EXHIBIT 10.55 MANAGEMENT INCENTIVE PLAN
AMERICAN ECOLOGY CORPORATION
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MANAGEMENT INCENTIVE PLAN
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1. ESTABLISHMENT, PURPOSE AND DURATION. The American Ecology
Corporation Management Incentive Plan (the "Plan") is hereby established by
American Ecology Corporation (the "Company"). The purpose of the Plan is to
promote the success and enhance the value of the Company by providing selected
executive officers with the opportunity to participate in the creation and
sustaining of significant shareholder value over an extended period and to set
annual compensation of such officers at levels commensurate with the Company's
size, locale and such officers' duties. The Plan is adopted, effective as of
January 1, 2003 (the "Effective Date"), and shall remain in effect, subject to
the right of the Board of Directors of the Company (the "Board") to amend or
terminate the Plan at any time.
2. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board, or such other committee designated by the Board, or in
the absence of such Committee, by the full Board (the Committee, or the Board
acting in the absence of a Committee shall hereafter be referred to as the
"Committee").
3. ELIGIBILITY. Only those executive officers designated by the
Committee shall participate in this Plan and shall be a "Participant" in this
Plan. References herein to an "executive officer" shall refer to only those
executive officers who have been selected for participation in the Plan. The
Committee will provide each Participant with an agreement evidencing such
Participant's share of the incentive opportunity bonus pool (the "Participation
Agreement").
4. AWARDS.
(a) The Company has targeted generation of at least $12 million of
annual, pre-tax operating income by 2005 and in each year thereafter. For
purposes of computing any amounts funded or paid hereunder, pre-tax operating
income shall be determined in the same manner used in the Company's planning and
budgeting process, and shall include expenses related to amounts payable under
this Plan.
(b) In the event the Company achieves in the 2003, 2004 or 2005
fiscal years annual pre-tax operating income of at least $12 million (the
"Income Goal"), the Company will establish a $3.375 million bonus pool. The
fiscal year in which such Income Goal is achieved is referred to herein as the
"Attainment Year". In the event the Income Goal is not achieved, but the
Company's annual, pre-tax operating income is at least $9.0 million in 2005,
then the bonus pool will be established at $1.6875 million (50% for achieving
75% of the Income Goal), and will be increased on a straight line basis for
pre-tax, operating income above $9.0 million up to the $12 million target. Such
income level between $9.0 million and $12.0 million shall become the Income Goal
for subsequent years, and 2005 shall be the Attainment Year. Upon the
Company's establishment of the bonus pool as set forth above, each Participant
shall be eligible to receive the portion of such bonus pool allocated to him by
the Committee.
(c) In order to assure that the Income Goal is sustainable in
future years, the bonus pool (and all resulting bonus payments to Participants)
will be paid in three substantially equal installments, the first payable
promptly upon availability of audited annual financial results for the
Attainment Year; the second payable promptly upon availability of audited annual
financial results for the fiscal year immediately following the Attainment Year
if the Income Goal is achieved in the fiscal year immediately following the
Attainment Year; and the remainder promptly upon availability of audited annual
financial results for the second fiscal year immediately following the
Attainment Year, if the Income Goal is achieved in the second fiscal year
immediately following the Attainment Year. In the event the Income Goal is not
achieved in the first fiscal year following the Attainment Year, that year's
portion of the bonus pool (and all resulting bonus payments for all
Participants) will not be paid, but will be carried forward and paid in the
subsequent year, if the Company's aggregate, two-year pre-tax operating income
at the end of the second year following the Attainment Year is at least 200% of
the Income Goal applicable for such second year. In the event the Company's
aggregate, two-year pre-tax operating income at the end of the second year
exceeds $18.0 million but is not at least 200% of the Income Goal applicable for
such second year, the portion of the balance remaining in the bonus pool that
will be paid out for such second year will be computed on a straight line basis
(with $18 million being zero percent) for aggregate, two-year pre-tax, operating
income above $18.0 million up to the amount which equals 200% of the Income Goal
applicable for such second year.
5. PAYOUTS. All awards shall be paid in cash, unless payment is
deferred at the election of the Participant under a deferred compensation plan
then maintained by the Company.
6. TERMINATION.
(a) Except as provided in the remainder of this Section 6(a), a
Participant must be employed by the Company on the date of payment in order to
be entitled to such payment. If a Participant's employment terminates prior to
the end of the Attainment Year due to death, disability, or termination by the
Company without Cause (as defined in Paragraph 6(b)), or termination by the
Participant with Good Reason (as defined in Paragraph 6(c)) then the Participant
will share in any subsequent bonus pool payouts. The share will be determined
based on the number of full and partial months elapsed in the period from the
Effective Date to the termination of such Participant's employment divided by
the number of months from the Effective Date to the end of the Attainment Year.
For example, if such an employment termination occurs on December 31, 2004 and
2005 is the Attainment Year, the Participant (or his beneficiary) will be
entitled to receive two-thirds of any payout he otherwise would have received
had he remained employed.
(b) "Cause" shall mean, with respect to termination of a
Participant's employment, the occurrence of any one or more of the following, as
determined by the Committee, in the exercise of good faith and reasonable
judgment:
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(i) In the case where there is no employment, change in control
or similar agreement in effect between the Participant and the Company at
the time of the grant of the bonus opportunity, or where there is such an
agreement but the agreement does not define "cause" (or similar words) or a
"cause" termination would not be permitted under such agreement at that
time because other conditions were not satisfied, the termination of an
employment arrangement by reason of a determination by two-thirds of the
members of the Board voting that such Participant: has engaged in willful
neglect (other than neglect resulting from his incapacity due to physical
or mental illness) or misconduct; has engaged in conduct the consequences
of which are materially adverse to the Company, monetarily or otherwise;
has materially breached the terms of any employment, change in control or
similar agreement in effect between the Participant and the Company, and
such breach persisted after notice thereof from the Company and a
reasonable opportunity to cure; or has been convicted of (or has plead
guilty or no contest to) any felony other than a traffic violation; or
(ii) In the case where there is an employment, change in control
or similar agreement in effect between the Participant and the Company at
the time of the grant of the bonus opportunity that defines "cause" (or
similar words) and a "cause" termination would be permitted under such
agreement at that time, the termination of an employment that is or would
be deemed to be for "cause" (or similar words) as defined in such
agreement.
(c) "Good Reason" shall mean the occurrence of any of the
following without Participant's prior written consent during the term of his
employment with the Company, which occurrence continues for ten (10) days after
written notice thereof from the Participant to the Company:
(i) In the case where there is no employment, change in control
or similar agreement in effect between the Participant and the Company at
the time of the grant of the bonus opportunity, or where there is such an
agreement, but the agreement does not define "good reason" (or similar
words) or a "good reason" termination would not be permitted under such
agreement at that time because other conditions were not satisfied, the
termination of an employment arrangement by the Participant for any of the
following reason:
(1) Any material adverse change in Participant's status,
title, authorities or responsibilities which represents a demotion
from such status, title, authorities or responsibilities which are
materially inconsistent with his then current status, title, position
or work responsibilities, or any removal of Participant from, or
failure to appoint, elect, reappoint or reelect Participant to, any of
his positions, except in connection with the termination of his
employment with or without Cause, or as a result of his death or
disability, provided, however, that no change in title, authorities or
responsibilities customarily attributable solely to the Company
ceasing to be a publicly traded corporation shall constitute Good
Reason hereunder;
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(2) The exclusion of Participant in any incentive, bonus or
other compensation plan in which Participant then participates in,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to the failure to
continue such plan, or the failure by the Company to continue
Participant's participation therein, or any action by the Company
which would directly or indirectly materially reduce his participation
therein or reward opportunities thereunder; provided, however, that
Participant continues to meet all eligibility requirements thereof.
Notwithstanding the foregoing, this provision shall not apply to the
exclusion of Participant in any incentive, bonus or other compensation
plan in which Employee then participates to the extent that such
termination is required by law.
(3) Any amendment, modification or termination of this Plan
which materially and adversely affects Participant's rights hereunder.
(4) The failure by the Company to continue in effect any
employee benefit plan (including any medical, hospitalization, life
insurance or disability benefit plan in which Participant
participates), or any material fringe benefit or prerequisite enjoyed
by him as of the Effective Date, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made
with respect to the failure to continue such plan, or the failure by
the Company to continue Participant's participation therein, or any
action by the Company which would directly or indirectly materially
reduce his participation therein or reward opportunities thereunder,
or the failure by the Company to provide him with the then current
benefits to which he is entitled under any employment agreement or
otherwise; provided, however, that Participant continues to meet all
eligibility requirements thereof. Notwithstanding the foregoing, this
provision shall not apply to the exclusion of Participant in any
employee benefit plan in which Participant then participates to the
extent that such termination is required by law, or to such failure to
continue any employee benefit plan or fringe benefit, or the
Participant's participation therein or reward opportunity thereunder
if such failure to continue such plan or benefit is applicable to the
Company's executive officers and/or employees generally.
(5) Any material breach by the Company of any provision of
his employment agreement, if any;
(6) The failure of the Company to obtain a reasonably
satisfactory agreement from any successor or assign of the Company to
assume and agree to perform Participant's employment agreement, if
any, as contemplated in such employment agreement; or
(7) termination by a Participant during the thirty (30)-day
period immediately following the first anniversary of the date of any
Change in Control (as defined herein) of the Company.
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(ii) In the case where there is an employment, change in control
or similar agreement in effect between the Participant and the Company at
the time of the grant of the bonus opportunity that defines "good reason"
(or similar words) and a "good reason" termination would be permitted under
such agreement at that time, the termination of an employment by the
Participant that is or would be deemed to be for "good reason" (or similar
words) as defined in such agreement.
7. CHANGE IN CONTROL.
(a) In the event of a Change in Control (as defined in Paragraph
7(b)), on or prior to December 31, 2005, the bonus pool will be established on a
pro rata basis based on the number of months elapsed in the performance period
divided by 36, and each Participant shall receive the amount of such bonus pool
allocated to him within 30 days after the closing of the transaction giving rise
to such Change in Control. The proration will be based on the actual, trailing
twelve months' pre-tax operating income divided by $12 million. For example, if
the Change in Control occurs in 2003 and the trailing twelve months pre-tax
operating income is $6 million, then the bonus pool will be established at a 50%
level. In the event of a Change in Control after December 31, 2005, then any
unpaid bonus pool shall be paid out in full within 30 days after the closing of
the transaction giving rise to such Change in Control.
(b) "Change in Control" shall mean:
(i) the consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if more
than 50% of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
stockholders of the Company immediately prior to such merger, consolidation
or other reorganization; provided, however, that a public offering of the
Company's securities shall not constitute a corporate reorganization;
(ii) the sale, transfer, or other disposition of all or
substantially all of the Company's assets;
(iii) a change in the composition of the Board, as a result of
which fewer than 50% of the incumbent directors are directors who either
(x) had been directors of the Company on the date 24 months prior to the
date of the event that may constitute a Change in Control (the "original
directors") or (y) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; or
(iv) any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
50% of the total voting power represented by the Company's then outstanding
voting securities. For purposes of this Paragraph (iv), the term "person"
shall have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act, but shall exclude (x) a trustee or other fiduciary
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holding securities under an employee benefit plan of the Company and (y) a
corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of the common
stock of the Company.
Notwithstanding the foregoing, a transaction shall not constitute a Change
in Control if its sole purpose is to change the state of the Company's
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company's securities
immediately before such transaction.
8. OTHER PROVISIONS. Bonus opportunities granted under the Plan may
also be subject to such other provisions (whether or not applicable to the bonus
opportunity granted to any other Participant) as the Committee determines on the
date of grant to be appropriate, including, without limitation, making such
bonus opportunity contingent upon execution by such Participant of a
Participation Agreement or similar agreement containing restrictive covenants,
in addition to such other provisions specifically provided for under the Plan.
9. AMENDMENT. The Plan may be amended, modified or terminated by the
Board.
10. NO RIGHT TO CONTINUED EMPLOYMENT. A Participant's rights, if any,
to continue to serve the Company as an officer, employee, or otherwise, shall
not be enlarged or otherwise affected by his or her designation as a Participant
under the Plan, and the Company reserves the right to terminate the employment
of any Participant at any time.
11. NO RIGHT, TITLE, OR INTEREST IN COMPANY ASSETS. Participants shall
have no right, title, or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan. Nothing
contained in the Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, beneficiary, legal
representative or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly
set forth in the Plan. The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.
12. WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes (including such
Participant's FICA obligations) required by law to be withheld with respect to
any taxable event arising as a result of the Plan.
13. BENEFICIARIES. The Committee shall establish such procedures as it
deems appropriate for a Participant to designate a beneficiary or beneficiaries
to whom any amounts payable in the event of such Participant's death are to be
paid.
14. MISCELLANEOUS. The Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, shall be
binding upon such Participant's heirs, legal
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representatives and successors. The Plan and all awards made and actions taken
hereunder shall be governed by and construed in accordance with the laws of the
State of Idaho (other than its provisions respecting choice of law).
15. DISPUTE RESOLUTION.
(a) All disputes arising out of this Plan shall be resolved by the
following alternative dispute resolution process: (i) the Company shall seek a
fair and prompt negotiated resolution with any Participant; but if this is not
possible, (ii) all disputes shall be resolved by binding arbitration; provided,
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that during this process, at the request of the Company or any Participant, made
not later than 60 days after the initial arbitration demand, the parties shall
attempt to resolve any dispute by non-binding, third-party intervention,
including either mediation or evaluation or both but without delaying the
arbitration hearing date. By the adoption hereof by the Company, and by
becoming a Participant in the Plan, both parties give up their right to have the
dispute decided in court by a judge or jury.
(b) Any controversy or claim arising out of or connected with this
Plan shall be decided by arbitration. In the event the parties cannot agree on
an arbitrator, then the arbitrator shall be selected by the administrator of the
American Arbitration Association ("AAA") office in Salt Lake City, Utah. The
arbitrator shall be an attorney with at least 15 years' experience in employment
law in Idaho. Boise, Idaho shall be the site of the arbitration. All statutes
of limitation, which would otherwise be applicable, shall apply to any
arbitration proceeding hereunder. Any issue about whether a controversy or
claim is covered by this Plan shall be determined by the arbitrator.
(c) The arbitration shall be conducted in accordance with this
Plan, using as appropriate the AAA Employment Dispute Resolution Rules in effect
on the date hereof. The arbitrator shall not be bound by the rules of evidence
or of civil procedure, but rather may consider such writings and oral
presentations as reasonable business people would use in the conduct of their
day-to-day affairs, and may require both parties to submit some or all of their
respective cases by written declaration or such other manner of presentation as
the arbitrator may determine to be appropriate. The parties agree to limit live
testimony and cross-examination to the extent necessary to ensure a fair hearing
on material issues.
(d) The arbitrator shall take such steps as may be necessary to
hold a private hearing within 120 days of the initial request for arbitration
and to conclude the hearing within two days; and the arbitrator's written
decision shall be made not later than 14 calendar days after the hearing. These
time limits are included in order to expedite the proceeding, but they are not
jurisdictional, and the arbitrator may for good cause allow reasonable
extensions or delays, which shall not affect the validity of the award. Both
written discovery and depositions shall be allowed. The extent of such
discovery will be determined by the Company and the Participant and any
disagreements concerning the scope and extent of discovery shall be resolved by
the arbitrator. The written decision shall contain a brief statement of the
claim (s) determined and the award made on each claim. In making the decision
and award, the arbitrator shall apply applicable substantive law. The
arbitrator may award injunctive relief or any other remedy available from a
judge, including consolidation of this arbitration with any other involving
common issues of law or fact which may promote judicial economy, and may award
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attorneys' fees and costs to the prevailing party, but shall not have the power
to award punitive or exemplary damages.
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