursday, May 12, 2011 at the Scottsdale Marriott at
McDowell Mountains, 16770 North Perimeter Drive, Scottsdale,
Arizona 85260. Directions to the hotel from the Phoenix airport
are as follows: Exit the airport east on Loop 202. Merge onto
North Loop 101. Continue north to the Princess Exit, exit and
turn left. Make a left onto Perimeter Drive and the hotel is on
the right.
Other than the items described herein, management does not
intend to present any other items of business and knows of no
other matters that will be brought before the Annual Meeting.
However, if any additional matters are properly brought before
the Annual Meeting, the persons named in the enclosed proxy
shall vote the proxies in their discretion in the manner they
believe to be in our best interest. We have prepared the
accompanying form of proxy at the Boards direction and
provide it to you at the Boards request. Your Board has
designated the proxies named therein.
77
APPENDIX A
REPUBLIC
SERVICES, INC.
AMENDED
AND RESTATED
2007 STOCK INCENTIVE PLAN
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1.
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ESTABLISHMENT,
RESTATEMENT,
EFFECTIVE DATE AND TERM
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Republic Services, Inc., a Delaware corporation
hereby
establishesestablished
the
Republic Services, Inc. 2007 Stock Incentive
Plan
. The effective
date of the
Plan shall be February 21, 2007; which is the date the Plan
was approved and adopted by the Board; provided, however, no
Award may be granted unless and until the Plan has been approved
by the shareholders of Republic.
February 21,
2007, as amended by the Board effective January 1, 2009
(the Republic 2007 Stock Incentive Plan). Republic
hereby amends and restates the Republic 2007 Stock Incentive
Plan in its entirety. The Plan was approved and adopted by the
Board on March 23, 2011 and shall become effective upon
approval by the stockholders of Republic of the Plan. Until such
approval, the provisions of the Republic 2007 Stock Incentive
Plan shall continue in effect in accordance with its terms. Any
Awards granted prior to stockholder approval of the Plan shall
remain subject to the terms of the Republic 2007 Stock Incentive
Plan as in effect on the date of grant. Any Awards granted on or
after the date on which the Plan is approved by the stockholders
of Republic shall be subject to the provisions of the
Plan.
Unless earlier terminated pursuant to
Section
1517
(k) hereof,
the Plan shall terminate on the tenth anniversary of the
Effective
Datedate
set forth above on which the Plan was approved and adopted by
the Board.
The purpose of the Plan is to enable the Company to attract,
retain, reward and motivate Eligible Individuals by providing
them with an opportunity to acquire or increase a proprietary
interest in Republic and to incentivize them to expend maximum
effort for the growth and success of the Company, so as to
strengthen the mutuality of the interests between the Eligible
Individuals and the
shareholdersstockholders
of
Republic.
As used in the Plan, the following terms shall have the meanings
set forth below:
(a) Award means any
Common
Stock, Option, Performance Share, Performance Unit,
Restricted Stock, Restricted Stock Unit, Stock Appreciation
Right
or any other
award,
Common Stock granted as a bonus or in lieu of another Award or
Dividend Equivalent, together with any other right or
interest,
granted
pursuant
to
a Participant under
the Plan.
(b) Award Agreement means a written agreement
entered into by Republic and a Participant setting forth the
terms and conditions of the grant of an Award to such
Participant.
(c) Board means the board of directors of
Republic.
(d) Cause means, with respect to a termination
of employment or service with the Company, a termination of
employment or service due to a Participants dishonesty,
fraud, insubordination, willful misconduct, refusal to perform
services (for any reason other than illness or incapacity) or
materially unsatisfactory performance of the Participants
duties for the Company;
provided, however, that if the
Participant and the Company have entered into an employment
agreement or consulting agreement which defines the term
Cause
or the Participant is covered under the Companys Executive
Separation Policy
, the term Cause shall be defined in
accordance with such agreement
or
policy, as amended from time to time and as applicable,
with respect to any Award granted to the Participant on or
after the effective date of the respective
employment or
consultingagreement
or policy.
The Committee shall determine in its
sole and absolute discretion whether Cause exists for purposes
of the Plan.
(e) Change in Control means any change
in control of Republic of a nature which would be required to be
reported (a) in response to Item 6(e) of
Schedule 14A of Regulation 14A, as in effect on the
date of an Agreement, promulgated under the Securities Exchange
Act of 1934, as amended (the Exchange Act),
(b) in response to Item 1 of the Current Report on
Form 8-K,
as in effect on the date of an Agreement, promulgated under the
Exchange Act, or (c) in any filing by the Company with the
Securities and Exchange commission;
78
provided, however, that without limitation, a Change of
Control of the Company shall be deemed to have occurred
ifthe
occurrence of any of the following
:
(i) Any person (as such term is defined
in Sections 13(d)(3) and Section 14(d)(3) of the
Exchange Act), other than the Company, any majority-owned
subsidiary of the Company, or any compensation plan of the
Company or any majority- owned subsidiary of the Company,
becomes the beneficial owner (as such term is
defined in
Rule 13d-3
of the Exchange Act)
(i) an
acquisition (other than directly from Republic) of any voting
securities of Republic (the Voting Securities) by
any Person (as the term person is used for purposes
of Section 13(d) or 14(d) of the Exchange Act), immediately
after which such Person has Beneficial Ownership
(within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or
more of the then outstanding common stock of Republic
(Shares) or the combined voting power of
Republics then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has
occurred pursuant to this subsection (i), Shares or Voting
Securities which are acquired in a Non-Control
Acquisition (as hereinafter defined) will not constitute
an acquisition which would cause a Change in Control. A
Non-Control Acquisition means an acquisition by
(A) an employee benefit plan (or a trust forming a part
thereof) maintained by (1) Republic or (2) any
corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is
owned
, directly or indirectly,
of securities of
Republic representing fifty percent (50%) or more of the
combined voting power of
Republic;by
Republic (for purposes of this definition, a Related
Entity), (B) Republic or any Related Entity, or
(C) any Person in connection with a Non-Control
Transaction (as hereinafter defined);
(ii) During any period of three consecutive years
during the term of this Agreement, the directors who at the
beginning of such period
constitute
(ii) the individuals who are members of
the
Board
(the Incumbent Board),
cease for any
reason to constitute at least a majority of the
Board,
unless the election of each director who was not a director at
the beginning of such period has
beenmembers
of the Board or, following a Merger Event (as defined in
Paragraph (iii)(A) below) which results in a Parent Corporation,
the board of directors of the ultimate Parent Corporation (as
defined in Paragraph (iii)(A)(1) below); provided,
however, that if the election, or nomination for election by
Republics common stockholders, of any new director
was
approved
in advance by directors
representingby
a vote of
at least two-thirds of the
directors then in office who were directors at the
beginning of such
periodIncumbent
Board, such new director will be considered as a member of the
Incumbent Board; provided further, however, that no
individual will be considered a member of the Incumbent Board if
such individual initially assumed office as a result of an
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board (a Proxy
Contest) including by reason of any agreement intended to
avoid or settle a Proxy Contest
; or
(iii) the
consummation of:
(A) a
merger, consolidation or reorganization with or into Republic or
in which securities of Republic are issued (a Merger
Event), unless such Merger Event is a Non-Control
Transaction. A Non-Control Transaction means a
Merger Event where:
(1)
the
stockholders of Republic immediately before such Merger Event
own directly or indirectly immediately following such Merger
Event at least fifty percent (50%) of the combined voting power
of the outstanding voting securities of (x) the corporation
resulting from such Merger Event (the Surviving
Corporation) if fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities
of the Surviving Corporation is not Beneficially Owned, directly
or indirectly by another Person (a Parent
Corporation), or (y) if there are one or more Parent
Corporations, the ultimate Parent Corporation; and,
(2)
the
individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such
Merger Event constitute at least a majority of the members of
the board of directors of (x) the Surviving Corporation, if
there is no Parent Corporation, or (y) if there are one or
more Parent Corporations, the ultimate Parent Corporation; and
79
(3) no
Person other than (w) Republic, (x) any Related
Entity, (y) any employee benefit plan (or any trust forming
a part thereof) that, immediately prior to such Merger Event was
maintained by Republic or any Related Entity, or (z) any
Person who, immediately prior to such Merger Event had
Beneficial Ownership of fifty percent (50%) or more of the then
outstanding Voting Securities or Shares, has Beneficial
Ownership of fifty percent (50%) or more of the combined voting
power of the outstanding voting securities or common stock of
(I) the Surviving Corporation, if there is no Parent
Corporation, or (II) if there are one or more Parent
Corporations, the ultimate Parent Corporation.
(iii) The shareholders of Republic approve
(1) a reorganization, merger, or consolidation with respect
to which persons who were the shareholders of Republic
immediately prior to such reorganization, merger, or
consolidation do not immediately thereafter own more than 50% of
the combined voting power entitled to vote generally in the
election of the directors of the reorganized, merged or
consolidated entity;
(2) a(B) a
complete
liquidation or dissolution of
Republic; or
(
3C
)
the sale
or
other disposition
of all or substantially all of the
assets of Republic
, or of a subsidiary of Republic that
accounts for 30% of the consolidated revenues of Republic, but
not including a reorganization, merger or consolidation of
Republic.
to any Person (other than a transfer to a Related Entity or
under conditions that would constitute a Non-Control Transaction
with the disposition of assets being regarded as a Merger Event
for this purpose or the distribution to Republics
stockholders of the stock of a Related Entity or any other
assets).
However, to the extent that
Notwithstanding the foregoing, a Change in Control will not be
deemed to occur solely because any Person (the Subject
Person) acquired Beneficial Ownership of more than the
permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting
Securities by Republic which, by reducing the number of Shares
or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject
Person, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the
acquisition of Shares or Voting Securities by Republic, and
after such share acquisition by Republic, the Subject Person
becomes the Beneficial Owner of any additional Shares or Voting
Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by
the Subject Person, then a Change of Control will occur.
In
addition, a Change in Control will not be deemed to occur unless
the event(s) that causes such Change in Control also constitutes
a change in control event, as such term is defined
in
Section 409A of the Code
would cause
an adverse tax consequence to a Participant using the above
definition, the term Change in Control shall have
the meaning ascribed to the phrase Change in the Ownership
or Effective Control of a Corporation or in the Ownership of a
Substantial Portion of the Assets of a Corporation under
Treasury Department Proposed
Regulation 1.409A-3(g)(5),
as revised from time to time in either subsequent proposed or
final regulations, and in the event that such regulations are
withdrawn or such phrase (or a substantially similar phrase)
ceases to be defined, as determined by the Committee.
(f) Change in Control Price means the
price per share of Common Stock paid in any transaction related
to a Change in Control of
Republic..
(f)
(g)
Code means the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder.
(g)
(h)
Committee means a committee or
sub-committee
of the Board consisting of two or more members of the Board,
none of whom shall be an officer or other salaried
employee of the Company, and each of whom shall
qualify in all respects
asbe
(i)
a non- employee director as defined
in
Rule 16b-3
under the Exchange Act,
and
asunless
administration of the Plan by non-employee directors
is not then required in order for exemptions under
Rule 16b-3
to apply to transactions under the Plan, (ii)
an
outside director for purposes of Code
Section 162
(m)
,
and (iii) Independent. The failure of the Committee to be
so comprised shall not invalidate any such Award that otherwise
satisfies the terms of the Plan.
If no Committee
exists,
the functions
ofor
for any other reason determined by the Board, then the Board
shall serve as
the Committee
will be
exercised by the Board;
80
provided, however, that a
Committee
(other
than the Board)
shall be created prior to the grant
of Awards to a Covered Employee and that grants of Awards to a
Covered Employee shall be made only by such Committee.
Notwithstanding the foregoing, with respect to the grant of
Awards to
non-employee
directorsNon-Employee
Directors
, the Committee shall be the Board.
(h)
(i)
Common Stock means the common stock,
$.01 par value per share, of Republic.
(i)
(j)
Company means Republic and all entities
whose financial statements are required to be consolidated with
the financial statements of Republic pursuant to United States
generally accepted accounting principles and any other entity
determined to be an affiliate as determined by the Committee in
its sole and absolute discretion.
(j)
(k)Covered
Employee means covered employee as defined in
Code Section 162(m)(3).
(k)
(l)
Covered Individual means any current or
former member of the Committee, any current or former officer of
the Company, or any individual designated pursuant
to
SectionSections
5(b
)
or 5(c
).
(l)
(m)
Detrimental Activity shall mean
(i) the disclosure to anyone outside the Company, or the
use in other than the Companys business, without written
authorization from the Company, of any confidential information
or proprietary information, relating to the business of the
Company, acquired by a Participant prior to a termination of the
Participants employment or service with the Company;
(ii) activity while employed or providing services that
results, or if known could result, in the termination of the
Participants employment or service that is classified by
the Company as a termination for Cause; (iii) any attempt,
directly or indirectly, to solicit, induce or hire (or the
identification for solicitation, inducement or hiring of) any
non-clerical employee of the Company to be employed by, or to
perform services for, the Participant or any person or entity
with which the Participant is associated (including, but not
limited to, due to the Participants employment by,
consultancy for, equity interest in, or creditor relationship
with such person or entity) or any person or entity from which
the Participant receives direct or indirect compensation or fees
as a result of such solicitation, inducement or hire (or the
identification for solicitation, inducement or hire) without, in
all cases, written authorization from the Company; (iv) any
attempt, directly or indirectly, to solicit in a competitive
manner any current or prospective customer of the Company
without, in all cases, written authorization from the Company;
(v) the Participants Disparagement, or inducement of
others to do so, of the Company or their past and present
officers, directors, employees or products; (vi) without
written authorization from the Company, the rendering of
services for any organization, or engaging, directly or
indirectly, in any business, which is competitive with the
Company, or which organization or business, or the rendering of
services to such organization or business, is otherwise
prejudicial to or in conflict with the interests of the Company;
provided, however that competitive activities shall only be
those competitive with any business unit of the Company with
regard to which the Participant performed services at any time
within the two (2) years prior to the termination of the
Participants employment or service; or (vii) any
other conduct or act determined by the Committee, in its sole
discretion, to be injurious, detrimental or prejudicial to any
interest of the Company. For purposes of subparagraphs (i),
(iii), (iv) and (vi) above, the Chief Executive
Officer and the General Counsel of the Company shall each have
authority to provide the Participant with written authorization
to engage in the activities contemplated thereby and no other
person shall have authority to provide the Participant with such
authorization.
(m)
(n)
Disability means a permanent and
total disability within the meaning of Code
Section 22(e)(3);
provided, however, that if a
Participant and the Company have entered into an employment or
consulting agreement which defines the term Disability for
purposes of such
agreement
or the Participant is covered under the Companys Executive
Separation Policy
, Disability shall be defined pursuant to
the definition in such agreement
or
policy, as applicable,
with respect to any Award granted
to the Participant on or after the effective date of the
respective employment or consulting
agreement
or policy.
The Committee shall determine in its sole
and absolute discretion whether a Disability exists for purposes
of the Plan.
(n)
(o)
Disparagement means making any comments or
statements to the press, the Companys employees or any
individual or entity with whom
the
companyCompany
has
a business relationship which would adversely affect in any
manner: (i) the conduct of the business of the Company
(including, without limitation, any products or business plans
or prospects), or (ii) the business reputation of the
Company or any of its products, or its past or present officers,
directors or employees.
81