ITEM 11.
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EXECUTIVE COMPENSATION
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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 the year ending December 31, 2016, or fiscal 2016. For fiscal
2015, our named executive officers were:
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John W. Casella, our Chief Executive Officer and Chairman of our Board;
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Edmond R. Coletta, our Senior Vice President and Chief Financial Officer;
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Edwin D. Johnson, our President and Chief Operating Officer;
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David L. Schmitt, our Senior Vice President and General Counsel; and
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Christopher B. Heald, our Vice President of Finance and Chief Accounting Officer.
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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:
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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;
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Reward achievement of our short-term and long-term business objectives, while discouraging excessive risk-taking behavior;
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Ensure that executive compensation is aligned with our corporate strategies, business objectives and the long-term interests of our stockholders; and
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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.
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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 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. During fiscal 2015, the Compensation Committee retained an independent compensation consultant, Arthur J. Gallagher & Co.s Compensation Consulting Practice, or Gallagher Compensation Consulting. Gallagher
Compensation Consulting was retained to assist the Compensation Committee with its 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.
6
In making executive compensation decisions for fiscal 2015 and fiscal 2016, the Compensation
Committee analyzed a number of factors, including the compensation data provided by Gallagher Compensation Consulting from independent commercially available salary surveys published by 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. 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, consists of Covanta Holding
Corporation, Progressive Waste Solutions Ltd., Republic Services, Inc., Waste Connections, Inc. and Waste Management, Inc. The Compensation Committee also relies on various other factors, including our long-term plan, 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 2015 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% of the total votes cast. Annually, the Compensation Committee
intends to review the results of the advisory vote and will consider this feedback as it completes its annual review of each pay element and the total compensation packages for our named executive officers with respect to the next fiscal year.
Components of our Executive Compensation Program
Fiscal 2015 Executive Compensation Program
In fiscal 2015, the primary elements of our executive compensation program were:
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annual cash incentive compensation;
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long-term incentives; and
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severance and change-of-control benefits.
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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 executives 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 group compensation data reviewed by the Compensation Committee. After
taking into consideration such factors, the Compensation Committee approved a 2.0% increase the annual base salaries of our named executive officers for fiscal 2015.
7
The following table sets forth the annual base salaries of our named executive officers for
fiscal 2015 and the transition period from May 1, 2014 to December 31, 2014, or transition period 2014:
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Name and Principal Position(s)
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Annual Base
Salary for Fiscal
2015
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Annual Base
Salary for
Transition Period
2014
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John W. Casella
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$
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459,000
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$
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450,000
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Chairman and Chief Executive Officer
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Edmond R. Coletta
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$
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302,650
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$
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296,715
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Senior Vice President and Chief Financial Officer
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Edwin D. Johnson
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$
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387,600
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$
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380,000
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President and Chief Operating Officer
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David L. Schmitt
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$
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276,170
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$
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270,755
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Senior Vice President and General Counsel
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Christopher B. Heald
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$
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188,700
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$
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185,000
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Vice President of Finance and Chief Accounting Officer
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Annual Cash Incentives
Fiscal 2015 Annual Cash Incentive Compensation
In January 2015, the Compensation Committee approved the annual incentive compensation plan for fiscal 2015, pursuant to which our named
executive officers were eligible to receive incentive compensation with respect to fiscal 2015, payable in cash or equity, as determined by our Compensation Committee, based upon the improvement of EVA in fiscal 2015 compared to EVA in the twelve
months ended December 31, 2014, or 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 defined by the plan, the Compensation Committee would allocate positive year-over-year EVA improvement to the annual incentive pool for our named executive officers as follows: 7.5% of such positive year-over-year
improvement that is less than or equal to $5.6 million if EVA increases year-over-year for fiscal 2015 as compared to calendar 2014; 15% of such incremental positive year-over-year EVA improvement that is greater than $5.6 million but less than or
equal to $9.1 million if EVA increases over $5.6 million year-over-year; and 30% of such incremental positive year-over-year EVA improvement that is greater than $9.1 million if EVA increases over $9.1 million year-over-year. If EVA decreases
year-over-year, then no EVA improvement would be allocated to the annual incentive pool. If we were not in compliance with financial covenants under our senior secured asset-based revolving credit facility before or after accruing for bonus awards
as determined by the fiscal 2015 bonus plan, then the Board would have the discretion to reduce the annual incentive compensation payouts to ensure compliance with such financial covenants.
Amounts payable under the annual incentive compensation plan to the named executive officers were calculated as a percentage, from zero to
100%, of a maximum bonus amount, which is based on a percentage of the applicable executives base salary. The following table shows the fiscal 2015 maximum annual incentive bonus amount calculated as a percentage of the annual base salary for
which each of Messrs. John Casella, Coletta, Johnson, Schmitt and Heald was eligible.
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Name and Principal Position(s)
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Fiscal 2015
Maximum
Bonus Amount
Percentage
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Fiscal 2015
Maximum
Annual Incentive
Bonus Amount
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John W. Casella
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120
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%
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$
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550,800
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Chairman and Chief Executive Officer
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Edmond R. Coletta
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75
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%
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$
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226,987
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Senior Vice President and Chief Financial Officer
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Edwin D. Johnson
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85
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%
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$
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329,460
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President and Chief Operating Officer
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David L. Schmitt
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60
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%
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$
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165,702
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Senior Vice President and General Counsel
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Christopher B. Heald
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50
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%
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$
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94,350
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Vice President of Finance and Chief Accounting Officer
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8
In March 2016, the Compensation Committee approved the payout of annual incentive compensation to
our named executive officers under the fiscal 2015 incentive compensation plan based upon the achievement of increased EVA when compared to calendar 2014. 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 10.8% of such positive year-over-year EVA improvement to the annual incentive bonus pool for our named executive officers. Based on such allocation, the annual cash incentive compensation
awarded under the fiscal 2015 incentive compensation plan was calculated at 73.8% of the fiscal 2015 maximum annual incentive compensation amount for each named executive officer and awarded by the Compensation Committee as follows: $406,695 for Mr.
John Casella, $167,601 for Mr. Coletta, $243,264 for Mr. Johnson, $122,350 for Mr. Schmitt and $69,665 for Mr. Heald.
Discretionary
Bonuses
In October 2014, the Compensation Committee approved a special 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.
Long-Term Incentives
Our named executive officers are also eligible to receive equity awards under our stock incentive plans. 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, 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 commencement of the respective fiscal year.
In fiscal 2015, we granted restricted stock units, or 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 upon a change of control of the Company.
Changes Implemented in 2016 to Further Align Pay with Performance
In March 2016, the Compensation Committee implemented several changes to our executive compensation program for fiscal 2016, including the
adoption by the Compensation Committee of the Non-Equity Incentive Plan as described further below. As part of its comprehensive annual review process, the Compensation Committee considered feedback received from stockholders, data provided by the
Compensation Committees 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 financial plan for the fiscal year ending
December 31, 2018, or Fiscal 2018 Plan.
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 directly link compensation to the achievement of company performance goals 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 50
th
percentile of the market
data provided by the Compensation Committees independent compensation consultant by increasing the total target annual cash incentive compensation for certain executive officers.
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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 incentive compensation for our executive officers will only be implemented after we receive stockholder approval for our new stock incentive plan at our 2016 Annual Meeting of
Stockholders. The Compensation Committee plans to shift long-term incentive compensation from the current program that only includes time-vested RSUs, to a new program that includes up to 75% in the form of performance-based stock units, or PSUs,
and 25% of long-term incentive compensation in the form of time-vested RSUs. PSUs are expected to be granted to our executive officers if stockholder approval of our new stock incentive plan is obtained, and such PSUs are expected to vest based upon
our achievement of Free Cash Flow and Adjusted EBITDA targets that will be established based on the Fiscal 2018 Plan. Further, we intend to use Relative Total Shareholder Returns, or RTSR, as a multiplier to scale achievement of the PSU targets
based upon the relative returns of our stock performance in relation to the Russell 2000 Index.
Non-Equity Incentive Plan and Fiscal
2016 Annual Cash Incentive Compensation
The Non-Equity Incentive Plan formalizes our annual incentive compensation program for our
executive officers and provides for the payment of incentive compensation to executive officers for their contributions to the Company based on achievement of pre-determined corporate performance goals. The Non-Equity Incentive Plan provides
for awards payable in cash or, to the extent permissible under a shareholder-approved stock plan of the Company, stock-based awards to our executive officers. Pursuant to the terms of the Non-Equity Incentive Plan, participants are granted
awards that are earned at the end of a specified performance period, subject to the achievement of performance goals established by the Compensation Committee that are based on any one or more of the performance measures set forth in the plan,
subject to certain adjustments as specified by the Compensation Committee pursuant to the plan.
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 Companys executive officers will have an opportunity to earn annual incentive compensation for fiscal
2016 based on a percentage of annual base salary. In order to bring total target cash compensation (base salary and annual cash incentive compensation) of our named executive officers closer to the
50
th
percentile of the market data provided by the Compensation Committees independent compensation consultant, the Compensation Committee approved increases to the target annual cash
incentive compensation opportunity for our named executive officers. After giving effect to said increases, the target annual cash incentive compensation opportunity of each named executive officer, which such target amounts are based upon the
following percentage of the respective officers annual base salary, are as follows: Mr. Casella: 150%; Mr. Johnson: 85%; Mr. Coletta: 85%; Mr. Schmitt: 75%; and Mr. Heald: 50%.
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:
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Fiscal 2016 Performance Measures and Weightings
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Adjusted Operating Income
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Free Cash Flow
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For All Executive Officers
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50
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%
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50
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%
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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. Adjusted Operating Income is calculated as earnings before interest, taxes, adjusted for 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; fiscal year-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 the Non-Equity Incentive Plan. 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.
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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
officers 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
officers 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
officers 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 executive officers are eligible to participate in all of our employee benefit plans, in each case, on the same basis as other employees.
Severance and Change-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 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.
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
$1.0 million paid to a companys chief executive officer and its three other officers (other than the chief financial officer) whose compensation is required to be reported to our stockholders pursuant to the Exchange Act by reason of being
among our most highly paid executive officers. Certain compensation, including qualified performance based compensation, is not subject to the deduction limitation if certain requirements are met. The Compensation Committee reviews the potential
effect of Section 162(m) periodically and uses its judgment to authorize compensation payments that may be in excess of the limit when it believes such payments are appropriate and in the best interests of our stockholders, after taking into
consideration changing business conditions and the performance of our employees.
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Summary Compensation
The following table sets forth the total compensation earned by, paid to or granted to our named executive officers during the fiscal years or
transition period indicated.
Summary Compensation Table
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Name and Principal
Position(s)
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Year
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Salary
($) (1)
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Stock
Awards
($) (2)
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Option
Awards
($) (3)
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Non-
Equity
Incentive
Plan Com-
pensation
($) (4)
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All Other
Compensation
($) (5)
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Total ($)
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John W. Casella
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Fiscal 2015
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459,000
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366,168
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406,695
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23,771
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1,255,634
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Chairman and
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Transition period 2014
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300,000
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244,110
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206,868
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28,029
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779,007
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Chief Executive
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Fiscal 2014 (6)
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402,016
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139,336
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226,831
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102,895
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87,575
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958,653
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Officer
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Fiscal 2013 (7)
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363,150
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278,674
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43,843
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685,667
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Edmond R. Coletta
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Fiscal 2015
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302,650
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200,000
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802,011
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325,556
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8,408
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1,638,625
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Senior Vice
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Transition period 2014
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197,810
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133,336
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129,351
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5,336
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465,833
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President and Chief
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Fiscal 2014
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258,905
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133,618
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52,840
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8,236
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453,599
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Financial Officer
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Fiscal 2013
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205,000
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114,365
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265,911
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7,000
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592,276
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Edwin D. Johnson
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Fiscal 2015
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387,600
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200,000
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243,264
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11,734
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842,598
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President and
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Transition period 2014
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265,833
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133,336
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123,738
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8,078
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530,985
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Chief Operating
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Fiscal 2014
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351,375
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133,618
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436,940
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(8)
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76,695
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196,533
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1,195,161
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Officer
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Fiscal 2013
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320,833
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267,232
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517,050
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11,673
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1,116,788
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David L. Schmitt
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Fiscal 2015
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276,170
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57,182
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122,350
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1,057
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456,759
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Senior Vice
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Transition period 2014
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180,504
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38,122
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62,234
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280,860
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President and
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|
Fiscal 2014
|
|
|
256,113
|
|
|
|
57,184
|
|
|
|
|
|
|
|
38,574
|
|
|
|
1,000
|
|
|
|
352,871
|
|
General Counsel
|
|
Fiscal 2013
|
|
|
241,825
|
|
|
|
114,365
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
357,190
|
|
|
|
|
|
|
|
|
|
Christopher B. Heald
|
|
Fiscal 2015
|
|
|
188,546
|
|
|
|
57,182
|
|
|
|
|
|
|
|
154,915
|
|
|
|
1,057
|
|
|
|
401,700
|
|
Vice President of
|
|
Transition period 2014
|
|
|
123,333
|
|
|
|
38,122
|
|
|
|
|
|
|
|
35,436
|
|
|
|
|
|
|
|
196,891
|
|
Finance and Chief
|
|
Fiscal 2014
|
|
|
165,733
|
|
|
|
57,184
|
|
|
|
|
|
|
|
21,964
|
|
|
|
1,000
|
|
|
|
245,881
|
|
Accounting Officer
|
|
Fiscal 2013
|
|
|
140,092
|
|
|
|
27,034
|
|
|
|
64,869
|
|
|
|
15,000
|
|
|
|
1,000
|
|
|
|
247,995
|
|
(1)
|
The transition period salary amounts included in the Summary Compensation Table differ from those in the annual base salary table on page 8 because transition period 2014 is eight months and because, in some instances,
salary increases were effected during each of the periods presented on a non-retroactive basis.
|
(2)
|
Amounts shown in this column reflect the aggregate grant date fair value of the restricted stock units and performance-based restricted stock units rewarded as a part of our broader annual equity incentive program under
our 2006 Stock Incentive Plan, computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718. Stock award compensation is based upon the last reported sales price of our Class A
common stock on the NASDAQ Stock Market on the grant date.
|
(3)
|
Reflects the aggregate grant date fair value for stock option awards granted under our 2006 Stock Incentive Plan in accordance with FASB ASC Topic 718. The assumptions used to calculate the value of stock option awards
are set forth in Note 11 to our Consolidated Financial Statements included in the Original Form 10-K.
|
(4)
|
The amounts reported in this column reflect amounts earned under the annual incentive bonus plan, except for as follows: the transition period 2014 and fiscal 2015 amounts reported in this column for Mr. Coletta
include $44,100 and $157,955 earned under the special bonus plan for transition period 2014 and fiscal 2015, respectively, and the fiscal year 2015 amount reported in this column for Mr. Heald includes $85,250 earned under the special bonus plan for
fiscal 2015, as described above in Compensation Discussion and Analysis Discretionary Bonus.
|
12
(5)
|
The amounts reported in All Other Compensation reflect, for each named executive officer, the sum of (a) the dollar value of life and medical insurance premiums we paid, (b) the amount we contributed to the
401(k) plan, (c) the amount of tax gross-ups we paid and (d) the incremental cost to us of all perquisites and other personal benefits. The following table sets forth All Other Compensation paid to or accrued by our named executive
officers in fiscal 2015, transition period 2014, fiscal 2014 and fiscal 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Life
Insurance
Premiums
($)
|
|
|
Medical
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)
|
|
|
Transition period 2014
|
|
|
8,050
|
|
|
|
|
|
|
|
|
|
|
|
19,979
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2014
|
|
|
8,080
|
|
|
|
|
|
|
|
|
|
|
|
17,904
|
|
|
|
61,591
|
(a)
|
|
|
|
|
|
|
Fiscal 2013
|
|
|
8,367
|
|
|
|
28,485
|
|
|
|
|
|
|
|
6,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edmond R. Coletta
|
|
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
7,351
|
|
|
|
|
|
|
|
57
|
(b)
|
|
|
Transition period 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,336
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2014
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
7,236
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edwin D. Johnson
|
|
Fiscal 2015
|
|
|
897
|
|
|
|
|
|
|
|
1,000
|
|
|
|
9,780
|
|
|
|
|
|
|
|
57
|
(b)
|
|
|
Transition period 2014
|
|
|
897
|
|
|
|
|
|
|
|
|
|
|
|
7,181
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2014
|
|
|
897
|
|
|
|
|
|
|
|
1,000
|
|
|
|
9,803
|
|
|
|
|
|
|
|
184,833
|
(c)
|
|
|
Fiscal 2013
|
|
|
897
|
|
|
|
|
|
|
|
1,000
|
|
|
|
9,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Schmitt
|
|
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
57
|
(b)
|
|
|
Transition period 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2014
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher B. Heald
|
|
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
57
|
(b)
|
|
|
Transition period 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2014
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Consists of a cash payment in connection with the reimbursement of withholding tax associated with the vesting of restricted stock units in fiscal 2014.
|
|
(b)
|
Consists of a gift provided to all attendees at a company retreat.
|
|
(c)
|
The amount shown constitutes a cash payment to Mr. Johnson equal to the excess of the aggregate exercise price of the stock options issued to him in replacement of stock options that were rescinded over the
exercise price of the rescinded stock options. See Note 7.
|
(6)
|
Represents the twelve month period ended April 30, 2014.
|
(7)
|
Represents the twelve month period ended April 30, 2013.
|
(8)
|
The amount shown reflects the aggregate grant date fair value of the stock options granted to Mr. Johnson to replace stock options previously granted to him that were rescinded because they were determined to have
been issued in excess of the limits set forth under our 2006 Stock Incentive Plan.
|
13
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.
Fiscal 2015 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
($) (5)
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
|
John W. Casella
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
550,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,600
|
|
|
|
|
|
|
|
|
|
|
|
366,168
|
|
|
|
|
|
|
|
|
|
|
Edmond R. Coletta
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
226,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,847
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
11/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
7.17
|
|
|
|
802,011
|
|
|
|
|
|
|
|
|
|
|
Edwin D. Johnson
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
329,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,847
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
David L. Schmitt
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
165,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,680
|
|
|
|
|
|
|
|
|
|
|
|
57,182
|
|
|
|
|
|
|
|
|
|
|
Christopher B. Heald
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
94,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,680
|
|
|
|
|
|
|
|
|
|
|
|
57,182
|
|
(1)
|
There are no threshold or targets amounts under the annual incentive bonus plan for fiscal 2015.
|
(2)
|
Represents restricted stock units granted under our 2006 Stock Incentive Plan. The restricted stock units vest based on continued employment in equal annual installments over a three-year period beginning on the first
anniversary of the date of grant.
|
(3)
|
Represents stock options granted under our 2006 Stock Incentive Plan. The stock options fully vest on the third anniversary of the date of grant.
|
(4)
|
The exercise price per share is equal to the last reported sales price of our Class A common stock on the NASDAQ Stock Market on the grant date.
|
(5)
|
The value of a restricted stock unit award is based on the last reported sales price of our Class A common stock on the NASDAQ Stock Market on the grant date. The value of a stock option award is calculated in
accordance with FASB ASC Topic 718 using a Black-Scholes valuation model as set forth in Note 11 to our Consolidated Financial Statements included in Note 11 to our Consolidated Financial Statements included in the Original Form 10-K.
|
14
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.
Outstanding Equity Awards at December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
($)
|
|
John W. Casella
|
|
|
30,000
|
|
|
|
|
|
|
|
13.00
|
|
|
|
7/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
|
|
|
|
11.01
|
|
|
|
7/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,582
|
(1)
|
|
|
18,292
|
(1)
|
|
|
5.54
|
|
|
|
12/12/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,600
|
(2)
|
|
|
523,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,822
|
(3)
|
|
|
184,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,414
|
(4)
|
|
|
68,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edmond R. Coletta
|
|
|
2,000
|
|
|
|
|
|
|
|
13.00
|
|
|
|
7/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
11.01
|
|
|
|
7/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
13.78
|
|
|
|
12/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
4.72
|
|
|
|
3/4/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
4.00
|
|
|
|
12/5/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(5)
|
|
|
7.17
|
|
|
|
11/18/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,847
|
(2)
|
|
|
286,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,836
|
(3)
|
|
|
100,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,946
|
(4)
|
|
|
65,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edwin D. Johnson
|
|
|
200,000
|
|
|
|
|
|
|
|
3.81
|
|
|
|
7/6/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,466
|
|
|
|
|
|
|
|
4.00
|
|
|
|
12/5/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
5.71
|
|
|
|
12/10/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,534
|
|
|
|
|
|
|
|
5.71
|
|
|
|
12/10/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,847
|
(2)
|
|
|
286,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,836
|
(3)
|
|
|
100,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,946
|
(4)
|
|
|
65,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Schmitt
|
|
|
15,000
|
|
|
|
|
|
|
|
15.60
|
|
|
|
5/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,680
|
(2)
|
|
|
81,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,814
|
(3)
|
|
|
28,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,685
|
(4)
|
|
|
28,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher B. Heald
|
|
|
1,800
|
|
|
|
|
|
|
|
13.00
|
|
|
|
7/6/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
11.01
|
|
|
|
7/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(6)
|
|
|
4.38
|
|
|
|
1/23/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,680
|
(2)
|
|
|
81,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,814
|
(3)
|
|
|
28,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,685
|
(4)
|
|
|
28,016
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents stock options granted on December 13, 2013. The stock options vest in equal annual installments over a three-year period, beginning on the first anniversary of the date of grant.
|
15
(2)
|
Represents restricted stock units granted on February 24, 2015. Restricted stock units vest based on continued employment in equal annual installments over a three-year period beginning on the first anniversary of
the date of grant.
|
(3)
|
Represents restricted stock units granted on June 24, 2014. Restricted stock units 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)
|
Represents restricted stock units granted on June 25, 2013. Restricted stock units vest based on continued employment in equal annual installments over a three-year period beginning on the first anniversary of the
date of grant.
|
(5)
|
Represents stock options granted on November 19, 2015. The stock options fully vest on the third anniversary of the date of grant.
|
(6)
|
Represents stock options granted on January 23, 2013. The options fully vest on the third anniversary of the date of grant.
|
Stock Vested During Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares Acquired
on Vesting (#) (1)
|
|
|
Value Realized on Vesting
($)
|
|
John W. Casella
|
|
|
35,806
|
|
|
|
201,025
|
|
Edmond R. Coletta
|
|
|
23,046
|
|
|
|
129,977
|
|
Edwin D. Johnson
|
|
|
27,974
|
|
|
|
157,081
|
|
David L. Schmitt
|
|
|
10,776
|
|
|
|
60,516
|
|
Christopher B. Heald
|
|
|
7,961
|
|
|
|
45,034
|
|
(1)
|
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.
|
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 Casellas and Johnsons employment
agreement has an initial term of three years and is automatically renewable for additional one-year terms thereafter unless terminated by either party pursuant to the terms of the agreement. Each of Messrs. Colettas, Schmitts and
Healds employment agreement has an initial term of one year and is automatically renewable for additional one-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 Incentive Bonus.
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, the non-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 Casellas 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
16
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 Casellas employment agreement, good reason means the occurrence of (a) a change of control, accompanied by, or followed within the 12-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 employees 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 Casellas 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 Casellas 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 Casellas 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. Colettas 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 the Non-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. Colettas 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. Colettas 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. Johnsons 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
the Non-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. Johnsons 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. Johnsons
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. Schmitts 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 the Non-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
17
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. Schmitts 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. Schmitts 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. Healds 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 the Non-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. Healds 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. Healds 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 a non-competition and non-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 officers restricted stock unit agreements (other than Mr. Healds restricted stock unit
agreements for RSUs granted to him prior to 2016), if the named executive officers employment is terminated as a result of a change in control (as defined in the applicable restricted stock unit agreement), the officers death or
disability, or by the Company without cause, then all unvested RSUs will vest immediately.
Summary of Potential Payments Upon
Termination or Change of Control as of December 31, 2015
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 and a change of control of the Company. We calculated the amounts shown based upon each such named
executive officers employment agreement, if applicable, described above and upon the hypothetical assumption that we terminated each named executive officer 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause
|
|
Name
|
|
Cash Payments
($) (1)
|
|
|
Value of
Benefits
($) (2)
|
|
|
Value of Stock
with Accelerated
Vesting
($)
|
|
John W. Casella
|
|
|
2,065,500
|
|
|
|
101,522
|
|
|
|
776,419
|
|
Edmond R. Coletta
|
|
|
529,638
|
|
|
|
19,261
|
|
|
|
452,261
|
|
Edwin D. Johnson
|
|
|
1,434,120
|
|
|
|
51,525
|
|
|
|
452,261
|
|
David L. Schmitt
|
|
|
441,872
|
|
|
|
24,799
|
|
|
|
138,610
|
|
Christopher B. Heald
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immediately upon a
Change of Control
|
|
|
Termination for Good Reason
|
|
Name
|
|
Value of
Stock with
Accelerated
Vesting
($)
|
|
|
Cash
Payments
($) (1)
|
|
|
Value of
Benefits
($) (2)
|
|
|
Tax
Reimbursement
($)
|
|
|
Value of
Stock with
Accelerated
Vesting
($)
|
|
John W. Casella
|
|
|
776,419
|
|
|
|
2,065,500
|
|
|
|
101,522
|
|
|
|
1,485,312
|
|
|
|
776,419
|
|
Edmond R. Coletta
|
|
|
452,261
|
|
|
|
529,638
|
|
|
|
19,261
|
|
|
|
408,383
|
|
|
|
452,261
|
|
Edwin D. Johnson
|
|
|
452,261
|
|
|
|
1,434,120
|
|
|
|
51,525
|
|
|
|
934,241
|
|
|
|
452,261
|
|
David L. Schmitt
|
|
|
138,610
|
|
|
|
441,872
|
|
|
|
24,799
|
|
|
|
|
|
|
|
138,610
|
|
Christopher B. Heald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automatically upon Death
|
|
|
Termination for Disability
|
|
Name
|
|
Cash Payments
($) (1)
|
|
|
Value of
Benefits
($) (2)
|
|
|
Value of
Stock with
Accelerated
Vesting
($)
|
|
|
Cash Payments
($) (1)
|
|
|
Value of
Benefits
($) (2)
|
|
|
Value of
Stock with
Accelerated
Vesting
($)
|
|
John W. Casella
|
|
|
2,065,500
|
|
|
|
33,841
|
|
|
|
776,419
|
|
|
|
2,065,500
|
|
|
|
33,841
|
|
|
|
776,419
|
|
Edmond R. Coletta
|
|
|
529,638
|
|
|
|
|
|
|
|
452,261
|
|
|
|
529,638
|
|
|
|
19,261
|
|
|
|
452,261
|
|
Edwin D. Johnson
|
|
|
1,434,120
|
|
|
|
|
|
|
|
452,261
|
|
|
|
1,434,120
|
|
|
|
51,525
|
|
|
|
452,261
|
|
David L. Schmitt
|
|
|
441,872
|
|
|
|
|
|
|
|
138,610
|
|
|
|
441,872
|
|
|
|
24,799
|
|
|
|
138,610
|
|
Christopher B. Heald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts in this column reflect payments, as described above, equal to a multiple of annual base salary in effect on December 31, 2015, and a bonus or other amount equal to a percentage of the base salary or
annual incentive bonus for each named executive officer in accordance with the terms of his employment agreement.
|
(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, 2015 and payments for monthly COBRA premiums for continued health and dental coverage for Mr. Heald as of December 31, 2015. For Mr. John Casella, payment of these benefits will continue for a period of three
years, for each of Messrs. Coletta, Schmitt and Heald, a period of one year and for Mr. Johnson, a period of two years from the date of termination.
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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.
The Compensation Committee
periodically reviews the compensation of our non-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.
19
Cash Compensation
In fiscal 2015, our non-employee directors were entitled to receive cash fees in consideration of their Board service as follows:
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● Annual retainer fee for service on our
Board
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$
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45,000
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● Additional annual retainer fee for service
as Audit Committee Chair
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$
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15,000
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● Additional annual retainer fee for service
as Compensation Committee Chair
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$
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5,000
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● Additional annual retainer fee for service
as Nominations and Governance Committee Chair
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$
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5,000
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● Additional annual retainer fee for service
as Lead Director
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$
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75,000
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Our non-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 a pro-rata portion of the applicable retainer fees.
For fiscal 2016, our non-employee directors will be entitled to receive the cash fees described above in consideration of their Board service.
In addition, Mr. Peters will receive a monthly payment of $3,125 in consideration of his monthly meetings with members of management on behalf of the Board.
Equity Compensation
Each new non-employee director receives a grant of shares of restricted Class A common stock on the date of such directors 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 incumbent non-employee director, other than non-employee
directors who were initially elected to our Board at any time after the prior years annual meeting of stockholders, receives at each annual meeting of stockholders an additional grant of shares of restricted Class A common stock 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. Our Board adopted stock ownership guidelines for its non-employee directors that require
each non-employee director to attain a share ownership level of our Class A common stock equal to $100,000. Each non-employee director is required to attain such ownership levels by the third annual meeting of stockholders following the first
annual meeting of stockholders at which such non-employee director is elected to our Board.
The following table provides compensation
information for fiscal 2015 for each of our non-employee directors.
Non-Employee Director Compensation for Fiscal 2015
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Name (1)
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Fees Earned or
Paid in Cash
($)
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Stock Awards
($) (2) (3)
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Total
($)
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Michael K. Burke
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45,000
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74,989
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119,989
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James F. Callahan, Jr.
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60,000
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59,989
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119,989
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John F. Chapple III (4)
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22,500
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22,500
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Joseph G. Doody
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46,667
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49,994
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96,661
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William P. Hulligan (5)
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11,250
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49,998
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61,248
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James P. McManus (6)
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37,500
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37,500
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James E. OConnor (7)
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38,125
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49,996
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88,121
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Emily Nagle Green
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45,000
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49,994
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94,994
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Gregory B. Peters (8)
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125,000
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49,994
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174,994
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(1)
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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.
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(2)
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Amounts shown in this column reflect the aggregate grant date fair value, calculated in accordance with FASB ASC
Topic 718, of restricted stock awards granted in fiscal 2015 under our 2006 Stock Incentive Plan for service on our Board, and for each of Messrs. Burke and Callahan, an additional restricted stock award for their contributions as members of the
Nominations and
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20
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Governance Committee in identifying and vetting the nominees who were elected as members of our Board at the 2015 Annual Meeting and their additional responsibilities on behalf of our Board
associated with the proxy contest. Restricted stock awards were granted at the fair market value as of the date of the grant, based upon the last reported sale price of our Class A common stock on the NASDAQ Stock Market. The restricted stock
awards vest in equal annual installments over a three-year period beginning on the first anniversary of the date of grant. The individual restricted stock awards reflected in the compensation table above are summarized below.
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Name
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Grant Date
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Number of Shares
of Restricted Stock
Granted in
Fiscal 2015 (#)
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Grant Date Fair
Value of Awards
Granted in
Fiscal 2015 ($)
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Michael K. Burke
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11/6/2015
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7,898
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49,994
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11/19/2015
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3,486
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24,995
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James F. Callahan, Jr.
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11/6/2015
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7,898
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49,994
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11/19/2015
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1,394
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9,995
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Joseph G. Doody
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11/6/2015
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7,898
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49,994
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William P. Hulligan
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9/1/2015
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8,333
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49,998
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Emily Nagle Green
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11/6/2015
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7,898
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49,994
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James E. OConnor
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7/7/2015
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8,912
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49,996
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Gregory B. Peters
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11/6/2015
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7,898
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49,994
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(3)
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As of December 31, 2015, our non-employee directors held the following aggregate number of unvested shares of restricted stock and shares underlying unexercised options as of such date:
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Name
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Number of
Unvested Shares of
Restricted Stock (#)
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Number of Shares
Underlying
Unexercised Option
Awards (#)
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Michael K. Burke
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19,585
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7,500
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James F. Callahan, Jr.
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19,585
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15,000
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John F. Chapple III
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Joseph G. Doody
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19,585
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15,000
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William P. Hulligan
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8,333
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James P. McManus
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Emily Nagle Green
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19,585
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James E. OConnor
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8,912
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Gregory B. Peters
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19,585
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15,000
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(4)
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Mr. Chapple retired from our Board on July 7, 2015.
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(5)
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Mr. Hulligan was elected to our Board on September 1, 2015.
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(6)
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Mr. McManus retired from our Board on August 31, 2015.
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(7)
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Mr. OConnor was elected to our Board on July 7, 2015 and was appointed as Lead Director on October 19, 2015.
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(8)
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Mr. Peters ceased serving as Lead Director on October 19, 2015. He received the full annual retainer fee of $75,000 for service as Lead Director and in consideration of his continued monthly meetings with members
of management on behalf of the Board.
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We have entered into or engaged in certain transactions with our directors or
affiliates of our directors. See Item 13. Certain Relationships and Related Transactions, and Director Independence Certain Relationship and Related Person Transactions.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in fiscal 2015 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, OConnor (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.
21
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
By the Compensation Committee of the Board of Directors of Casella Waste Systems, Inc.
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Joseph G. Doody, Chair
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Emily Nagle Green
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James E. OConnor
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Gregory B. Peters
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22
ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
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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 Regulation S-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 security agreement for our
senior secured asset-based 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 arms 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, and
Douglas R. Casella, the Vice Chairman of our Board, to provide construction 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 for fiscal 2015 was $1,340,629, of which $27,625 was outstanding and included in either accounts payable or other current liabilities at December 31, 2015. 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 landfill to assist in the remediation of the site as a part of our settlement with the Massachusetts Office of the Attorney General.
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, 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. In fiscal 2015, we paid an aggregate of $9,230
pursuant to this arrangement. As of December 31, 2015, we had accrued $74,615 for costs related to those post-closure obligations.
26
In fiscal 2015, we granted Mr. Douglas Casella a restricted stock unit award with a grant date
fair value of $120,618 and paid $6,965 for life insurance premiums in connection with Mr. Douglas Casellas service as President of Casella Waste Management, Inc., our wholly-owned subsidiary.
Michael Casella, the son of Mr. John Casella, is employed by the Company as a general manager. From January 1, 2015 through December 31,
2015, 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.
Elizabeth Casella, the daughter of Mr. John Casella, is employed by the Company as Director, Solutions Development &
Coordination. From January 1, 2015 through December 31, 2015, 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.
We have entered into employment agreements with certain of our officers. See Item 11.
Executive Compensation Potential Payments Upon Termination or Change of Control Employment Agreements.
Board Determination of
Independence
Our Second Amended and Restated Certificate of Incorporation and our By-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 James F. Callahan, Jr., Douglas R. Casella and Michael K. Burke, each with a term ending at the 2016 Annual Meeting of Stockholders. Class II consists of Gregory B. Peters, Joseph G. Doody and Emily
Nagle Green, each with a term ending at the 2017 Annual Meeting of Stockholders. Class III consists of John W. Casella, William P. Hulligan and James E. OConnor, each with a term ending at the 2018 Annual Meeting of Stockholders.
Under the applicable rules of the NASDAQ 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, OConnor 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 NASDAQ 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.
Our
Board has established three standing committeesAudit, Compensation and Nominations and Governanceeach of which operates under a charter that was approved by our Board.
27
Our Board determined that all of the members of each of its three committees are independent as
defined under the rules of NASDAQ, including, in the case of all members of the Audit Committee, the independence requirements under Rule 10A-3 under the Exchange Act, and, in the case of all members of the Compensation Committee, the
independence requirements under Rule 10C-1 under the Exchange Act. Our current non-employee directors serve on the committees of our Board as follows:
**
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Lead Independent Director
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Chairperson
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Member
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28