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 x☒ Filed by a Party other than the Registrant ¨☐
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Preliminary Proxy Statement | ||
Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material Pursuant to |
CASELLA WASTE SYSTEMS, 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):
No fee required. | ||||
Fee computed on table below per Exchange Act Rules14a-6(i)(1) and 0-11. | ||||
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CASELLA WASTE SYSTEMS, INC.
25 Greens Hill Lane
Rutland, Vermont 05701
NOTICE OF THE 20162018 ANNUAL MEETING OF STOCKHOLDERS
To be Held on Thursday, November 17, 2016Friday, June 1, 2018
The 20162018 Annual Meeting of Stockholders (the “2016“2018 Annual Meeting”) of Casella Waste Systems, Inc., a Delaware corporation (the “Company,” “we,” “us” or “our”), will be held on Thursday, November 17, 2016Friday, June 1, 2018 at 10:00 a.m., Eastern Time, at the Killington Grand Hotel, located at 228 East Mountain Road, Killington, Vermont 05751, to consider and act on the following matters:
1. | To elect three Class |
2. | To approve, in an advisory |
3. |
To ratify the appointment of RSM US LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, |
To transact such other business as may properly come before the |
Stockholders of record of our Class A common stock and our Class B common stock at the close of business on September 29, 2016,April 13, 2018, the record date for the 20162018 Annual Meeting, are entitled to notice of, and to vote at, the 20162018 Annual Meeting or any adjournment thereof. Your vote is important regardless of the number of shares you own. If you are a stockholder of record, please vote in one of the following ways:
• | Vote over the Internetby going to the website of our tabulator, Computershare Trust Company, N.A., atwww.investorvote.com/CWSTand following the instructions for |
• | Vote by Telephone, by calling1-800-652-VOTE (8683) and following the recorded instructions; or |
• | Vote by Mail, by completing and signing your enclosed proxy card and mailing it in the enclosed postage prepaid envelope. If you vote over the |
If your shares are held in “street name,” that is, held for your account by a bank, broker or other nominee, please use the enclosed voting instruction form for your shares to be voted by mail or telephone or over the Internet.internet.
All stockholders are invited to attend the 20162018 Annual Meeting in person. You may obtain directions to the 20162018 Annual Meeting by contacting our Investor Relations Department at1-802-775-0325. Whether or not you plan to attend the 20162018 Annual Meeting in person, we urge you to take the time to vote your shares.
Please read the attached proxy statement in its entirety, as it contains important information you need to know to vote at the 20162018 Annual Meeting.
By order of the Board of Directors,
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Rutland, Vermont | John W. Casella Chairman and Chief Executive Officer |
PROXY STATEMENT
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IMPORTANT INFORMATION ABOUT THE | ||||
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PROPOSAL 2 — ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE | ||||
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STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE | ||||
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CASELLA WASTE SYSTEMS, INC.
25 Greens Hill Lane
Rutland, Vermont 05701
PROXY STATEMENT
for the
20162018 ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday, November 17, 2016Friday, June 1, 2018
TIME, DATE AND PLACE OF 20162018 ANNUAL MEETING
This proxy statement and the enclosed proxy card are being furnished to you in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Casella Waste Systems, Inc.’s (the “Company,” “we,” “us” or “our”) Board of Directors (the “Board”), for use at the 20162018 Annual Meeting of Stockholders to be held on Thursday, November 17, 2016Friday, June 1, 2018 at 10:00 a.m., Eastern Time, at the Killington Grand Hotel, located at 228 East Mountain Road, Killington, Vermont 05751, and at any adjournments, postponements, continuations or reschedulings thereof (the “2016“2018 Annual Meeting”), pursuant to the enclosed Notice of the 20162018 Annual Meeting.
The Notice of the 20162018 Annual Meeting, this proxy statement, the accompanying proxy card and our Annual Report to Stockholders for the fiscal year ended December 31, 20152017 (the “2015“2017 Annual Report”), are being mailed to stockholders on or about October 7, 2016.April 23, 2018. Stockholders should review the information provided herein in conjunction with our 20152017 Annual Report that accompanies this proxy statement. Our principal executive offices are located at 25 Greens Hill Lane, Rutland, Vermont 05701, and our telephone number is(802) 775-0325.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
For the 20162018 Annual Meeting of Stockholders to be Held on Thursday, November 17, 2016Friday, June 1, 2018
The proxy materials, which include this proxy statement, a proxy card and our 20152017 Annual Report, are available for viewing, printing and downloading atwww.casella.com/2016AnnualMeeting.2018AnnualMeeting.
A copy of our Annual Report on Form10-K (including financial statements and schedules) for the fiscal year ended December 31, 2015,2017 (“fiscal 2017”), as filed with the Securities and Exchange Commission (the “SEC”), except for exhibits, will be furnished without charge to any stockholder upon oral or written request to Casella Waste Systems, Inc., Attn: Investor Relations, 25 Greens Hill Lane, Rutland, Vermont 05701, Telephone:1-802-775-0325.
This proxy statement and our Annual Report on Form10-K for the fiscal year ended December 31, 20152017 are also available on the SEC’s website atwww.sec.gov.
This summary highlights information that is contained elsewhere in this proxy statement and does not include all of the information that you should consider. You should read the entire proxy statement carefully before voting.
20162018 Annual Meeting of Stockholders
Date and Time
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Location
| Killington Grand Hotel, 228 East Mountain Rd., Killington, VT 05751
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Voting Matters and Board Recommendations
Item | Proposal | Board
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1 | Elect three Class I Directors
| For | 55 | Elect three Class III Directors
| For | 54 | ||||||
2 | Approve, in an advisory “say-on-pay” vote, named executive officer compensation
| For | 57 | Approve, in an advisory“say-on-pay” vote, the compensation of our named executive officers
| For | 56 | ||||||
3 | Approve Casella Waste Systems, Inc. 2016 Incentive Plan
| For | 59 | Ratify the appointment of RSM US LLP as the Company’s independent auditors for the fiscal year ending December 31, 2018
| For | 58 | ||||||
4 | Ratify the appointment of RSM US LLP as the Company’s independent auditors for the fiscal year ending December 31, 2016
| For | 71 | Transact other business that properly comes before the meeting
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5 | Transact other business that properly comes before the meeting
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20162018 Nominees for the Board of Directors
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| and Chief Executive Officer of Republic Services, Inc. | Compensation Committee |
Company Performance Highlights and Execution Against 2018 Strategic Plan
Over the last several years, the Company haswe have performed well against our key strategic initiatives, with this solid execution translating tointo strong stockholder value creation in the fiscal year ended December 31, 2015 (“fiscal 2015”).
Strong execution of fiscal 2018 strategic plan (“Fiscal 2018 Plan”)2017.
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Peer stocks include: Advanced Disposal Services, Inc., Covanta Holding Corporation, |
2021 Strategic Plan
In August 2017, we announced our updated strategic plan through our fiscal year ending December 31, 2021 (the “2021 Strategic Plan”). As part of the 2021 Strategic Plan, we intend to remain focused on creating shareholder value through: (1) increasing landfill returns; (2) improving collection profitability; and (3) creating incremental value through resource solutions. In addition, we also announced two new key strategies as part of the 2021 Strategic Plan: (4) reducing general and administration costs and improving efficiencies; and (5) allocating capital to balance debt delevering with smart growth.
Executive Compensation Highlights
The Company maintainsWe maintain an executive compensation program that reflects our corporate strategy and short- and long-term business objectives and that provides performance-based pay that aligns the interests of our executives with those of our stockholders.
Our stockholders have shown their support for our executive compensation program as evidenced by a 97%99.7% favorable “say-on-pay”“sayon-pay” vote at our 20152017 Annual Meeting of Stockholders.
Our Compensation Committee periodicallyannually reviews our executive compensation program to ensure continued alignment with our philosophy, corporate strategy, and business objectives. As a result of the Compensation Committee’s review in fiscal 2015 and the concurrent refresh of our strategic plan, we made several key changes to our executive pay practices for the fiscal year ending December 31, 2016 (“fiscal 2016”) in order to further align pay with Company performance and to ensure continued alignment of executive pay with our corporate strategy. These changes, which include a shift to more performance-based pay elements, are described in our Compensation Discussion and Analysis. The change in the overall mix of paytotal target compensation for our Chief Executive Officer and our other named executive officers for fiscal 2017 is illustrated in the following charts:
We employ a number of “best practices” with respect to executive compensation design:
✓ Anti-hedging policy
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Approval of Casella Waste Systems, Inc. 2016 Incentive Plan
In the opinion of our Board, the future success of our company depends, in large part, on our ability to maintain a competitive position in attracting, retaining and motivating key employees with experience and ability – periodic equity awards as part of a competitive compensation package are an important factor in enabling us to do so.
On September 29, 2016, our Board adopted, subject to stockholder approval, the Casella Waste Systems, Inc. 2016 Incentive Plan (“2016 Incentive Plan”) to replace our 2006 Stock Incentive Plan, which expires on October 9, 2016. The 2016 Incentive Plan would allow for the issuance of up to 2,250,000 shares of Class A common stock and up to an additional 2,722,884 shares of Class A common stock, which is equal to the sum of the number of shares of Class A common stock reserved for issuance under the 2006 Stock Incentive Plan that remain available for grant immediately prior to the expiration of the 2006 Stock Incentive Plan and the number of shares of Class A common stock subject to awards granted under the 2006 Stock Incentive Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us. As of August 31, 2016, the number of shares of Class A common stock that remain available for grant under the 2006 Stock Incentive Plan was 646,081, and the number of shares of Class A common stock subject to awards granted under the 2006 Stock Incentive Plan was 2,101,625.
We believe that the 2016 Incentive Plan represents best practices from a corporate governance perspective. Key features include:
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PURPOSES OF THE 20162018 ANNUAL MEETING
At the 20162018 Annual Meeting, our stockholders will consider and vote upon the following matters:
1. | To elect three Class |
2. | To approve, in an advisory |
3. |
To ratify the appointment of RSM US LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, |
To transact such other business as may properly come before the |
All proxies will be voted in accordance with the instructions contained in those proxies. Unless contrary instructions are indicated on the enclosed proxy, all shares of our Class A and Class B common stock represented by valid proxies received pursuant to this solicitation (and that have not been revoked in accordance with the procedures set forth herein) will be voted (a) “FOR” the election of all three director nominees nominated by our Board as set forth in this proxy statement, (b) “FOR” the approval, on an advisory basis, of the compensation of our named executive officers, (c) “FOR” the approval of the Casella Waste Systems, Inc. 2016 Incentive Plan; (d) “FOR” the ratification of the appointment RSM US LLP as our independent auditors for the fiscal year ending December 31, 2016,2018, and (e)(d) in the discretion of the persons named on the proxy card in connection with any other business that may properly come before the 20162018 Annual Meeting and any adjournments, postponements, reschedulings or continuations thereof, subject to compliance withRule 14a-4(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). At this time, except as otherwise disclosed in this proxy statement, the Board knows of no other business that may properly come before the 20162018 Annual Meeting; however, if other matters properly come before the 20162018 Annual Meeting, it is intended that the persons named in the proxy will vote thereon in accordance with their best judgment.
IMPORTANT INFORMATION ABOUT THE 20162018 ANNUAL MEETING AND VOTING
Q. Why did I receive these proxy materials? | We are providing these proxy materials to you in connection with the solicitation by our Board of proxies to be voted at the |
Q. What is included in the proxy materials? | A. | The proxy materials include this proxy statement, a proxy card and our |
Q. What are the recommendations of the Board? | A. | Our Board unanimously recommends that you vote your shares as follows: |
“FOR” the election of the three class IClass III directors nominated by our Board as set forth in this proxy statement;
“FOR” the approval, in an advisory “say-on-pay”“say-on-pay” vote, of the compensation of our named executive officers;
“FOR” the approval of the Casella Waste Systems, Inc. 2016 Incentive Plan; and
“FOR” the ratification of the appointment of RSM US LLP as our independent auditors for the fiscal year ending December 31, 2016.2018.
Q. Who can vote at the | A. | Our Board fixed |
On the record date, we had 40,500,20241,700,025 shares of Class A common stock outstanding (each of which entitles its holder to one vote per share) and 988,200 shares of Class B common stock outstanding (each of which entitles its holder to 10 votes per share). Unless indicated otherwise in this proxy statement, we refer to our Class A common stock and our Class B common stock together as our common stock. Holders of our common stock do not have cumulative voting rights.
No securities other than our Class A common stock and Class B common stock are entitled to vote at the 20162018 Annual Meeting. Only stockholders of record on September 29, 2016April 13, 2018 are entitled to notice of, and to vote at, the 20162018 Annual Meeting.
Q. How do I vote? | A. | If your shares are registered directly in your name, you may vote three ways: |
(1) | Over the Internet: Go to the website of our tabulator, Computershare Trust Company, N.A., atwww.investorvote.com/ |
shares voted or your |
instructions. You must submit your |
(2) | By Telephone: Call1-800-652-VOTE (8683), toll free from the United States, Canada and Puerto Rico, and follow the recorded instructions. You must specify how you want your shares voted and confirm your vote at the end of the call or your telephone vote cannot be completed. Your shares will be voted according to your instructions. You must submit your telephonic proxy before 11:59 p.m., Eastern Time, on |
(3) | By Mail: If you received your proxy materials by mail, complete and sign your proxy card and mail it to Computershare Trust Company, N.A. in the postage prepaid envelope we provided. Computershare Trust Company, N.A. must receive the proxy card by |
(4) | In Person at the Meeting: If you attend the |
A. | If your shares are held in “street name,” meaning they are held for your account by a bank, broker or other nominee, you may vote: |
(1) | Over the Internet or by Telephone:You will receive instructions from your bank, broker or other nominee if they permit |
(2) | By Mail: You will receive instructions from your bank, broker or other nominee explaining how you can vote your shares by mail. You should follow those instructions. |
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Q. How will my shares be voted if I do not return my proxy or do not provide specific voting instructions in the proxy card or voting instruction form that I submit? | A. | If your shares are registered directly in your name, your shares will not be voted if you do not vote over the |
If your shares are held in street name at a broker, your broker may under certain circumstances vote your shares on “routine” matters if you do not timely provide voting instructions in accordance with the instructions provided by them. However, if you do not provide timely instructions, your broker does not have the authority to vote on any “non-routine”“non-routine” proposals at the 20162018 Annual Meeting and a “brokernon-vote” would occur.
Q. What effect do brokernon-votes have on the proposals? | A. | Under applicable stock exchange rules, brokers may vote shares in their discretion on “routine” matters for which their customers do not provide voting instructions; however, on matters considered |
The election of directors (Proposal 1), and the advisory “say-on-pay”“say-on-pay” vote (Proposal 2) and the approval of the Casella Waste Systems, Inc. 2016 Incentive Plan (Proposal 3) are “non-routine”“non-routine” matters. The ratification of the appointment of our independent auditors (Proposal 4)3) is a “routine” matter.
We encourage you to provide voting instructions to your bank, broker or other nominee by giving your proxy to them. This ensures that your shares will be voted at the 20162018 Annual Meeting according to your instructions.
Q. How will my shares be voted if I mark “Abstain” on my proxy card? | A. | We will count a properly executed proxy card marked “Abstain” as present for purposes of determining whether a quorum is present, but abstentions will not be counted as votes cast for or against any given matter. |
Q. Can I change my vote or revoke my proxy? | A. | If your shares are registered directly in your name, you may revoke your proxy or change your vote at any time before the |
(1) | Vote over the |
(2) | Sign a new proxy and mail it as instructed above. Only your latest dated, valid proxy received by Computershare Trust Company, N.A. by |
(3) | Attend the |
If your shares are held in street name, you may submit a new, later-dated voting instruction form or contact your bank, broker or other nominee. You may also vote in person at the 20162018 Annual Meeting if you obtain a legal proxy as described in the answer to the question above entitled “How do I vote?”.
Q. How many shares must be present to hold the | A. | The presence, in person or by proxy, of shares representing a majority of the votes entitled to be cast at the |
Q. What vote is required to approve each matter and how are votes counted? | A. | Proposal |
The three (3) nominees for director receiving the highest number of votes FOR election will be elected as Class IIII directors.Proposal 1 is anon-routine matter. Pursuant to our majority vote resignation policy included in the Company’s Corporate Governance Guidelines, any nominee who is an incumbent director and who does not receive more votes “for” his or her election than votes “withheld” from his or her election in an uncontested election of directors would be required to offer his or her resignation to the Board.
If a stockholder does not vote for the election of directors because the authority to vote is withheld, because a proxy is not returned, because the broker holding the shares does not vote, or because of some other reason, the shares will not count in determining the total number of votes for each nominee. Proxies signed and returned to the Company unmarked will be voted FOR the three (3) nominees (James F. Callahan, Jr., Douglas R.(John W. Casella, William P. Hulligan and Michael K. Burke)James E. O’Connor).
If your shares are held by a bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannot vote your shares on Proposal 1. InIn this regard, please note that brokers may not vote on the election of directors in the absence of specific client instructions. Those who hold shares in a brokerage account are encouraged to provide voting instructions to their broker. Votes that are not returned, votes that are withheld orand brokernon-votes will have no effect on the outcome of the election. In this regard, shares held in street name by banks, brokers or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 1 will not be counted as votes FOR or WITHHELD from any nominee and will be treated as brokernon-votes.
Votes that are withheld will not be included in the vote tally for the election of directors and will not affect the results of the vote.
With respect to Proposal 1, you may:
vote FOR all nominees;
vote FOR one or more nominees and WITHHOLD your vote from the other nominees; or
WITHHOLD your vote from all nominees.
Proposal 2—2 — Advisory “Say-on-Pay”“Say-on-Pay” Vote on the Compensation of Our Named Executive Officers
To approve Proposal 2, the holders of shares of Class A common stock and Class B common stock, voting together as a class, representing a majority of the votes cast on the matter must vote FOR the proposal.Proposal 2 is anon-routine matter. Therefore, if your shares are held by a bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannot vote your shares on Proposal 2. Shares held in street name by banks, brokers or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 2 will not be counted as votes FOR or AGAINST Proposal 2 and will be treated as brokernon-votes. Brokernon-votes will have no effect on the voting on Proposal 2. If you vote to ABSTAIN on this Proposal 2, your shares will not be voted FOR or AGAINST the proposal and will not be counted as votes cast or shares withheld on Proposal 2. Voting to ABSTAIN will have no effect on the voting on Proposal 2.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote will not overrule any decision by us or our Board (or any committee thereof). However, the Compensation Committee of our Board and our Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
Proposal 3—Approval3 — Ratification of Casella Waste Systems, Inc. 2016 Incentive Planthe Appointment of Independent Auditors
To approve Proposal 3, the holders of shares of Class A common stock and Class B common stock, voting together as a class, representing a majority of the votes cast on the matter must vote FOR the proposal.Proposal 3 is a non-routineroutine matter. Therefore, ifIf your shares are held by a bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannotmay vote your unvoted shares on Proposal 3. Shares held in street name by banks, brokers or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 3 will not be counted as votes FOR or AGAINST Proposal 3 and will be treated as broker non-votes. Broker non-votes will have no effect on the voting on Proposal 3. If you vote to ABSTAIN on this Proposal 3, your shares will not be voted FOR or AGAINST the proposal and will not be counted as votes cast or shares withheld on Proposal 3. Voting to ABSTAIN will have no effect on the voting on Proposal 3.
Proposal 4—Ratification of the Appointment of Independent Auditors
To approve Proposal 4, the holders of shares of Class A common stock and Class B common stock, voting together as a class, representing a majority of the votes cast on the matter must vote FOR the proposal.Proposal 4 is a routine matter. If your shares are held by a bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee may vote your unvoted shares on Proposal 4. If you vote to ABSTAIN on this Proposal 4, your shares will not be voted FOR or AGAINST the proposal and will not be counted as votes cast or shares withheld on Proposal 4. Voting to ABSTAIN will have no effect on the voting on Proposal 4.
Although stockholder ratification of the appointment of RSM US LLP as our independent auditors for the fiscal year ending December 31, 20162018 by the Audit Committee of our Board is not required, we believe that it is advisable to give stockholders an opportunity to ratify this appointment. If such ratification is not approved at the 20162018 Annual Meeting, our Audit Committee may reconsider its appointment of RSM US LLP as our independent auditors for the fiscal year ending December 31, 2016.2018.
Q. Are there other matters to be voted on at the | A. | We do not know of any matters that may come before the |
Q. Where can I find the voting results? | A. | We will report the voting results in a Current Report on Form8-K within four business days following the conclusion of the |
Q. What is the Company’s Internet address? | A. | The Company’s |
Q. May I attend the | A. | Only holders of the Company’s shares as of the record date are entitled to attend the |
No cameras, recording equipment, large bags, briefcases or packages will be permitted into the 20162018 Annual Meeting and anyone recording the meeting on any device may be asked to leave.
Q. What are the costs of soliciting these proxies? | A. | We will bear the entire cost of soliciting proxies on behalf of the Board, including the costs of preparing, assembling, printing and mailing this proxy statement, the proxy card and any additional soliciting materials furnished to stockholders by or on behalf of the Company. In addition to such solicitation materials, our directors, officers and employees may solicit proxies by telephone, telegram, facsimile, electronic mail, |
Copies of solicitation material will be furnished to banks, brokerage houses, dealers, banks, voting trustees, their respective nominees and other agents holding shares in their names, which are beneficially owned by others, so that they may forward such solicitation material, together with our 20152017 Annual Report, which includes our Annual Report on Form10-K for the fiscal year ended December 31, 2015,2017, to beneficial owners. In addition, if asked, we will reimburse these persons for their reasonable expenses in forwarding these materials to the beneficial owners.
Information Regarding Directors and Director Nominees
Our Second Amended and Restated Certificate of Incorporation and ourBy-Laws provide for the classification of our Board into three classes, each having as nearly an equal number of directors as possible. The terms of service of the three classes are staggered so that the term of one class expires each year. At each annual meeting of stockholders, directors are elected for a full term of three years to continue or succeed those directors whose terms are expiring.
Our Board currently consists of nine directors. Class I consists of Michael K. Burke, James F. Callahan, Jr. and Douglas R. Casella, each with a term ending at the 20162019 Annual Meeting.Meeting of Stockholders. Class II consists of Joseph G. Doody, Emily Nagle Green and Gregory B. Peters, each with a term ending at the 20172020 Annual Meeting of Stockholders. Class III consists of John W. Casella, William P. Hulligan and James E. O’Connor, each with a term ending at the 2018 Annual Meeting of Stockholders.Meeting.
Upon the recommendation of the Nominations and Governance Committee of our Board, our Board nominated Messrs. Michael K. Burke,John W. Casella, William P. Hulligan and James F. Callahan, Jr. and Douglas R. CasellaE. O’Connor forre-election at the 20162018 Annual Meeting as Class IIII directors, each to serve until the 20192021 Annual Meeting of Stockholders and until his respective successor is elected and qualified.
Director Biographies and Qualifications
The following table provides biographical information relating to each director and director nominee, including his or her age and period of service as a director of the Company; his or her committee memberships; his or her business experience, including principal occupation and employment and directorships at other public companies during the past five years; his or her community activities; and his or her other experience, qualifications, attributes or skills that led our Board to conclude he or she should serve as a director of the Company.
Name | Age | Board Tenure, Principal Occupation, Other Business Experience During the Past Five Years and Other Directorships | |||||
Class elected at the (terms expiring | |||||||
John W. Casella Chairman | 67 | Mr. Casella has served as Chairman of our Board since July 2001 and as our Chief Executive Officer since 1993. Mr. Casella also served as our President from 1993 to July 2001 and as Chairman of our Board from 1993 to December 1999. In addition, Mr. Casella has served as Chairman of the Board of Directors of Casella Waste Management, Inc., a wholly-owned subsidiary of ours, since 1977. Mr. Casella is also an executive officer and director of Casella Construction, Inc., a company owned by Mr. Casella, his son John Casella II, his brother Douglas R. Casella, also a member of our Board, and Mr. Douglas Casella’s son, Joseph Casella, which specializes in general contracting, soil excavation and heavy equipment work, and which performs landfill-construction and related services for us. Mr. Casella has been a member of numerous industry-related and community service-related state |
Name | Age | Board Tenure, Principal Occupation, Other Business Experience During the Past Five Years and Other Directorships | ||
and local boards and commissions, including the National Recycling Coalition, the Board of Directors of the Associated Industries of Vermont, the Association of Vermont Recyclers, the Vermont State Chamber of Commerce, the Rutland Industrial Development Corporation and the Rutland Regional Medical Center. Mr. Casella has also served on various state task forces, serving in an advisory capacity to the Governors of Vermont and New Hampshire on solid waste issues. Mr. Casella holds an A.S. in Business Management from Bryant & Stratton College and a B.S. in Business Education from Castleton State College. Skills and Qualifications: We believe Mr. Casella is qualified to serve on our Board due to his insight and expertise in the waste management industry and his leadership and knowledge of the Company obtained in his role as our Chief Executive Officer, coupled with his extensive business and leadership experience. | ||||
William P. Hulligan Audit Committee | 74 | Mr. Hulligan has served as a member of our Board since September 2015. Mr. Hulligan served as senior advisor to Progressive Waste Solutions Ltd., a waste management company, from March 2014 to August 2015, as President and Chief Operating Officer from January 2012 to March 2014, and as President USA and Executive Vice President of Florida operations from July 2010 to January 2012. Prior to joining Progressive Waste Solutions, Mr. Hulligan served as Executive Vice President of North America Operations of Waste Services, Inc., a publicly-traded solid waste services company, from June 2003 to July 2010. Prior to joining Waste Services, Mr. Hulligan also spent over 20 years at Waste Management, Inc., a provider of waste management services, where he held various senior management positions. Mr. Hulligan previously served as a member of the Board of Directors of two publicly-traded waste management companies, EarthCare Company and OHM Corporation. He has also served on the Board of Directors of the Environmental Industry Association as well as on the board of Trustees at John Carroll University and Bradley University. Mr. Hulligan holds a B.S. in Business Administration from John Carroll University. Skills and Qualifications: We believe Mr. Hulligan is qualified to serve on our Board due to his over 40 years of experience in the waste management industry, including extensive operational and executive experience. |
Name | Age | Board Tenure, Principal Occupation, Other Business Experience During the Past Five Years and Other Directorships | ||||
James E. O’Connor Lead Director Compensation Committee | 68 | Mr. O’Connor has served as a member of our Board since July 2015. Mr. O’Connor served as Chief Executive Officer of Republic Services, Inc., a publicly-tradednon-hazardous solid waste collection, recycling and disposal services company, from 1998 to 2011, and as Chairman of the Board of Republic Services from 2003 to 2011. Prior to joining Republic Services, Mr. O’Connor spent close to 30 years at Waste Management, Inc., a provider of waste management services, where he held various senior management positions. Mr. O’Connor is a member of the Board of Directors of Clean Energy Fuels Corp., a publicly-traded provider of natural gas fuel for transportation in North America, where he serves on the Compensation Committee and the Nominating and Corporate Governance Committee, and the Canadian National Railway Company, a publicly-traded rail transportation company, where he chairs the board’s Strategic Planning Committee and also serves on the Audit, Environmental & Safety and Finance Committees. Mr. O’Connor holds a B.S. in Commerce (concentration in accounting) from DePaul University. Skills and Qualifications: We believe Mr. O’Connor is qualified to serve on our Board due to his over 40 years of experience in the waste management industry, including extensive public company leadership experience, as well as experience serving on the boards of directors of publicly-traded companies in a variety of industries, including waste management, transportation and energy. | ||||
Class I Directors (terms expiring at 2019 Annual Meeting of Stockholders) | ||||||
Michael K. Burke Audit Committee Nominations and Governance Committee | Mr. Burke has served as a member of our Board since February 2008. Mr. Burke has served as Chief Financial Officer of EndoGastric Solutions, Inc., a medical device company focused on developing and commercializing incisionless surgical technology for the treatment of gastroesophageal reflux disease, since November 2015. From January 2012 to June 2014, Mr. Burke served as Senior Vice President and Chief Financial Officer of Landauer, Inc., a publicly traded global provider of devices, consumable medical products and technical/analytical services. Prior to Landauer, Mr. Burke served as Senior Vice President and Chief Financial Officer of Albany International Corp., a publicly-traded global advanced textiles and materials processing company, from July 2009 to September 2010. Mr. Burke served as the Executive Vice President and Chief Financial Officer of Intermagnetics General Corporation, a publicly traded medical device company, from December 2001 until its sale to Royal Philips Electronics in November 2006. Before joining Intermagnetics |
Name | Age | Board Tenure, Principal Occupation, Other Business Experience During the Past Five Years and Other Directorships | ||
General Corporation, Mr. Burke served as Executive Vice President and Chief Financial Officer of HbT, Inc., a manufacturer of hydrogen generators and processors. Prior to |
joining HbT in May 2000, Mr. Burke served as a Managing Director within the U.S. Investment Banking Department of CIBC Oppenheimer Corp. Mr. Burke holds a B.A. in Economics from Lake Forest College and a Graduate Certificate in Mergers and Acquisitions from The Wharton School.
Skills and Qualifications:
We believe Mr. Burke is qualified to serve on our Board due to his leadership and financial experience, particularly his past experience as a senior-level investment banker with a prominent investment banking firm and as a chief financial officer of various publicly-traded companies, and his broad functional skill set. | ||||||
James F. Callahan, Jr. Audit Committee (Chair) Nominations and Governance Committee | 74 | Mr. Callahan has served as a member of our Board since March 2003. Mr. Callahan served as an audit and business advisory partner of Arthur Andersen LLP, an independent public accounting firm, from September 1975 to March 2000. Mr. Callahan has been retired since March 2000. Mr. Callahan has served as a member of various community service-related boards and currently serves on the Board of Trustees of the Massachusetts Department of Developmental Services’ Hogan Regional Center and is Trustee Emeritus of Bates College. Mr. Callahan holds a B.A. from Bates College and an M.B.A. from the Rutgers University School of Management.
Skills and Qualifications:
We believe Mr. Callahan is qualified to serve on our Board due to his years of experience at Arthur Andersen LLP, the depth and breadth of his financial reporting expertise and his experience with complex financial matters. | ||||
Douglas R. Casella Vice Chairman | 61 | Mr. Casella has served as Vice Chairman of our Board since 1993. Mr. Casella founded Casella Waste Management, Inc., a wholly owned subsidiary of ours, in 1975 and has served as its President since then. Since 1989, Mr. Casella has served as President of Casella Construction, Inc., a company owned by Mr. Casella,
Skills and Qualifications:
We believe Mr. Casella is qualified to serve on our Board due to his extensive experience with operational and asset management matters in the waste management industry. |
Name | Age | Board Tenure, Principal Occupation, Other Business Experience During the Past Five Years and Other Directorships | ||||
Class II Directors (terms expiring | ||||||
Joseph G. Doody Compensation Committee (Chair) | Mr. Doody has served as a member of our Board since 2004. Mr. Doody |
Mr. Doody had served as President, North American Commercial of Staples, Inc. from 1998 until January 2014. From 1974 to 1998, Mr. Doody held several managerial positions with the Eastman Kodak Company, an imaging technology company, including General Manager and Vice President, North America, Office Imaging. Mr. Doody has served on the Board of Directors of Paychex, Inc., a leading provider of payroll, human resource, and benefits outsourcing solutions, since October
Skills and Qualifications:
We believe Mr. Doody is qualified to serve on our Board due to his significant leadership experience, board experience and management experience | ||||||
Emily Nagle Green Compensation Committee Nominations and Governance Committee | 60 | Ms. Nagle Green has served as a member of our Board since July 2012. From January 2012 until July 2015, Ms. Nagle Green served as President and Chief Executive Officer of Smart Lunches, Inc., an online delivery service providing fresh meals to children. From November 2005 to June 2011, Ms. Nagle Green served as Chief Executive Officer and a member of the Board of Directors of Yankee Group, a technology research firm, and from June 2011 to January 2012, Ms. Nagle Green served as Chairman of the Board of Directors of Yankee Group. Prior to joining Yankee Group, Ms. Nagle Green served as President and Chief Executive Officer of Cambridge Energy Research, an energy research and consulting firm, from 2003 to 2004. From 1995 to 2003, Ms. Nagle Green served in several leadership positions with Forrester Research, a provider of information technology and consulting services. Ms. Nagle Green is a member of the Board of Directors of Investors Real Estate Trust, a multifamily real estate investment trust. Ms. Nagle Green holds a B.S.L. from Georgetown University and an M.S. in Engineering and Computer Graphics from the University of Pennsylvania.
Skills and Qualifications:
We believe Ms. Nagle Green is qualified to serve on our Board due to her substantial senior management executive experience as well as over 25 years of experience in identifying and leveraging technology trends. |
Name | Age | Board Tenure, Principal Occupation, Other Business Experience During the Past Five Years and Other Directorships | ||
Gregory B. Peters Compensation Committee Audit Committee Nominations and Governance Committee (Chair) | Mr. Peters has served as a member of our Board since 1993. From November 2002 to October 2015, he served as our Lead Director. Mr. Peters has served as managing general partner of Lake Champlain Capital Management, LLC, a corporate finance firm, since April 2001. From April 1988 to March 2001, Mr. Peters served as managing general partner of Vermont Venture Capital Partners, L.P., a venture capital company. Mr. Peters also previously served as general partner of North Atlantic Capital Partners, L.P., a venture capital company. Mr. Peters holds a B.A. from Harvard College and an M.B.A. from Harvard Business School. |
Skills and Qualifications:
We believe Mr. Peters is qualified to serve on our Board due to his significant experience as a professional investor and extensive experience in areas of corporate governance. | ||||||
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The holders of Class A common stock, voting separately as a class, are entitled to elect the Class A Director. Mr. Peters, a Class II director and a member of the Compensation Committee, Audit Committee and Nominations and Governance Committee, serves as the Class A Director.
The employment agreement by and between us and Mr. John Casella requires that we use our best efforts to cause Mr. John Casella to be nominated and elected as a director.
General
We believe that good corporate governance is important to ensure that the Company is managed for the long-term benefit of our stockholders. This section describes key corporate governance policies and practices that we have adopted. We have adopted a Code of Business Conduct and Ethics, which applies to all of our directors, officers and employees, Corporate Governance Guidelines and charters for the Audit Committee, Compensation Committee and Nominations and Governance Committee of our Board. Complete copies of our Code of Business Conduct and Ethics, Corporate Governance Guidelines and committee charters, which are described below, are available on the Investor Relations section of our website,www.casella.com. Alternatively, you can request a copy of any of these documents by writing to Casella Waste Systems, Inc., Attn: Corporate Secretary, 25 Greens Hill Lane, Rutland, Vermont 05701.
Board Responsibilities
The Board oversees, counsels and directs management in our long-term interests and those of our stockholders. The Board’s responsibilities include:
Selecting and regularly evaluating the performance of the Chief Executive Officer and other executive officers;
Reviewing and approving our major financial objectives and strategic and operating plans, business risks and actions;
Overseeing the conduct of our business to evaluate whether the business is being properly managed; and
Overseeing the processes for maintaining the integrity of our financial statements and other publicly disclosed information in compliance with law.
All of our directors are expected to comply with our Code of Business Conduct and Ethics and our Insider Trading Policy. The Board conducts an annual self-evaluation. In addition, we encourage our directors to attend formal training programs in areas relevant to the discharge of their duties as directors.
Corporate Governance Guidelines
Our Board has adopted Corporate Governance Guidelines to assist in the exercise of its duties and responsibilities and to serve the best interests of the Company and its stockholders. These guidelines, which provide a framework for the conduct of our Board’s business, provide, among other matters, that:
our Board’s principal responsibility is to oversee the management of the Company;
a majority of the members of our Board shall be independent directors;
the independent directors shall meet regularly in executive session;
directors shall have full and free access to management and, as necessary and appropriate, independent advisors;
newly elected directors are expected to participate in a briefing program and all directors are expected to participate in continuing director education on an ongoing basis. The briefing program is designed to provide new directors with the non-public information regarding the strategic direction of the Company as well as a background of the Company’s financial information; and
is designed to provide new directors with thenon-public information regarding the strategic direction of the Company as well as a background of the Company’s financial information; and |
at least annually, our Board and its committees will conduct a self-evaluation to determine whether they are functioning effectively.
Director Stock Ownership Guidelines
Our Board believes that eachnon-employee director should acquire and hold shares of our stock in an amount that is meaningful and appropriate to such director. Accordingly, our Board adopted stock ownership guidelines that require eachnon-employee director to attain a share ownership level of our Class A common stock having a value equal to $100,000.three times the amount of the annual retainer fee paid tonon-employee directors for service on our Board. Eachnon-employee director is required to attain such ownership levels by the third annual meeting of stockholders following the first annual meeting of stockholders at which suchnon-employee director is elected to our Board. As of the end of fiscal 2015,December 31, 2017, each of ournon-employee directors was in compliance with the stock ownership guidelines.
Executive Officer Stock Ownership Policy
We have adopted an executive officer stock ownership policy reflective of the Board’s view that all executive officers should have a significant personal investment in the Company through their ownership of shares of Class A common stock. Our stock ownership policy is applicable to all executive officers who are required to file reports pursuant to Section 16 of the Exchange Act and requires such executive officers to hold shares of Class A common stock or other equity rights, including restricted stock with time-based vesting, vested stock options and unvested restricted stock units with time-based vesting, with a value at least equal to the following multiple of the individual’s respective base salary: Chief Executive Officer: 3X, President/Chief Operating Officer: 2X, Chief Financial Officer: 2X and our other executive officers: 1X. The stock ownership requirement will be measured as to each executive officer as of March 1 (the “measurement date”) of each year. In the event that an executive officer does not satisfy the stock ownership requirement as of any measurement date, then such executive officer is required to retain all shares of Class A common stock held by such executive officer, subject to certain exceptions, and any shares thereafter acquired by such executive officer until such time as such executive officer satisfies the stock ownership requirement. As of March 1, 2016,2018, all of our executive officers were in compliance with the executive officer stock ownership policy.
Restrictions on Hedging Transactions and Pledging Transactions
Our insider trading policy restricts hedging transactions and the pledging of shares other than pledges pursuant to approved exceptions granted in extraordinary situations where a person wishes to pledge Company securities as collateral for a loan (other than a margin loan) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities.
Compensation Clawback Policy
In September 2015, we adopted a Compensation Clawback Policy that applies to our current or former executive officers, or covered officers, and other applicable employees. Under the Compensation Clawback Policy, in the event of a restatement of our financial results due to the material noncompliance with any financial reporting requirement under the securities laws, regardless of fault, we will use reasonable efforts to recover cash and equity incentive-based compensation from covered officers that was: (i) based on the erroneous data; (ii) paid during the three-year period preceding the date on which the accounting restatement is required to be prepared; and (iii) in excess of what would have been paid under the accounting restatement. In the event that the Board determines in its sole discretion that a covered person’s or another current or former employee’s act or omission involving willful misconduct or fraud contributed to the circumstances requiring the restatement, then we will use reasonable efforts to recover from such covered person or current or former employee, up to 100% of cash and equity incentive-based compensation paid during the three-year period preceding the date on which the accounting restatement is required to be prepared.
Board Determination of Independence
Under the applicable rules of the NASDAQNasdaq Stock Market, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our Board
determined that none of Ms. Nagle Green or Messrs. Burke, Callahan, Doody, Hulligan, O’Connor and Peters has a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under Rule 5605(a)(2) of the NASDAQNasdaq Marketplace Rules. The Board also determined that Mr. Chapple, a former director, was an “independent director” prior to his retirement from our Board on July 7, 2015 and that Mr. McManus, a former director, was an “independent director” prior to his retirement from our Board on August 31, 2015.
Director Nomination Process
The Nominations and Governance Committee acts under a written charter that we have posted on the Corporate Governance page of the Investor Relations section of our website,www.casella.com. The process followed by the Nominations and Governance Committee to identify and evaluate director candidates includes requests to Board members and others for recommendations, meetings to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the Nominations and Governance Committee and our Board. In addition, in 2017 the Nominations and Governance Committee retained the services of an independent consultant to assist the Committee and our Board in developing a board succession plan to serve as a guideline for future Board member recruitment.
Criteria and Diversity
In considering whether to recommend any particular candidate for inclusion in our Board’s slate of recommended director nominees, the Nominations and Governance Committee applies the criteria set forth in our Corporate Governance Guidelines. These criteria include the candidate’s integrity, business acumen, knowledge of our business and industry, experience, diligence, absence of conflicts of interest and the ability to act in the interests of all stockholders. The Nominations and Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. The Nominations and Governance Committee does not have a formal diversity policy, but believes that the backgrounds and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow our Board to fulfill its responsibilities to our stockholders.
The director biographies appearing above indicate each nominee’s experience, qualifications, attributes and skills that led our Board to conclude that he or she should continue to serve as a member of our Board. Our Board believes that each of the nominees has substantial achievement in his or her professional pursuits, and possesses the background, talents and experience that our Board desires and that will contribute to the best interests of the Company and to long-term stockholder value.
Stockholder Nominations
Stockholders may recommend individuals to the Nominations and Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials to: Nominations and Governance Committee, c/o Corporate Secretary, Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701. The Nominations and Governance Committee has no obligation to consider individuals recommended by stockholders for nomination by the Committee as potential director candidates. However, assuming that appropriate biographical and background material has been provided on a timely basis, we expect that individuals recommended by stockholders would be so considered and evaluated by the Nominations and Governance Committee by following substantially the same process, and applying substantially the same criteria, as it follows for candidates identified by the Committee and others.
Stockholders also have the right under ourBy-Laws to directly nominate director candidates, without any action or recommendation on the part of the Nominations and Governance Committee or our Board, by following the procedures set forth under “Stockholder Proposals and Nominations for the 20172019 Annual Meeting of Stockholders.” If our Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy statement and proxy card for the next annual meeting of stockholders. Otherwise, candidates nominated by stockholders in accordance with the procedures set forth in theBy-Laws will not be included in our proxy statement and proxy card for the next annual meeting.
Board Meetings and Attendance
Our Board met 14eight times during the fiscal year ended December 31, 2015, which we refer to as fiscal 2015,2017, either in person or by teleconference. During fiscal 2015,2017, each incumbent director attended at least 75% of the meetings of our Board during the period for which he or she has been a director and at least 75% of the meetings of the committees of our Board on which he or she then served.
Director Attendance at Annual Meeting of Stockholders
We encourage, but have no policy with respect to, attendance of directors at the annual meeting of stockholders. SevenFour of our then-serving directors attended the 20152017 Annual Meeting of Stockholders.
Board Leadership Structure
Mr. John Casella serves as Chairman of our Board and our Chief Executive Officer. Mr. O’Connor serves as our Lead Director. Our Board believes that combining the Chairman and Chief Executive Officer positions fosters clear accountability, effective decision-making and alignment of corporate strategy, strikes an effective balance between strategy development, independent leadership and management oversight in the Board process and, taken together with the Lead Director role, is the appropriate leadership structure for us at this time. The responsibilities of the Lead Director are included in our Corporate Governance Guidelines, which are posted on the Corporate Governance page of the Investor Relations section of our website,www.casella.com. The Lead Director chairs meetings of our independent directors, meets with any director who is not adequately performing his or her duties as a member of our Board or any committee and facilitates communications between the Chairman of our Board and other directors. The Lead Director also works with the Chairman of our Board in preparing agendas for each meeting of our Board and consults with the Chairman of our Board on matters relating to corporate governance and board performance.
Our Board believes that its leadership structure is appropriate because it strikes an effective balance between strategy development, independent leadership and management oversight in the Board process. Specifically, this leadership model provides clear accountability and efficient and effective leadership of our business, and our Board believes Mr. Casella is the appropriate person to lead both our Board and the management of our business.
Board Committees
Our Board has established three standing committees—committees — Audit, Compensation and Nominations and Governance—each of which operates under a charter that was approved by our Board.
Our Board determined that all of the members of each of its three committees are independent as defined under the rules of NASDAQ,the Nasdaq Stock Market, including, in the case of all members of the Audit Committee, the independence requirements under Rule10A-3 under the Exchange Act, and, in the case of all members of the Compensation Committee, the independence requirements under Rule10C-1 under the Exchange Act. Our currentnon-employee directors serve on the committees of our Board as follows:
Audit Committee | Compensation | Nominations and | ||||
Michael K. Burke | ![]() | ![]() | ||||
James F. Callahan | ![]() | ![]() | ||||
Joseph G. Doody | ![]() | |||||
William P. Hulligan | ![]() | |||||
Emily Nagle Green | ![]() | ![]() | ||||
James E. O’Connor** | ![]() | |||||
Gregory B. Peters | ![]() | ![]() | ![]() |
** | Lead Director |
![]() | Chairperson |
![]() | Member |
Audit Committee
The Audit Committee’s responsibilities include:
appointing, evaluating, retaining and, if necessary, terminating an independent registered public accounting firm to serve as our independent auditors;
reviewing and discussing with management and our independent auditors our annual and quarterly financial statements and related disclosures and the internal controls over our financial reporting;
overseeing our compliance with legal and regulatory requirements;
taking appropriate actions, or recommending that our Board take appropriate action, to oversee the qualifications and independence of our independent auditors, including the consideration of independence when preapproving audit andnon-audit services;
overseeing our internal audit function;
monitoring the performance of our internal audit function and our independent auditors, including conducting an annual evaluation of the performance of our auditors;
overseeing our risk management policies;
reviewing and approving or ratifying any related person transactions; and
preparing the Audit Committee report required by SEC rules, which is included beginning on page 2726 of this proxy statement.
The members of the Audit Committee are Messrs. Callahan (Chair), Burke, Hulligan and Peters. Our Board determined that Mr. Callahan is an “audit committee financial expert” as defined in Item 407(d)(5) of RegulationS-K. The Audit Committee met four times during fiscal 2015,2017, either in person or by teleconference. See “Report of the Audit Committee of the Board of Directors.”
Compensation Committee
The Compensation Committee’s responsibilities include:
administering any bonus, incentive compensation and stock incentive plans;
reviewing and approving the salaries and certain other compensation and benefits of our executive officers;
reviewing and making recommendations to our Board with respect to director compensation;
reviewing and discussing with management our “Compensation Discussion and Analysis,” which is included beginning on page 2827 of this proxy statement; and
preparing the Compensation Committee report required by SEC rules, which is included on page 3836 of this proxy statement.
Under its charter, the Compensation Committee may form and delegate authority to subcommittees as its deems appropriate from time to time under the circumstances. The members of the Compensation Committee
are Messrs. Doody (Chair), O’Connor and Peters and Ms. Nagle Green. The Compensation Committee met sevenfive times during fiscal 2015,2017, either in person or by teleconference.
Nominations and Governance Committee
The Nominations and Governance Committee’s responsibilities include:
identifying individuals qualified to become members of our Board;
recommending to our Board persons to be nominated for election as directors;
developing, reviewing and recommending to our Board applicable corporate governance guidelines; and
overseeing an annual evaluation of our Board.
The members of the Nominations and Governance Committee are Messrs. Peters (Chair), Burke and Callahan and Ms. Nagle Green. The Nominations and Governance Committee met fivefour times during fiscal 2015,2017, either in person or by teleconference.
Risk Oversight
Role of Our Board in Management of Risk
Our Board administers its risk oversight function directly and through its Audit Committee and receives regular reports from members of senior management on areas of material risk to us, including operational, financial, legal and regulatory, cybersecurity, strategic and reputational risks. As part of its charter, the Audit Committee regularly discusses with management our major risk exposures, their potential financial impact on us and the steps we take to manage them. In addition, the Compensation Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs and succession planning. The Nominations and Governance Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure and corporate governance.
Risk Considerations in Executive Compensation
Our Compensation Committee regularly considers risk as it relates to our executive compensation program, and our Compensation Committee does not believe our executive compensation program encourages excessive or inappropriate risk taking. As described more fully below in “Compensation Discussion and Analysis,” we structure our compensation program to consist of both fixed and variable components to motivate our executives to produce superior short and long-term results that are in the best interests of us and our stockholders in order to attain our ultimate objective of increasing stockholder value. We believe that any risks that may arise from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on us.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in fiscal 20152017 were Messrs. McManus (until his retirement from our Board on August 31, 2015), Chapple (until his retirement from our Board on July 7, 2015), Doody, O’Connor (effective as of July 28, 2015), and Peters and Ms. Nagle Green. None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our Board or Compensation Committee.
Certain Relationships and Related Person Transactions
We have adopted a written policy and have established procedures regarding approval of transactions between us and any employee, officer, director and other related persons, including those required to be reported under Item 404 of RegulationS-K. The policy requires that all related person transactions are reviewed by the Audit Committee and approved by our Board.
With respect to bidding projects in excess of $500,000 in which a related person, including Casella Construction, Inc., is a bidder, the Audit Committee has established a specific procedure. This procedure requires us to solicit a minimum of three qualified bids. The bid package is required to be sufficiently detailed to allow for direct comparisons of costs between responsive bidders. Bids for work on which Casella Construction, Inc. or any other related person is bidding are required to be directed to a third party engineer for opening, compilation and tabulation. The bids are then evaluated by the project team based on price, performance references, qualifications, experience, alternate bid items, proposed schedule, subcontractors qualifications/references, technical compliance and other bid information that is in the best interest of the project. In the event that a construction contract is successfully bid by a related person, bids and recommendations are required to be submitted to our Chief Financial Officer and our President and Chief Operating Officer for submission to the Audit Committee for review and to our Board for approval. With respect to sole source bids (i.e. those less than $500,000), the Audit Committee is required to be provided with documentation describing the reason for the work, a comparison of market or historical prices to the bid price, and approval by our Chief Financial Officer or our President and Chief Operating Officer. Change orders relating to contracts with related parties are required to be forwarded to our Chief Financial Officer for submission to the Audit Committee for review and to our Board for approval before the change order is approved; provided that change orders to existing contracts with related parties may be approved by our Chief Financial Officer and our President and Chief Operating Officer (executive officers who are not affiliated with the related parties), as long as the total value of such change orders does not exceed 10% of the value of the contract, up to a maximum of $500,000, and subject to ratification of the change order by our Board. Transactions not exceeding $75,000 individually or $300,000 in the aggregate in any fiscal year may, for administrative purposes, be approved by our President and Chief Operating Officer or our Chief Financial Officer, subject to ratification and approval by the Audit Committee and our Board.
The loan and securitycredit agreement for our senior secured asset-basedterm loan facility and revolving credit facility provides that, subject to certain exceptions, we may not enter into any transaction with any affiliate of ours, whether or not in the ordinary course of business, unless our Board determines in good faith that such transaction is on fair and reasonable terms substantially as favorable as would be obtainable by us at the time in a comparable arm’s length transaction.
With respect to related person transactions involving aggregate consideration in excess of $10.0 million, or in excess of $5.0 million if such transaction is not approved by a majority of disinterested directors, subject to certain exceptions, we are required by the terms of our debt instruments to obtain an opinion as to the fairness of such transactions from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.
Our related person transaction policy also provides that transactions involving compensation of executive officers shall be reviewed and approved by the Compensation Committee in the manner specified in its charter.
We engage Casella Construction, Inc., a company owned by John W. Casella, our Chief Executive Officer and the Chairman of our Board, andhis son John Casella II, his brother Douglas R. Casella, the Vice Chairman of our Board, and Mr. Douglas Casella’s son, Joseph Casella, to provide construction and related services for us, including construction, closure and capping activities at our landfills. Total purchased services from Casella Construction, Inc. charged to operations or capitalized to landfills from January 1, 20152017 to June 30, 2016December 31, 2017 was $3,843,563,$3,377,303, of which $726,412$30,006 was outstanding and included in either accounts payable or other current liabilities at June 30, 2016.December 31, 2017. All contracts awarded to Casella Construction, Inc.
in excess of $500,000 were approved in accordance with the procedures described above for bidding projects in which a related person is a bidder. In addition, we have approved ongoing contracts with Casella Construction, Inc., which we expect will result in additional payments by us to Casella Construction, Inc. In 2015, Casella Construction, Inc. contributed $350,000 in cash and $390,000 in non-compensable services for work performed at our Southbridge landfillTotal revenue recorded pursuant to assist in the remediation of the site as a part of our settlement with the Massachusetts’ Office of the Attorney General.these contracts from January 1, 2017 to December 31, 2017 was $237,102.
We are also party to two real estate leases with Casella Associates, LLP, a Vermont limited liability company owned by Messrs. John Casella and Douglas Casella. These leases relate to our corporate headquarters in Rutland, Vermont, and our Montpelier, Vermont facility, and provide for aggregate monthly payments by us of $27,375,$27,916, subject to an annual escalation provision based on increases in the consumer price index, through their expiration in April 2018. These leases include a five year lessee renewal option with terms consistent with the current leases.
From 1977 to 1992, we operated an unlined landfill located in Whitehall, New York, owned by Bola, Inc., a corporation owned by Messrs. John Casella and Douglas Casella, which operated as a single-purpose real estate holding company. We paid the cost of closing this landfill in 1992, and have agreed to pay all post-closure obligations. From January 1, 20152017 to June 30, 2016,December 31, 2017, we paid an aggregate of $9,230$27,400 pursuant to this arrangement. As of June 30, 2016,December 31, 2017, we had accrued $78,163$60,365 for costs related to those post-closure obligations.
In connection with Mr. Douglas Casella’s service as President of Casella Waste Management, Inc., our wholly-owned subsidiary, in fiscal 20152017 we granted Mr. Douglas Casella a restricted stock unit award with a grant date fair value of $120,618$120,619 and paid $6,965 for life insurance premiums, and from January 1, 2016 through June 30, 2016, we granted Mr. Douglas Casella a restricted stock unit award with a grant date fair value of $120,617 and paid $6,726$8,883 for life insurance premiums.
Michael Casella, the son of Mr. John Casella, is employed by the Company as a general manager. From January 1, 20152017 through December 31, 2015,2017, Mr. Michael Casella earned $132,070 as salary, bonus, and other benefits related to his employment and received a restricted stock unit award with a grant date fair value of $8,001. From January 1, 2016 through June 30, 2016, Mr. Michael Casella earned $59,550$165,627 as salary, bonus, and other benefits related to his employment and received a restricted stock unit award with a grant date fair value of $8,001.
Elizabeth Casella, the daughter of Mr. John Casella, is employed by the Company as Director, Solutions Development & Coordination. From January 1, 20152017 through December 31, 2015,2017, Ms. Casella earned $115,557 as salary, bonus, grant date fair value of restricted stock units and other benefits related to her employment and received a restricted stock unit award with a grant date fair value of $5,998. From January 1, 2016 through June 30, 2016, Ms. Casella earned $60,476$142,361 as salary, bonus, and other benefits related to her employment and received a restricted stock unit award with a grant date fair value of $9,998.
We have entered into employment agreements with certain of our officers. See “Executive and Director Compensation and Related Matters–Matters — Potential Payments Upon Termination or Change of Control–Control — Employment Agreements.”
Communicating with the Independent Directors
Our Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Our Lead Director, with the assistance of our Chief Financial Officer and General Counsel, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he considers appropriate.
Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that our Lead Director considers to be important for the directors to know. In
general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we receive repetitive or duplicative communications.
Stockholders who wish to send communications on any topic to our Board should address such communications to: Board of Directors, Attn: Corporate Secretary, Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701.
Code of Business Conduct and Ethics
We have adopted a written Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. We have posted a current copy of the Code of Business Conduct and Ethics on the Corporate Governance page of the Investor Relations section of our website,www.casella.com. In addition, we intend to post on our website all disclosures that are required by law or NASDAQ’sNasdaq’s listing standards concerning any amendments to, or waivers from, any provision of the Code of Business Conduct and Ethics.
Report of the Audit Committee of the Board of Directors
The Audit Committee reviewed our audited financial statements for fiscal 20152017 and discussed these financial statements with our management and RSM US LLP, our independent auditors.
The Audit Committee also received from, and discussed with, our independent auditors various communications that our independent auditors are required to provide to the Audit Committee, including the matters required to be discussed by Auditing Standard No. 16,AS 1301:Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.Board (“PCAOB”).
Our independent auditors also provided the Audit Committee with the written disclosures and the letter required by PCAOB Rule 3526 (Communicating(Communication with Audit Committees Concerning Independence), as modified or supplemented. The Audit Committee discussed with the independent auditors their independence from us.
Based on its discussions with management and the independent auditors, and its review of the representations and information provided by management and the independent auditors, the Audit Committee recommended to our Board that the audited financial statements be included in our Annual Report on Form10-K for fiscal 2015.2017.
Following the completion of the Audit Committee’s review of our fiscal 20152017 financial statements and our internal accounting controls over financial reporting for fiscal 2015,2017, the Audit Committee, with input from management, completed an evaluation of the performance of our independent auditors, RSM US LLP. Based on the results of this evaluation, the Audit Committee determined that it was in the best interest of Casella Waste Systems, Inc. and its stockholders to appoint, and the Audit Committee then appointed, RSM US LLP as our independent auditors for the fiscal year ending December 31, 2016.2018.
By the Audit Committee of the Board of Directors of Casella Waste Systems, Inc.
James F. Callahan, Jr., Chair
Michael K. Burke
William P. Hulligan
Gregory B. Peters
EXECUTIVE AND DIRECTOR COMPENSATION AND RELATED MATTERS
Compensation Discussion and Analysis
This Compensation Discussion and Analysis is designed to provide our stockholders with an understanding of our executive compensation philosophy, objectives, program and process, as well as the compensation paid to our named executive officers in fiscal 2015 and the changes the Compensation Committee has implemented for fiscal 2016.2017. For fiscal 2015,2017, our named executive officers were:
John W. Casella, our Chief Executive Officer and Chairman of our Board;
Edmond R. Coletta, our Senior Vice President and Chief Financial Officer;
Edwin D. Johnson, our President and Chief Operating Officer;
David L. Schmitt, our Senior Vice President and General Counsel; and
Christopher B. Heald, our Vice President of Finance and Chief Accounting Officer.
Executive Summary
Objectives and Philosophy of Our Executive Compensation Program
The Compensation Committee seeks to achieve the following broad objectives in connection with our executive compensation program:
Attract, retain and incentivize qualified and talented executives by providing compensation opportunities comparable to those offered by other companies with which we compete for business and talent;
Reward achievement of our short-term and long-term business objectives, while discouraging excessive risk-taking behavior;
Ensure that executive compensation is aligned with our corporate strategies, business objectives and the long-term interests of our stockholders; and
Closely align the long-term interests of our executives with those of our stockholders by providing equity incentives that link a portion of the executives’ compensation with the future performance of our Class A common stock.
Company Performance Highlights and Execution Against 2018 Strategic Plan
FollowingOver the substantial completion of the priorities established during the fiscal year ended April 30, 2013, or fiscal 2013, startinglast five years we have made significant progress in August 2015 we focusedsimplifying our efforts on furtherbusiness structure, improving Free Cash Flowcash flows and reducing debt leveragerisk exposure by targetingdivesting and closing under-performing operations that did not enhance or complement our core operations. Specifically, we have had success during this period improving our financial performance and driving positive cash flows by advancing efforts in the following four key areas:
• | Increasing landfill returns |
• | Driving additional profitability in our collection operations through profitable revenue growth, operating efficiencies and selling or swapping under-performing routes or |
• | Creating incremental value through our resource solutions offerings in our recycling, organics, and customer solutions |
• | Improving our balance sheet and reducing risk through continued capital discipline and a focus on debt repayment with excess cash flows. |
2021 Strategic Plan
In August 2017, we announced our 2021 Strategic Plan. As part of the 2021 Strategic Plan, we intend to remain focused on creating shareholder value through: (1) increasing landfill returns; (2) improving collection profitability; and (3) creating incremental value through resource solutions. In addition, we also announced two new key strategies as part of the 2021 Plan: (4) reducing general and administration costs and improving efficiencies; and (5) allocating capital to balance debt delevering with smart growth.
Fiscal 20152017 Compensation Decisions
Our compensation decisions for fiscal 2015,2017, including with respect to our named executive officers, were based on company and individual performance.
Base salary increases of 2%ranging from 2.4% to 12.1% for each of our named executive officers;
AnnualFor our Chief Executive Officer, annual cash incentive compensation payout of 73.8%132.6% of maximumhis target annual cash incentive amount, and for each of our other named executive officers, annual cash incentive compensation payout of 167.7% of each such named executive officer’s target annual cash incentive amount, driven by EVA improvement of 10.8% over the twelve months ended December 31, 2014, or calendar 2014,strong performance against our fiscal 2017 budgeted amounts for Adjusted Operating Income and Free Cash Flow, with 100% of core annual incentivesuch payments made to named executive officers based on corporate performance;
Finalperformance. The Compensation Committee exercised discretion to reduce our Chief Executive Officer’s annual cash incentive compensation payout on account of special one-time bonus programthe decision to select named executive officers for their leadershipclose the landfill located in closing specified financing transactions includingSouthbridge, Massachusetts, or Southbridge Landfill, and the refinancing of our senior secured credit facility;resultant impairment charge; and
RSU awards thatAwards consisting of performance-based stock units, or PSUs, which vest based on continued employment in three equal annual installments beginning on(i) our level of achievement of Free Cash Flow and Adjusted EBITDA during the first anniversary of the date of grant.
Fiscal 2016 Changes to Executive Compensation
Our Compensation Committee undertook a broad reviewthird year of our executive compensation pay practices atthree-year performance period running from January 1, 2017 to December 31, 2019 and (ii) a multiplier based on Relative Total Shareholder Return, or Relative TSR, for the end of fiscal 2015 withperiod running from January 1, 2017 to December 31, 2019. Relative TSR means the objectives of strengthening the alignment of pay to performance, improving the alignment of executive interests with those of our stockholders, and to ensure that our pay practices continue to encourage achievement of our Fiscal 2018 Plan and long-term business objectives. The underlying rationale for several of these changes was to re-balance our mix of fixed vs. variable pay and to increase our focus on performance-based pay elements. The changes approved by the Compensation Committee resulted in a shiftCompany’s total shareholder return relative to the overall mix of pay for our named executive officers as illustrated in the following charts:Russell 2000 Index.
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Roles of Our Compensation Committee and Compensation Committee Consultant
The Compensation Committee is responsible for overseeing our executive compensation program. In this capacity, the Compensation Committee designs, implements, reviews and approves annually all compensation for our named executive officers. In the performance of its duties, the Compensation Committee periodically reviews the total compensation, including the base salary, annual incentive compensation opportunities, long-term incentive award opportunities and other benefits for each of our named executive officers. In the first quarter of each year, the Compensation Committee meets to determine base salary increases, if any, for our named executive officers; confirm the results of our prior-year performance for purposes of the annual incentive compensation awards; approve strategic and business objectives, which include the performance measures and goals for the annual incentive compensation plan; review the annual incentive compensation targets for the current year; and approve the form, amount, dollar value and vesting criteria for equity awards.
The Compensation Committee has the authority to retain compensation consultants and other outside advisors to assist in the evaluation of executive officer compensation. DuringIn fiscal 2015, 2017,the Compensation Committee retained an independent compensation consultant, Arthur J. Gallagher & Co.’s Compensation Consulting Practice,Pay Governance LLC, or Gallagher Compensation Consulting. Gallagher Compensation Consulting was retainedPay Governance, to assist the Compensation Committee with itsand the Company in reviewing executive compensation disclosures, compensation surveys and CEO pay ratio; administering the Relative TSR multiplier for PSUs and performance options; and completing a review of the fiscal 2015 executive compensation program and recommendations for the fiscal 2016 executive compensation program and reports directly to the Compensation Committee. During fiscal 2015, Gallagher Compensation Consulting advised the Compensation Committee on a variety of subjects, including compensation plan design and trends, pay-for-performance analytics, peer group benchmarking and other related matters. During fiscal 2015, we retained Gallagher Benefit Services, Inc., a subsidiary of Arthur J. Gallagher & Co., to provide us with insurance brokerage and benefit plan advisory services. The primary representative of Gallagher Compensation Consulting that advised the Compensation Committee in fiscal 2015 did not participate in the provision of these other services performed by Gallagher Benefit Services, Inc. Management directly engaged Gallagher Benefit Services, Inc., and the Compensation Committee had no role in selecting or approving them for the services performed.director compensation.
In making executive compensation decisions for fiscal 2015 and fiscal 2016,2017, the Compensation Committee analyzed a number of factors, including the compensation data provided by Gallagher Compensation ConsultingPay Governance, from independent commercially available salary surveys published by Willis Towers Watson and Mercer
LLC and other sources, which included publicly available compensation information from our industry and other industries. Data was generally gathered from this independent market data based on the size of the organization (measured in revenue) and type of organization, and where possible, the data was targeted to our revenue level using regression analysis.
The Compensation Committee also reviewed compensation programs of a peer group of publicly traded companies in the waste management industry, as provided by Gallagher Compensation Consulting.industry. While we do not consider their compensation programs to be directly comparable to ours due to the larger size of those companies, we do review their programs to understand how relevant peers in our industry align performance-based compensation to key operating and financial metrics. This peer group, which is periodically reviewed and updated by the Compensation Committee after consultation with Gallagher Compensation Consulting,and its external advisor, consists of Covanta Holding Corporation, Progressive Waste Solutions Ltd., Republic Services, Inc., Waste Connections, Inc. and Waste Management, Inc. Progressive Waste Solutions Ltd. was formerly included in our peer group prior to its acquisition by Waste Connections, Inc. While the Compensation Committee did not target any compensation element or total compensation for fiscal 2015 and fiscal 20162017 to any specified level of the peer group due to the relative size of the Company compared to the peer group companies, it reviewed the peer group executive compensation data to supplement its general understanding of current executive compensation practices and levels among the Company’s industry peers.
In addition, the Compensation Committee also relied on various other factors in making executive compensation decisions for fiscal 2015 and fiscal 2016,2017, including our Fiscal 2018 Strategic Plan, our budget, our guidance ranges, existing compensation paid to executive officers, experience level of the individual, market factors, general economic conditions, corporate performance and cost of living in the areas where our executive officers live.
Say-on-Pay Feedback from Stockholders
The Compensation Committee carefully considers feedback received from shareholders on compensation for our named executive officers. At our 20152017 Annual Meeting of Stockholders, or 2015 Annual Meeting, we submitted our executive compensation program to an advisory vote of our stockholders and it received the support of 97%over 99% of the total votes cast. Annually, theThe Compensation Committee intends to reviewconsidered the results of the advisory stockholder vote, together with the other factors and data discussed in this proxy statement, in determining executive compensation decisions and policies. The Compensation Committee will continue to consider this feedbackthe outcome of thesay-on-pay votes as it completes its annual review of each pay elementreviews and determines the total compensation packages for our named executive officers with respect to the next fiscal year.officers.
Components of our Executive Compensation Program
Fiscal 2015 Executive Compensation Program
In fiscal 2015, theThe primary elements of our executive compensation program were:are:
base salary;
annual cash incentive compensation;
long-term incentives; and
severance and change-of-control benefits.
Element | Fixed or | Objectives | ||
Base Salary | Fixed | To attract and retain executive officers by offering fixed compensation that is generally competitive with market opportunities and that recognizes each executive officer’s position, role, responsibility and experience. | ||
Annual Cash Incentive Compensation | Variable | To link pay and annual Company performance. Align executive compensation with the annual financial performance of the Company. | ||
Long-Term Incentive Compensation | Variable | To link pay and long-term Company performance. Reward stock appreciation, align our executive officers’ interests with those of our stockholders by focusing on the creation of long-term stockholder value and promote long-term retention. |
Base Salary
On an annual basis, our Compensation Committee reviews and evaluates for adjustment the base salaries of our named executive officers based on the scope of each executive’s responsibilities, individual contribution, prior experience and sustained performance. Base salaries are also reviewed and adjusted, as deemed appropriate, in the case of promotions or other significant changes in responsibility. No formulaic base
salary increases are provided to our named executive officers, and none of our named executive officers is currently party to an employment agreement that provides for automatic or scheduled increases in base salary. In making decisions regarding salary increases, the Compensation Committee may also draw on the experiences of members of our Board with other companies and the peer groupits review of independent commercially available salary surveys and publicly available compensation data reviewed by the Compensation Committee.information. After taking into consideration such factors, the Compensation Committee approved a 2.0% increaseincreases in the annual base salaries of our named executive officers ranging from 2.4% to 12.1% for fiscal 2015.2017.
The following table sets forth the annual base salaries of our named executive officers for fiscal 20152017 and the transition period from May 1, 2014 to December 31, 2014, or transition period 2014:fiscal 2016:
Name | Annual Base Salary for Fiscal 2015 | Annual Base Salary for Transition Period 2014 | Percentage Increase in Base Salary | Annual Base Salary for Fiscal 2017 | Annual Base Salary for Fiscal 2016 | Percentage Increase in Base Salary | ||||||||||||||||||
John W. Casella | $ | 459,000 | $ | 450,000 | 2 | % | $ | 525,000 | $ | 468,180 | 12.1 | % | ||||||||||||
Edmond R. Coletta | $ | 302,650 | $ | 296,715 | 2 | % | $ | 335,000 | $ | 308,703 | 8.5 | % | ||||||||||||
Edwin D. Johnson | $ | 387,600 | $ | 380,000 | 2 | % | $ | 405,000 | $ | 395,352 | 2.4 | % | ||||||||||||
David L. Schmitt | $ | 276,170 | $ | 270,755 | 2 | % | $ | 310,000 | $ | 281,694 | 10.0 | % | ||||||||||||
Christopher B. Heald | $ | 188,700 | $ | 185,000 | 2 | % | $ | 210,000 | $ | 192,474 | 9.1 | % |
Annual Cash Incentives
Fiscal 2015 Annual Cash Incentive Compensation
In January 2015, the Compensation Committee approved the annualAnnual incentive compensation plan for fiscal 2015, or fiscal 2015 bonus plan, pursuantis paid to which our named executive officers were eligibleunder ourNon-Equity Incentive Plan, pursuant to receive incentive compensation with respectwhich participants are granted awards that are earned at the end of a specified performance period, subject to fiscal 2015, payable in cash or equity, as determined by our Compensation Committee, based upon the improvementachievement of EVA in fiscal 2015 compared to EVA in calendar 2014. EVA is calculated as operating income, adjusted for certain items, less a cost of capital charge, with the cost of capital charge calculated as our weighted average cost of capital applied to our consolidated net fixed assets. As definedperformance goals established by the plan,Compensation Committee. Performance goals for the applicable fiscal year are established by the Compensation Committee would allocate positive year-over-year EVA improvementand based on attainment of specified levels of one or any combination of performance measures. The amount of incentive
compensation paid to a named executive officer may, in the sole discretion of the Compensation Committee, be less than or more than the amount otherwise payable to such named executive officer based on attainment of performance goals for the applicable fiscal year.
Fiscal 2017 target annual cash incentive pool for ouramounts
In 2017, the Compensation Committee determined that each of the Company’s named executive officers as follows:
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The amount payablewould have an opportunity to each named executive officer from theearn annual incentive pool would becompensation for fiscal 2017 based on a percentage, from zero to 100%, of a maximum bonus amount (based on a percentage of annual base salary) thatsalary. The target annual cash incentive compensation opportunity of each named executive officer for fiscal 2017, based upon the applicable executive would be eligible to receive under the fiscal 2015 bonus plan. Suchfollowing percentage would be calculated by comparing the amount of the respective officer’s annual incentive pool to the aggregate maximum bonus amounts of all the named executive officers. If we were not in compliance with financial covenants under our senior secured asset-based revolving credit facility before or after accruing for bonus awardsbase salary, was as determined by the fiscal 2015 bonus plan, then the Board would have the discretion to reduce the annual incentive compensation payouts to ensure compliance with such financial covenants.
Name | Fiscal 2017 Target Annual Cash Incentive Percentage | Fiscal 2017 Target Annual Cash Incentive Amount | ||||||
John W. Casella | 150 | % | $ | 787,500 | ||||
Edmond R. Coletta | 85 | % | $ | 284,750 | ||||
Edwin D. Johnson | 85 | % | $ | 344,250 | ||||
David L. Schmitt | 75 | % | $ | 232,500 | ||||
Christopher B. Heald | 50 | % | $ | 105,000 |
Fiscal 2017 performance measures, weightings and goals
In MarchDecember 2016, the Compensation Committee approved the payout ofestablished performance measures and specific performance goals based solely on our fiscal 2017 budget, and not individual performance, that had to be achieved in order for any annual incentive compensation to be paid to our named executive officers under thefor fiscal 2015 bonus plan based upon the achievement of increased EVA when compared to calendar 2014.2017. The period-over-period increase in EVA for calendar 2014 to fiscal 2015 was $9,315,247. As defined by the plan, the Compensation Committee allocated $1,009,575, which was 10.8%evaluated key financial measures and identified and defined Adjusted Operating Income and Free Cash Flow, bothnon-GAAP measures, as appropriate drivers of such positive year-over-year EVA improvement, toperformance under the annual incentive bonus poolNon-Equity Incentive Plan for our named executive officers. Such allocated amount was calculated to be 73.8%fiscal 2017.1 All of the aggregate maximum bonus amounts that all theour named executive officers were eligible to receive underassigned the same performance measures and weightings in recognition of their shared responsibility for overall corporate financial performance.
The performance measures and weightings for fiscal 2015 bonus plan, and therefore the2017 annual cash incentive compensation awarded to each named executive officerwere as follows:
Fiscal 2017 Performance Measures and Weightings | ||||||||
Adjusted Operating Income | Free Cash Flow | |||||||
For All Executive Officers | 50 | % | 50 | % |
Each performance goal has a performance range built around it, with a commensurate increase or decrease in the associated annual incentive compensation opportunity. The range of performance goals and associated incentive compensation opportunities under theNon-Equity Incentive Plan for fiscal 2015 bonus plan2017 was 73.8%expressed in the form of “minimum,” threshold,” “target” and “maximum” achievement levels. Between each of the maximum bonusachievement levels, results would be interpolated within each achievement level to calculate specific annual incentive compensation award percentages. If Free Cash Flow for fiscal 2017 did not exceed a certain minimum amount, or Free Cash Flow Gate, no annual incentive compensation would be paid to the executive officers under theNon-Equity Incentive Plan for fiscal 2017 even if achievement of the Adjusted Operating Income performance goal would have resulted in payment of the annual incentive compensation.
1 | For purposes of annual cash incentive compensation, Adjusted Operating Income is calculated as earnings before interest, taxes, adjusted for the Southbridge Landfill closure charge; gains or losses on assets sales or divestiture transactions; development project charge write-offs; legal, contract or tax settlement costs; bargain purchase gains; asset or goodwill impairment charges; environmental remediation charges; severance and reorganization costs; expenses from divestiture, acquisition and financing transactions; gains on the settlement of acquisition related contingent consideration; fiscalyear-end transition costs; proxy contest costs; losses on the abandonment or the closure and discontinuation of operations, subject to certain adjustments as specified by the Compensation Committee pursuant to theNon-Equity Incentive Plan. |
For purposes of annual cash incentive compensation, Free Cash Flow is calculated as net cash provided by operating activities, less capital expenditures (excluding acquisition and rail infrastructure related capital expenditures), less payments on landfill operating lease contracts, plus proceeds from divestiture transactions, plus proceeds from the sale of property and equipment, plus proceeds from property insurance settlement, less contributions from (distributions to) noncontrolling interest holders, plus certain cash outflows associated with landfill closure, site improvement and remediation expenditures, plus certain cash outflows associated with new contract and project capital expenditures, plus cash (inflows) outflows associated with certain business dissolutions, plus cash interest outflows associated with the timing of refinancing transactions, subject to certain adjustments as specified by the Compensation Committee pursuant to theNon-Equity Incentive Plan. |
The goals and performance ranges for Adjusted Operating Income and Free Cash Flow and the degree to which we attained these goals in fiscal 2017 are as follows:
Performance Measure | Weighting | Minimum | Threshold | Target | Maximum | Actual Achievement | Payout % | |||||||||||||
Adjusted Operating Income | 50 | % | $44.0 million | $47.5 million | $51.0 million | $55.0 million | $ | 52.8 million | 140.4 | % | ||||||||||
Free Cash Flow | 50 | % | $24.2 million | $33.0 million | $35.0 million | $39.0 million | $ | 38.8 million | 195.0 | % | ||||||||||
Overall Payout % | 167.7 | % |
Free Cash Flow for fiscal 2017 exceeded the Free Cash Flow Gate of $24.2 million.
Fiscal 2017 annual cash incentive payments
As reflected in the table above, we demonstrated solid performance against our performance goals for fiscal 2017, resulting in a payout of that percentage of each named executive officer.
The table below shows theofficer’s target annual cash incentive compensation paid to the named executive officers under the fiscal 2015 bonus plan. The total annual incentive paid to each named executive, which includes the special bonus payments received by Mr. Coletta and Mr. Healdamount as described below, is reflectedset forth in the “Non-Equity Incentive Plan Compensation” columntable below. The Compensation Committee used its discretion to adjust downward the payout percentage for Mr. Casella to 132.6% on account of the Summary Compensation Table.decision to close the Southbridge Landfill and the resultant impairment charge.
Named Executive Officer Fiscal 2015 Bonus Plan Payments | ||||||||||||||||||||
Maximum | Actual | |||||||||||||||||||
Name | Annual Base Salary for Fiscal 2015 | Maximum Bonus Amount % | Maximum Bonus Amount $ | Bonus Received $ | Bonus Received as % of Maximum Bonus Amount | |||||||||||||||
John W. Casella | $ | 459,000 | 120 | % | $ | 550,800 | $ | 406,695 | 73.8 | % | ||||||||||
Edmond R. Coletta | 302,650 | 75 | 225,987 | 167,601 | 73.8 | |||||||||||||||
Edwin D. Johnson | 387,600 | 85 | 329,460 | 243,264 | 73.8 | |||||||||||||||
David L. Schmitt | 276,170 | 60 | 165,702 | 122,350 | 73.8 | |||||||||||||||
Christopher R. Heald | 177,700 | 50 | 94,350 | 69,665 | 73.8 | |||||||||||||||
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TOTAL | $ | 1,366,299 | $ | 1,009,575 | ||||||||||||||||
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Special Bonuses
In October 2014, the Compensation Committee approved a special one-time bonus plan for members of our finance team, including Messrs. Coletta and Heald, relating to certain proposed financing transactions, including the refinancing of our senior secured credit facility. Pursuant to such bonus plan, Mr. Coletta was eligible to receive a bonus payment upon the closing of each of four specified financing transactions for a total bonus payout of $202,055 and Mr. Heald was eligible to receive a bonus payment upon the closing of each of two specified financing transactions for a total bonus payout of $85,250. Two of the transactions closed during transition period 2014, and the remaining other two transactions closed in fiscal 2015. Mr. Coletta received a bonus payout of $202,055, of which $44,100 was earned during transition period 2014 and $157,955 was earned during fiscal 2015. Mr. Heald received a bonus payout of $85,250, all of which was earned in fiscal 2015.
Name | Fiscal 2017 Target Annual Cash Incentive Amount | Payout % Against Target | Actual Fiscal 2017 Annual Cash Incentive Amount | |||||||||
John W. Casella | $ | 787,500 | 132.6 | % | $ | 1,044,225 | ||||||
Edmond R. Coletta | $ | 284,750 | 167.7 | % | $ | 477,526 | ||||||
Edwin D. Johnson | $ | 344,250 | 167.7 | % | $ | 577,307 | ||||||
David L. Schmitt | $ | 232,500 | 167.7 | % | $ | 389,903 | ||||||
Christopher B. Heald | $ | 105,000 | 167.7 | % | $ | 176,085 |
Long-Term IncentivesIncentive Compensation
Our named executive officers are also eligible to receive equity awards under our stock incentive plans.plan. We typically make equity awards to our officers and employees as an incentive to enhance long-term shareholder value. Equity awards are typically granted when the person is first hired or receives a promotion or other significant change in responsibility, and thereafter once annually as a part of our broader equity incentive program at a regularly scheduled Compensation Committee meeting early in the commencementfiscal year. Our long-term incentive compensation program includes the granting of awards up to 75% in the respective fiscal year.
In fiscal 2015, we grantedform of PSUs and 25% in the form of time-based restricted stock units, or RSUs. The Compensation Committee believes that this approach to long-term incentive compensation builds upon itspay-for-performance philosophy and provides a balanced focus on stock price appreciation and the achievement of financial metrics that are drivers of long-term shareholder value creation.
In fiscal 2017, we granted time-based RSUs, each of which represents the right to receive a share of our Class A common stock, to our named executive officers that vest based on continued employment in three equal annual installments beginning on the first anniversary of the date of grant. The RSUs will vest in full, uponif on or prior to the first
anniversary of the date of the consummation of a change of control of the Company.Company, a named executive officer’s service with the Company is terminated without cause. The number of time-based RSUs granted to our named executive officers in fiscal 2017 are as follows:
Name | Number of RSUs Granted | |||
John W. Casella | ||||
Edmond R. Coletta | ||||
Edwin D. Johnson | ||||
David L. Schmitt | ||||
Christopher B. Heald |
Changes Implemented in Fiscal 2016In fiscal 2017, we granted PSUs to Further Align Payeach named executive officer, with Performance
In March 2016,each PSU award representing the Compensation Committee implemented several changesright to our executive compensation program for fiscal 2016, including the adoption by the Compensation Committeereceive a target number of shares of Class A common stock and up to a maximum number of shares of Class A common stock (equal to 180% of the Non-Equity Incentive Plan pursuant to which participants are granted awards that are earned at the endtarget number of a specified performance period, subject to the achievement of performance goals established by the Compensation Committee. As part of its comprehensive annual review process, the Compensation Committee considered feedback received from stockholders, data provided by the Compensation Committee’s independent compensation consultant, and alignment of the executive compensation program to our fiscal 2016 operating plan and budget, or Fiscal 2016 Operating Plan, and our Fiscal 2018 Plan, as described above in “Proxy Summary”.
In implementing such changes to the executive compensation program for fiscal 2016, the goal of the Compensation Committee was to further align the compensation of our executive officers with stockholders’ interests, to better align executive compensation to the Fiscal 2016 Operating Plan and the Fiscal 2018 Plan by directly linking compensation to the achievement of company performance goals under such plans and to appropriately balance “fixed” and “performance-based” compensation. Further, while the percentage of the total compensation of each executive officer that is comprised of each component of our executive compensation program is not specifically fixed, the Compensation Committee has targeted total target cash compensation (base salary and annual cash incentive compensation) of our executive officers closer to the 50th percentile of the market data provided by the Compensation Committee’s independent compensation consultant by increasing the total target annual cash incentive compensation for certain executive officers.
The key changes to the executive compensation program approved by the Compensation Committee for fiscal 2016 areshares), as follows:
Name | Target Number of Shares Issuable Upon Vesting of PSUs | Maximum Number of Shares Issuable Upon Vesting of PSUs | ||||||
John W. Casella | 77,055 | 138,699 | ||||||
Edmond R. Coletta | 44,949 | 80,908 | ||||||
Edwin D. Johnson | 44,949 | 80,908 | ||||||
David L. Schmitt | 12,842 | 23,116 | ||||||
Christopher B. Heald | 12,842 | 23,116 |
re-balancing the mixThe number of fixed versus variable pay and increasing our focus on performance-based pay;
increasing target annual incentivesPSUs eligible to improve the competitive position ofvest for each named executive officers’ total annual cash compensation compared to median benchmark data by increasing performance-based pay; and
adopting a shift in annualofficer will be based upon our level of achievement of two performance focus to operating income and free cash flow.
While the Compensation Committee approved the majority of its planned changes to our executive compensation program in March 2016, the planned updates to long-term equity incentive compensation for our executive officers will only be fully implemented after we receive stockholder approvalobjectives measured for the 2016 Incentive Plan at the 2016 Annual Meeting.third year, or measurement period, of our three-year performance period running from January 1, 2017 to December 31, 2019. The Compensation Committee plans to shift long-term incentive compensation from the current program that only includes time-vested RSUs, to a new program by implementing the following:
introducing performance-based stock units, or PSUs, based on company achievement of three-yearperformance objectives are: (i) Free Cash Flow, as defined in the applicable PSU agreement, for the measurement period (weighted 50%) and (ii) Adjusted EBITDA, targets and with a multiplieras defined in the applicable PSU agreement, for the measurement period (weighted 50%).2
2 | For purposes of the PSUs, Free Cash Flow is calculated as net cash provided by operating activities, less capital expenditures (excluding acquisition and rail infrastructure related capital expenditures), less payments on landfill operating lease contracts, plus proceeds from divestiture transactions, plus proceeds from the sale of property and equipment, plus proceeds from property insurance settlement, less contributions from (distributions to) noncontrolling interest holders, plus certain cash outflows associated with landfill closure, site improvement and remediation expenditures, plus certain cash outflows associated with new contract and project capital expenditures, plus cash (inflows) outflows associated with certain business dissolutions, plus cash interest outflows associated with the timing of refinancing transactions. |
For purposes of the PSUs, Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, amortization, accretion and depletion of landfill operating lease obligations, adjusted for the following items: gains or losses on assets sales or divestiture transactions; development project charge write-offs; legal, contract or tax settlement costs; bargain purchase gains; asset or goodwill impairment charges; environmental remediation charges; severance and reorganization costs; expenses from divestiture, acquisition and financing transactions; gains on the settlement of acquisition related contingent consideration; fiscalyear-end transition costs; proxy contest costs; losses on the abandonment or the closure and discontinuation of operations. |
The number of shares of Class A common stock issuable upon vesting of the PSUs will be determined based upon (i) the number of PSUs determined to be eligible to vest based on the level of achievement of such performance objectives during the measurement period multiplied by (ii) a Relative TSR multiplier for the period running from January 1, 2017 to December 31, 2019. Relative TSR means the Company’s total shareholder return relative to the Russell 2000 Index; andIndex.
shifting the mix of long-term equity incentive compensation to be 75% PSUs and 25% time-based RSUs from 100% RSUs.
In addition, in July 2016, the Compensation Committee retained a new independent compensation consultant, Pay Governance LLC, to assist the Compensation Committee and the Company in effecting these changes, including reviewing the executive compensation disclosure in this proxy statement, developing the necessary analytics to calculate and administer the Relative TSR multiplier for PSUs, and completing a competitive review of director compensation.
Fiscal 2016 Annual Cash Incentive Compensation
Annual incentive compensation for fiscal 2016 will be paid to our executive officers pursuant to the Non-Equity Incentive Plan. The Compensation Committee determined that each of the Company’s executive officers will have an opportunity to earn annual incentive compensation for fiscal 2016 based on a percentage of annual base salary. The target annual cash incentive compensation opportunity of each named executive officer, based upon the following percentage of the respective officer’s annual base salary, is as follows:
Name and Principal Position(s) | Fiscal 2016 Target Annual Cash Incentive Percentage | Fiscal 2016 Target Annual Cash Incentive Amount | ||||||
John W. Casella | 150 | % | $ | 702,270 | ||||
Edmond R. Coletta | 85 | % | $ | 262,397 | ||||
Edwin D. Johnson | 85 | % | $ | 336,049 | ||||
David L. Schmitt | 75 | % | $ | 211,271 | ||||
Christopher B. Heald | 50 | % | $ | 96,237 |
The Compensation Committee established performance measures and specific performance goals pursuant to the Non-Equity Incentive Plan that are based on the Fiscal 2016 Operating Plan. Annual incentive compensation will be paid based on the degree of achievement against the specific performance goals following the end of fiscal 2016. All of our named executive officers were assigned the same performance measures and weightings in recognition of their shared responsibility for overall corporate financial performance.
The performance measures and weighting for the fiscal 2016 annual incentive compensation are as follows:
Fiscal 2016 Performance Measures and Weightings | ||||||||
Adjusted Operating Income | Free Cash Flow | |||||||
For All Executive Officers | 50 | % | 50 | % |
The Compensation Committee evaluated key financial measures and identified Adjusted Operating Income and Free Cash Flow, both non-GAAP measures, as appropriate drivers of performance under the Non-Equity Incentive Plan for fiscal 2016. 1 Each performance goal has a performance range built around it, with a commensurate increase or decrease in the associated annual incentive compensation opportunity. The range of performance goals and associated incentive compensation opportunities under the Non-Equity Incentive Plan for fiscal 2016 is expressed in the form of “minimum,” threshold,” “target” and “maximum” achievement levels. For fiscal 2016, subject to Free Cash Flow exceeding a certain threshold amount, if the “minimum” achievement level of a performance measure is not met, no incentive compensation payment will be paid to an executive officer with respect to such performance measure component; if the “threshold” achievement level is met for a performance measure, 50% of the executive officer’s target incentive compensation amount will be multiplied against the 50% weighting of such performance measure component; if the “target” achievement level is met for a performance measure, 100% of the executive officer’s target incentive compensation amount will be multiplied against the 50% weighting of such performance measure component; and if the “maximum” achievement level is met for a performance measure, 200% of the executive officer’s target incentive compensation amount will be multiplied against the 50% weighting of such performance measure component. Between each of the achievement levels, results will be interpolated within each achievement level to calculate specific annual incentive compensation award percentages.
If Free Cash Flow for fiscal 2016 does not exceed a certain threshold amount, no annual incentive compensation will be paid to the executive officers under the Non-Equity Incentive Plan for fiscal 2016 even if achievement of the Adjusted Operating Income performance goal would have resulted in payment of the annual incentive compensation.
Benefits and Other Compensation
We maintain broad based benefits that are provided to all employees, including health and dental insurance, life and disability insurance and a 401(k) plan. Our named executive officers are eligible to participate in all of our employee benefit plans, in each case, on the same basis as other employees.
We provide limited perquisites to our named executive officers. Messrs. Casella, Coletta and Johnson are eligible to receive car allowances, and the amounts that they received for car allowances in fiscal 20152017 are detailed in the Summary Compensation Table. We provide this benefit because we believe it is reasonable, competitive and consistent with our overall executive compensation program.
Severance andChange-of-Control Benefits
Pursuant to employment agreements we have entered into with our named executive officers, each such named executive officer is entitled to specified benefits in the event of the termination of his employment under
Free Cash Flow is calculated as net cash provided by operating activities, less capital expenditures (excluding acquisition and rail infrastructure related capital expenditures), less payments on landfill operating lease contracts, plus proceeds from divestiture transactions, plus proceeds from the sale of property and equipment, plus proceeds from property insurance settlement, less contributions from (distributions to) noncontrolling interest holders, subject to certain adjustments as specified by the Compensation Committee pursuant to the Non-Equity Incentive Plan.
specified circumstances, including termination following a change of control of the Company. We have provided more detailed information about these benefits, along with estimates of their value under various circumstances, under the caption “—Potential Payments Upon Termination or Change of Control” below.
Compensation Clawback Policy
In September 2015, we adopted a Compensation Clawback Policy that applies to our current or former executive officers, or covered officers, and other applicable employees. Under the Compensation Clawback Policy, in the event of a restatement of our financial results due to the material noncompliance with any financial reporting requirement under the securities laws, regardless of fault, we will use reasonable efforts to recover cash and equity incentive-based compensation from covered officers that was: (i) based on the erroneous data; (ii) paid during the three-year period preceding the date on which the accounting restatement is required to be prepared; and (iii) in excess of what would have been paid under the accounting restatement. In the event that the Board determines in its sole discretion that a covered person’s or another current or former employee’s act or omission involving willful misconduct or fraud contributed to the circumstances requiring the restatement, then we will use reasonable efforts to recover from such covered person or current or former employee, up to 100% of cash and equity incentive-based compensation paid during the three-year period preceding the date on which the accounting restatement is required to be prepared.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, generally disallows a tax deduction for compensation in excess of $1.0 million paid to a company’s chief executive officer and its three other officers (other than the chief financial officer) whose compensation is required to be reported to our stockholders pursuant to the Exchange Act by reason of being among our most highly paid executive officers. CertainPursuant to the Tax Cuts and Jobs Act, signed into law on December 22, 2017, or Tax Act, for fiscal years beginning after December 31, 2017, the compensation including qualified performance based compensation,of our chief financial officer is notalso subject to the deduction limitationlimitations. For fiscal years beginning on or before December 31, 2017, certain compensation, including qualified performance-based compensation, will not be subject to the deduction limitations if certain requirements are met. Pursuant to the Tax Act, subject to certain transition rules, for fiscal years beginning after December 31, 2017, the performance-based compensation exception to the deduction limitations under
Section 162(m) will no longer be available. As a result, for fiscal years beginning after December 31, 2017, all compensation in excess of $1 million paid to the specified executives will not be deductible, unless grandfathered under transition guidance. The Compensation Committee reviewshas and will continue to review on a periodic basis the potential effect of Section 162(m) periodically and usesmay use its judgment to authorize compensation payments that may be in excess of the limit when it believes such payments are appropriate, and in the best interests of our stockholders, after taking into consideration changing business conditions and the performance of our employees.
Compensation Committee Report
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management. Based on this review and discussion, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this proxy statement.
By the Compensation Committee of the Board of Directors of Casella Waste Systems, Inc.
Joseph G. Doody, Chair
Emily Nagle Green
James E. O’Connor
Gregory B. Peters
Summary Compensation
The following table sets forth the total compensation earned by, paid to or granted to our named executive officers during the fiscal years or transition period indicated.
Summary Compensation Table
Name and Principal Position(s) | Year | Salary ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non- Equity Incentive Plan Com- pensation ($) (4) | All Other Compensation ($) (5) | Total ($) | Year | Salary ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non- Equity Incentive Plan Com- pensation ($) | All Other Compensation ($) (4) | Total ($) | ||||||||||||||||||||||||||||||||||||||
John W. Casella | Fiscal 2015 | 459,000 | 366,168 | — | 406,695 | 23,771 | 1,255,634 | 2017 | 525,000 | 1,263,959 | — | 1,044,225 | 52,289 | 2,885,473 | ||||||||||||||||||||||||||||||||||||||
Chairman and Chief Executive Officer | Transition period 2014 | 300,000 | 244,110 | — | 206,868 | 28,029 | 779,007 | 2016 | 468,180 | 1,331,242 | 134,000 | 1,318,231 | 21,369 | 3,273,022 | ||||||||||||||||||||||||||||||||||||||
Fiscal 2014 (6) | 402,016 | 139,336 | 226,831 | 102,895 | 87,575 | 958,653 | 2015 | 459,000 | 366,168 | — | 406,695 | 23,771 | 1,255,634 | |||||||||||||||||||||||||||||||||||||||
Fiscal 2013 (7) | 363,150 | 278,674 | — | — | 43,843 | 685,667 | ||||||||||||||||||||||||||||||||||||||||||||||
Edmond R. Coletta | Fiscal 2015 | 302,650 | 200,000 | 802,011 | 325,556 | 8,408 | 1,638,625 | 2017 | 335,000 | 737,313 | — | 477,526 | 8,351 | 1,558,190 | ||||||||||||||||||||||||||||||||||||||
Senior Vice President and Chief Financial Officer | Transition period 2014 | 197,810 | 133,336 | — | 129,351 | 5,336 | 465,833 | |||||||||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | 258,905 | 133,618 | — | 52,840 | 8,236 | 453,599 | 2016 | 308,703 | 776,559 | 67,000 | 492,545 | 8,351 | 1,653,158 | |||||||||||||||||||||||||||||||||||||||
Fiscal 2013 | 205,000 | 114,365 | 265,911 | — | 7,000 | 592,276 | 2015 | 302,650 | 200,000 | 802,011 | 325,556 | 8,408 | 1,638,625 | |||||||||||||||||||||||||||||||||||||||
Edwin D. Johnson | Fiscal 2015 | 387,600 | 200,000 | — | 243,264 | 11,734 | 842,598 | 2017 | 405,000 | 737,313 | — | 577,307 | 11,677 | 1,731,297 | ||||||||||||||||||||||||||||||||||||||
President and Chief Operating Officer | Transition period 2014 | 265,833 | 133,336 | — | 123,738 | 8,078 | 530,985 | 2016 | 395,352 | 776,559 | 67,000 | 630,798 | 11,678 | 1,881,387 | ||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | 351,375 | 133,618 | 436,940 | (8) | 76,695 | 196,533 | 1,195,161 | 2015 | 387,600 | 200,000 | — | 243,264 | 11,734 | 842,598 | ||||||||||||||||||||||||||||||||||||||
Fiscal 2013 | 320,833 | 267,232 | 517,050 | — | 11,673 | 1,116,788 | ||||||||||||||||||||||||||||||||||||||||||||||
David L. Schmitt | Fiscal 2015 | 276,170 | 57,182 | — | 122,350 | 1,057 | 456,759 | 2017 | 310,000 | 210,656 | — | 389,903 | 1,000 | 911,559 | ||||||||||||||||||||||||||||||||||||||
Senior Vice President and General Counsel | Transition period 2014 | 180,504 | 38,122 | — | 62,234 | — | 280,860 | |||||||||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | 256,113 | 57,184 | — | 38,574 | 1,000 | 352,871 | 2016 | 281,694 | 221,869 | 33,500 | 396,576 | 1,000 | 934,639 | |||||||||||||||||||||||||||||||||||||||
Fiscal 2013 | 241,825 | 114,365 | — | — | 1,000 | 357,190 | 2015 | 276,170 | 57,182 | — | 122,350 | 1,057 | 456,759 | |||||||||||||||||||||||||||||||||||||||
Christopher B. Heald | Fiscal 2015 | 188,546 | 57,182 | — | 154,915 | 1,057 | 401,700 | 2017 | 210,000 | 210,656 | — | 176,085 | 1,000 | 597,741 | ||||||||||||||||||||||||||||||||||||||
Vice President of Finance and Chief Accounting Officer | Transition period 2014 | 123,333 | 38,122 | — | 35,436 | — | 196,891 | 2016 | 192,317 | 221,869 | 33,500 | 180,646 | 1,000 | 629,332 | ||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | 165,733 | 57,184 | — | 21,964 | 1,000 | 245,881 | 2015 | 188,546 | 57,182 | — | 154,915 | 1,057 | 401,700 | |||||||||||||||||||||||||||||||||||||||
Fiscal 2013 | 140,092 | 27,034 | 64,869 | 15,000 | 1,000 | 247,995 |
(1) | The |
(2) | Amounts shown in this column reflect the aggregate grant date fair value of |
(3) | Reflects the aggregate grant date fair value for time-based stock options and performance options granted under our 2006 Stock Incentive Plan and 2016 |
(4) |
The amounts reported in All Other Compensation reflect, for each named executive officer, the sum of (a) the dollar value of life |
(c) the amount of taxgross-ups we paid and (d) the incremental cost to us of all perquisites and other personal benefits. The following table sets forth All Other Compensation paid to or accrued by our named executive officers in |
Name | Year | Life Insurance Premiums ($) | Medical Insurance Premiums ($) | 401(k) Plan Matching Contributions ($) | Car Allowance and Usage ($) | Tax Gross-Up Payments ($) | Other ($) | Year | Life Insurance Premiums ($) | 401(k) Plan Matching Contributions ($) | Car Allowance and Usage ($) | Tax Gross-Up Payments ($) | Other ($) | |||||||||||||||||||||||||||||||||||
John W. Casella | Fiscal 2015 | 9,012 | — | — | 14,702 | — | 57 | (b) | 2017 | 12,316 | 1,000 | 18,920 | 20,053 | (a) | — | |||||||||||||||||||||||||||||||||
Transition period 2014 | 8,050 | — | — | 19,979 | — | — | 2016 | 12,862 | — | 5,670 | 2,837 | (a) | — | |||||||||||||||||||||||||||||||||||
Fiscal 2014 | 8,080 | — | — | 17,904 | 61,591 | (a) | — | 2015 | 9,012 | — | 9,799 | 4,922 | (b) | 38 | (c) | |||||||||||||||||||||||||||||||||
Fiscal 2013 | 8,367 | 28,485 | — | 6,991 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Edmond R. Coletta | Fiscal 2015 | — | — | 1,000 | 7,351 | — | 57 | (b) | 2017 | — | 1,000 | 6,901 | 450 | (a) | — | |||||||||||||||||||||||||||||||||
Transition period 2014 | — | — | — | 5,336 | — | — | ||||||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | — | — | 1,000 | 7,236 | — | — | 2016 | — | 1,000 | 6,901 | 450 | (a) | — | |||||||||||||||||||||||||||||||||||
Fiscal 2013 | — | — | 1,000 | 6,000 | — | — | 2015 | — | 1,000 | 6,901 | 469 | (b) | 38 | (c) | ||||||||||||||||||||||||||||||||||
Edwin D. Johnson | Fiscal 2015 | 897 | — | 1,000 | 9,780 | — | 57 | (b) | 2017 | 897 | 1,000 | 9,120 | 660 | (a) | — | |||||||||||||||||||||||||||||||||
Transition period 2014 | 897 | — | — | 7,181 | — | — | 2016 | 897 | 1,000 | 9,120 | 661 | (a) | — | |||||||||||||||||||||||||||||||||||
Fiscal 2014 | 897 | — | 1,000 | 9,803 | — | 184,833 | (c) | 2015 | 897 | 1,000 | 9,120 | 679 | (b) | 38 | (c) | |||||||||||||||||||||||||||||||||
Fiscal 2013 | 897 | — | 1,000 | 9,776 | — | — | ||||||||||||||||||||||||||||||||||||||||||
David L. Schmitt | Fiscal 2015 | — | — | 1,000 | — | — | 57 | (b) | 2017 | — | 1,000 | — | — | — | ||||||||||||||||||||||||||||||||||
Transition period 2014 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Fiscal 2014 | — | — | 1,000 | — | — | — | 2016 | — | 1,000 | — | — | — | ||||||||||||||||||||||||||||||||||||
Fiscal 2013 | — | — | 1,000 | — | — | — | 2015 | — | 1,000 | — | 19 | (d) | 38 | (c) | ||||||||||||||||||||||||||||||||||
Christopher B. Heald | Fiscal 2015 | — | — | 1,000 | — | — | 57 | (b) | 2017 | — | 1,000 | — | — | — | ||||||||||||||||||||||||||||||||||
Transition period 2014 | — | — | — | — | — | — | 2016 | — | 1,000 | — | — | — | ||||||||||||||||||||||||||||||||||||
Fiscal 2014 | — | — | 1,000 | — | — | — | 2015 | — | 1,000 | — | 19 | (d) | 38 | (c) | ||||||||||||||||||||||||||||||||||
Fiscal 2013 | — | — | 1,000 | — | — | — |
(a) |
(b) | This amount consists of tax gross ups provided with respect to car allowance and usage and the gift described in note (c). |
(c) | Consists of a gift provided to all attendees at a company retreat. |
Grants of Plan-Based Awards
The following table sets forth information regarding grants of equity awards made to our named executive officers during fiscal 2015.2017.
Fiscal 20152017 Grants of Plan-Based Awards
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | All Other Option Awards: Number of Securities Underlying Options (#) (3) | Exercise or Base Price of Option Awards ($/Sh) (4) | Grant Date Fair Value of Stock and Stock Option Awards ($) (5) | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | Grant Date Fair Value of Stock and Option Awards ($) (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John W. Casella | N/A | — | — | 550,800 | — | — | — | — | N/A | — | 787,500 | 1,575,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | — | — | — | — | — | — | 25,685 | 300,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/24/2015 | — | — | — | 87,600 | — | — | 366,168 | 2/28/2017 | — | — | — | — | 77,055 | 138,699 | — | 963,958 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Edmond R. Coletta | N/A | — | — | 226,987 | — | — | — | — | N/A | — | 284,750 | 569,500 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/24/2015 | — | — | — | 47,847 | — | — | 200,000 | 2/28/2017 | — | — | — | — | — | — | 14,983 | 175,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
11/19/2015 | — | — | — | — | 150,000 | 7.17 | 802,011 | 2/28/2017 | — | — | — | — | 44,949 | 80,908 | — | 562,312 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Edwin D. Johnson | N/A | — | — | 329,460 | — | — | — | — | N/A | — | 344,250 | 688,500 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/24/2015 | — | — | — | 47,847 | — | — | 200,000 | 2/28/2017 | — | — | — | — | — | — | 14,983 | 175,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | — | — | — | — | 44,949 | 80,908 | — | 562,312 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David L. Schmitt | N/A | — | — | 165,702 | — | — | — | — | N/A | — | 232,500 | 465,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | — | — | — | — | — | — | 4,281 | 50,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/24/2015 | — | — | — | 13,680 | — | — | 57,182 | 2/28/2017 | — | — | — | — | 12,842 | 23,116 | — | 160,653 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher B. Heald | N/A | — | — | 94,350 | — | — | — | — | N/A | — | 105,000 | 210,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/24/2015 | — | — | — | 13,680 | — | — | 57,182 | 2/28/2017 | — | — | — | — | — | — | 4,281 | 50,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | — | — | — | — | 12,842 | 23,116 | — | 160,653 |
(1) |
Name | Actual Payout Under Non-Equity Incentive Plan for Fiscal 2017 | |||
John W. Casella | $ | 1,044,225 | ||
Edmond R. Coletta | $ | 477,526 | ||
Edwin D. Johnson | $ | 577,307 | ||
David L. Schmitt | $ | 389,903 | ||
Christopher B. Heald | $ | 176,085 |
(2) | Represents |
(3) | Represents RSUs granted under our 2016 Incentive Plan. The RSUs vest based on continued employment in equal annual installments over a three-year period beginning on the first anniversary of the date of grant. |
(4) | The |
Information Relating to Equity Awards and Holdings
The following table sets forth information regarding outstanding unexercised options and stock units that have not vested and related information for each of our named executive officers as of December 31, 2015.2017.
Outstanding Equity Awards at December 31, 20152017
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/sh) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($/sh) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||
John W. Casella | 30,000 | — | 13.00 | 7/6/2016 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John W.Casella | 54,874 | — | — | 5.54 | 12/12/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14,000 | — | 11.01 | 7/23/2017 | — | — | — | — | — | — | 20,000 | (1) | 12.48 | 11/16/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
36,582 | (1) | 18,292 | (1) | 5.54 | 12/12/2023 | — | — | — | — | — | — | — | — | — | 25,685 | (2) | 591,269 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 87,600 | (2) | 523,848 | — | — | — | — | — | — | — | 31,646 | (3) | 728,491 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 30,822 | (3) | 184,316 | — | — | — | — | — | — | — | 29,200 | (4) | 672,184 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 11,414 | (4) | 68,256 | — | — | — | — | — | — | — | — | — | 77,055 | (5) | 1,773,806 | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 72,115 | (6) | 1,660,087 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Edmond R. Coletta | 2,000 | — | 13.00 | 7/6/2016 | — | — | — | — | 20,000 | — | — | 4.72 | 3/4/2020 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
1,000 | — | 11.01 | 7/23/2017 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20,000 | — | 13.78 | 12/13/2017 | — | — | — | — | 90,000 | — | — | 4.00 | 12/5/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
20,000 | — | 4.72 | 3/4/2020 | — | — | — | — | — | 150,000 | (7) | — | 7.17 | 11/18/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
90,000 | — | 4.00 | 12/5/2022 | — | — | — | — | — | — | 10,000 | (1) | 12.48 | 11/16/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
— | 150,000 | (5) | 7.17 | 11/18/2025 | — | — | — | — | — | 14,983 | (2) | 344,909 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 47,847 | (2) | 286,125 | — | — | — | — | — | — | — | 18,460 | (3) | 424,949 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 16,836 | (3) | 100,679 | — | — | — | — | — | — | — | 15,949 | (4) | 367,146 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 10,946 | (4) | 65,457 | — | — | — | — | — | — | — | — | — | 44,949 | (5) | 1,034,726 | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 42,067 | (6) | 968,382 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Edwin D. Johnson | 200,000 | — | 3.81 | 7/6/2020 | — | — | — | — | 200,000 | — | — | 3.81 | 7/6/2020 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
122,466 | — | 4.00 | 12/5/2022 | — | — | — | — | 72,466 | — | — | 4.00 | 12/5/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
50,000 | — | 5.71 | 12/10/2023 | — | — | — | — | 50,000 | — | — | 5.71 | 12/10/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
52,534 | — | 5.71 | 12/10/2023 | — | — | — | — | 52,534 | — | — | 5.71 | 12/10/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 47,847 | (2) | 286,125 | — | — | — | — | 10,000 | (1) | 12.48 | 11/16/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 16,836 | (3) | 100,679 | — | — | — | — | — | — | — | 14,983 | (2) | 344,909 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 10,946 | (4) | 65,457 | — | — | — | — | — | — | — | 18,460 | (3) | 424,949 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 15,949 | (4) | 367,146 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 44,949 | (5) | 1,034,726 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
42,067 | (6) | 968,382 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David L. Schmitt | 15,000 | — | 15.60 | 5/31/2016 | — | — | — | — | — | — | 5,000 | (1) | 12.48 | 11/16/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 4,281 | (2) | 98,549 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 13,680 | (2) | 81,806 | — | — | — | — | — | — | — | 5,274 | (3) | 121,407 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 4,814 | (3) | 28,788 | — | — | — | — | — | — | — | 4,560 | (4) | 104,971 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 4,685 | (4) | 28,016 | — | — | — | — | — | — | — | — | — | 12,842 | (5) | 295,623 | ||||||||||||||||||||||||||||||||||||||||||||||||||
12,019 | (6) | 276,677 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher B. Heald | 1,800 | — | 13.00 | 7/6/2016 | — | — | — | — | 20,000 | — | — | 4.38 | 1/23/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
500 | — | 11.01 | 7/23/2017 | — | — | — | — | — | — | 5,000 | (1) | 12.48 | 11/16/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
— | 20,000 | (6) | 4.38 | 1/23/2023 | — | — | — | — | — | — | — | — | — | 4,281 | (2) | 98,549 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 13,680 | (2) | 81,806 | — | — | — | — | — | — | — | 5,274 | (3) | 121,407 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 4,814 | (3) | 28,788 | — | — | — | — | — | — | — | 4,560 | (4) | 104,971 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 4,685 | (4) | 28,016 | — | — | — | — | — | — | — | — | — | 12,842 | (5) | 295,623 | ||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 12,019 | (6) | 276,677 |
(1) | Represents |
(2) | Represents |
(3) | Represents |
(4) | Represents |
(5) | Represents PSUs granted on February 28, 2017 at the target award level. The PSUs vest based on (i) our level of achievement of Free Cash Flow and Adjusted EBITDA during the third year of our three-year performance period running from January 1, 2017 to December 31, 2019 and (ii) a Relative TSR multiplier for the period running from January 1, 2017 to December 31, 2019. |
(6) | Represents PSUs granted on November 17, 2016 at the target award level. The PSUs vest based on (i) our level of achievement of Free Cash Flow and Adjusted EBITDA during the third year of our three-year performance period running from January 1, 2016 to December 31, 2018 and (ii) a Relative TSR multiplier for the period running from January 1, 2016 to December 31, 2018. |
(7) | Represents stock options granted on November 19, 2015. The stock options fully vest on the third anniversary of the date of grant. |
Option Exercises and Stock Vested During Fiscal 20152017
Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||
Name | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) (1) | Value Realized on Exercise (#) | Number of Shares Acquired on Vesting (#) (2) | Value Realized on Vesting ($) | ||||||||||||||||||
John W. Casella | 35,806 | 201,025 | 14,000 | 22,055 | 60,433 | 786,958 | ||||||||||||||||||
Edmond R. Coletta | 23,046 | 129,977 | 21,000 | 123,257 | 33,597 | 436,965 | ||||||||||||||||||
Edwin D. Johnson | 27,974 | 157,081 | 250,000 | 4,248,000 | 33,597 | 436,965 | ||||||||||||||||||
David L. Schmitt | 10,776 | 60,516 | — | — | 9,604 | 124,913 | ||||||||||||||||||
Christopher B. Heald | 7,961 | 45,034 | 500 | 1,997 | 9,604 | 124,913 |
(1) | Number of shares acquired on exercise of stock options is the gross number of shares exercised, including shares that were surrendered to us, if applicable, for the payment of withholding taxes pursuant to the terms of our 2006 Stock Incentive Plan or 2016 Incentive Plan. |
(2) | Number of shares acquired on vesting of stock awards is the gross number of shares vested, including shares that were surrendered to us, if applicable, for the payment of withholding taxes pursuant to the terms of our 2006 Stock Incentive Plan or 2016 Incentive Plan. |
Potential Payments Upon Termination or Change of Control
Employment Agreements
We have employment agreements with Messrs. John Casella, Johnson, Coletta, Schmitt and Heald, which we entered into as follows: Mr. John Casella: December 8, 1999; Mr. Johnson: July 6, 2010; Mr. Coletta: September 1, 2012; Mr. Schmitt: May 31, 2006; and Mr. Heald: March 1, 2016. Each of Messrs. John Casella’s and Johnson’s employment agreement has an initial term of three years and is automatically renewable for additionalone-year terms thereafter unless terminated by either party pursuant to the terms of the agreement. Each of Messrs. Coletta’s, Schmitt’s and Heald’s employment agreement has an initial term of one year and is automatically renewable for additionalone-year terms thereafter unless terminated by either party pursuant to the terms of the agreement. In December 2008, we amended our employment agreements with Messrs. John Casella and Schmitt to document compliance with, and, as applicable, exemption from, Section 409A of the Code.
Pursuant to the terms of their employment agreements, each of Messrs. John Casella, Johnson, Coletta, Schmitt and Heald is entitled to a specified annual base salary, subject to adjustment as set forth in the agreement, an annual bonus consisting of cash, stock awards or a combination of cash and stock awards, in an amount determined by the Compensation Committee each fiscal year, and a severance package upon the termination of employment. The base salary and bonus components of their compensation are described above
under “Compensation Discussion and Analysis — Components of our Executive Compensation Program — Base Salary” and “Compensation Discussion and Analysis — Components of our Executive Compensation Program — Annual Cash Incentive Bonus”Compensation”.
Mr. John Casella has agreed not to compete with us for a period of two years after the termination of his employment within 300 miles of any facility operated by us during the term of his employment and not to solicit our customers, accounts or employees for a period of two years after the termination of his employment. Each of Messrs. Johnson, Coletta, Schmitt and Heald has agreed not to compete with us for a period of one year after the termination of his employment within 100 miles of any facility operated by us during the term of his employment and not to solicit our customers, accounts or employees for a period of one year after the termination of his employment. In the event that Mr. John Casella terminates his employment voluntarily and is not entitled to severance, thenon-compete provisions of his agreement would not apply unless we continue to pay his base salary and any termination benefits or payments required under his agreement.
In the event Mr. John Casella’s employment is terminated by us other than for cause (as defined below), he will be entitled to payment of an amount equal to (a) three times the sum of (i) the highest annual base salary paid to him at any time prior to his termination and (ii) the higher of the most recent bonus paid to him at any time prior to his termination or 50% of his annual base salary immediately prior to such termination, plus (b) an amount in cash equal to the value of any accrued but unpaid or unused, as applicable, base salary, bonus and vacation. In addition, Mr. John Casella will continue to receive healthcare and other benefits for a period of three years from the date of termination, and any equity grants issued by us to him will become vested in full upon termination without cause. In the event that Mr. John Casella terminates his employment with us for good reason or qualified good reason (as defined below), he will receive the severance payments and benefits described in the preceding two sentences plus an additional payment intended to compensate him for excise taxes under Section 4999 of the Code payable in connection with the severance payments and benefits. For the purposes of Mr. John Casella’s employment agreement, “good reason” means the occurrence of (a) a change of control, accompanied by, or followed within the12-month period after a change of control by (b)(i) the assignment to the employee of any duties inconsistent with his status prior to the change of control, (ii) a material adverse alteration in the nature or status of the employee’s responsibilities from those provided in the agreement or the transfer of a significant portion of such responsibilities to one or more other persons, (iii) a material diminution in his base compensation or (iv) a material change in the geographic location at which he must perform services for us. For the purposes of Mr. John Casella’s employment agreement, “qualified good reason” means the occurrence of one of the events under clause (b)(i), (ii) or (iii) of the preceding definition of good reason. In the event Mr. John Casella’s employment is terminated upon his death, his
written designee, spouse or estate, as applicable, will be entitled to the severance payments described in the first sentence of this paragraph as well as healthcare and other benefits for a period of one year from the date of death. In the event Mr. John Casella’s employment is terminated by us for disability, he will be entitled to the severance payments described in the first sentence of this paragraph as well as healthcare and other benefits for a period of one year from the date of such termination.
In the event Mr. Coletta’s employment is terminated by us without cause, he will be entitled to payment of an amount equal to (a) the sum of (i) the highest annual base salary paid to him at any time prior to such termination and (ii) his target annual cash incentive compensation opportunity under theNon-Equity Incentive Plan for the fiscal year in which such termination occurs and (b) an amount in cash equal to any accrued but unpaid or unused, as applicable, base salary, bonus and vacation. In addition, Mr. Coletta will continue to receive healthcare and other benefits for a period of one year from the date of termination. Any stock options or equity grants issued by us to Mr. Coletta will become exercisable or vested in full upon termination without cause. In the event that Mr. Coletta terminates his employment for good reason, defined as the assignment of any duties inconsistent with his status as Senior Vice President, Chief Financial Officer and Treasurer, a material adverse alteration in the nature or status of his responsibilities from those provided in the agreement or the transfer of a significant portion of such responsibilities to one or more other persons, a material diminution in his base compensation, or a material change in the geographic location at which he must perform services for us,
Mr. Coletta will be entitled to receive the severance payments and benefits described in the preceding three sentences plus an additional payment intended to compensate him for excise taxes under Section 4999 of the Code payable in connection with the severance payments and benefits. In the event Mr. Coletta’s employment is terminated upon his death, his written designee, spouse or estate, as applicable, will be entitled to the payments described in the first sentence of this paragraph. In the event Mr. Coletta’s employment is terminated by us for disability, he will be entitled to the severance payments and benefits described in the first two sentences of this paragraph.
In the event Mr. Johnson’s employment is terminated by us without cause, he will be entitled to payment of an amount equal to (a) the sum of (i) two times the highest annual base salary paid to him at any time prior to such termination and (ii) two times his target annual cash incentive compensation opportunity under theNon-Equity Incentive Plan for the fiscal year in which such termination occurs and (b) an amount in cash equal to the value of any accrued but unpaid or unused, as applicable, base salary, bonus and vacation. In addition, Mr. Johnson will continue to receive healthcare and other benefits for a period of two years from the date of termination. Any stock options or equity grants issued by us to Mr. Johnson will become exercisable or vested in full upon termination without cause. In the event that Mr. Johnson terminates his employment with us for good reason, defined as the assignment of any duties inconsistent with his status as President and Chief Operating Officer, a material adverse alteration in the nature or status of his responsibilities from those provided in the agreement or the transfer of a significant portion of such responsibilities to one or more other persons, or a material diminution in his compensation, Mr. Johnson will receive the severance payments and benefits described in the preceding three sentences and an additional payment intended to compensate him for excise taxes under Section 4999 of the Code payable in connection with the severance payments and benefits. In the event Mr. Johnson’s employment is terminated upon his death, his written designee, spouse or estate, as applicable, will be entitled to the payments described in the first sentence of this paragraph. In the event Mr. Johnson’s employment is terminated by us for disability, he will be entitled to the severance payments and benefits described in the first two sentences of this paragraph.
In the event Mr. Schmitt’s employment is terminated by us without cause, he will be entitled to payment of an amount equal to (a) the sum of (i) the highest annual base salary paid to him at any time prior to such termination and (ii) his target annual cash incentive compensation opportunity under theNon-Equity Incentive Plan for the fiscal year in which such termination occurs and (b) an amount in cash equal to any accrued but unpaid or unused, as applicable, base salary, bonus and vacation. In addition, Mr. Schmitt will continue to receive healthcare and other benefits for a period of one year from the date of termination. Any stock options or equity grants issued by us to Mr. Schmitt will become exercisable or vested in full upon termination without cause. In the event that Mr. Schmitt terminates his employment for good reason, defined as the assignment of any duties inconsistent with his status as Senior Vice President and General Counsel, a material adverse alteration in
the nature or status of his responsibilities from those provided in the agreement or the transfer of a significant portion of such responsibilities to one or more other persons, or a material diminution in his base compensation, Mr. Schmitt will be entitled to receive the severance payments and benefits described in the preceding three sentences plus an additional payment intended to compensate him for excise taxes under Section 4999 of the Code payable in connection with the severance payments and benefits. In the event Mr. Schmitt’s employment is terminated upon his death, his written designee, spouse or estate, as applicable, will be entitled to the payments described in the first sentence of this paragraph. In the event Mr. Schmitt’s employment is terminated by us for disability, he will be entitled to the severance payments and benefits described in the first two sentences of this paragraph.
In the event Mr. Heald’s employment is terminated by us without cause, or by reason, he will be entitled to payment of an amount equal to (a) the sum of (i) the highest annual base salary paid to him at any time prior to such termination and (ii) his target annual cash incentive compensation opportunity under theNon-Equity Incentive Plan for the fiscal year in which such termination occurs and (b) an amount in cash equal to any accrued but unpaid or unused, applicable, base salary and vacation and a bonus relating to the prior fiscal year which, as of the date of termination, has been determined by us pursuant to his agreement but not yet paid prior to the date of termination. In addition, Mr. Heald will continue to receive healthcare benefits for a period of one
year from the date of termination. Any stock options or equity grants issued by us to Mr. Heald will become exercisable or vested in full upon termination without cause. In the event that Mr. Heald terminates his employment for good reason, defined as the assignment of any duties inconsistent with his status as Vice President and Chief Accounting Officer, a material adverse alteration in the nature or status of his responsibilities from those provided in the agreement or the transfer of a significant portion of such responsibilities to one or more other persons, a material diminution in his base compensation, or a material change in the geographic location at which he must perform services for us, Mr. Heald will be entitled to receive the severance payments and benefits described in the preceding three sentences. In the event Mr. Heald’s employment is terminated upon his death, his written designee, spouse or estate, as applicable, will be entitled to the payments described in the first sentence of this paragraph. In the event Mr. Heald’s employment is terminated by us for disability, he will be entitled to the severance payments and benefits described in the first two sentences of this paragraph.
For purposes of each agreement discussed above, “cause” means the discharge of the employee resulting from (a) a conviction of a crime involving us; (b) an act or omission which has a material adverse effect on us; (c) fraud, misappropriation or embezzlement; or (d) the breach in any material respect of the material terms and provisions of the agreement.
The severance benefits described above were extended to Messrs. John Casella, Coletta and Heald as an inducement to their decisions to continue to remain employed by us and, in the case of Messrs. Johnson and Schmitt, as an inducement to accept employment with us. At the time each of such agreements was entered into, our Board considered a number of factors, including severance arrangements offered by comparable companies, the importance of the respective employee to our ongoing success and the benefits of receiving anon-competition andnon-solicitation covenant from the respective employee in exchange for the agreed severance. The Compensation Committee considers the severance benefits to be separate from the compensation payable to employees for their ongoing services and accordingly does not consider the value of the severance package when setting current compensation.
Equity Award Agreements
Under the terms of each named executive officer’s restricted stock unit agreements under our 2006 Stock Incentive Plan (other than Mr. Heald’s restricted stock unit agreements for RSUs granted to him prior to 2016), (a) if the named executive officer’s employment is terminated as a result of a change in controlthe officer’s death or disability, or by the Company without Cause (as defined in the applicable restricted stock unit agreement), then all unvested RSUs will vest immediately and (b) upon a Change in Control (as defined in the applicable restricted stock unit agreement), all unvested RSUs will vest immediately. Under the terms of each named executive officer’s restricted stock unit agreements under our 2016 Incentive Plan, if the named executive officer’s employment is terminated as a result of the officer’s death or disability, by the Company without Cause or by the
officer for Good Reason (as such terms are defined in the applicable restricted stock unit agreement) or by the Company without cause,Cause on or prior to the first anniversary of the date of consummation of a Change in Control Event (as defined in our 2016 Incentive Plan), then all unvested RSUs will vest immediately.
Under the terms of each named executive officer’s performance-based stock unit agreements under our 2016 Incentive Plan, if the named executive officer’s employment is terminated by the Company without Cause or by the officer for Good Reason (as such terms are defined in the applicable performance-based stock unit agreement) during the performance period, then notwithstanding anything to the contrary in any employment, severance or other agreement between the named executive officer and the Company, the PSU award will remain outstanding and vest as set forth in the applicable performance-based stock unit agreement as if the officer had remained employed by the Company through the end of the performance period. Upon the occurrence of a Change in Control Event (as defined in our 2016 Incentive Plan), the acquiring or succeeding entity will assume each outstanding PSU such that, following the consummation of the Change in Control Event, the PSU will confer the officer with the right to receive, for each share of Class A common stock subject to the award, the consideration received by each holder of Class A common stock immediately prior to the Change in Control Event, or replacement award, provided that (a) the vesting of such replacement award shall only be subject to the continued service requirement in the applicable performance-based stock unit agreement through the end of the performance period and will not be subject to achievement of the performance goals set forth in the agreement and (b) the amount of cash, securities or other property subject to such replacement award will be determined assuming that the number of shares subject to the PSU is equal to the greater of (i) the Target Number of Shares (as defined in the applicable performance-based stock unit agreement) and (ii) such number of shares as the Compensation Committee will determine in its sole discretion exercised in good faith based upon the projected level of achievement of the applicable performance goals for the performance period. In the event that the officer’s employment is terminated by either the Company or its successor without Cause or by the officer for Good Reason, in either case within twelve months following a Change in Control Event, the remaining unvested portion of the replacement award will become vested as of the date of the officer’s termination of employment. In the event that the acquiring or succeeding entity refuses to assume the PSUs and grant replacement awards in connection with a Change in Control Event, the PSU award will become vested, immediately prior to the Change in Control Event, with respect to a number of shares equal to the greater of (i) the Target Number of Shares and (ii) such number of shares as the Compensation Committee shall determine in its sole discretion exercised in good faith based upon the projected level of achievement of the applicable performance goals for the performance period. If an officer dies or is disabled prior to the end of the performance period, then the PSUs will vest as to a number of shares equal to the greater of the Target Number of Shares for the performance period and such number of shares as the Compensation Committee will determine in its sole discretion exercised in good faith based upon the projected level of achievement of the applicable performance goals for the performance period as if the death or disability had not occurred.
Under the terms of each named executive officer’s performance-based stock option agreements under our 2016 Incentive Plan, if the named executive officer’s employment is terminated by the Company without Cause or by the officer for Good Reason (as such terms are defined in the applicable performance-based stock option agreement) during the performance period, then notwithstanding anything to the contrary in any employment, severance or other agreement between the named executive officer and the Company, the performance option award will remain outstanding and vest as set forth in the applicable performance-based stock option agreement as if the officer had remained employed by the Company through the end of the performance period, and the officer’s right to exercise the performance option will terminate three months after the date on which the Compensation Committee certifies the level of achievement of the performance goals following the end of the performance period, but in no event after the Final Exercise Date (as such term is defined in the applicable performance-based stock option agreement). Upon the occurrence of a Change in Control Event (as defined in our 2016 Incentive Plan), the acquiring or succeeding entity will assume each outstanding performance option, provided that (a) the vesting of such performance option shall only be subject to the continued service requirement in the applicable performance-based stock option agreement through the end of the performance period and will not be subject to achievement of the performance goals set forth in the agreement and (b) the number of shares that may be purchased upon exercise of the performance option will be equal to the greater of (i) the Target Number of Shares (as defined in the applicable performance-based stock option agreement) and (ii) such number of shares as the Compensation Committee will determine in its sole discretion
exercised in good faith based upon the projected level of achievement of the applicable performance goals for the performance period. In the event that the officer’s employment is terminated by either the Company or its successor without Cause or by the officer for Good Reason, in either case within twelve months following a Change in Control Event, the remaining unvested portion of the performance option will become vested as of the date of the officer’s termination of employment. In the event that the acquiring or succeeding entity refuses to assume the performance option in connection with a Change in Control Event, the performance option award will become vested, immediately prior to the Change in Control Event, with respect to a number of shares equal to the greater of (i) the Target Number of Shares and (ii) such number of shares as the Compensation Committee shall determine in its sole discretion exercised in good faith based upon the projected level of achievement of the applicable performance goals for the performance period. If an officer dies or is disabled prior to the end of the performance period, then the performance option will vest as to a number of shares equal to the greater of the Target Number of Shares for the performance period and such number of shares as the Compensation Committee will determine in its sole discretion exercised in good faith based upon the projected level of achievement of the applicable performance goals for the performance period as if the death or disability had not occurred, and the performance option will be exercisable (to the extent vested) within the period of one year following the date of death or disability of the officer, by the officer or in the case of death, by an authorized transferee, provided that the performance option will not be exercisable after the Final Exercise Date.
Summary of Potential Payments Upon Termination or Change of Control as of December 31, 20152017
The following table quantifies the amounts that would be payable to our named executive officers upon termination of their employment under the circumstances described above under “Employment Agreements”, “Equity Award Agreements” and a change ofin control of the Company. We calculated the amounts shown based upon each such named executive officer’s employment agreement ifand equity award agreements, as applicable, described above and upon the hypothetical assumption that we terminated each named executive officerofficer’s employment terminated effective December 31, 2015. Mr. Heald was not party to an employment agreement in 2015 and entered into his employment agreement on March 1, 2016.2017.
Termination without Cause | ||||||||||||
Name | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) | |||||||||
John W. Casella | 2,065,500 | 101,522 | 776,419 | |||||||||
Edmond R. Coletta | 529,638 | 19,261 | 452,261 | |||||||||
Edwin D. Johnson | 1,434,120 | 51,525 | 452,261 | |||||||||
David L. Schmitt | 441,872 | 24,799 | 138,610 | |||||||||
Christopher B. Heald | — | — | — |
Immediately upon a Change of Control | Termination for Good Reason | Termination Without Cause | ||||||||||||||||||||||||||||||||||
Name | Value of Stock with Accelerated Vesting ($) | Cash Payments ($) (1) | Value of Benefits ($) (2) | Tax Reimbursement ($) | Value of Stock with Accelerated Vesting ($) | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) | Value of Options with Accelerated Vesting ($) | |||||||||||||||||||||||||||
John W. Casella | 776,419 | 2,065,500 | 101,522 | 1,485,312 | 776,419 | 5,529,693 | 96,675 | 1,991,944 | — | |||||||||||||||||||||||||||
Edmond R. Coletta | 452,261 | 529,638 | 19,261 | 408,383 | 452,261 | 619,750 | 22,448 | 1,137,004 | 2,377,500 | |||||||||||||||||||||||||||
Edwin D. Johnson | 452,261 | 1,434,120 | 51,525 | 934,241 | 452,261 | 1,498,500 | 53,132 | 1,137,004 | — | |||||||||||||||||||||||||||
David L. Schmitt | 138,610 | 441,872 | 24,799 | — | 138,610 | 542,500 | 25,609 | 324,927 | — | |||||||||||||||||||||||||||
Christopher B. Heald | — | — | — | — | — | 315,000 | 24,921 | 324,927 | — |
Automatically upon Death | Termination for Disability | Termination for Good Reason | ||||||||||||||||||||||||||||||||||||||
Name | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) | Value of Options with Accelerated Vesting ($) | ||||||||||||||||||||||||||||||
John W. Casella | 2,065,500 | 33,841 | 776,419 | 2,065,500 | 33,841 | 776,419 | 5,529,693 | 96,675 | 1,991,944 | — | ||||||||||||||||||||||||||||||
Edmond R. Coletta | 529,638 | — | 452,261 | 529,638 | 19,261 | 452,261 | 619,750 | 22,448 | 1,137,004 | 2,377,500 | ||||||||||||||||||||||||||||||
Edwin D. Johnson | 1,434,120 | — | 452,261 | 1,434,120 | 51,525 | 452,261 | 1,498,500 | 53,132 | 1,137,004 | — | ||||||||||||||||||||||||||||||
David L. Schmitt | 441,872 | — | 138,610 | 441,872 | 24,799 | 138,610 | 542,500 | 25,609 | 324,927 | — | ||||||||||||||||||||||||||||||
Christopher B. Heald | — | — | — | — | — | — | 315,000 | 24,921 | 324,927 | — |
Immediately upon a Change in Control | Change in Control with Termination Without Cause or for Good Reason | |||||||||||||||||||||||||||
Name | Value of Stock with Accelerated Vesting ($) | Value of Options with Accelerated Vesting ($) | Cash Payments ($) (1) | Value of Benefits ($) (2) | Tax Reimbursement ($) (3) | Value of Stock with Accelerated Vesting ($) (4) | Value of Options with Accelerated Vesting ($) (4) | |||||||||||||||||||||
John W. Casella | 1,991,944 | — | 5,529,693 | 96,675 | 6,542,265 | 5,425,837 | 210,800 | |||||||||||||||||||||
Edmond R. Coletta | 1,137,004 | 2,377,500 | 619,750 | 22,448 | 2,110,829 | 3,140,122 | 2,482,900 | |||||||||||||||||||||
Edwin D. Johnson | 1,137,004 | — | 1,498,500 | 53,132 | 2,463,394 | 3,140,122 | 105,400 | |||||||||||||||||||||
David L. Schmitt | 324,927 | — | 542,500 | 25,609 | 682,346 | 897,228 | 52,700 | |||||||||||||||||||||
Christopher B. Heald | 324,927 | — | 315,000 | 24,921 | — | 897,228 | 52,700 |
Termination for Disability | ||||||||||||||||
Name | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) (4) | Value of Options with Accelerated Vesting ($) (4) | ||||||||||||
John W. Casella | 5,529,693 | 32,225 | 5,425,837 | 210,800 | ||||||||||||
Edmond R. Coletta | 619,750 | 22,448 | 3,140,122 | 2,482,900 | ||||||||||||
Edwin D. Johnson | 1,498,500 | 53,132 | 3,140,122 | 105,400 | ||||||||||||
David L. Schmitt | 542,500 | 25,609 | 897,228 | 52,700 | ||||||||||||
Christopher B. Heald | 315,000 | 24,921 | 897,228 | 52,700 |
Automatically Upon Death | ||||||||||||||||
Name | Cash Payments ($) (1) | Value of Benefits ($) (2) | Value of Stock with Accelerated Vesting ($) (4) | Value of Options with Accelerated Vesting ($) (4) | ||||||||||||
John W. Casella | 5,529,693 | 32,225 | 5,425,837 | 210,800 | ||||||||||||
Edmond R. Coletta | 619,750 | — | 3,140,122 | 2,482,900 | ||||||||||||
Edwin D. Johnson | 1,498,500 | — | 3,140,122 | 105,400 | ||||||||||||
David L. Schmitt | 542,500 | — | 897,228 | 52,700 | ||||||||||||
Christopher B. Heald | 315,000 | — | 897,228 | 52,700 |
(1) | The amounts in this column reflect payments, as described above, equal to a multiple of annual base salary in effect on December 31, |
(2) | The amounts in this column reflect payments for monthly COBRA premiums for continued health, dental and vision coverage, as well as payments for life insurance premiums for Messrs. John Casella, Coletta, Johnson and Schmitt as of December 31, |
(3) | The amounts in this column reflect additional payments intended to compensate the named executive officers for excise taxes under Section 4999 of the Code payable in connection with severance payments and benefits in accordance with the terms of their employment agreements, other than Mr. Heald’s employment agreement which does not provide for such a payment. Such payments will only be received by a named executive officer in the event of the termination of employment by the named executive officer for good reason following a change in control of the Company. |
(4) | The value of accelerated unvested RSUs is based on the last reported sales price of our Class A common stock on the Nasdaq Stock Market on the last trading day of fiscal 2017 multiplied by the number of accelerated units. The value of accelerated unvested PSUs is based on the last reported sales price of our Class A common stock on the Nasdaq Stock Market on the last trading day of fiscal 2017 multiplied by the Target Number of Shares (as defined in the applicable performance-based stock unit agreement). The value of accelerated unvested stock options is calculated by taking the difference between the last reported sales price of our Class A common stock on the Nasdaq Stock Market on the last trading day of fiscal 2017 and the exercise price and multiplying it by the number of shares of Class A common stock underlying the unvested stock options (as defined in the applicable stock option agreement). The value of accelerated unvested performance options is calculated by taking the difference between the last reported sales price of our Class A common stock on the Nasdaq Stock Market on the last trading day of fiscal 2017 and the exercise price and multiplying it by the Target Number of Shares (as defined in the applicable performance-based stock option agreement). |
CEO Pay Ratio
Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees. Our Chief Executive Officer’s annual total compensation for 2017 was $2,885,473, as disclosed in the Summary Compensation Table appearing on page 37. The annual total compensation for our median employee (other than our Chief Executive Officer) for 2017 was $37,578. Based on the foregoing, we estimate that our Chief Executive Officer’s annual total compensation was approximately 77 times that of the median of the annual total compensation of all other employees.
For purposes of identifying the median employee, we examined our employee population as of November 30, 2017. There were 1,936 full-time and part-time employees, excluding the Chief Executive Officer, and no temporary or seasonal workers. We used a consistently applied compensation measure to identify the median employee that included the sum of the following 2017 compensation elements: annualized base salary, incentives paid during 2017, vesting value of stock awards, value of stock options exercised and benefits. Once this amount was estimated for each employee (excluding the Chief Executive Officer), we arrayed and sorted the data to identify the median employee. After the median employee was identified, we estimated the annual total compensation for that employee by applying the same rules as used for determining total compensation for our Chief Executive Officer in the Summary Compensation Table.
Director Compensation
We compensate our directors who are not our employees or employees of our subsidiaries. Accordingly, Mr. John Casella, who serves as our Chief Executive Officer, and Mr. Douglas Casella, who serves as President of Casella Waste Management, Inc., our wholly-owned subsidiary, do not receive any additional compensation for their service as directors. Mr. Chapple and Mr. McManus resigned from our Board on July 7, 2015 and August 31, 2015, respectively. Mr. O’Connor and Mr. Hulligan were elected as a director on July 7, 2015 and September 1, 2015, respectively.
The Compensation Committee periodically reviews the compensation of ournon-employee directors. We seek to attract exceptional talent to our Board and therefore, our policy is to compensate our directors competitively relative to comparable companies. Our Board believes that it is appropriate for the chairs and members of the committees of our Board to receive additional compensation for their services in those positions.
Cash Compensation
In fiscal 2015,2017, ournon-employee directors were entitled to receive cash fees in consideration of their Board service as follows:
• Annual retainer fee for service on our Board | $ | 45,000 | ||
• Additional annual retainer fee for service as Audit Committee Chair | $ | 15,000 | ||
• Additional annual retainer fee for service as Compensation Committee Chair | $ | 5,000 | ||
• Additional annual retainer fee for service as Nominations and Governance Committee Chair | $ | 5,000 | ||
• Additional annual retainer fee for service as Lead Director | $ | 75,000 |
• Annual retainer fee for service on our Board | $ | 55,000 | ||
• Additional annual retainer fee for service as Audit Committee Chair | $ | 17,500 | ||
• Additional annual retainer fee for service as Compensation Committee Chair | $ | 10,000 | ||
• Additional annual retainer fee for service as Nominations and Governance Committee Chair | $ | 7,500 | ||
• Additional annual retainer fee for service as Lead Director | $ | 75,000 |
Ournon-employee directors are entitled to reimbursement for reasonable travel and other expenses incurred in connection with attending Board meetings and meetings of committees on which he or she serves. Directors who begin their Board service during the year receive apro-rata portion of the applicable retainer fees.
For fiscal 2016, our non-employee directors are entitled to receive the cash fees described above in consideration of their Board service. In addition, Mr. Peters will receivereceives a monthly payment of $3,125 in consideration of his monthly meetings with members of management on behalf of the Board.
Equity Compensation
Each newnon-employee director receives a grant of shares of restricted Class A common stock on the date of such director’s initial election to our Board having a value on the date of grant of approximately $50,000, which vests in three equal annual installments beginning on the first anniversary of the date of grant. Each incumbentnon-employee director, other thannon-employee directors who were initially elected to our Board at any time after the prior year’s annual meeting of stockholders, receives aton the date of each annual meeting of stockholders an additional grantaward consisting of sharesthe number of restricted Class A common stockRSUs having a value on the date of grant of approximately $50,000,$65,000, which vestsvest in three equal annual installments beginningfull on the first anniversary of the date of grant.
Our Board has adopted stock ownership guidelines for its ournon-employee directors that require eachnon-employee director to attain a share ownership level of our Class A common stock equal to $100,000.three times the amount of the annual retainer fee for service on our Board. Eachnon-employee director is required to attain such ownership levels by the third annual meeting of stockholders following the first annual meeting of stockholders at which suchnon-employee director is elected to our Board.
The following table provides compensation information for fiscal 20152017 for each of ournon-employee directors.
Non-Employee Director Compensation for Fiscal 20152017
Name (1) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) (3) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) (3) | Total ($) | ||||||||||||||||||
Michael K. Burke | 45,000 | 74,989 | 119,989 | 55,000 | 64,989 | 119,989 | ||||||||||||||||||
James F. Callahan, Jr. | 60,000 | 59,989 | 119,989 | 72,500 | 64,989 | 137,489 | ||||||||||||||||||
John F. Chapple III (4) | 22,500 | — | 22,500 | |||||||||||||||||||||
Joseph G. Doody | 46,667 | 49,994 | 96,661 | 65,000 | 64,989 | 129,989 | ||||||||||||||||||
William P. Hulligan (5) | 11,250 | 49,998 | 61,248 | |||||||||||||||||||||
William P. Hulligan | 55,000 | 64,989 | 119,989 | |||||||||||||||||||||
James P. McManus (6) | 37,500 | — | 37,500 | |||||||||||||||||||||
James E. O’Connor (7) | 38,125 | 49,996 | 88,121 | |||||||||||||||||||||
James E. O’Connor | 130,000 | 64,989 | 194,989 | |||||||||||||||||||||
Emily Nagle Green | 45,000 | 49,994 | 94,994 | 55,000 | 64,989 | 119,989 | ||||||||||||||||||
Gregory B. Peters (8) | 125,000 | 49,994 | 174,994 | |||||||||||||||||||||
Gregory B. Peters | 100,000 | 64,989 | 164,989 |
(1) | Excludes Mr. John Casella, our Chief Executive Officer and Chairman of our Board, who does not receive compensation for his services as director and whose compensation as a named executive officer |
is reported in the Summary Compensation Table above, and Mr. Doug Casella, the Vice Chairman of our Board and President of Casella Waste Management, Inc., our wholly-owned subsidiary, who does not receive compensation for his services as director. |
(2) | Amounts shown in this column reflect the aggregate grant date fair value, calculated in accordance with FASB ASC Topic 718, of |
Name | Grant Date | Number of Shares of Restricted Stock Granted in Fiscal 2015 (#) | Grant Date Fair Value of Awards Granted in Fiscal 2015 ($) | Grant Date | Number of RSUs Granted in Fiscal 2017 (#) | Grant Date Fair Value of Awards Granted in Fiscal 2017 ($) | ||||||||||||||||||
Michael K. Burke | 11/6/2015 | 7,898 | 49,994 | 6/6/2017 | 4,421 | 64,989 | ||||||||||||||||||
11/19/2015 | 3,486 | 24,995 | ||||||||||||||||||||||
James F. Callahan, Jr. | 11/6/2015 | 7,898 | 49,994 | 6/6/2017 | 4,421 | 64,989 | ||||||||||||||||||
11/19/2015 | 1,394 | 9,995 | ||||||||||||||||||||||
Joseph G. Doody | 11/6/2015 | 7,898 | 49,994 | 6/6/2017 | 4,421 | 64,989 | ||||||||||||||||||
William P. Hulligan | 9/1/2015 | 8,333 | 49,998 | 6/6/2017 | 4,421 | 64,989 | ||||||||||||||||||
Emily Nagle Green | 11/6/2015 | 7,898 | 49,994 | 6/6/2017 | 4,421 | 64,989 | ||||||||||||||||||
James E. O’Connor | 7/7/2015 | 8,912 | 49,996 | 6/6/2017 | 4,421 | 64,989 | ||||||||||||||||||
Gregory B. Peters | 11/6/2015 | 7,898 | 49,994 | 6/6/2017 | 4,421 | 64,989 |
(3) | As of December 31, |
Name | Number of Unvested Shares of Restricted Stock (#) | Number of Shares Underlying Unexercised Option Awards (#) | ||||||
Michael K. Burke | 19,585 | 7,500 | ||||||
James F. Callahan, Jr. | 19,585 | 15,000 | ||||||
John F. Chapple III | — | — | ||||||
Joseph G. Doody | 19,585 | 15,000 | ||||||
William P. Hulligan | 8,333 | — | ||||||
James P. McManus | — | — | ||||||
Emily Nagle Green | 19,585 | — | ||||||
James E. O’Connor | 8,912 | — | ||||||
Gregory B. Peters | 19,585 | 15,000 |
Name | Number of Unvested Shares of Restricted Stock (#) | Number of Unvested RSUs (#) | ||||||
Michael K. Burke | 5,304 | 4,421 | ||||||
James F. Callahan, Jr. | 5,304 | 4,421 | ||||||
Joseph G. Doody | 5,304 | 4,421 | ||||||
William P. Hulligan | 5,449 | 4,421 | ||||||
Emily Nagle Green | 5,304 | 4,421 | ||||||
James E. O’Connor | 5,642 | 4,421 | ||||||
Gregory B. Peters | 5,304 | 4,421 |
We have entered into or engaged in certain transactions with our directors or affiliates of our directors. See “Corporate Governance – Certain Relationships and Related Person Transactions.”
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of September 15, 2016March 31, 2018 information regarding the beneficial ownership of our capital voting stock by (a) each person or entity known by us to beneficially own more than 5% of any class of our common stock, (b) our directors and director nominees, (c) our named executive officers and (d) our directors and executive officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Shares of Class A common stock that an individual or entity has a right to acquire within 60 days after September 15, 2016,March 31, 2018, including pursuant to options to purchase Class A common stock, Class B common stock convertible into Class A common stock and restricted stock unit awards subject to vesting, are included in the number of shares of Class A common stock beneficially owned by the person or entity and are deemed outstanding for purposes of computing the percentage of beneficial ownership owned by the person or entity, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person or entity. Each share of Class B common stock is convertible at the discretion of the holder thereof into one share of Class A common stock. As of September 15, 2016,March 31, 2018, a total of 40,500,20241,700,025 shares of Class A common stock were outstanding and a total of 988,200 shares of Class B common stock were outstanding. Except as otherwise indicated by footnote, we believe that the persons named in this table, based on information provided by these persons, have sole voting and investment power with respect to the securities indicated. Unless otherwise indicated, the address of each beneficial owner listed in the table is care of Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701.
Class A Common Stock | Class B Common Stock | Combined Voting Percentage (1) | ||||||||||||||||||
Name of Beneficial Owner | # of Shares | % of Class | # of Shares | % of Class | ||||||||||||||||
5% Stockholders | ||||||||||||||||||||
Portolan Capital Management (2) | 3,442,603 | 8.50 | % | — | — | 6.83 | % | |||||||||||||
RMB Capital Management, LLC (3) | 3,190,757 | 7.88 | % | — | — | 6.33 | % | |||||||||||||
BlackRock, Inc. (4) | 2,648,242 | 6.54 | % | — | — | 5.26 | % | |||||||||||||
Rutabaga Capital Management LLC (5) | 2,144,151 | 5.29 | % | — | — | 4.26 | % | |||||||||||||
Executive Officers and Directors | ||||||||||||||||||||
John W. Casella (6) | 949,088 | 2.31 | % | 494,100 | 50.0 | % | 10.70 | % | ||||||||||||
Edmond R. Coletta (7) | 227,532 | * | — | — | * | |||||||||||||||
Edwin D. Johnson (8) | 625,195 | 1.53 | % | — | — | 1.23 | % |
Class A Common Stock | Class B Common Stock | Combined Voting Percentage (1) | ||||||||||||||||||
Name of Beneficial Owner | # of Shares | % of Class | # of Shares | % of Class | ||||||||||||||||
5% Stockholders | ||||||||||||||||||||
Renaissance Technologies LLC (2) | 3,211,600 | 7.70 | % | — | — | 6.23 | % | |||||||||||||
BlackRock, Inc. (3) | 2,772,472 | 6.65 | % | — | — | 5.37 | % | |||||||||||||
Standard Life Aberdeen plc (4) | 2,249,588 | 5.39 | % | — | — | 4.36 | % | |||||||||||||
Executive Officers and Directors | ||||||||||||||||||||
John W. Casella (5) | 948,021 | 2.24 | % | 494,100 | 50.0 | % | 10.45 | % | ||||||||||||
Edmond R. Coletta (6) | 233,652 | * | — | — | * | |||||||||||||||
Edwin D. Johnson (7) | 514,134 | 1.23 | % | — | — | * | ||||||||||||||
David L. Schmitt | 59,405 | * | — | — | * | |||||||||||||||
Christopher B. Heald (8) | 81,883 | * | — | — | * | |||||||||||||||
Michael K. Burke | 80,593 | * | — | — | * |
Name of Beneficial Owner David L. Schmitt (9) Christopher B. Heald (10) Michael K. Burke (11) James F. Callahan, Jr. (12) Douglas R. Casella (13) Joseph Doody (14) William P. Hulligan (15) Emily Nagle Green (16) James E. O’Connor (17) Gregory B. Peters (18) Executive officers and directors as a group (13 people) (19) Class A
Common Stock Class B
Common Stock Combined
Voting
Percentage (1) # of
Shares % of
Class # of
Shares % of
Class 51,040 * — — * 73,647 * — — * 112,508 * — — * 171,874 * — — * 1,203,049 2.93 % 494,100 50.0 % 11.21 % 97,980 * — — * 108,333 * — — * 37,690 * — — * 18,912 * — — * 107,664 * — — * 3,784,512 8.97 % 988,200 100.0 % 24.82 %
Class A Common Stock | Class B Common Stock | Combined Voting Percentage (1) | ||||||||||||||||||
Name of Beneficial Owner | # of Shares | % of Class | # of Shares | % of Class | ||||||||||||||||
James F. Callahan, Jr. (9) | 138,380 | * | — | — | * | |||||||||||||||
Douglas R. Casella (10) | 1,188,457 | 2.82 | % | 494,100 | 50.0 | % | 10.93 | % | ||||||||||||
Joseph Doody | 86,986 | * | — | — | * | |||||||||||||||
William P. Hulligan (11) | 72,339 | * | — | — | * | |||||||||||||||
Emily Nagle Green | 37,296 | * | — | — | * | |||||||||||||||
James E. O’Connor (12) | 22,918 | * | — | — | * | |||||||||||||||
Gregory B. Peters | 87,870 | * | — | — | * | |||||||||||||||
Executive officers and directors as a group (13 people) (13) | 3,551,934 | 8.25 | % | 988,200 | 100.0 | % | 23.96 | % |
* | Represents less than 1% of the outstanding shares of the respective class of our voting stock and/or less than 1% of total ownership of equity securities. |
(1) | This column represents voting power rather than percentage of equity interest as each share of Class A common stock is entitled to one vote, while each share of Class B common stock is entitled to ten votes. Combined, the Class A common stock |
(2) | We obtained information regarding beneficial ownership of these shares solely from |
(3) | We obtained information regarding beneficial ownership of these shares solely from |
(4) | We obtained information regarding beneficial ownership of these shares solely from |
Consists of (a) |
Consists of (a) |
Consists of (a) |
Consists of (a) |
Consists of (a) |
Consists of (a) |
Consists of |
Consists of |
Consists of (a) |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and beneficial owners of more than 10% of our Class A common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our Class A common stock and other equity securities. Based solely on a review of copies of reports filed pursuant to Section 16(a) and representations made by persons required to file such reports, we believe that during fiscal 2015,2017, our officers, directors and greater than 10% beneficial owners timely filed all reports they were required to file under Section 16(a), with the exception of late Form 4 filings reporting a grant of restricted Class A common stock to each of Messrs. Burke and Callahan, filed with the SEC on November 25, 2015, and a late Form 4 filing reporting the grant of a stock option award to purchase shares of Class A common stock to Edmond R. Coletta, our Senior Vice President and Chief Financial Officer, filed with the SEC on November 25, 2015..
PROPOSAL 1 — ELECTION OF DIRECTORS
Our Second Amended and Restated Certificate of Incorporation provides for a classified Board. Our Board is divided into three classes, with each class having as nearly as possible an equal number of directors. The term of service of each class of directors is staggered so that the term of one class expires at each annual meeting of stockholders. At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring.
Our Board currently consists of nine members, divided into three classes as follows:
Class I is comprised of Michael K. Burke, James F. Callahan, Jr. and Douglas R. Casella, each with a term ending at the 20162019 Annual Meeting;Meeting of Stockholders;
Class II is comprised of Joseph G. Doody, Emily Nagle Green and Gregory B. Peters, each with a term ending at the 20172020 Annual Meeting of Stockholders;Meeting; and
Class III is comprised of John W. Casella, William P. Hulligan and James E. O’Connor, each with a term ending at the 2018 Annual Meeting of Stockholders.Meeting.
Messrs. Burke, CallahanJohn Casella, Hulligan and Douglas CasellaO’Connor are current Class IIII directors whose terms expire at the 20162018 Annual Meeting. Messrs. John Burke, CallahanCasella, Hulligan and Douglas CasellaO’Connor are each nominated forre-election as a Class IIII director, each to serve for a term ending at the 20192021 Annual Meeting of Stockholders and until his or her respective successor has been duly elected and qualified. Each of our three (3) director nominees was recommended by the Nominations and Governance Committee to the Board, which unanimously approved their nomination. The recommendations of our Board are based on its carefully considered judgment and the Board’s belief that the experience, record and qualifications of each of its nominees make them the best candidates to serve on the Board.
The affirmative vote of the holders of shares representing a plurality of the votes cast by the holders of shares of Class A common stock and Class B common stock, voting together as a class, in person or by proxy, at the 20162018 Annual Meeting is required to elect each nominee as a director. A withhold vote for a director nominee and brokernon-votes, if any, will be counted as present for purposes of determining the presence of a quorum at the meeting but will not counted as a vote cast. Banks, brokers and other nominees holding shares in “street name” are not entitled to vote on the proposal unless instructed by the beneficial owner.
We have adopted a majority vote resignation policy, pursuant to which, in an uncontested election of directors, any nominee who is an incumbent director and who does not receive more votes “for” his or her election than votes “withheld” from his or her election will be required to offer his or her resignation to our Board. In such an event, our Board, acting upon the recommendation of the Nominations and Governance Committee or other committee of independent directors, will take action with respect to the offered recommendation, which could range from accepting the resignation, maintaining the director but addressing what the committee believes to be the underlying cause of the “withheld” votes, or resolving that the director will not bere-nominated in the future for election, to rejecting the resignation. Following the Board’s determination, the Company will promptly publicly disclose the Board’s decision of whether or not to accept the resignation offer and an explanation of how the decision was reached. The election of directors at the 20162018 Annual Meeting will be uncontested. Accordingly, the majority vote resignation policy would apply at the 20162018 Annual Meeting.
Unless contrary instructions are provided on the proxy card, the persons named as proxies will, upon receipt of a properly executed proxy, vote for the election of Messrs. Burke, CallahanJohn Casella, Hulligan and Douglas CasellaO’Connor as Class IIII directors for a term expiring at the 20192021 Annual Meeting of Stockholders, each such nominee to hold office until his or her respective successor has been duly elected and qualified. Each of the nominees has consented to being named in this proxy statement and to serve on our Board, if elected. If any nominee should be
unable to serve, the person acting under the proxy may vote the proxy for a substitute nominee designated by our Board. We do not contemplate that any of the nominees will be unable to serve if elected.
BOARD RECOMMENDATION
Our Board unanimously recommends a vote “FOR” the election of Michael K. Burke, James F. Callahan, Jr. and Douglas R. Casella as Class I directors.
PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are providing our stockholders the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act. Section 14A of the Exchange Act requires that we provide our stockholders with the opportunity to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. Section 14A of the Exchange Act also requires us to submit a non-binding, advisory resolution to stockholders at least once every six years to determine whether advisory votes on executive compensation paid to our named executive officers should be held every one, two or three years. At the 2011 Annual Meeting of Stockholders, stockholders approved an advisory resolution to vote annually to approve, on an advisory basis, the compensation of our named executive officers. In accordance with the results of this vote, the Board determined to implement an advisory vote on executive compensation every year until the next vote on the frequency of stockholder votes on executive compensation, which will occur at the 2017 Annual Meeting of Stockholders. The next advisory vote on our named executive officer compensation will also occur at the 2017 Annual Meeting of Stockholders.
We encourage stockholders to read the “Executive Compensation” section of this proxy statement beginning with the “Compensation Discussion and Analysis” on page 28, which describes in detail our executive compensation programs and the decisions made by the Compensation Committee and our Board with respect to fiscal 2015.
As we describe in the “Compensation Discussion and Analysis,” we maintain an executive compensation program that consists almost entirely of base salary, an annual incentive bonus and annual equity awards. These elements of compensation have been selected by the Compensation Committee because it believes that they effectively achieve the fundamental goals of our executive compensation program, which are to attract, motivate and retain qualified and talented executives, who are critical to our success, motivating them to achieve our business goals and rewarding them for superior short- and long-term performance. The goal of the Compensation Committee is to ensure that our executive compensation program is aligned with the interests of our stockholders and our business goals in order to attain our ultimate objective of increasing stockholder value. We believe that, consistent with these goals, the total compensation paid to each of our named executive officers is fair, reasonable and competitive. Further, we believe our program does not encourage excessive risk-taking by management. Annual compensation decisions for executive officers are made by our Compensation Committee based on the achievement of specified performance goals as described under “Compensation Discussion and Analysis.”
Our Board is asking stockholders to approve an advisory vote on the following resolution:
RESOLVED, that the compensation paid to the named executive officers of Casella Waste Systems, Inc., as disclosed pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, the compensation tables and any related material disclosed in the proxy statement of Casella Waste Systems, Inc., is hereby approved.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote does not overrule any decision by us or our Board (or any committee thereof), create or imply any change to our fiduciary duties or those of our Board (or any committee thereof), or create or imply any additional fiduciary duties for us or our Board (or any committee thereof). However, the Compensation Committee and our Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
Unless otherwise indicated on your proxy, your shares will be voted “FOR” the approval of the compensation of our named executive officers. If your shares are held by your bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannot vote your shares on Proposal 2.
BOARD RECOMMENDATION
Our Board unanimously recommends that you vote to approve the compensation of our named executive officers by voting “FOR” Proposal 2.
PROPOSAL 3 — APPROVAL OF CASELLA WASTE SYSTEMS, INC. 2016 INCENTIVE PLAN
Overview
In the opinion of our Board, the future success of our company depends, in large part, on our ability to maintain a competitive position in attracting, retaining and motivating key employees with experience and ability. On September 29, 2016, our Board adopted, subject to stockholder approval, the Casella Waste Systems, Inc. 2016 Incentive Plan, which we refer to as the 2016 Incentive Plan. The 2016 Incentive Plan is intended to replace our 2006 Stock Incentive Plan, which expires on October 9, 2016, and after which date we may not grant any new awards.
The 2016 Incentive Plan would allow for the issuance of up to 2,250,000 shares of Class A common stock. In addition, up to an additional 2,722,884 shares of Class A common stock, which is equal to the sum of the number of shares of Class A common stock reserved for issuance under the 2006 Stock Incentive Plan that remain available for grant immediately prior to the expiration of the 2006 Stock Incentive Plan and the number of shares of Class A common stock subject to awards granted under the 2006 Stock Incentive Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right (subject, in the case of incentive stock options, to any limitations of the Code), will be available for issuance under the 2016 Incentive Plan.
We may no longer issue awards under the 2006 Stock Incentive Plan following its expiration on October 9, 2016 (however, awards previously granted under the 2006 Stock Incentive Plan will remain outstanding and may be returned to the 2016 Incentive Plan as described above). As of August 31, 2016, (1) options covering 1,101,299 shares of Class A common stock with a weighted average exercise price of $5.98 and a weighted average remaining term of 5.73 years, (2) unvested RSUs covering 787,877 shares of Class A common stock, (3) unvested PSUs covering 97,279 shares of Class A common stock and (4) 115,170 shares of Class A common stock subject to unvested restricted stock awards were outstanding under the 2006 Stock Incentive Plan and our other equity compensation plans. As of August 31, 2016, 646,081 shares of Class A common stock were available for future grant under the 2006 Stock Incentive Plan.
Highlights of the 2016 Incentive Plan
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Our Board believes that approving 2,250,000 shares (plus any unused shares from the 2006 Stock Incentive Plan) for issuance under the 2016 Incentive Plan is appropriate and in the best interests of stockholders given (1) the expiration of the 2006 Stock Incentive Plan on October 9, 2016, after which we may not grant any new equity awards, (2) the duration of the 2016 Incentive Plan, (3) our historical rate of issuing equity awards, (4) our current expectations of the number of shares likely to be needed for future grants and (5) the importance of equity as a proportion of total compensation. Our Board will carefully consider all proposed grants under the 2016 Incentive Plan.
In developing our share request for the 2016 Incentive Plan and analyzing the impact of utilizing equity on our stockholders, we considered our “burn rate” and “overhang.”
Burn rate provides a measure of the potential dilutive impact of our annual equity award program. Set forth below is a table that reflects our burn rate for fiscal 2015, transition period 2014, fiscal 2014 and fiscal 2013 as well as the average over those periods.
Period | Full-Value Shares Granted – RSUs and Restricted Stock Awards | Full- Value Shares Granted - PSUs | Full- Value Shares Vested - PSUs | Options Granted | Total Shares | Basic Weighted Average Number of Shares of Class A Common Stock Outstanding | Gross Burn Rate (1) | |||||||||||||||||||||
Fiscal 2015 (January 1, 2015 – December 31, 2015) | 624,119 | — | — | 150,000 | 774,119 | 40,642,443 | 1.9 | % | ||||||||||||||||||||
Transition period 2014 (May 1, 2014 – December 31, 2014) | 370,163 | — | — | 200,000 | 570,163 | 40,262,005 | 1.4 | % | ||||||||||||||||||||
Fiscal 2014 (May 1, 2013 – April 30, 2014) | 541,951 | — | — | 157,408 | 699,359 | 39,819,935 | 1.8 | % | ||||||||||||||||||||
Fiscal 2013 (May 1, 2012 – April 30, 2013) | 418,544 | 315,552 | — | 387,500 | 806,044 | 34,015,061 | 2.4 | % | ||||||||||||||||||||
Average | 1.9 | % |
Overhang is a measure of potential dilution and is defined as the sum of (1) the total number of shares underlying all equity awards outstanding, excluding restricted stock awards, and (2) the total number of shares available for future award grants, divided by: the sum of (a) the total number of shares underlying all equity awards outstanding, excluding restricted stock awards, (b) the total number of shares available for future award grants and (c) the total number of shares of Class A common stock and Class B common stock outstanding. Our overhang at August 31, 2016 was 6.0%. If the additional 2,250,000 shares proposed to be authorized for grant under the 2016 Incentive Plan are included in the calculation, our overhang would have been 10.5% at August 31, 2016.
Summary of the 2016 Incentive Plan
The following summary of the 2016 Incentive Plan is qualified in its entirety by reference to the 2016 Incentive Plan, a copy of which is attached asAppendix A to this proxy statement. References to our Board in this summary shall include the Compensation Committee or any similar committee appointed by our Board to administer the 2016 Incentive Plan.
Types of Awards; Shares Available for Issuance.
The 2016 Incentive Plan allows for the issuance of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, or Code, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, cash-based awards and performance awards; we refer to these securities as Awards. Subject to adjustment in the event of stock splits, stock dividends or similar events, Awards may be made under the 2016 Incentive Plan for (i) up to 2,250,000 shares of Class A common stock plus (ii) an additional number of shares of Class A common stock (up to 2,722,884 shares) as is equal to the sum of the number of shares of Class A common stock remaining available for grant under the 2006 Stock Incentive Plan immediately prior to the expiration of the 2006 Stock Incentive Plan and the number of shares of Class A common stock subject to awards granted under the 2006 Stock Incentive Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right (subject, in the case of incentive stock options, to any limitations of the Code). In addition, if any Award granted under the 2016 Incentive Plan expires or is terminated, surrendered,
cancelled, forfeited or otherwise results in any Class A common stock not being issued, the unused Class A common stock covered by such Award shall again be available for the grant of Awards under the 2016 Incentive Plan (subject, in the case of incentive stock options, to any limitations under the Code). However, shares of Class A common stock delivered to us by a participant to purchase Class A common stock upon exercise of an Award or to satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares of Class A common stock available for the future grant of Awards under the 2016 Incentive Plan. In addition, Class A common stock repurchased by us on the open market using proceeds from the exercise of an Award shall not increase the number of shares of Class A common stock available for future grant of Awards under the 2016 Incentive Plan.
Certain sub-limitations apply to the shares available for issuance under the 2016 Incentive Plan. The maximum number of shares of Class A common stock with respect to which Awards may be granted to any participant under the 2016 Incentive Plan is 750,000 shares per calendar year. The maximum value (calculated based on grant date fair value for financial reporting purposes) of shares subject to Awards granted to directors who are not employees of Casella at the time of grant shall not exceed $200,000 in any calendar year, subject to exceptions in extraordinary circumstances as the Compensation Committee may determine in its discretion.
All shares of Class A common stock covered by stock appreciation rights shall be counted against the number of shares available for grant under the 2016 Incentive Plan and against the sub-limitations described above. However, stock appreciation rights that may be settled only in cash shall not be so counted, and if a stock appreciation right is granted in tandem with an option for the same number of shares of Class A common stock and the grant provides that only one such Award may be exercised (which we refer to as a “tandem SAR”), only the shares covered by the option shall be counted, and the expiration of one in connection with the other’s exercise will not restore shares to the 2016 Incentive Plan. The shares covered by a tandem SAR will not again become available for grant under the 2016 Incentive Plan upon the expiration or termination of the tandem SAR. In the case of the exercise of a stock appreciation right, the number of shares counted against the shares available under the 2016 Incentive Plan and the sub-limitations described above shall be the full number of shares subject to the stock appreciation right multiplied by the percentage of the stock appreciation right actually exercised, regardless of the number of shares actually used to settle the stock appreciation right upon exercise.
In connection with a merger or consolidation of an entity with us or our acquisition of property or stock of an entity, our Board may grant Awards under the 2016 Incentive Plan in substitution for any options or other stock or stock-based Awards granted by such entity or an affiliate thereof on such terms as our Board determines appropriate in the circumstances, notwithstanding any limitation on Awards contained in the 2016 Incentive Plan. No such substitute Awards shall count against the overall share limits or sub-limitations described above, except as required by reason of Section 422 and related provisions of the Code.
Shares issued under the 2016 Incentive Plan may consist in whole or in part of authorized but unissued shares or treasury shares.
Descriptions of Awards.
Options. Optionees receive the right to purchase a specified number of shares of Class A common stock at a specified option price and subject to such other terms and conditions as are specified in connection with the option grant. Only our employees or employees of our subsidiaries may receive “incentive stock options” as defined in Section 422 of the Code. An option that is not intended to be an “incentive stock option” is a “nonstatutory stock option”. Options may not be granted at an exercise price that is less than 100% of the fair market value of the Class A common stock on the effective date of grant; provided, however, that if our Board approves the grant of an option with an exercise price to be determined on a future date, the exercise price may not be less than 100% of the fair market value of the Class A common stock on such future date. Under present law, incentive stock options may not be granted at an exercise price less than 110% of the fair market value in the case of stock options granted to optionees holding more than 10% of the total combined voting power of all
classes of our stock or any of our subsidiaries. Under the terms of the 2016 Incentive Plan, stock options may not be granted for a term in excess of 10 years (and, under present law, five years in the case of incentive stock options granted to optionees holding greater than 10% of the total combined voting power of all classes of our stock or any of our subsidiaries). The 2016 Incentive Plan permits participants to pay the exercise price of options using one or more of the following methods of payment: (1) payment by cash or check, or, except as may otherwise be provided in the applicable option agreement or approved by our Board, in connection with a “cashless exercise” through a broker, (2) to the extent provided in the applicable option agreement or approved by our Board, and subject to certain conditions, by surrender to us of shares of Class A common stock owned by the participant valued at their fair market value, (3) to the extent provided in an applicable nonstatutory stock option agreement or approved by our Board, and subject to certain conditions, by delivery of a notice of “net exercise” as a result of which we will retain a number of shares of Class A common stock otherwise issuable pursuant to the option equal to the aggregate exercise price for the portion of the option being exercised divided by the fair market value of Class A common stock on the date of exercise, (4) to the extent permitted by applicable law and provided for in the applicable option agreement or approved by our Board, by any other lawful means (provided that in no event may a promissory note of the participant be used to pay the option exercise price), or (5) any combination of the foregoing.
Stock Appreciation Rights. A stock appreciation right, or SAR, is an award entitling the holder, upon exercise, to receive a number of shares of Class A common stock or cash (or a combination thereof) determined by reference to the appreciation, from and after the date of grant, in the fair market value of a share of Class A common stock over the measurement price. The 2016 Incentive Plan provides that the measurement price of a SAR may not be less than 100% of the fair market value of Class A common stock on the effective date of grant (provided, however, that if our Board approves the grant of a SAR effective as of a future date, the measurement price shall not be less than 100% of the fair market value on such future date) and that SARs granted under the 2016 Incentive Plan may not have a term in excess of 10 years.
Limitation on Repricing of Options or SARs; Other Limitations. With respect to options and SARs, unless such action is approved by stockholders or otherwise permitted under the terms of the 2016 Incentive Plan in connection with certain changes in capitalization and reorganization events, we may not (1) amend any outstanding option or SAR granted under the 2016 Incentive Plan to provide an exercise price or measurement price per share that is lower than the then-current exercise price or measurement price per share of such outstanding option or SAR, (2) cancel any outstanding option or SAR (whether or not granted under the 2016 Incentive Plan) and grant in substitution therefor new Awards under the 2016 Incentive Plan (other than certain substitute Awards described above) covering the same or a different number of shares of Class A common stock and having an exercise price or measurement price per share lower than the then-current exercise price or measurement price per share of the cancelled option or SAR, (3) cancel in exchange for a cash payment any outstanding option or SAR with an exercise price or measurement price per share above the then-current fair market value of Class A common stock, or (4) take any other action under the 2016 Incentive Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ Stock Market. No option or SAR granted under the 2016 Incentive Plan shall contain any provision entitling the participant to the automatic grant of additional options or SARs in connection with any exercise of the original option or SAR, or provide for the payment or accrual of dividend equivalents.
Restricted Stock Awards. We may issue Awards entitling recipients to acquire shares of Class A common stock subject to our right to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by our Board in the applicable Award are not satisfied prior to the end of the applicable restriction period established for such Award. We refer to these Awards as Restricted Stock. Unless otherwise provided in the applicable Award agreement, any dividend declared and paid by us with respect to a share of Restricted Stock shall be paid to the participant (without interest) only if and when such shares of Restricted Stock become free from any applicable restrictions on transferability and forfeitability.
Restricted Stock Units. We may also grant Awards entitling the recipient to receive shares of Class A common stock (or cash equal to the fair market value of such shares) to be delivered the time such Award vests.
We refer to these Awards as Restricted Stock Units. Our Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the participant, in a manner that complies with Section 409A of the Code. A participant has no voting rights with respect to any Restricted Stock Units. A grant of Restricted Stock Units may provide the participant with a right to receive dividend equivalents, which may be paid currently or credited to an account for the participant, may be settled in cash and/or shares of Class A common stock and shall be subject to the same restrictions on transfer and forfeitability as the underlying Restricted Stock Units. No interest will be paid on dividend equivalents.
Other Stock-Based Awards; Cash-Based Awards. Under the 2016 Incentive Plan, our Board may grant other Awards of shares of our Class A common stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon Class A common stock or other property, having such terms and conditions as our Board may determine. We refer to these types of Awards as Other Stock-Based Awards. Other Stock-Based Awards may be available as a form of payment in the settlement of other Awards granted under the 2016 Incentive Plan or as payment in lieu of compensation to which a participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Class A common stock or cash, as our Board determines. Dividend equivalents with respect to Other Stock-Based Awards may be paid currently or credited to an account for the participant, may be settled in cash and/or shares of Class A common stock and will be subject to the same restrictions on transfer and forfeitability as the underlying Other Stock-Based Award. No interest will be paid on dividend equivalents. Our Board may also grant Awards denominated in cash rather than shares of Class A common stock. We refer to these types of Awards as Cash-Based Awards.
Performance Awards. Restricted Stock, Restricted Stock Units, Other Stock-Based Awards and Cash-Based Awards granted under the 2016 Incentive Plan may be made subject to achievement of performance goals. We refer to these types of Awards as Performance Awards. Performance Awards can also provide for cash payments of up to $2,000,000 per calendar year per individual. With respect to Performance Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, a committee comprised solely of two or more directors eligible to serve on a committee making qualified “performance-based compensation” awards under Section 162(m) of the Code shall specify, at the time of grant, that such Performance Award will be granted, vest and/or pay out solely upon the achievement of specified objective performance criteria that are based on the relative or absolute attainment of specified levels of one or any combination of the following, which may be determined pursuant to generally accepted accounting principles, or GAAP, or on a non-GAAP basis, as determined by the Compensation Committee: earnings before interest, taxes, depreciation, amortization, accretion and depletion of landfill operating lease obligations; earnings before interest and taxes; net cash provided by operating activities, cash flow or free cash flow; total shareholder return or relative total shareholder returns; economic value added; revenue or revenue growth; achievement of cost of operations or general and administration cost reduction goals; net income, earnings per share, or earnings per share growth; gross margin, earnings before interest and taxes margin, or earnings before interest, taxes, depreciation, amortization, accretion and depletion of landfill operating lease obligations margin; achievement of balance sheet goals, such as debt reduction or working capital improvement; consolidated leverage ratio; and return on net assets, investment or equity. The preceding performance criteria may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Compensation Committee may specify that such performance measures shall be adjusted to exclude any one or more of (i) gains or losses on assets sales or divestiture transactions; (ii) development project charge write-offs; (iii) legal, contract or tax settlement costs; (iv) bargain purchase gains; (v) asset or goodwill impairment charges; (vi) environmental remediation charges; (vii) severance and reorganization costs; (viii) expenses from divestiture, acquisition and financing transactions; (ix) gains on the settlement of acquisition related contingent consideration; (x) fiscal year-end transition costs; (xi) proxy contest costs; (xii) losses on the abandonment or the closure and discontinuation of operations; (xiii) impairment of equity method investments; (xiv) gains or losses on the sale of equity method investments; (xv) gains or losses on debt extinguishment or modification and associated cash interest payment timing differences; (xvi) gains or losses on derivatives deemed to be ineffective or terminated; (xvii) gains or losses on the disposition of
discontinued operations; (xviii) fluctuations in foreign currency exchange rates; (xix) non-recurring or unusual gains or losses; (xx) the cumulative effects of changes in GAAP; and (xxi) cash flow timing differences due to unusual or non-recurring transactions. Such performance measures (x) may vary by participant and may be different for different Awards; (y) may be particular to a participant or the department, branch, line of business, subsidiary or other unit in which the participant works and may cover such period as may be specified by the Compensation Committee; and (z) shall be set by the Compensation Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). The Compensation Committee may adjust downwards, but not upwards, the cash or number of shares payable pursuant to such Awards and may not waive the achievement of the applicable performance measures except in the case of the death or disability of the participant or a change in control of Casella. Performance Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) may be based on these or other performance measures as determined by our Board.
Transferability of Awards.
Except as our Board may otherwise determine or provide in an Award in connection with certain gratuitous transfers, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an incentive stock option, pursuant to a qualified domestic relations order. During the life of the participant, Awards are exercisable only by the participant.
Eligibility to Receive Awards.
Employees, officers, directors, consultants and advisors of Casella and of our present or future parent or subsidiary corporations and any other business venture in which Casella has a controlling interest (as determined by our Board) are eligible to be granted Awards under the 2016 Incentive Plan. However, incentive stock options may only be granted to our employees, employees of our present or future parent or subsidiary corporations, and employees of any other entities the employees of which are eligible to receive incentive stock options under the Code. As of September 15, 2016, approximately 1,900 persons were eligible to receive Awards under the 2016 Incentive Plan, including our executive officers and non-employee directors. The granting of Awards under the 2016 Incentive Plan is discretionary, and we cannot now determine the number or type of Awards to be granted in the future to any particular person or group, except that Awards are subject to the limitations described above. On September 30, 2016, the last reported sale price of Class A common stock on the Nasdaq Global Select Market was $10.30.
Clawback Policy
All awards granted under the 2016 Incentive Plan are subject to clawback pursuant to the Company’s Compensation Clawback Policy (described above under “Corporate Governance—Compensation Clawback Policy”) and any other clawback policy that the Company may adopt in the future.
Administration.
Our Board administers the 2016 Incentive Plan and is authorized to grant Awards, to adopt, amend and repeal the administrative rules, guidelines and practices relating to the 2016 Incentive Plan and to construe and interpret the provisions of the 2016 Incentive Plan and any Award agreements entered into under the 2016 Incentive Plan. Our Board may correct any defect, supply any omission or reconcile any inconsistency in the 2016 Incentive Plan or any Award. All actions and decisions by the Board with respect to the 2016 Incentive Plan and any Awards shall be made in our Board’s discretion and shall be final and binding on all persons having or claiming any interest in the 2016 Incentive Plan or any Award.
Pursuant to the terms of the 2016 Incentive Plan, our Board may delegate authority under the 2016 Incentive Plan to one or more committees or subcommittees of our Board. Our Board has authorized the Compensation Committee to administer certain aspects of the 2016 Incentive Plan, including the granting of awards to directors and executive officers. The Compensation Committee, with the input of management, selects the recipients of Awards and determines, in addition to other items, and subject to the terms of the 2016 Incentive Plan:
the number of shares of Class A common stock, cash or other consideration covered by Awards and the terms and conditions of such Awards, including the dates upon which such Awards become exercisable or otherwise vest;
the exercise or measurement price of Awards, if any;
the effect on Awards of a change in control of us; and
the duration of Awards.
Subject to any requirements of applicable law, our Board may delegate to one or more of our officers the power to grant Awards to our employees or non-executive officers and to exercise such other powers under the 2016 Incentive Plan as our Board may determine, provided that our Board shall fix the terms of the Awards to be granted by such officers, the maximum number of shares subject to Awards that the officers may grant, and the time period in which such Awards may be granted. No officer shall be authorized to grant Awards to any of our executive officers.
Awards to non-employee directors will only be granted and administered by a committee, all the members of which are independent as defined by Section 5605(a)(2) of the NASDAQ Marketplace Rules.
The 2016 Incentive Plan provides that no Award may vest earlier than the first anniversary of its date of grant. However, the foregoing minimum-vesting rule does not apply to (1) Awards granted in lieu of salary, bonus or other compensation otherwise earned by or payable to the participant and (2) Awards granted, in the aggregate, for up to 5% of the maximum number of authorized shares available for issuance under the 2016 Incentive Plan. Notwithstanding the 2016 Incentive Plan’s minimum-vesting rule described above, our Board may at any time provide that any Award will become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.
Except as otherwise provided under the 2016 Incentive Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and our Board need not treat participants uniformly. Our Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a participant and the extent to which, and the period during which, the participant (or the participant’s legal representative, conservator, guardian or designated beneficiary) may exercise rights under the Award.
We are required to make equitable adjustments (in the manner determined by our Board) to the number and class of securities available under the 2016 Incentive Plan and any outstanding Awards under the 2016 Incentive Plan and the share counting rules and sub-limits set forth in the 2016 Incentive Plan, to reflect stock splits, stock dividends, recapitalizations, combinations of shares, reclassifications of shares, spin-offs and other similar changes in capitalization or events or any dividends or distributions to holders of Class A common stock other than ordinary cash dividends.
We will indemnify and hold harmless each director, officer, employee or agent to whom any duty or power relating to the administration or interpretation of the 2016 Incentive Plan has been or will be delegated against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with our Board’s approval) arising out of any act or omission to act concerning the 2016 Incentive Plan unless arising out of such person’s own fraud or bad faith.
Amendment of Awards. Except as otherwise provided under the 2016 Incentive Plan with respect to repricing outstanding stock options or SARs and the minimum vesting rules and exclusions thereto, our Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an incentive stock option to a nonstatutory stock option, provided that the participant’s consent to any such action will be required unless our Board determines that the action, taking into account any related action, does not materially and adversely affect the participant’s rights under the 2016 Incentive Plan or the change is otherwise permitted under the terms of the 2016 Incentive Plan in connection with a change in capitalization or reorganization event.
Reorganization Events; Change in Control Events.
Definitions. The 2016 Incentive Plan contains provisions addressing the consequences of any reorganization event or change in control event.
A “reorganization event” is defined under the terms of the 2016 Incentive Plan to mean (a) any merger or consolidation of Casella with or into another entity as a result of which all of the Class A common stock is converted into or exchanged for the right to receive cash, securities or other property, or is cancelled, or (b) any exchange of shares of Class A common stock for cash, securities or other property pursuant to a share exchange or other transaction.
A “change in control event,” as defined under the terms of the 2016 Incentive Plan, means (a) any merger or consolidation which results in our voting securities outstanding immediately prior to such merger or consolidation representing immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the voting securities of us or such surviving or acquiring entity outstanding immediately after such merger or consolidation; (b) subject to certain exceptions contained in the definition of change in control event under the 2016 Incentive Plan, the acquisition by an individual, entity or group of beneficial ownership of any of our capital stock if, after such acquisition, such person beneficial owns 50% or more of either our then-outstanding shares of Class A common stock or the combined voting power of our then-outstanding voting securities entitled to vote generally in the election of directors; (c) any sale of all or substantially all of our assets; or (d) our complete liquidation.
Awards Other than Restricted Stock; Alternatives Available to our Board. Under the 2016 Incentive Plan, if a reorganization event occurs (regardless of whether such event also constitutes a change in control event), our Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as our Board determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between a participant and us): (1) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (2) upon written notice to a participant, provide that all of the participant’s unexercised Awards will terminate immediately prior to the consummation of such reorganization event unless exercised by the participant (to the extent then exercisable) within a specified period following the date of such notice, (3) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such reorganization event, (4) in the event of a reorganization event under the terms of which holders of Class A common stock will receive upon consummation thereof a cash payment for each share surrendered in the reorganization event, which we refer to as the Acquisition Price, make or provide for a cash payment to participants with respect to each Award held by a participant equal to (A) the number of shares of Class A common stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such reorganization event) multiplied by (B) the excess, if any, of (I) the Acquisition Price over (II) the exercise, grant or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, and (5) any combination of the foregoing. Our Board is not obligated to treat all Awards, all Awards held by a participant, or all Awards of the same type, identically.
The 2016 Incentive Plan also provides, however, that for Restricted Stock Units that are subject to Section 409A of the Code: (A) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units shall be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the reorganization event constitutes such a “change in control event,” then no assumption or substitution of the Restricted Stock Unit shall be permitted, and the Restricted Stock Units shall instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (B) our Board may only undertake the actions set forth in clauses (3), (4) or (5) above if the reorganization event is a “change in control event” as so defined under the Treasury Regulation and such action is permitted or required by Section 409A of the Code. If the reorganization event does not constitute a “change in control event” as defined in the Treasury Regulation or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (1) above, then the unvested Restricted Stock Units shall terminate immediately prior to the consummation of the reorganization event without any payment in exchange therefor.
Notwithstanding the foregoing, if a change in control event occurs, then except to the extent specifically provided to the contrary in the instrument evidencing an Award or any other agreement between a participant and us, each Award (other than Restricted Stock) shall become immediately vested, exercisable, or free from forfeiture, as applicable, if on or prior to the first anniversary of the date of the consummation of the change in control event, the participant’s service with us or a successor corporation is terminated without cause (as defined in the 2016 Incentive Plan) by us or the successor corporation.
Provisions Applicable to Restricted Stock. Upon the occurrence of a reorganization event (regardless of whether such event also constitutes a change in control event), our repurchase and other rights with respect to outstanding Restricted Stock shall inure to the benefit of our successor and shall, unless our Board determines otherwise, apply to the cash, securities or other property which the Class A common stock was converted into or exchanged for pursuant to such reorganization event in the same manner and to the same extent as they applied to such Restricted Stock; provided, however, that our Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a participant and us, either initially or by amendment.
Upon the occurrence of a change in control event (regardless of whether such event also constitutes a reorganization event), except to the extent specifically provided to the contrary in the instrument evidencing an Award or any other agreement between a participant and us, each Award of Restricted Stock will become immediately vested and free from forfeiture if on or prior to the first anniversary of the date of the consummation of the change in control event, the participant’s service with us or a successor corporation is terminated without cause (as defined in the 2016 Incentive Plan) by us or the successor corporation.
Provisions for Foreign Participants.
Our Board may from time to time establish one or more sub-plans under the 2016 Incentive Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. Our Board shall establish such sub-plans by adopting supplements to the 2016 Incentive Plan containing any limitations on our Board’s discretion under the 2016 Incentive Plan as our Board shall deem necessary or desirable and any additional terms and conditions not otherwise inconsistent with the 2016 Incentive Plan that our Board shall deem necessary or desirable. All supplements adopted by our Board shall be deemed to be part of the 2016 Incentive Plan, but each supplement shall apply only to participants within the affected jurisdiction.
Amendment or Termination.
Our Board may amend, suspend or terminate the 2016 Incentive Plan or any portion thereof at any time provided that (1) to the extent required by Section 162(m) of the Code, no Award granted to a participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or
vested, as applicable to such Award, unless and until our stockholders approve such amendment in the manner required by Section 162(m); (2) no amendment that would require stockholder approval under the rules of the national securities exchange on which we then maintain our primary listing may be made effective unless and until our stockholders approve such amendment; and (3) if the national securities exchange on which we then maintain our primary listing does not have rules regarding when stockholder approval of amendments to equity compensation plans is required (or if the Class A common stock is not then listed on any national securities exchange), then no amendment to the 2016 Incentive Plan (A) materially increasing the number of shares authorized under the 2016 Incentive Plan (other than as provided for in the 2016 Incentive Plan in connection with substitute Awards, changes in capitalization or reorganization events), (B) expanding the types of Awards that may be granted under the 2016 Incentive Plan, or (C) materially expanding the class of participants eligible to participate in the 2016 Incentive Plan shall be effective unless and until our stockholders approve such amendment. In addition, if at any time the approval of our stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to incentive stock options, our Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the 2016 Incentive Plan adopted in accordance with the procedures described above shall apply to, and be binding on the holders of, all Awards outstanding under the 2016 Incentive Plan at the time the amendment is adopted, provided that our Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of participants under the 2016 Incentive Plan. No Award may be made that is conditioned upon stockholder approval of any amendment to the 2016 Incentive Plan unless the Award provides that (i) it will terminate or be forfeited if stockholder approval of such amendment is not obtained within no more than 12 months from the date of grant and (ii) it may not be exercised or settled (or otherwise result in the issuance of Class A common stock) prior to such stockholder approval.
Effective Date and Term of 2016 Incentive Plan.
The 2016 Incentive Plan shall become effective on the date the plan is approved by our stockholders. No Awards shall be granted under the 2016 Incentive Plan after the expiration of 10 years from the effective date, but Awards previously granted may extend beyond that date.
Federal Income Tax Consequences
The following generally summarizes the United States federal income tax consequences that generally will arise with respect to Awards granted under the 2016 Incentive Plan. This summary is based on the federal tax laws in effect as of the date of this proxy statement. In addition, this summary assumes that all Awards are exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. Changes to these laws or assumptions could alter the tax consequences described below.
Incentive Stock Options. A participant will not have income upon the grant of an incentive stock option. Also, except as described below, a participant will not have income upon exercise of an incentive stock option if the participant has been employed by us or our corporate parent or 50% or more-owned corporate subsidiary at all times beginning with the option grant date and ending three months before the date the participant exercises the option. If the participant has not been so employed during that time, then the participant will be taxed as described below under “Nonstatutory Stock Options.” The exercise of an incentive stock option may subject the participant to the alternative minimum tax.
A participant will have income upon the sale of the stock acquired under an incentive stock option, which we refer to as ISO stock, at a profit (if sales proceeds exceed the exercise price). The type of income will depend on when the participant sells the ISO stock. If a participant sells the ISO stock more than two years after the option was granted and more than one year after the option was exercised, then all of the profit will be long-term capital gain. If a participant sells the ISO stock prior to satisfying these waiting periods, then the participant will have engaged in a disqualifying disposition and a portion of the profit will be ordinary income and a portion
may be capital gain. This capital gain will be long-term if the participant has held the ISO stock for more than one year and otherwise will be short-term. If a participant sells the ISO stock at a loss (sales proceeds are less than the exercise price), then the loss will be a capital loss. This capital loss will be long-term if the participant held the ISO stock for more than one year and otherwise will be short-term.
Nonstatutory Stock Options. A participant will not have income upon the grant of a nonstatutory stock option. A participant will have compensation income upon the exercise of a nonstatutory stock option equal to the fair market value of the stock on the day the participant exercised the option less the exercise price. Upon sale of the stock, which we refer to as NSO stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the fair market value of the NSO stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the NSO stock for more than one year and otherwise will be short-term.
Stock Appreciation Rights. A participant will not have income upon the grant of a SAR but generally will recognize compensation income upon the exercise of a SAR equal to the amount of the cash and the fair market value of any stock received. Upon the sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the SAR was exercised. This capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.
Restricted Stock. A participant will not have income upon the grant of Restricted Stock unless an election under Section 83(b) of the Code is made within 30 days of the date of grant. If a timely Section 83(b) election is made, then a participant will have compensation income equal to the fair market value of the stock on the date of grant less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the fair market value of the stock on the date of grant. If the participant does not make a Section 83(b) election, then when the shares of Restricted Stock vest the participant will have compensation income equal to the fair market value of the stock on the vesting date less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the fair market value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.
Restricted Stock Units. A participant will not have income upon the grant of a Restricted Stock Unit. A participant is not permitted to make a Section 83(b) election with respect to a Restricted Stock Unit. When the Restricted Stock Unit vests, the participant will have income on the vesting date in an amount equal to the fair market value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.
Other Stock-Based Awards. The tax consequences associated with any Other Stock-Based Award granted under the 2016 Incentive Plan will vary depending on the specific terms of the Award. Among the relevant factors are whether or not the Award has a readily ascertainable fair market value, whether or not the Award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the Award and the participant’s holding period and tax basis for the Award or underlying Class A common stock.
Tax Consequences to Us. There will be no tax consequences to us except that we will be entitled to a deduction when a participant has compensation income. Any such deduction will be subject to the limitations of Section 162(m) of the Code.
BOARD RECOMMENDATION
Our Board unanimously recommends a vote “FOR” the election of John W. Casella, William P. Hulligan and James E. O’Connor as Class III directors.
PROPOSAL 2 — ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS
We are providing our stockholders the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as“say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act. Section 14A of the Exchange Act requires that we provide our stockholders with the opportunity to vote to approve, on an advisory(non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. Section 14A of the Exchange Act also requires us to submit anon-binding, advisory resolution to stockholders at least once every six years to determine whether advisory votes on executive compensation paid to our named executive officers should be held every one, two or three years. At the 2017 Annual Meeting of Stockholders, stockholders approved, on an advisory basis, an annual advisory vote on the compensation of our named executive officers. In accordance with the results of this vote, the Board determined to implement an advisory vote on the compensation of our named executive officers every year.
We encourage stockholders to read the “Executive Compensation” section of this proxy statement beginning with the “Compensation Discussion and Analysis” on page 27, which describes in detail our executive compensation programs and the decisions made by the Compensation Committee and our Board with respect to fiscal 2017.
As we describe in the “Compensation Discussion and Analysis,” we maintain an executive compensation program that is designed to deliver competitive total compensation linked to the achievement of performance objectives and to attract, motivate and retain qualified and talented executives, who are critical to our success, motivating them to achieve our business goals and rewarding them for superior short- and long-term performance. The goal of the Compensation Committee is to ensure that our executive compensation program is aligned with the interests of our stockholders and our business goals in order to attain our ultimate objective of increasing stockholder value. We believe that, consistent with these goals, the total compensation paid to each of our named executive officers is fair, reasonable and competitive. Further, we believe our program does not encourage excessive risk-taking by management. Annual compensation decisions for executive officers are made by our Compensation Committee based on the achievement of specified performance goals as described under “Compensation Discussion and Analysis.”
Our Board is asking stockholders to approve an advisory vote on the following resolution:
RESOLVED, that the compensation paid to the named executive officers of Casella Waste Systems, Inc., as disclosed pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, the compensation tables and any related material disclosed in the proxy statement of Casella Waste Systems, Inc., is hereby approved.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote does not overrule any decision by us or our Board (or any committee thereof), create or imply any change to our fiduciary duties or those of our Board (or any committee thereof), or create or imply any additional fiduciary duties for us or our Board (or any committee thereof). However, the Compensation Committee and our Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
Unless otherwise indicated on your proxy, your shares will be voted “FOR” the approval of the compensation of our named executive officers. If your shares are held by your bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannot vote your shares on Proposal 2.
BOARD RECOMMENDATION
Our Board unanimously recommends that you vote to approve the Casella Waste Systems, Inc. 2016 Incentive Plancompensation of our named executive officers by voting “FOR” Proposal 3.2.
PROPOSAL 43 — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Our Audit Committee appointed RSM US LLP, an independent registered public accounting firm, to audit our books, records and accounts for the fiscal year ending December 31, 2016.2018. The appointment of RSM US LLP is being presented to the stockholders for ratification at the 20162018 Annual Meeting.
RSM US LLP has no direct or indirect material financial interest in the Company or its subsidiaries. Representatives of RSM US LLP are expected to be present at the 20162018 Annual Meeting and will be given the opportunity to make a statement on their firm’s behalf if they so desire. The representatives also will be available to respond to appropriate questions.
RSM US LLP served as our independent auditors for fiscal 2015, transition period 20142017 and the fiscal 2014.year ended December 31, 2016, or fiscal 2016. A summary of the fees billed for services rendered by RSM US LLP in fiscal 2015, transition period 20142017 and fiscal 20142016 is set forth in the table below.
Period | Audit Fees (1) | Audit Related Fees (2) | Tax Fees (3) | All Other Fees (4) | Total Fees | Period | Audit Fees (1) | Audit Related Fees (2) | Tax Fees (3) | All Other Fees (4) | Total Fees | |||||||||||||||||||||||||||||||||
RSM US LLP | Fiscal 2015 | $ | 1,124,693 | $ | 22,204 | $ | 13,100 | $ | 7,603 | $ | 1,167,601 | Fiscal 2017 | $ | 1,290,662 | $ | 23,580 | $ | — | $ | 28,786 | $ | 1,343,028 | ||||||||||||||||||||||
RSM US LLP | Transition period 2014 | $ | 1,202,675 | $ | 21,163 | $ | 38,000 | $ | 20,631 | $ | 1,282,469 | Fiscal 2016 | $ | 1,150,594 | $ | 23,681 | $ | 2,050 | $ | — | $ | 1,176,325 | ||||||||||||||||||||||
RSM US LLP | Fiscal 2014 | $ | 1,002,102 | $ | 19,379 | $ | — | $ | — | $ | 1,021,481 |
(1) | Audit fees consist of fees for the audit of our financial statements, the audit of our internal control over financial reporting, the review of the interim financial statements included in our quarterly reports on Form10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements. This amount includes reimbursement of out of pocket costs in fiscal |
(2) | Audit related fees consist of fees billed for the audit of our 401(k) benefit plan. This amount includes reimbursement of out of pocket costs in fiscal |
(3) | Tax fees consist of fees billed for general tax consultation. |
(4) | Consists of fees billed for all other services provided by RSM US LLP related to enterprise risk management. This amount includes reimbursement ofout-of-pocket costs in fiscal |
Our Audit Committee has adopted policies and procedures relating to the approval of all audit andnon-audit services that are to be performed by our independent auditors. This policy generally provides that we will not engage an independent registered public accounting firm to render audit ornon-audit services unless the service is specifically approved in advance by the Audit Committee.
The Audit Committeepre-approved 100% of the audit andnon-audit services performed by our independent auditors in fiscal 2015, transition period 20142017 and fiscal 2014.2016. No services were approved pursuant to the de minimis exception to the Audit Committeepre-approval requirements.
Unless otherwise indicated on your proxy, your shares will be voted “FOR” the ratification of the appointment of RSM US LLP as our independent auditors for the fiscal year ending December 31, 2016.2018. Although we are not required to submit the appointment to a vote of the stockholders, our Board believes it is appropriate as a matter of good corporate governance to request that the stockholders ratify the appointment of RSM US LLP as our independent auditors. If our stockholders do not ratify this appointment, the Audit Committee will investigate the reasons for stockholder rejection and consider whether to retain RSM US LLP or appoint another independent registered public accounting firm. Even if the appointment is ratified, our Board and the Audit Committee, in their discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
BOARD RECOMMENDATION
Our Board unanimously recommends that you vote to approve the ratification of the appointment of RSM US LLP as our independent auditors for the fiscal year ending December 31, 20162018 by voting “FOR” Proposal 4.3.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 20172019 ANNUAL MEETING OF STOCKHOLDERS
The 2017 Annual Meeting of Stockholders (the “2017 Annual Meeting”) is anticipated to be held on June 6, 2017, which is earlier in the calendar year than the 2016 Annual Meeting. STOCKHOLDERS
Pursuant to Rule14a-8 of the Exchange Act, any proposal that a stockholder intends to present at the 20172019 Annual Meeting of Stockholders (the “2019 Annual Meeting”), for inclusion in the proxy statement for the 20172019 Annual Meeting, must be submitted to the attention of the Corporate Secretary at our offices, 25 Greens Hill Lane, Rutland, Vermont 05701 no later than January 27, 2017.December 24, 2018. In order to avoid controversy, stockholders should submit proposals by means (including electronic) that permit them to prove the date of delivery.
In addition, ourBy-Laws require that we be given advance written notice for nominations for election to our Board and of other business that stockholders wish to present for consideration at an annual meeting of stockholders (other than those proposals of business intended to be included in our proxy statement in accordance with Rule14a-8 under the Exchange Act). The required notice must be delivered by the stockholder and received by our Corporate Secretary at our principal offices and must otherwise meet the requirements set forth in ourBy-Laws. The required notice must be made in writing and delivered or mailed by first class United States mail, postage prepaid, to our Corporate Secretary at our principal offices, and received by March 8, 2017,3, 2019, but not before February 6, 2017,1, 2019, which is not less than 90 days nor more than 120 days prior to the 2017anniversary date of the 2019 Annual Meeting. However, in the event that the 2019 Annual Meeting is scheduled to be held on a date before May 12, 2019, or after July 31, 2019, which are dates 20 days before or 60 days after the anniversary date of the 2018 Annual Meeting, then such advance notice must be received by us not earlier than the 120th day prior to the 2019 Annual Meeting and not later than the close of business on the later of (1) the 90th day prior to the 2019 Annual Meeting and (2) the 10th day following the day on which notice of the date of the 2019 Annual Meeting is mailed or public disclosure of the date of the 2019 Annual Meeting is made, whichever first occurs.
If a stockholder who wishes to present a proposal before the 20172019 Annual Meeting outside ofRule 14a-8 of the Exchange Act fails to notify us by the required date, the proxies that our Board solicits for the 20172019 Annual Meeting will confer discretionary authority on the person named in the proxy to vote on the stockholder’s proposal if it is properly brought before that meeting subject to compliance with Rule14a-4(c) of the Exchange Act. If a stockholder makes timely notification, the proxies may still confer discretionary authority to the person named in the proxy under circumstances consistent with the SEC’s proxy rules, including Rule14a-4(c) of the Exchange Act.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement or annual report may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you if you call or write us at the following address or phone number: Investor Relations, Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701,1-802-775-0325. If you would like to receive separate copies of the annual report and proxy statement in the future or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee record holders, or you may contact us at the above address and phone number.
Our 20152017 Annual Report is available atwww.casella.com under the sectionheading entitled “Financial Information.“Investor Relations.” Stockholders may request a copy of our Annual Report on Form10-K for fiscal 20152017 filed with the SEC (without exhibits) free of charge upon written request to: Casella Waste Systems, Inc., Attn: Investor Relations, 25 Greens Hill Lane, Rutland, VT 05701.
Our Board knows of no other business which will be presented for consideration at the 20162018 Annual Meeting other than that described above. However, if any other business should come before the 20162018 Annual Meeting, it is the intention of the persons named in the enclosed proxy to vote, or otherwise act, in accordance with their best judgment on such matters.
CASELLA WASTE SYSTEMS, INC.
2016 INCENTIVE PLAN
The purpose of this 2016 Incentive Plan (the “Plan”) of Casella Waste Systems, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).
All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as the terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), or any successor form) are eligible to be granted Awards (as defined below) under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” The Plan provides for the following types of awards, each of which is referred to as an “Award”: Options (as defined in Section 5), SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), RSUs (as defined in Section 7), Other Stock-Based Awards (as defined in Section 8) and Cash-Based Awards (as defined in Section 8). Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.
(a)Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award. All actions and decisions by the Board with respect to the Plan and any Awards shall be made in the Board’s discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.
(b)Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.
(c)Delegation to Officers. Subject to any requirements of applicable law (including as applicable Sections 152 and 157(c) of the General Corporation Law of the State of Delaware), the Board may delegate to one or more officers of the Company the power to grant Awards (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of Awards to be granted by such officers, the maximum
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number of shares subject to Awards that the officers may grant, and the time period in which such Awards may be granted; and provided further, that no officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1(f) under the Exchange Act).
(d)Awards to Non-Employee Directors. Awards to non-employee directors will be granted and administered by a Committee, all of the members of which are independent directors as defined by Section 5605(a)(2) of the NASDAQ Marketplace Rules.
(a)Number of Shares; Share Counting.
(1)Authorized Number of Shares. Subject to adjustment under Section 10, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for such number of shares of Class A Common Stock, $0.01 par value per share, of the Company (the “Common Stock”) as is equal to the sum of:
(A) 2,250,000 shares of Common Stock; plus
(B) such additional number of shares of Common Stock (up to 2,722,884 shares) as is equal to the sum of (x) the number of shares of Common Stock reserved for issuance under the Company’s 2006 Stock Incentive Plan, as amended (the “Existing Plan”) that remain available for grant under the Existing Plan1 immediately prior to the expiration of the Existing Plan and (y) the number of shares of Common Stock subject to awards granted under the Existing Plan2 which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code).
Shares of Common Stock issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.
(2)Share Counting. For purposes of counting the number of shares available for the grant of Awards under the Plan under this Section 4(a) and under the sublimits contained in Section 4(b):
(A) all shares of Common Stock covered by SARs shall be counted against the number of shares available for the grant of Awards under the Plan and against the sublimits referenced in the first clause of this Section 4(a)(2); provided, however, that (i) SARs that may be settled only in cash shall not be so counted and (ii) if the Company grants an SAR in tandem with an Option for the same number of shares of Common Stock and provides that only one such Award may be exercised (a “Tandem SAR”), only the shares covered by the Option, and not the shares covered by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other’s exercise will not restore shares to the Plan;
(B) if any Award (i) expires or is terminated, surrendered or cancelled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (ii) results in any Common Stock not being issued (including as a result of an SAR that was settleable either in cash or in stock actually being settled in cash), the unused Common Stock covered by such Award shall
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again be available for the grant of Awards; provided, however, that (1) in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code, (2) in the case of the exercise of an SAR, the number of shares counted against the shares available under the Plan and against the sublimits referenced in the first clause of this Section 4(a)(2) shall be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR upon exercise and (3) the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR;
(C) shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations with respect to Awards (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and
(D) shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards.
(b)Sublimits. Subject to adjustment under Section 10, the following sublimits on the number of shares subject to Awards shall apply:
(1)Section 162(m) Per-Participant Limit. The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 750,000 shares per calendar year. For purposes of the foregoing limit, the combination of an Option in tandem with an SAR shall be treated as a single Award. The per-Participant limit described in this Section 4(b)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).
(2) Limit on Awards to Non-Employee Directors. The maximum value (calculated based on grant date fair value for financial reporting purposes) of shares of Common Stock subject to Awards granted in any calendar year to any individual non-employee director shall not exceed $200,000. The Compensation Committee may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the Committee may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation.
(c)Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code.
(a)General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as the Board considers necessary or advisable.
(b)Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Casella Waste Systems, Inc., any of Casella Waste Systems, Inc.’s present or future parent or subsidiary corporations as
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defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a “Nonstatutory Stock Option.” The Company shall have no liability to a Participant, or any other person, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.
(c)Exercise Price. The Board shall establish the exercise price of each Option or the formula by which such exercise price will be determined. The exercise price shall be specified in the applicable Option agreement. The exercise price shall be not less than 100% of the Grant Date Fair Market Value (as defined below) on the date the Option is granted;provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Grant Date Fair Market Value on such future date. “Grant Date Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as follows:
(1) if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or
(2) if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or
(3) if the Common Stock is not publicly traded, the Board will determine the Grant Date Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Code Section 409A, except as the Board may expressly determine otherwise.
For any date that is not a trading day, the Grant Date Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly. The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Code Section 409A.
The Board has sole discretion to determine the Grant Date Fair Market Value for purposes of the Plan, and all Awards are conditioned on the participants’ agreement that the Administrator’s determination is conclusive and binding even though others might make a different determination.
(d)Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Option agreement;provided, however, that no Option will be granted with a term in excess of 10 years.
(e)Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.
(f)Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
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(2) except as may otherwise be provided in the applicable Option agreement or approved by the Board, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;
(3) to the extent provided for in the applicable Option agreement or approved by the Board, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value (valued in the manner determined by (or in a manner approved by) the Board), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;
(4) to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (i) the number of shares underlying the portion of the Option being exercised, less (ii) such number of shares as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board) on the date of exercise;
(5) to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, by payment of such other lawful consideration as the Board may determine; provided, however, that in no event may a promissory note of the Participant be used to pay the Option exercise price; or
(6) by any combination of the above permitted forms of payment.
(g)Limitation on Repricing. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 10): (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ Stock Market (“NASDAQ”).
(h)No Reload Options. No Option granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option.
(i)No Dividend Equivalents. No Option shall provide for the payment or accrual of dividend equivalents.
(a)General. The Board may grant Awards consisting of stock appreciation rights (“SARs”) entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the fair
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market value of a share of Common Stock (valued in the manner determined by (or in a manner approved by) the Board) over the measurement price established pursuant to Section 6(b). The date as of which such appreciation is determined shall be the exercise date.
(b)Measurement Price. The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price shall not be less than 100% of the Grant Date Fair Market Value of the Common Stock on the date the SAR is granted;provided that if the Board approves the grant of an SAR effective as of a future date, the measurement price shall be not less than 100% of the Grant Date Fair Market Value on such future date.
(c)Duration of SARs. Each SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.
(d)Exercise of SARs. SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board.
(e)Limitation on Repricing. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 10): (1) amend any outstanding SAR granted under the Plan to provide a measurement price per share that is lower than the then-current measurement price per share of such outstanding SAR, (2) cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(c)) covering the same or a different number of shares of Common Stock and having an exercise or measurement price per share lower than the then-current measurement price per share of the cancelled SAR, (3) cancel in exchange for a cash payment any outstanding SAR with a measurement price per share above the then-current fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ.
(f)No Reload SARs. No SAR granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional SARs in connection with any exercise of the original SAR.
(g)No Dividend Equivalents. No SAR shall provide for the payment or accrual of dividend equivalents.
(a)General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. The Board may also grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“RSUs”).
(b)Terms and Conditions for Restricted Stock and RSUs. The Board shall determine the terms and conditions of Restricted Stock and RSUs, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.
(c)Additional Provisions Relating to Restricted Stock.
(1)Dividends. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Unvested Dividends”) shall be paid to the Participant only if and when such shares become free from the
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restrictions on transferability and forfeitability that apply to such shares. Each payment of Unvested Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock. No interest will be paid on Unvested Dividends.
(2)Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, the Participant’s estate.
(d)Additional Provisions Relating to RSUs.
(1)Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each RSU, the Participant shall be entitled to receive from the Company the number of shares of Common Stock specified in the Award agreement or (if so provided in the applicable Award agreement or otherwise determined by the Board) an amount of cash equal to the fair market value (valued in the manner determined by (or in a manner approved by) the Board) of such number of shares or a combination thereof. The Board may provide that settlement of RSUs shall be deferred, on a mandatory basis or at the election of the Participant, in a manner that complies with Section 409A of the Code or any successor provision thereto, and the regulations thereunder (“Section 409A”).
(2)Voting Rights. A Participant shall have no voting rights with respect to any RSUs.
(3)Dividend Equivalents. The Award agreement for RSUs may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid currently or credited to an account for the Participant, may be settled in cash and/or shares of Common Stock and shall be subject to the same restrictions on transfer and forfeitability as the RSUs with respect to which paid, in each case to the extent provided in the Award agreement. No interest will be paid on Dividend Equivalents.
(a)General. The Board may grant other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine. The Company may also grant Awards denominated in cash rather than shares of Common Stock (“Cash-Based Awards”).
(b)Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award or Cash-Based Award, including any purchase price applicable thereto.
(c)Dividend Equivalents. The Award agreement for an Other Stock-Based Award may provide Participants with the right to receive Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account for the Participant, may be settled in cash and/or shares of Common Stock and shall be
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subject to the same restrictions on transfer and forfeitability as the Other Stock-Based Award with respect to which paid, in each case to the extent provided in the Award agreement. No interest will be paid on Dividend Equivalents.
(a)Grants. Restricted Stock, RSUs and Other Stock-Based Awards and Cash-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant to this Section 9 (“Performance Awards”). Performance Awards can also provide for cash payments of up to $2,000,000 per calendar year per individual.
(b)Committee. Grants of Performance Awards to any Covered Employee (as defined below) intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”) shall be made only by a Committee (or a subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m). In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be treated as referring to such Committee (or subcommittee). “Covered Employee” shall mean any person who is, or whom the Committee, in its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.
(c)Performance Measures. For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following, which may be determined pursuant to generally accepted accounting principles (“GAAP”) or on a non-GAAP basis, as determined by the Committee: earnings before interest, taxes, depreciation, amortization, accretion and depletion of landfill operating lease obligations; earnings before interest and taxes; net cash provided by operating activities, cash flow or free cash flow; total shareholder return or relative total shareholder returns; economic value added; revenue or revenue growth; achievement of cost of operations or general and administration cost reduction goals; net income, earnings per share, or earnings per share growth; gross margin, earnings before interest and taxes margin, or earnings before interest, taxes, depreciation, amortization, accretion and depletion of landfill operating lease obligations margin; achievement of balance sheet goals, such as debt reduction or working capital improvement; consolidated leverage ratio; and return on net assets, investment or equity. Such goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Committee may specify that such performance measures shall be adjusted to exclude any one or more of (i) gains or losses on assets sales or divestiture transactions; (ii) development project charge write-offs; (iii) legal, contract or tax settlement costs; (iv) bargain purchase gains; (v) asset or goodwill impairment charges; (vi) environmental remediation charges; (vii) severance and reorganization costs; (viii) expenses from divestiture, acquisition and financing transactions; (ix) gains on the settlement of acquisition related contingent consideration; (x) fiscal year-end transition costs; (xi) proxy contest costs; (xii) losses on the abandonment or the closure and discontinuation of operations; (xiii) impairment of equity method investments; (xiv) gains or losses on the sale of equity method investments; (xv) gains or losses on debt extinguishment or modification and associated cash interest payment timing differences; (xvi) gains or losses on derivatives deemed to be ineffective or terminated; (xvii) gains or losses on the disposition of discontinued operations; (xviii) fluctuations in foreign currency exchange rates; (xix) non-recurring or unusual gains or losses; (xx) the cumulative effects of changes in GAAP; and (xxi) cash flow timing differences due to unusual or non-recurring transactions. Such performance measures: (x) may vary by Participant and may be different for different Awards; (y) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (z) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m).
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Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine.
(d)Adjustments. Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.
(e)Other. The Committee shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.
(a)Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the share counting rules and sublimits set forth in Sections 4(a) and 4(b), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share and per-share provisions and the measurement price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding award of Restricted Stock and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding RSU and each Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.
(b)Reorganization and Change in Control Events.
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(a)Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by a Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant;provided, however, that, except with respect to Awards subject to Section 409A, the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee;provided further, that the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 11(a) shall be deemed to restrict a transfer to the Company.
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(b)Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.
(c)Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights, or receive any benefits, under an Award.
(d)Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may elect to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price, unless the Company determines otherwise. If provided for in an Award or approved by the Board, a Participant may satisfy the tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their fair market value (determined by (or in a manner approved by) the Company;provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that the Company is able to retain shares of Common Stock having a fair market value (determined by (or in a manner approved by) the Company) that exceeds the statutory minimum applicable withholding tax without financial accounting implications or the Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company may retain such number of shares of Common Stock (up to the number of shares having a fair market value equal to the maximum individual statutory rate of tax (determined by (or in a manner approved by) the Company)) as the Company shall determine in its sole discretion to satisfy the tax liability associated with any Award. Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.
(e)Amendment of Award. Except as otherwise provided in Section 5(g), 6(e) and 11(g), the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 10.
(f)Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.
(g)Limitations on Vesting. Subject to Section 11(h), no Award shall vest earlier than the first anniversary of its date of grant, unless such Award is granted in lieu of salary, bonus or other compensation
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otherwise earned by or payable to the Participant. The foregoing sentence shall not apply to Awards granted, in the aggregate, for up to 5% of the maximum number of authorized shares set forth in Section 4(a).
(h)Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in whole or in part, free of some or all restrictions or conditions or otherwise realizable in whole or in part, as the case may be.
(a)No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.
(b)No Rights As Stockholder; Clawback. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be issued with respect to an Award until becoming the record holder of such shares. In accepting an Award under the Plan, a Participant shall agree to be bound by the Company’s Compensation Clawback Policy and any clawback policy the Company may adopt in future.
(c)Effective Date and Term of Plan. The Plan shall become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.
(d)Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until the Company’s stockholders approve such amendment in the manner required by Section 162(m); (ii) no amendment that would require stockholder approval under the rules of the national securities exchange on which the Company then maintains its primary listing may be made effective unless and until the Company’s stockholders approve such amendment; and (iii) if the national securities exchange on which the Company then maintains its primary listing does not have rules regarding when stockholder approval of amendments to equity compensation plans is required (or if the Company’s Common Stock is not then listed on any national securities exchange), then no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Sections 4(c) or 10), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless and until the Company’s stockholders approve such amendment. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan. No Award shall be made that is conditioned upon stockholder approval of any amendment to the Plan unless the Award provides that (i) it will terminate or be forfeited if stockholder approval of such amendment is not obtained within no more than 12 months from the date of grant and (2) it may not be exercised or settled (or otherwise result in the issuance of Common Stock) prior to such stockholder approval.
(e)Authorization of Sub-Plans (including for Grants to non-U.S. Employees). The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan
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containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.
(f)Compliance with Section 409A of the Code. Except as provided in individual Award agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A) (the “New Payment Date”), except as Section 409A may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.
The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A but do not to satisfy the conditions of that section.
(g)Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.
(h)Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Delaware.
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Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 11:59 p.m.,
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![]() | Vote by Internet
• Go towww.investorvote.com/CWST
• Or scan the QR code with your smartphone
• Follow the steps outlined on the secure website | |||
Vote by telephone
• Call toll free1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
• Follow the instructions provided by the recorded message |
Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Proposals |
The Board of Directors recommends that you voteFOR each of the director nominees. 1. To elect the following nominees as Class | + | |||||||||||||||||||||||
For | Withhold | For | Withhold | For | Withhold | |||||||||||||||||||
01 - | 02 - | 03 - |
The Board of Directors recommends that you voteFOR Proposal 2. | For | Against | Abstain | |||||||
2. | To approve, in an advisory | |||||||||
The Board of Directors recommends that you voteFOR Proposal 3. | ||||||||||
To ratify the appointment of RSM US LLP as the Company’s independent auditors for the fiscal year ending December 31, |
B | Non-Voting Items |
Change of Address— Please print new address below.
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C | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
Please sign name(s) exactly as appearing hereon. When signing as attorney, executor, administrator or other fiduciary, please give your full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name, by authorized officer. If a partnership, please sign in partnership name, by authorized person.
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||||
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q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — CASELLA WASTE SYSTEMS, INC.
20162018 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, NOVEMBER 17, 2016FRIDAY, JUNE 1, 2018
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CASELLA WASTE SYSTEMS, INC.
The undersigned, having received notice of the 20162018 Annual Meeting of Stockholders and the proxy statement therefor and revoking all prior proxies, hereby appoints John W. Casella and David L. Schmitt (each with full power of substitution), as proxies of the undersigned, to attend the 20162018 Annual Meeting of Stockholders of Casella Waste Systems, Inc. (the “Company”), to be held on Thursday, November 17, 2016,Friday, June 1, 2018 at 10:00 a.m. Eastern Time, and any adjournment, postponement, continuation or rescheduling thereof, and there to vote and act, as indicated, upon the matters on the reverse side in respect of all shares of Class A common stock and Class B common stock of the Company which the undersigned would be entitled to vote or act upon, with all powers the undersigned would possess if personally present.
Attendance of the undersigned at the 20162018 Annual Meeting of Stockholders or at any adjournment, postponement, continuation or rescheduling thereof will not be deemed to revoke this proxy unless the undersigned affirmatively indicates thereat the intention of the undersigned to vote said shares of common stock in person. If the undersigned hold(s) any such shares in a fiduciary, custodial or joint capacity or capacities, this proxy is signed by the undersigned in every such capacity as well as individually.
THE SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY PROPOSAL SPECIFIED HEREIN, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONRECOMMENDATIONS OF THE BOARD OF DIRECTORS. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN THIS PROXY WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THEIR DISCRETION.
IF YOU HAVE NOT VOTED VIA TELEPHONE OR INTERNET, PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED POSTAGEPRE-PAID ENVELOPE.