AMERICAN DISPOSAL SERVICES INC - 10-K/A - 19980427 - PART_III
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information
concerning the Company's executive officers and directors.
Merril M. Halpern, A. Lawrence Fagan, Richard T. Henshaw, III,
David C. Stoller and Norman Steisel have indicated that they will
not stand for re-election to the Board of Directors of the
Company at the 1998 Annual Meeting of Stockholders of the Company
(the "Annual Meeting"). At the Annual Meeting, the Company
proposes to nominate to the Board of Directors two executive
officers of the Company (Richard De Young and Stephen P. Lavey)
and not less than four independent directors (including G.T.
Blankenship).
Name Age Position
Richard De Young ........... 43 Chairman; President;
Chief Executive Officer;
Director
Richard T. Kogler .......... 38 Vice President; Chief
Operating Officer
Stephen P. Lavey ........... 36 Vice President; Chief
Financial Officer
Ann L. Straw ............... 44 Vice President; General
Counsel and Secretary
Lawrence R. Conrath, Sr..... 41 Vice President;
Controller
John J. McDonnell .......... 42 Vice President--
Engineering
Mary T. Ryan ............... 44 Vice President--Corporate
Affairs
Merril M. Halpern .......... 63 Director
A. Lawrence Fagan(1) ....... 67 Director
Richard T. Henshaw, III(2).. 59 Director
David C. Stoller ........... 46 Director
G.T. Blankenship(2) ........ 68 Director
Norman Steisel(1) .......... 54 Director
_____________________
(1) Member of audit committee.
(2) Member of compensation committee.
Richard De Young has been Chairman of the Company since
April 8, 1998, Chief Executive Officer since September 4, 1997
and President and a director of the Company since January 1,
1996. He has also served as President of ADS, Inc. ("ADS") since
April 1994 and as a director since September 1993 and was the
Chief Operating Officer and Vice President for ADS from January
1993 through April 1994. Mr. De Young has been a director of
County Disposal, Inc. ("CDI") since May 1995, and its President
since July 31, 1996. Both ADS and CDI were predecessor entities
of the Company. From June 1982 through January 1993 he was
employed by Waste Management of North America, a subsidiary of
Waste Management, Inc. ("WMI"), most recently as a Regional
Operations Vice President, with responsibility for landfill and
collection operations in the Midwest region.
Richard T. Kogler has been a Vice President and the Chief
Operating Officer of the Company since January 1, 1996. He
previously served in the same capacities for ADS since May 1995
and as President of CDI between May 1995 and July 1996. He has
been Vice President of CDI since July 31, 1996. From October
1984 through May 1995 Mr. Kogler was employed by WMI, most
recently as a Regional Operations Vice President.
Stephen P. Lavey has been a Vice President and the Chief
Financial Officer of the Company since February 1997. He was
previously employed by Bank of America from June 1990 through
January 1997, most recently as a Vice President in its
Environmental Services Lending Group, specializing in the solid
waste, environmental engineering and water purification
industries. Mr. Lavey is also a Certified Public Accountant.
Ann L. Straw has been a Vice President and the General
Counsel of the Company since January 1, 1996. She previously
served in the same capacities for ADS (since June 1995) and for
CDI (since June 1995). She has been the Secretary of the Company
since January 1, 1996, and of ADS and CDI since July 31, 1995.
From 1986 through May 1995 she was employed by WMI, most recently
as a Group Counsel for WMI's Midwest Group.
Lawrence R. Conrath, Sr. has been Controller of the Company
since January 1, 1996 and a Vice President since May 1996. He
previously served as Controller for ADS since May 1994. Prior to
joining the Company, Mr. Conrath spent two years with United
Waste Systems, Inc., as Regional Controller of its Michigan
region. From 1978 through 1990, Mr. Conrath was employed by WMI
in several financial positions, most recently as Director of
Accounting for the WMI Urban Services Group. Mr. Conrath is also
a Certified Public Accountant.
John J. McDonnell has been the Vice President--Engineering
of the Company since January 1, 1996. He previously served as
Environmental Engineer for ADS (since February 1993) and CDI
(since June 1995). From 1985 through February 1993, Mr.
McDonnell was employed by WMI, most recently as an Engineering
Manager.
Mary T. Ryan has been the Vice President--Corporate Affairs
since March 1997 after joining the Company in November 1996.
From May 1996 to November 1996, she was employed by Ketchum
Public Relations as Senior Vice President, Corporate Issues.
From July 1984 to April 1995 she was employed by WMI, most
recently as Vice President, Management Services.
Merril M. Halpern has served as director of the Company,
since January 1, 1996. Since October 1984, Mr. Halpern has
served as Chairman of the Board of Charterhouse Group
International, Inc., which is a private investment firm
specializing in leveraged buy-out acquisitions ("Charterhouse").
From 1973 to October 1984, Mr. Halpern served as President and
Chief Executive Officer of Charterhouse. Mr. Halpern is also a
director of Insignia Financial Group, Inc., a real estate
management firm; and Microwave Power Devices, Inc., a
manufacturer of highly linear power amplifiers primarily for the
wireless telecommunications market ("MPD").
A. Lawrence Fagan has served as a director of the Company
since January 1, 1996. He has been President of Charterhouse
since January 1997 and formerly served as Executive Vice
President of Charterhouse since 1984. Mr. Fagan is also a
director of MPD.
Richard T. Henshaw, III has been a director of the company
since January 1, 1996. He has served as a director of ADS (since
January 1993) and CDI (since May 1995). Mr. Henshaw has been a
Managing Director of Charterhouse since January 1997 and formerly
served as a Senior Vice President of Charterhouse since 1991.
Prior thereto he was a Senior Vice President of The Bank of New
York. Mr. Henshaw is also a director of Cornell Corrections,
Inc., a provider of privatized correctional services.
David C. Stoller was Chairman of the Company from January 1,
1996 through April 7, 1998. He served in the same capacities for
ADS since January 1993 and CDI since May 1995. Since March 1998,
Mr. Stoller has been an entrepreneur with Charterhouse. From
January 1997 until February 1998, he was a Managing Director of
Charterhouse. From August 1992 through December 1996, Mr.
Stoller served as the Chairman of Charterhouse Environmental
Capital Group, Inc. ("Charterhouse Environmental Capital"), which
provided management and consulting services to companies with
environmental operations including the Company. Mr. Stoller was
a partner at the law firm of Milbank, Tweed, Hadley & McCloy
(where he remains as "Of Counsel") from January 1989 through July
1992.
G.T. Blankenship has been a director of the Company since
January 1, 1996. He previously served as a director of ADS
(since January 1991). Mr. Blankenship has been a self-employed
private investor since 1990.
Norman Steisel has been a director of the Company since July
1996. He has served as Vice President, Business Development of
Computer Sciences Corp. since May 1997. He was the President of
EnEssCo Strategies, a strategic consulting services firm
specializing in government regulated markets, from January 1994
to May 1997. From January 1990 through December 1993, Mr.
Steisel was the First Deputy Mayor of the City of New York.
Prior to 1990, he was a Senior Vice President at Lazard Freres &
Co., specializing in environmental, corporate and municipal
finance.
Directors of the Company hold office until the next annual
meeting of stockholders and until their successors are elected
and qualified, or until their earlier resignation or removal.
Messrs. Halpern, Fagan, Henshaw, Stoller and Steisel have
indicated they will not stand for re-election to the Board of
Directors at the Annual Meeting. All officers of the Company are
appointed by and serve at the discretion of the Board of
Directors. There are no family relationships among any directors
or officers of the Company.
Board Committees and Membership
The Board of Directors has established a compensation
committee and an audit committee. The compensation committee
(which is currently comprised of Messrs. Blankenship and Henshaw)
reviews executive salaries, administers any bonus, incentive
compensation and stock option plans of the Company, including the
Company's Stock Option Plan, and approves the salaries and other
benefits of the executive officers of the Company. In addition,
the compensation committee consults with the Company's management
regarding pension and other benefit plans and compensation
policies and practices of the Company. The audit committee
(which is currently comprised of Messrs. Fagan and Steisel)
reviews the professional services provided by the Company's
independent auditors, the independence of such auditors from
management of the Company, the annual financial statements of the
Company and the Company's system of internal accounting controls.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Under the securities laws of the United States, the
Company's directors, officers, and any persons holding more than
10 percent of the Common Stock are required to report their
ownership of Common Stock and any changes in that ownership, on a
timely basis, to the Securities and Exchange Commission. Based
on material provided to the Company, all such required reports
were filed on a timely basis in 1997 except that the Company's
executive officers did not timely file Form 5s reporting 1997
stock option grants. All non-timely Form 5s have now been filed.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information about the
compensation paid, or payable, by the Company for services
rendered in all capacities to the Chief Executive Officer of the
Company and each of the four other most highly paid key policy-
making executive officers of the Company for each of the last
three fiscal years in which such officers were executive officers
for all or part of the year.
SUMMARY COMPENSATION TABLE
Annual Long Term
Compensation Compensation
Securi-
ties
Other Restricted Under- All
Name and Annual Stock lying Other
Principal Salary Bonus Compen- Award(s) Options Compen-
Position Year ($) ($) sation($) ($) #(1) sation
Richard De Young 1997 300,000 300,000 7,824 0 101,087 0
President and 1996 275,442 0 0 0 282,743 0
Chief Executive 1995 230,092 0 0 0 0 0
Officer(2)
Richard Kogler 1997 184,283 180,000 0 0 95,000 0
Vice President 1996 160,500 0 0 0 52,082 0
Chief Operating 1995 93,246 0 0 0 0 0
Officer(3)
David C. Stoller 1997 300,000 0 0 0 0 0
Chairman(4) 1996 125,000 0 0 0 218,371 0
1995 0 0 0 0 0 0
Stephen P. Lavey 1997 150,208 175,000 12,000 0 125,000 0
Vice President 1996 0 0 0 0 0 0
and Chief 1995 0 0 0 0 0 0
Financial
Officer(5)
Ann L. Straw 1997 155,200 155,000 0 0 35,765 0
Vice President, 1996 142,500 0 0 0 34,863 0
General Counsel 1995 73,125 0 0 0 0 0
and Secretary(6)
______________
(1) The Company is the sole stockholder of ADS and CDI. The Company
acquired all of the shares of common stock of ADS and CDI effective January
1, 1996 in exchange for which the previous stockholders of ADS and CDI
received all of the then outstanding shares of the Company's Common Stock
(the "Exchange"). As part of the Exchange, all options that had previously
been granted by ADS and CDI were canceled in exchange for options granted
by the Company.
(2) Options to purchase 282,743 shares were granted to Mr. De Young in 1996
as part of the Exchange to replace options to purchase shares of ADS and
CDI granted in prior years.
(3) Options to purchase 29,857 shares were granted to Mr. Kogler in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years. Mr. Kogler's 1995 compensation figure reflects
employment during the period from May 1995 through December 1995.
(4) Options to purchase 218,371 shares were granted to Mr. Stoller in 1996
as part of the Exchange to replace options to purchase shares of ADS and
CDI granted in prior years. Mr. Stoller's 1996 compensation figure
reflects employment during the period from August 1996 through December
1996.
(5) Mr. Lavey's 1997 compensation figure reflects employment during the
period from February 1997 through December 1997. Other Annual Compensation
reflects a $12,000 relocation payment to Mr. Lavey.
(6) Options to purchase 19,863 shares were granted to Ms. Straw in 1996 as
part of the Exchange to replace options to purchase shares of ADS and CDI
granted in prior years. Ms. Straw's 1995 compensation figure reflects
employment during the period from June 1995 through December 1995.
Stock Options
The following table contains information concerning the
grant of options to purchase shares of the Company's Common Stock
to each of the named executive officers of the Company during the
year ended December 31, 1997. No stock appreciates rights
("SARS") were granted in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Appreciation
for Option
Individual Grants Term(1)
Percent
of
Number Total
of Options
Securi- Granted
ties to
Under- Employ-
lying ees in Exercise Expi-
Options Fiscal Price ration
Name Granted Year ($/Share) Date(2) 5% 10%
Richard De Young 26,087 5.5% 17.25 3/21/07 733,004 1,167,186
75,000 15.7% 27.13 8/21/07 3,314,393 5,277,617
Richard Kogler 50,000 10.5% 17.25 5/15/07 1,404,922 2,237,103
45,000 9.4% 27.13 8/21/07 1,988,636 3,166,570
David C. Stoller 0 0% N/A N/A N/A N/A
Stephen P. Lavey 125,000 26.2% 17.50 2/21/07 3,563,207 5,673,812
Ann L. Straw 12,765 2.7% 17.25 3/21/07 358,676 571,132
23,000 4.8% 27.13 8/21/07 1,016,414 1,618,469
_____________________
(1) Amounts reported in these columns represent amounts that may be
realized upon exercise of options immediately prior to the expiration of
their term assuming the specified compounded rates of appreciation (5% and
10%) on the Company's Common Stock over the term of the options. The
potential realizable values set forth above do not take into account
applicable tax and expense payments that may be associated with such
options exercises. Actual realizable value, if any, will be dependent on
the future price of the Common Stock on the actual date of exercise, which
may be earlier than the stated expiration date. The 5% and 10% assumed
annualized rates of stock price appreciation over the exercise period of
the options used in the table above are mandated by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future price of the Common Stock on any date.
There is no representation either express or implied that the stock price
appreciation rates for the Common Stock assumed for purposes of this table
will actually be achieved.
(2) Each option is subject to earlier termination if the officer's
employment with the Company is terminated for certain reasons.
The following table sets forth information for each of the named
executive officers with respect to the value of options
outstanding as of December 31, 1997. There were no options
exercised during 1997. No SARs were exercised during 1997 and
none were outstanding as of December 31, 1997.
FISCAL YEAR-END OPTION VALUES
Number of Value
Securities Underlying of Unexercised In-
Unexercised Options the-Money Options at
at December 31, 1997 December 31, 1997(1)
Exerci- Unexerci- Exerci- Unexerci-
Name sable sable sable sable
Richard De Young 196,204 187,626 $5,720,726 $3,726,520
Richard Kogler 25,745 121,337 $ 737,707 $2,127,808
David C. Stoller 171,271 47,100 $4,982,274 $1,370,139
Stephen P. Lavey 0 125,000 $ 0 $2,375,000
Ann L. Straw 17,206 53,422 $ 492,946 $ 959,653
(1) Represents the difference between $36.50 the last reported
sales price per share of the Common Stock on December 31, 1997,
and the exercise price per share of the in-the-money options,
multiplied by the number of shares underlying the in-the-money
options.
Director Compensation
The only directors who are compensated for services as a
director are Messrs. Blankenship and Steisel, each of whom
receives $2,000 for each meeting of the Board of Directors that
he attends and $500 for each meeting of a committee of the Board
of Directors that he attends.
Compensation Committee Interlocks and Insider Participation
During 1997, the Company's compensation committee determined
the compensation of all the Company's executive officers. No
member of the compensation committee or executive officer of the
Company has a relationship that would constitute an interlocking
relationship with the executive officers or directors of another
entity.
Employment Agreements
On January 1, 1998, Mr. De Young entered into a new three-
year employment agreement with the Company. The employment
agreement provides that on each anniversary of the agreement, the
term shall be automatically extended for an additional one-year
period unless no later than six months before such anniversary
either party gives written notice to the other that it does not
wish to extend the term of the agreement. The employment
agreement provides for a current annual base salary of $300,000
plus an annual bonus determined on the basis of criteria
established annually by the compensation committee of the Board
of Directors. In the event of a Change of Control of the Company
(as defined in the employment agreement), Mr. De Young will be
entitled to receive, in addition to certain other benefits, a
payment (the "Change of Control Payment") equal to the sum of (i)
the base salary otherwise payable during the remainder of the
term had the Change of Control not occurred and (ii) an amount
equal to the product of (x) the average of the annual bonuses
earned in each of the last two years (the "Average Bonus") and
(y) the number of full and partial years remaining in the term of
the agreement. In no event will the Change of Control Payment be
less than three times the sum of the annual base salary then in
effect and the Average Bonus (which Average Bonus shall not be
less than 50% of the base salary).
In May 1996, Mr. Stoller entered into an employment
agreement with the Company which provides for annual compensation
of $300,000. Mr. Stoller ceased to serve as Chairman of the
Company on April 7, 1998 but will be entitled to receive
compensation through July 30, 1998. The employment agreement
provides that Mr. Stoller has the right to receive a $600,000
payment in the event of a Change of Control during the term.
On January 1, 1998, Messrs. Kogler, Lavey, Conrath and
McDonnell and Mses. Straw and Ryan each entered into a new 18-
month employment agreement with the Company. Each employment
agreement provides that on each anniversary of such agreement,
the term shall be automatically extended for an additional one-
year period unless no later than six months before such
anniversary either party gives written notice to the other that
it does not wish to extend the term of the agreement. The
employment agreements for Messrs. Kogler, Lavey, Conrath and
McDonnell and for Mses. Straw and Ryan provide for an annual base
salary of $225,000, $175,000, $140,000, $142,830, $158,000, and
$150,000 respectively, plus an annual bonus determined on the
basis of criteria established annually by the compensation
committee of the Board of Directors. In the event of a Change of
Control, each of Messrs. Kogler, Lavey, Conrath and McDonnell and
Mses. Straw and Ryan will be entitled to receive, in addition to
certain other benefits, a Change of Control Payment equal to the
sum of (i) the base salary otherwise payable during the remainder
of the term had the Change of Control not occurred and (ii) an
amount equal to the product of (x) the Average Bonus and (y) the
number of full and partial years remaining in the term of the
agreement. In no event will the Change of Control Payment be
less than three times the sum of the annual base salary then in
effect and the Average Bonus (which Average Bonus shall not be
less than 50% of the base salary).
In January 1998, the Company entered into agreements with
each of Messrs. De Young, Kogler, Lavey, Conrath and McDonnell
and Mses. Straw and Ryan providing for a payment in the event of
a Change of Control in an amount equal to the product of (i)
157,895 in the case of Mr. De Young, 75,188 in the case of Mr.
Kogler, 46,992 in the case of Mr. Lavey, 30,075 in the case of
Mr. Conrath, 30,075 in the case of Mr. McDonnell, 46,617 in the
case of Ms. Straw and 30,075 in the case of Ms. Ryan and (ii) the
difference between (x) the closing price of the Company's Common
Stock on the date on which the stockholders of the Company
approve an amendment (the "Amendment") to the Company's Stock
Option Plan increasing the number of shares of Common Stock for
which options may be granted under the plan (the "Amendment
Approval Price") and (y) $33.25. In the event of the occurrence
of a Change of Control prior to the approval of the Amendment,
the Amendment Approval Price will be replaced with the highest
per share price actually paid to the Company's stockholders in
connection with the Change of Control. Each of the agreements
will terminate if the Amendment is not approved by the
stockholders of the Company by June 30, 1999.
In the event the executive officers are required to pay an
excise tax on "excess parachute payments" received from the
Company upon a Change of Control, the Company has agreed to pay
to the executive an amount necessary to place the executive in
the same after-tax financial position as the executive would have
been in had the executive not incurred such tax.
Effective as of January 1, 1996, the Company entered into
agreements with each of its executive officers (other than Mr.
Lavey and Ms. Ryan) providing that, upon such officer's exercise
of stock options granted in exchange for options previously
granted by CDI, the Company will pay to such officer an amount
equal to the tax savings actually recognized by the Company as a
result of the deductions attributable to such exercise. In no
event can the payment to be received by an executive officer
under such agreement exceed the difference between the federal
income tax actually paid by such officer as a result of such
option exercise and the amount of federal income tax that would
have been paid by such officer had such option exercise been
taxed at the capital gains rate.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information with
respect to beneficial ownership of the Company's Common Stock as
of April 15, 1998 by: (i) each person known by the Company to be
the beneficial owner of more than 5% of the Company's Common
Stock; (ii) each of the Company's directors; (iii) the Company's
Chief Executive Officer and each of the Company's other current
executive officers; and (iv) the Company's directors and
executive officers as a group.
Number of shares
of Common Stock
Name and Address beneficially owned Percent of
of Beneficial Owners as of April 15, 1998 Common Stock
Pilgrim Baxter &
Associates, Ltd.(1) 1,754,020 7.7%
Nicholas-Applegate
Capital Mgmt.(2) 1,173,600 5.2%
Richard De Young(3)(4) 215,059 *
David C. Stoller(3) 173,738 *
Merril M. Halpern -- --
A. Lawrence Fagan -- --
Richard T. Henshaw, III -- --
G.T. Blankenship(5) 97,451 *
Norman Steisel -- --
Richard T. Kogler(3) 26,922 *
Stephen P. Lavey(3) 41,666 *
Ann L. Straw(3)(6) 21,661 *
John J. McDonnell(3)(7) 54,191 *
Lawrence R. Conrath, Sr.(3)(8) 38,980 *
Mary T. Ryan (3)(9) 17,725 *
All directors and executive
officers as a group (13
persons)(3) 687,393 3.0%
* Less than one percent.
(1) Information regarding Pilgrim Baxter & Associates, Ltd. is
based on Schedule 13G filed by such person with the Securities
and Exchange Commission as of December 31, 1997. The address of
Pilgrim Baxter & Associates, Ltd. is 825 Duportail Road, Wayne,
Pennsylvania 19087.
(2) Information regarding Nicholas-Applegate Capital Mgmt. is
based on Schedule 13G filed by such person with the Securities
and Exchange Commission as of December 31, 1997. The address of
Nicholas-Applegate Capital Mgmt. is 600 West Broadway, 29th
Floor, San Diego, California 92101.
(3) Includes options exercisable within 60 days of April 15, 1998
to purchase 212,952, 171,271, 41,666, 26,922, 53,195, 37,982,
21,461 and 725 shares granted under the American Disposal
Services, Inc. 1996 Stock Option Plan to Messrs. De Young,
Stoller, Lavey, Kogler, McDonnell and Conrath and Ms. Straw and
Ryan, respectively. For purposes of computing the percentage of
outstanding shares beneficially held by each person or group of
persons named above on a given date, any security which such
person or persons has the right to acquire within 60 days after
such date is deemed to be beneficially owned for the purpose of
computing the percentage ownership of such person or group of
persons, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(4) Includes 2,467 shares held jointly by Mr. De Young and his
wife.
(5) Includes 7,995 shares held by Mr. Blankenship's wife, of
which Mr. Blankenship disclaims beneficial ownership.
(6) Includes 200 shares held by Ms. Straw's minor children.
(7) Includes 996 shares held by Mr. McDonnell's minor children.
(8) Includes 498 shares held jointly by Mr. Conrath and his wife
and 400 shares held in an IRA for the benefit of Mr. Conrath.
(9) Includes 6,000 shares held in an IRA for the benefit of Ms.
Ryan and 11,000 shares held jointly by Ms. Ryan and her husband.
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