CLEAN HARBORS INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Clean Harbors, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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April 27, 2016
Corporate Headquarters
42 Longwater Drive
Norwell, Massachusetts 02061
Tel. 781-792-5000
To Our Fellow Shareholders:
On behalf of the Board of Directors, it is my pleasure to invite you to attend the
2016
annual meeting of shareholders, to be held at
10:00 a.m.
, local time, on
Wednesday, June 8, 2016
at the Company’s training facility at 101 Philip Drive, Norwell, Massachusetts, located adjacent to the Company headquarters.
Information about the annual meeting is presented on the following pages. In addition to the formal items of business, the meeting will include a report by members of management on Company operations. You will have an opportunity to ask questions of our management team if you attend the meeting in person.
For the
2016
annual meeting, we are again using the “notice and access” method of providing proxy materials via the internet. On or about
April 29, 2016
, we are mailing to our shareholders a notice of internet availability of proxy materials, or “e-proxy notice,” containing instructions on how to access our
2016
proxy statement and
2015
annual report to shareholders (including our
2015
annual report on Form 10-K) and how to vote. The e-proxy notice also contains instructions on how to receive a paper or e-mail copy of the proxy materials.
Your vote is important. If you are unable to attend the meeting in person, it is important that your shares be represented and voted at the annual meeting. You may authorize your proxy to vote your shares over the internet, by telephone, or by mail as described in the e-proxy notice you receive.
Please note that under the current rules of the New York Stock Exchange, your broker will not be able to vote your shares at the annual meeting on the election of directors or on certain other proposals described in the attached proxy statement if you have not given your broker instructions on how to vote. Please be sure to give voting instructions to your broker so that your vote can be counted on the election and such proposals.
Thank you for your continued support of Clean Harbors. We look forward to seeing those shareholders who are able to attend the annual meeting on
June 8
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Sincerely,
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Alan S. McKim
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Chairman of the Board
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CLEAN HARBORS, INC.
42 Longwater Drive
Norwell, Massachusetts 02061
___________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
___________________________
Notice is hereby given that the
2016
annual meeting of shareholders of Clean Harbors, Inc. (the “Company”), will be held at
10:00 a.m.
, local time, on
Wednesday, June 8, 2016
at the Company’s training facility at 101 Philip Drive, Norwell, Massachusetts, located adjacent to the Company headquarters, for the following purposes:
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1.
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To elect
three
(
3
) Class III members of the Board of Directors of the Company to serve until the
2019
annual meeting of shareholders and until their respective successors are duly elected;
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2.
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To hold an advisory vote on the Company’s executive compensation;
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3.
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To ratify the selection by the Audit Committee of the Company's Board of Directors of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the current fiscal year; and
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4.
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To act upon such other business as may properly come before the meeting and any adjournment thereof.
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Shareholders of record at the close of business on
April 18, 2016
will be entitled to notice and to vote at the meeting.
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By order of the Board of Directors
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C. Michael Malm, Secretary
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April 27, 2016
Norwell, Massachusetts
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE AUTHORIZE YOUR PROXY TO VOTE YOUR SHARES OVER THE INTERNET, BY TELEPHONE, OR BY MAIL AS DESCRIBED IN THE E-PROXY NOTICE YOU RECEIVE.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
JUNE 8, 2016
: The Notice of Annual Meeting, Proxy Statement, and
2015
Annual Report to Shareholders (including the
2015
Annual Report on Form 10-K), are available for viewing, printing and downloading at www.proxyvote.com.
CLEAN HARBORS, INC.
42 Longwater Drive
Norwell, MA 02061
_________________________
PROXY STATEMENT
_________________________
This proxy statement and the accompanying notice of annual meeting of shareholders are being furnished to the holders of common stock, $0.01 par value (“common stock”), of Clean Harbors, Inc., a Massachusetts corporation (the “Company” or “we”), in connection with the solicitation of proxies by the Company's Board of Directors for use at the
2016
annual meeting of shareholders and any adjournment thereof. The annual meeting will be held at the Company's training facility at 101 Philip Drive, Norwell, Massachusetts, located adjacent to the Company headquarters, on
June 8, 2016
, commencing at
10:00 a.m.
, local time.
PROXY SOLICITATION
For the
2016
annual meeting, we are again using the “notice and access” process permitted by the Securities and Exchange Commission to distribute proxy materials to our shareholders. This process allows us to post proxy materials on a designated website and notify shareholders of the availability of such proxy materials on that website by distributing a notice of internet availability of proxy materials, or “e-proxy notice,” rather than mailing hard copies of all of these materials. We expect this process to lower the cost of the annual meeting, expedite receipt of the meeting materials and preserve natural resources.
The e-proxy notice also includes instructions for how to request a paper copy of our proxy materials or an electronic copy by e-mail. Your request to receive proxy materials in paper form by mail or electronically by e-mail will remain in effect for future meetings until you revoke it.
If your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, you are considered the shareholder of record with respect to those shares and the e-proxy notice is being sent directly to you. As a shareholder of record, you may vote in person at the annual meeting or vote by proxy. Whether or not you plan to attend the annual meeting, we urge you to vote by telephone, via the internet, or, if you request a paper copy of the proxy materials, by completing, signing, dating and returning the proxy card provided. You may revoke your proxy before it is exercised at the annual meeting by delivery of written revocation or a subsequently dated proxy to the Secretary of the Company, by voting again by telephone or via the internet, or by voting in person at the annual meeting. Attendance at the annual meeting will not, by itself, revoke a proxy.
If your shares are held in “street name” by a broker or other nominee, you are considered the beneficial owner of such shares and a form of e-proxy notice is being forwarded to you by the broker or nominee which is the shareholder of record with respect to those shares. As a beneficial owner of the shares, you have the right to direct your broker or nominee on how to vote the shares held in your account. You may provide this direction by following the instructions on the e-proxy notice you receive. If you request a paper copy of the proxy materials, your broker or nominee will enclose or provide voting instructions for you to vote your shares. Although you have the right to direct how your shares are voted, the entity that holds your shares is the shareholder of record for purposes of voting at the annual meeting. Accordingly, because you are not the shareholder of record, you may not vote your shares in person at the annual meeting unless you request and obtain a valid proxy from your broker or nominee giving you the right to vote the shares at the meeting. If your shares are held of record by a broker or nominee and you wish to change your voting instructions, you must contact your broker or nominee to revoke any prior voting instructions.
If you wish to attend the annual meeting in person, please bring with you the e-proxy notice you have received and a government-issued proof of identity (such as a driver's license).
The cost of this solicitation shall be borne by the Company. Solicitations of proxies by telephone or in person may be made by the Company's directors, officers or other employees, but any such solicitation will be carried on during working hours and for no additional cost, other than the time expended and telephone charges in making such solicitation. This proxy statement and the accompanying proxy form are first being made available to shareholders beginning on or about
April 29, 2016
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1
INFORMATION AS TO VOTING SECURITIES
On
April 18, 2016
, the record date for the annual meeting, there were
57,552,959
issued and outstanding shares of common stock. The presence in person or by proxy of a majority of shares of common stock entitled to vote is necessary to constitute a quorum at the annual meeting. Each share is entitled to one vote. Only shareholders of record at the close of business on the record date will be entitled to vote at the meeting. Votes cast by proxy or in person at the meeting will be counted by one or more persons appointed by the Company to act as election inspectors for the meeting.
At the annual meeting, the shareholders will vote upon proposals to (i) elect
three
Class III directors, (ii) approve an advisory vote on executive compensation, and (iii) ratify the selection by the Audit Committee of the Company's Board of Directors of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the current fiscal year. Election of each of the Class III directors will require the affirmative vote of the holders of a majority of the total shares of common stock cast on such election at the meeting, and votes withheld from any nominee for election as a director will have the effect of “against” votes. The advisory vote on executive compensation and the proposal for ratification of the selection by the Audit Committee of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the current fiscal year will each require the affirmative vote of the holders of a majority of the shares represented at the meeting and voted on such proposals. Abstentions on such election and each of the other proposals, and any broker “non-votes,” will be counted as present or represented for purposes of determining the presence of a quorum for the meeting, but will not be taken into account in the voting.
Broker “non-votes” occur when a broker holding shares in “street name” votes on one proposal, but does not vote on another proposal because the broker does not have discretionary voting power and has not received instructions from the beneficial owner of such shares. Usually, this would occur when brokers holding stock in “street name” have not received voting instructions from clients, in which case the brokers (as holders of record) are generally permitted by the rules of the New York Stock Exchange to vote only on “discretionary” matters. Under the Exchange's current rules, brokers will not be permitted to vote shares for which they have not received voting instructions in favor of the proposed election of the Class III directors or the proposal on advisory approval of executive compensation. However, under such rules, the proposed ratification of the selection by the Audit Committee of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the current fiscal year is a “discretionary” matter, and brokers will therefore generally be able to vote shares held in “street name” on such matter without receiving instructions from the beneficial holders of such shares.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below describes the “beneficial ownership” of the Company's common stock as of
April 18, 2016
, by (i) each of the Company's directors, principal executive officer, principal financial officer and the three other current executive officers who were the most highly compensated during the most recently completed fiscal year, and (ii) all of the Company's current directors and executive officers as a group. Rule 13d-3 of the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 defines “beneficial ownership” to mean the right to vote or exercise dispositive power, or to share in the right to vote or exercise dispositive power, with respect to the specified securities, whether or not the specified person has any economic interest in the specified securities. Each named owner has sole voting and dispositive power with respect to the specified shares.
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Name of Beneficial Owner
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Amount and Nature of
Beneficial Ownership (1) |
Percent
of Class |
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Alan S. McKim
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4,579,296
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8.0
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%
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Eugene Banucci
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42,691
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*
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John P. DeVillars
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18,617
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*
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Edward G. Galante
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12,361
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*
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Rod Marlin
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50,085
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*
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Daniel J. McCarthy
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35,408
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*
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John T. Preston
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12,760
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*
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Andrea Robertson
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18,568
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*
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James M. Rutledge
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131,980
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*
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Thomas J. Shields
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26,377
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*
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Lauren C. States
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—
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*
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John R. Welch
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9,952
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*
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Eric W. Gerstenberg
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74,707
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*
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David M. Parry
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39,984
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*
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Brian P. Weber
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40,466
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*
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All current directors and executive officers as a group (23 persons)
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5,486,760
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9.5
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%
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_______________________
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*
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Less than 1%
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(1)
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Beneficial ownership has been determined in accordance with the SEC's regulations and includes in the numerator and denominator used for the calculation of certain of the percent of total outstanding, as appropriate, the following number of shares of the Company's common stock which may be acquired under stock options which are exercisable within 60 days of
April 18, 2016
: Mr. McCarthy (
8,000
shares), Ms. Robertson (
4,000
shares) and Mr. Shields (
12,000
shares). None of the other directors and executive officers listed in the table held as of
April 18, 2016
any stock options which are exercisable within 60 days of that date.
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3
The following table shows each person or entity which, to the Company's knowledge, as of
April 18, 2016
, “beneficially owned” (as that term is defined above) 5% or more of the total of
57,552,959
shares of common stock then outstanding. Except as otherwise indicated below, the Company understands that the named person or entity held sole voting and dispositive power with respect to the specified shares.
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Name and Address
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Number of Shares
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Percent
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Wellington Management Company LLP
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6,072,906
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(1)
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10.6
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%
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280 Congress Street
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Boston, MA 02210
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SouthernSun Asset Management LLC
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4,639,699
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(2)
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8.1
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%
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6070 Poplar Avenue, Suite 300
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Memphis, TN 38119
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Alan S. McKim
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4,579,296
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8.0
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%
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Clean Harbors, Inc.
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42 Longwater Drive
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Norwell, MA 02061
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BlackRock, Inc.
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3,557,611
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(3)
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6.2
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%
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55 East 52nd Street
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New York, NY 10022
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The Vanguard Group
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3,338,229
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(4)
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5.8
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%
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100 Vanguard Blvd.
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Malvern, PA 19355
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_________________________
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(1)
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Based upon Amendment No. 4 to Schedule 13G dated
December 31, 2015
filed with the SEC, Wellington Management Company LLP is deemed to have beneficial ownership of
6,072,906
shares of common stock, of which such entity held shared dispositive power as to
6,072,906
shares and shared voting power as to
4,108,153
shares.
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(2)
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Based upon Schedule 13G dated
December 31, 2015
filed with the SEC, SouthernSun Asset Management LLC is deemed to have beneficial ownership of
4,639,699
shares of common stock, of which such entity held sole dispositive power as to
4,639,699
shares and sole voting power as to
4,063,049
shares.
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(3)
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Based upon Amendment No. 2 to Schedule 13G dated
December 31, 2015
filed with the SEC, BlackRock Inc. is deemed to have beneficial ownership of
3,557,611
shares of common stock, of which such entity held sole dispositive power as to
3,557,611
shares and sole voting power as to
3,365,356
shares.
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(4)
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Based upon Amendment No. 3 to Schedule 13G dated
December 31, 2015
filed with the SEC, The Vanguard Group is deemed to have beneficial ownership of
3,338,229
shares of common stock, of which such entity held sole dispositive power as to
3,299,413
shares, sole voting power as to
39,116
shares, shared dispositive power as to
38,816
shares and shared voting power as to
2,700
shares.
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4
ELECTION OF DIRECTORS
(Item 1 on Proxy Form)
The Board of Directors is the ultimate decision making body of the Company except with respect to those matters reserved by law or the Company's By-Laws to the shareholders. The Board is responsible for selection of the Chief Executive Officer and for advising the Chief Executive Officer with respect to the selection of a management team, providing oversight responsibility and direction to management and evaluating the performance of management on behalf of the shareholders. As more fully described below, the Board has determined that, except for Alan S. McKim, the Company's Chairman and Chief Executive Officer, and James M. Rutledge, the Company's Vice Chairman and President, all of the current members of the Board are “independent” directors as defined by the rules of the New York Stock Exchange.
During 2015, the Board held six meetings, of which two were held by conference call or unanimous written consent. All directors attended at least 75% of each of the meetings of the Board and the Committees on which they served. All members of the Board also attended the 2015 annual meeting of shareholders.
The Board of Directors of the Company is currently composed of 12 directors classified into three classes. There are now four Class I directors, three Class II directors, and five Class III directors. One class of directors is elected each year for a term of three years. The term of the current Class III directors, John P. DeVillars, Daniel J. McCarthy, Andrea Robertson, James M. Rutledge and Lauren C. States, will expire at the 2016 annual meeting. Two of the Class III directors, John P. DeVillars and Daniel J. McCarthy, have decided not to stand for re-election. The Board has nominated the other three current Class III directors, Andrea Robertson, James M. Rutledge and Lauren C. States, to stand for re-election as Class III directors.
Director Nomination Process and Diversity
As more fully described below under “Corporate Governance - Board Committees,” the Board's Corporate Governance Committee, which is composed solely of independent directors, is responsible for selecting nominees to recommend to the full Board for election as directors. In that capacity, the Corporate Governance Committee and the full Board determine on an annual basis the appropriate characteristics, skills and experience for the Board as a whole and for its individual members. In evaluating the suitability of individual Board members, the Committee and the full Board do not have any formal policy with regard to racial or gender diversity. In evaluating the suitability of individual Board members, the Committee and the full Board take into account many factors in addition to high personal and professional ethics, integrity and values, including particular industry or geographic experience, understanding of the business of the Company, particular disciplines such as finance, marketing, sales and management, and personal, educational and professional background. The Committee and the full Board evaluate each individual in the context of the Board as a whole, with the objective of recommending nominees for election as director who can best perpetuate the success of the business and represent shareholder interests through the exercise of sound judgment, using the diversity of experience of the various directors. In choosing individuals to recommend for nomination to the Board, the Corporate Governance Committee seeks individuals with particular skills that the Board may currently lack, or knowledge and experience that the Board is likely to need in the future. In determining whether to recommend a director for re-election, the Committee and the full Board also consider the director's past attendance at meetings and contributions to the activities of the Board.
In the past, nominees for the Board have been submitted to the Corporate Governance Committee by members of the Board. However, the Committee will also consider shareholder recommendations for Board candidates. For the
2017
annual meeting of shareholders, names of potential candidates for consideration by the Corporate Governance Committee should be received no later than
November 2, 2016
. The Committee will use the same evaluation method described above in assessing any candidates recommended by shareholders. The name of any recommended candidate for director, together with a brief biography, a document indicating the candidate's willingness to serve, and evidence of the nominating person's ownership of Company stock, should be sent to the Chairman, Corporate Governance Committee, in the manner described below under “Corporate Governance - Communications to the Independent Directors.”
Current Directors and Nominees
The following paragraphs provide information as of the date of this proxy statement about each of the Company's 12 current directors. Such directors consist of the five current Class III directors, three of whom (Ms. Robertson, Mr. Rutledge and Ms. States) are standing for re-election and two of whom (Messrs. DeVillars and McCarthy) have decided not to stand for re-election, and the seven other current directors who are not now standing for re-election but who will continue to serve in accordance with their current terms as Class I or Class II directors. This includes information each director has provided
5
about his or her age, positions, principal occupation and business experience for the past five years, the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years, and any material legal proceedings during the past ten years which might be relevant to service as a director. In addition to the information presented below regarding each director's specific experience, qualifications, attributes and skills that led the Corporate Governance Committee and full Board of Directors to the conclusion that he or she should serve as a director, the Committee and full Board also believe that all of the directors have high personal and professional ethics, integrity and values and that each of them has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the Company and the Board. Finally, the Committee and full Board value their significant experience on other company boards of directors and board committees.
Directors Standing for Re-election at the Meeting
This year there are three nominees standing for re-election as Class III directors; Andrea Robertson, James M. Rutledge and Lauren C. States.
Andrea Robertson
, age 58, was the Group Executive, Corporate Treasurer of MasterCard Worldwide from 2003 to June 2010. From 1996 to 2003, she held financial management positions with RR Donnelley & Sons Company, and from 1984 to 1996 with International Business Machines Corporation. From 1979 to 1982, she was an auditor with Coopers & Lybrand. She holds a BS in Accounting from Merrimack College and an MBA in Finance/Management Information Systems from the University of Chicago. She is a certified public accountant and has served as a director of the Company since June 2004. She is a member of the Board of Trustees of Merrimack College and the Board of Directors of Prevent Child Abuse America. She qualifies as an “audit committee financial expert” under Regulation S-K of the Securities Exchange Act and serves on the Board's Audit and Compensation Committees. Ms. Robertson brings to the Board considerable knowledge and experience in finance and risk management from her training as an accountant and her work in financial management positions.
James M. Rutledge
, age 63, is Vice Chairman of the Company's Board of Directors and President. Mr. Rutledge joined the Company in August 2005 as Executive Vice President and Chief Financial Officer and was appointed by the Board on June 9, 2011 as an additional Director and Vice Chairman and on August 20, 2012 as President. From 2002 to 2005, he was the Chief Financial Officer of Rogers Corporation, a publicly-held producer of highly engineered specialty materials sold in a broad range of technology markets. From 2000 to 2001, he was the Chief Financial Officer of Baldwin Technology Company, Inc., a publicly-held manufacturer of controls, accessories and handling equipment for the printing industry. From 1999 to 2000, he was Vice President of Finance and Tax of Rayonier Inc., a publicly-held manufacturer of pulp, timber and wood products. From 1979 to 1999, he held a variety of positions, including Vice President and Treasurer, with Witco Corporation, a publicly-held manufacturer of specialty chemicals. From 1976 to 1979, he was a certified public accountant with Price Waterhouse & Co. He holds a BA from Assumption College and an MBA from Rutgers University. Mr. Rutledge's experience as the Chief Financial Officer of the Company and of four previous publicly-held companies give him valuable insight into finance and financial reporting matters.
Lauren C. States
, age 59, retired in 2014 after more than 36 years with IBM Corporation. Prior to her retirement, she served as Vice President, Strategy and Transformation for IBM’s Software Group and was a member of the Growth and Transformation senior leadership team. Her principal responsibilities included leading the global sales force strategy and go-to-market for IBM’s multi-billion dollar software business. From 2008 to 2013, she was a leader in the company’s transformation to cloud computing, working with clients to provide insights to the company’s strategy and serving as Chief Technology Officer in the corporate strategy function. Over her career, she has served in a broad variety of roles including technology, transformation, sales and talent development. Ms. States received her Bachelor of Science in Economics from The Wharton School of the University of Pennsylvania. In 2015, she completed a Fellowship with Harvard University’s Advanced Leadership Initiative. She serves as an Advisor on the Dean’s Executive Council and as an Executive-in-Residence for the D’Amore-McKim School of Business at Northeastern University. She also serves as a Trustee for International House, New York and on the Advisory Board for Mobiquity, Inc. Ms. States brings to the Board her considerable experience in sales, technology and strategy. On March 10, 2016, the Company’s Board of Directors elected Ms. States as an additional Class III director, and Ms. States is standing for re-election by the shareholders at the annual meeting. If Ms. States is re-elected, she will serve on the Audit and Corporate Governance Committees.
6
Directors Not Standing for Re-election at the Meeting
Eugene Banucci
, age 72, is the founder and former Chairman and CEO of ATMI, Inc., a public company that was acquired by Entegris (ENTG) in 2014. ATMI was a supplier of specialty materials to the worldwide semiconductor industry. Dr. Banucci served as Chief Executive Officer of ATMI, Inc. from its founding in 1986 until the beginning of 2005. He serves on the boards of directors of Cognex Corporation (Nasdaq: CGNX) and several private companies. From 2005 until February 2010, he served as a director of Zygo Corporation, a public company that was acquired in 2014. Dr. Banucci holds a BA from Beloit College and a Ph.D. in chemistry from Wayne State University. Dr. Banucci joined the Board in 2008 and is the Chairman of the Board’s Compensation Committee and a member of the Board’s Audit Committee. Dr. Banucci brings to the Board considerable experience and skills in growing and managing companies. His current term as a Class I director will expire in 2017.
John P. DeVillars
, age 66, is the Managing Partner of BlueWave Capital, LLC, a privately-owned renewable energy development company with development projects in New England, South Africa and the Caribbean. Mr. DeVillars is currently a director of Next Step Living, a private residential and commercial energy efficiency company. From 2000 to 2003, Mr. DeVillars served as Executive Vice President of Brownfields Recovery Corporation, a private company engaged in remediating, financing, and redeveloping environmentally impacted properties. From 1994 through 2000, Mr. DeVillars served as the New England Administrator for the U.S. Environmental Protection Agency. From 1991 to 1994, he was a Director of Environmental Advisory Services with Coopers & Lybrand, and from 1988 to 1991, he served as Secretary of Environmental Affairs for the Commonwealth of Massachusetts and Chairman of the Board of the Massachusetts Water Resources Authority. In March 2012, Mr. DeVillars was appointed by the Administrator of the U.S. Environmental Protection Agency to the National Advisory Council on Environmental Policy and Technology, the Agency's leading panel of independent, outside advisors on policy, management and technology. Mr. DeVillars holds a BA from the University of Pennsylvania and an MPA from Harvard University. He has served as a director of the Company since 2001 and serves on the Board's Compensation Committee. In addition to Mr. DeVillars' considerable knowledge of the environmental services industry and regulations, he brings to the Board unique knowledge of the highly regulated environmental services industry from a governmental perspective. His current term as a Class III director will expire at the 2016 annual meeting, and he has decided not to stand for re-election.
Edward G. Galante
, age 65, retired in 2006 after more than 30 years with Exxon Mobil Corporation. Prior to his retirement, he most recently served as a Senior Vice President and member of the Management Committee. His principal responsibilities included the worldwide Downstream business: Refining & Supply, Fuels Marketing, Lubricants and Specialties and Research and Engineering. He also was responsible for Exxon Mobil's corporate Public Affairs and Safety, Health and Environmental activities. Mr. Galante received his Bachelor of Science degree in civil engineering from Northeastern University. He serves as a Vice Chairman of Northeastern's Board of Trustees. He also serves on the board of directors of Praxair, Inc. (NYSE: PX), where he chairs the compensation and executive development committee and sits on the governance and nominating committee and the technology, safety and sustainability committee; Celanese Corporation (NYSE: CE), where he serves as the lead independent director and is a member of the compensation committee and environmental safety, health and public policy committee; Tesoro Corporation ( NYSE: TSO) where he serves on the compensation committee and environmental, health, safety and security committee; and the United Way Foundation and United Way of Metropolitan Dallas. The Company's Board of Directors elected Mr. Galante as an additional director on September 21, 2010 and appointed him to the Corporate Governance Committee, of which he now serves as Chairman. In addition to his extensive experience with Exxon Mobil in the oil and gas industry, which accounts for a significant portion of the Company's business, Mr. Galante's responsibility for Exxon Mobil's Public Affairs and Safety, Health and Environmental activities and his services as a director and board committee member of three other major public corporations give him valuable insight into corporate governance, public affairs, environmental, compensation and audit matters. His current term as a Class I director will expire in 2017.
Daniel J. McCarthy
, age 83, is a Professor of Global Management and Innovation at Northeastern University's D'Amore - McKim School of Business. He has taught at the Northeastern University's School of Business since 1972, prior to which he was President of Computer Environments Corporation, a public company. In the past, he served on five boards, most recently at Tufts Associated Health Maintenance Organization as a member of its audit committee and as chairman of its investment committee. Dr. McCarthy also served as director and member of the audit and compensation committees of MANAGEDCOMP, Inc., a private company. Dr. McCarthy holds a BA and an MBA from Dartmouth College and a DBA from Harvard Business School. Dr. McCarthy is the longest serving non-employee member of the Company's Board. He is personally familiar with all senior management of the Company and communicates well with that group. He has served on the Board's Compensation Committee since 1987. He was elected in 2005 by the Board as Lead Director and continues to
7
serve in that capacity. Dr. McCarthy's long tenure of service on the Board gives him a unique perspective of the Company and a considerable knowledge of the environmental services industry. His current term as a Class III director will expire at the 2016 annual meeting, and he has decided not to stand for re-election as a director.
Alan S. McKim
, age 61, founded the Company in 1980 and has served as Chairman of the Board of Directors and Chief Executive Officer since its founding. He serves as a director of most of the Company's subsidiaries. Mr. McKim holds an MBA from Northeastern University's D'Amore - McKim School of Business. He now serves on Northeastern University's Board of Trustees, and he holds an honorary doctorate from the Massachusetts Maritime Academy. Mr. McKim is recognized as an industry leader, with over 35 years' experience in the environmental services business, and is the largest individual shareholder of the Company.
Rod Marlin
, age 68, was the President and Chief Executive Officer of Eveready Inc., a public company listed on the Toronto Stock Exchange headquartered in Edmonton, Alberta, and its predecessors from 2002 until the Company's acquisition of Eveready on July 31, 2009. From October 2009 until January 2014, Mr. Marlin was the Chief Executive Officer of ENTREC Corporation, a public Canadian company listed on the TSX Exchange which provides crane, heavy haul transportation, engineering, logistics and related services. Mr. Marlin ceased to be the chief executive officer of ENTREC in January 2014, but currently serves as Executive Chairman. Approximately 21% of Clean Harbors' total revenues during 2015 were recorded in Canada. Mr. Marlin brings to the Board extensive knowledge of Canadian culture and business practices, in addition to his skills in acquiring, developing, managing and selling various Canadian businesses.
John T. Preston
, age 66, is the Managing Partner of TEM Capital, a privately-held equity investment company, and President and Chief Executive Officer of Continuum Energy Technologies LLC, a private company. Mr. Preston is currently a director of numerous private companies. From 1992 through 1995, he served as Director of Technology Development at the Massachusetts Institute of Technology (“MIT”). From 1986 to 1992 he was Director of the MIT Technology Licensing Office where he was responsible for the commercialization of intellectual property developed at MIT. Some of Mr. Preston's prior appointments include director or advisory positions for the Governor of Massachusetts, the U.S. Department of Defense, the National Aeronautics and Space Administration and the National Technology Board of Singapore. He holds a BS in Physics from the University of Wisconsin and an MBA from Northwestern University. He has served as a director of the Company since 1995 and now serves on the Corporate Governance Committee. Mr. Preston brings to the Board his considerable experience in technology development, corporate growth and corporate governance.
Thomas J. Shields
, age 69, is a Managing Director of Shields & Company, Inc., a privately-held investment banking firm that he co-founded in 1991. He served as the presiding director and chairman of the audit committee of B.J.'s Wholesale Club, Inc., a public company, until it was sold in 2011 and he now serves as a director and chairman of the audit committee of Ensign-Bickford Industries, Inc., a private company. Mr. Shields is a graduate of Harvard College and Harvard Business School. He has served as a director of the Company since 1999. He has served as Chairman of the Audit Committee of the Board since 2005 and also serves on the Corporate Governance Committee. He is qualified as an “audit committee financial expert” under Regulation S-K under the Securities Exchange Act of 1934. Mr. Shields brings to the Board considerable investment banking skills and experience as a director of private and public companies. His current term as a Class I director will expire in 2017.
John R. Welch
, age 59, was until June 2015 a Director (Senior Partner) in the Boston office of McKinsey & Company, an international business consulting firm, and is now a Director Emeritus. As a Director, he served clients across a variety of industries for 29 years. From 2007 to 2012, he was the Managing Partner of McKinsey’s New England Practice, and from 2001 to 2005 he led the firm’s Strategy Practice. He has written several articles on mergers and acquisitions and capital markets approach to strategy. He was a leader of McKinsey’s internal training program throughout his career and serves on the McKinsey Committee which evaluates and elects partners. Prior to joining McKinsey, Mr. Welch was a project engineer with Hooker Chemical and with Caltex Petroleum and worked in the Municipal Lending Group at Bank of America. Mr. Walsh is also now an adjunct teacher at the Carroll School of Management at Boston College. Mr. Welch joined the Company’s Board in 2014. He holds an MBA from the University of Chicago, where he has completed all his coursework towards a PhD in Finance, and BS and MS degrees in chemical engineering from Cornell University. Mr. Welch brings to the Board his considerable experience in business consulting, operations and finance. His current term as a Class I director will expire in 2017.
Election of each of the three Class III directors who are standing for re-election will require the affirmative vote of the holders of a majority of the total shares of common stock cast on such election at the annual meeting. Unless otherwise specified therein, shares represented by the accompanying form of proxy will be voted to elect Ms.
8
Robertson, Mr. Rutledge, and Ms. States as Class III directors of the Company for a three-year term, until the 2019 annual meeting of shareholders and until their respective successors shall be duly elected. In the event that any of the nominees is unable to stand for election (which event is not now contemplated), the holders of the accompanying form of proxy will vote for the election of a nominee or nominees acceptable to the remaining members of the Company's Board of Directors. The Board of Directors recommends that shareholders vote “FOR” the election of Ms. Robertson, Mr. Rutledge and Ms. States as Class III directors.
CORPORATE GOVERNANCE
Board Leadership Structure
Clean Harbors, Inc. is a Massachusetts corporation, and all public Massachusetts corporations have by law a staggered board of directors with either two or three classes of directors unless the corporation elects to be exempt from this statutory requirement by vote of its board of directors or of two-thirds of each class of stock outstanding. The Board has not elected to exempt, or to recommend that the shareholders exempt, the Company from this statutory requirement because the Board believes that a staggered board of directors promotes continuity and stability.
Alan S. McKim, the Company's founder, now serves and has served since the Company's formation in 1980 as both the Chief Executive Officer and Chairman of the Board. The Board has a Lead Director, nominated by the Corporate Governance Committee and elected by the full Board. The Lead Director is a non-management, independent director who presides over executive sessions of the Board, serves as a contact person for correspondence with the independent members of the Board, works with the Chairman in establishing the agenda for Board meetings, and meets with the Chief Executive Officer, in person or by phone, at least quarterly. Daniel J. McCarthy has served as Lead Director since 2005 and a member of the Board since 1987. However, because Mr. McCarthy will retire from the Board at the 2016 annual meeting, the Board at its March 10 meeting elected Eugene Banucci to serve as the new Lead Director effective as of the date of the annual meeting. Dr. Banucci has served as Class I director since joining the Board in 2008 and is now the Chairman of the Board’s Compensation Committee and a member of the Board’s Audit Committee. The Board also then determined that, effective as of 2016 annual meeting, the Chairs of each of the Board’s three Committees will change, and each independent director will be expected to serve on two Committees, except for the Lead Director, who will be eligible to attend all Committee meetings but will not be a voting member of any.
The Company's Board believes this board leadership structure is the most appropriate for the Company at this time because of the efficiency gained by assigning the responsibilities of both Chairman of the Board and Chief Executive Officer to Mr. McKim, who has a thorough knowledge of the Company's business and an impressive track record in managing the Company through its growth for the benefit of the shareholders, employees and other interested parties. The Board believes that, particularly because Mr. McKim is the Company's largest individual shareholder, Mr. McKim has always placed major emphasis on the interests of the shareholders. The Board also believes this structure is appropriate because ten of the current 12 members of the Company's Board of Directors are “independent,” as described below under “Corporate Governance - Director Independence,” and the Board elects from the independent directors a Lead Director with the authority described above.
Corporate Governance Guidelines, Committee Charters and Code of Ethics
The Company's Board of Directors has adopted Corporate Governance Guidelines, charters of each of the Board's committees as described below, and a Code of Ethics which sets forth standards of ethical professional conduct for the officers, directors and employees of the Company and its subsidiaries. Each of those documents is posted on the Company's website at
www.cleanharbors.com
under “Investors - Corporate Governance.” A copy may also be obtained without cost by writing to Clean Harbors, Inc., 42 Longwater Drive, Norwell, MA 02061, Attention: Executive Office. In the event that any waiver of the Code of Ethics were approved by the Audit Committee or the full Board of Directors, such wavier would also be posted on the corporate website.
9
Director Independence
The Corporate Governance Guidelines adopted by the Board of Directors require that at least a majority of the Board of Directors be “independent” as defined by the rules of the New York Stock Exchange (the “NYSE”) on which the Company's common stock is listed. To be considered independent under the NYSE rules, the Board must affirmatively determine that a director does not, except as a director or shareholder, have a direct or indirect material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). In making that determination, the Board must consider all relevant facts and circumstances. In particular (but without limitation as to the potential reasons for which a director might not be determined to be independent), a director is not independent if:
|
•
|
The director is, or has been within the last three years, an employee of the Company or the director has an immediate family member who is, or has been within the last three years, an executive officer of the Company.
|
|
•
|
The director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).
|
|
•
|
(A) The director or an immediate family member of the director is a current partner of the Company's internal or external auditor; (B) the director is a current employee of the Company's external auditing firm; (C) the director has an immediate family member who is a current employee of the Company's external auditing firm and who participates in the firm's audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or an immediate family member of the director is, or has been within the last three years, a partner or employee of the Company's external auditing firm and personally worked on the Company's audit within that time.
|
|
•
|
The director or an immediate family member of the director is, or has been within the last three years, employed as an executive officer of another company where any of the Company's present executive officers serve or served at the same time on that other company's compensation committee.
|
|
•
|
The director is a current employee, or an immediate family member of the director is a current executive officer, of a company that has made payments to or received payments from the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.
|
The Board also has established the following categorical standards to assist it in determining director independence in accordance with the NYSE rules:
|
•
|
Stock Ownership.
Ownership of stock in the Company by a director or a director’s immediate family is not considered a relationship which would adversely impact a director’s independence.
|
|
•
|
Commercial Relationships.
The following commercial relationships are not considered material relationships that would impair a director’s independence: (i) if a director of the Company is an executive officer or an employee of, or an immediate family member of a director is an executive officer of, another company that does business with the Company and the annual sales to, or purchases from, the Company are less than 1% of the annual revenues of such other company, and (ii) if a director of the Company is an executive officer of another company which is indebted to the Company, or to which the Company is indebted, and the total amount of either company’s indebtedness to the other is less than 2% of the total consolidated assets of the company for which he or she serves as an executive officer.
|
|
•
|
Charitable Relationships.
The following charitable relationship will not be considered a material relationship that would impair a director’s independence: if a director, or an immediate family member of the director, serves as an executive officer, director or trustee of a charitable organization, and the Company’s discretionary charitable contributions (if any) to that charitable organization in any single fiscal year are less than 1% (or $500,000, whichever is less) of that charitable organization’s annual consolidated gross revenues.
|
10
|
•
|
Personal Relationships.
The following personal relationship will not be considered to be a material relationship that would impair a director’s independence: if a director, or immediate family member of the director, receives from, or provides to, the Company products or services in the ordinary course and on substantially the same terms as those prevailing at the time for comparable products or services provided to unaffiliated third parties.
|
For relationships not qualifying within the foregoing guidelines, the determination of whether the relationship is material, and therefore whether the director is independent, shall be made by the directors who satisfy the foregoing independence guidelines. For purposes of these guidelines, “immediate family member” has the meaning defined in the NYSE rules. The Board and its Corporate Governance Committee monitor the Board's compliance with the NYSE requirements for director independence on an ongoing basis.
In accordance with current NYSE rules and the Board's own categorical standards of independence, the Board of Directors has determined that the following non-employee directors are “independent” and have no direct or indirect material relationship with the Company except as a director and shareholder: Eugene Banucci, John P. DeVillars, Edward G. Galante, Rod Marlin, Daniel J. McCarthy, John T. Preston, Andrea Robertson, Thomas J. Shields, Lauren C. States, and John R. Welch. Accordingly, the Board has determined that ten out of the total of 12 current members of the Board are independent. The Board has determined that, to the extent (if any) the Company has had during the past three years any commercial relationships with any of the entities with which any of the independent directors are affiliated, those relationships fall below the categorical standards for commercial relationships, were established in the ordinary course of business on an arms-length basis, and are not material to the Company or those individuals or entities. The Board has also determined that each of Alan S. McKim and James M. Rutledge are not independent. Mr. McKim and Mr. Rutledge are, respectively, the Company's Chairman and Chief Executive Officer, and Vice Chairman and President, and, in such capacities, each of them is an employee of the Company.
Board Committees
The Board has established three Committees: the Audit Committee, Compensation Committee and Corporate Governance Committee. The Board has determined that each of the Committees of the Board consists solely of non-employee “independent directors” as defined by the rules of the New York Stock Exchange which are applicable to membership on such committees, and that each member of each Committee is free of any relationship that would interfere with his or her ability to exercise independent judgment. Based upon their training and experience as described above under “Election of Directors,” the Board has also determined that each of Andrea Robertson and Thomas J. Shields, who are two of the members of the Audit Committee, qualifies as an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K under the Securities Exchange Act of 1934. All members of the three Committees are appointed by the Board, and each Committee operates under a charter approved by the Board. As described above, those charters are available on the Company's website at
www.cleanharbors.com
under “Investors - Corporate Governance.” Copies may also be obtained without cost by writing to Clean Harbors, Inc., 42 Longwater Drive, Norwell, MA 02061, Attention: Executive Office.
Audit Committee
During 2015, Thomas Shields, Chairman, Eugene Banucci and Andrea Robertson served on the Audit Committee. The primary functions of the Audit Committee are to select the Company's independent registered public accounting firm, review the scope of and approach to audit work, meet with and review the activities of the Company's internal auditors and the Company's independent registered public accounting firm, and fulfill its oversight responsibilities relating to the integrity of the Company's financial statements and policies with respect to risk assessment and risk management. During 2015, there were four meetings of the Audit Committee.
Compensation Committee
During 2015, Eugene Banucci, Chairman, Daniel McCarthy, John DeVillars and Andrea Robertson served on the Compensation Committee. The primary responsibilities of the Compensation Committee are to recommend to the full Board of Directors the base salary for the Chief Executive Officer, review and approval of the base salary for the other senior executive officers, administer the Company's management incentive cash bonus plans (which now consist of the 2014 Annual CEO Incentive Plan and the Management Incentive Plan, each as described below under “Compensation Discussion and
11
Analysis”) and equity incentive plans, review and approve the Company’s other management compensation policies, and oversee the trustees of the Company's 401(k) Plan (for U.S. citizens) and Registered Retired Savings Plan (for Canadian citizens). The Committee also considers issues relating to executive succession planning. The Committee also works with the CEO in developing near the beginning of each fiscal year annual goals for the CEO and his senior executive staff and determining over the course of each fiscal year whether any changes to such goals are necessary in order to adjust for effects of extraordinary events (such as a major acquisition or change in GAAP) which become effective during such year. Under its charter, the Compensation Committee has authority to select and retain its own executive compensation consultants, legal counsel and other advisors to assist the Committee in its determinations and, in connection with each such selection and retention, the Committee considers factors that could bear on the independence of each such advisor from the management of the Company. Following the completion of each fiscal year, the Committee evaluates the level of success of the CEO and senior executive staff in achieving those goals during the year and determines the level of bonuses (if any) which are payable to the CEO and senior executive staff based on such level of achievement and certain other factors. The Compensation Committee held six meetings during 2015, of which two were by written consent.
Corporate Governance Committee
During 2015, Edward Galante, Chairman, John Preston and Thomas Shields served on the Corporate Governance Committee. The primary responsibilities of the Corporate Governance Committee are to serve as a nominating committee for directors and Board officers, recommend committee structures, review director independence and compensation, monitor the Company's social responsibility programs and assist the Board in reviewing the performance of the Board and the Chief Executive Officer. The Committee held four meetings during 2015.
Compensation Committee Interlocks and Insider Participation
No person who served as a member of the Board's Compensation Committee during the last fiscal year (Dr. Banucci, Mr. McCarthy, Mr. DeVillars and Ms. Robertson) has (i) served as one of the officers or employees of the Company or any of its subsidiaries; or (ii) any relationship requiring disclosure under any paragraph of Item 404 of Regulation S-K promulgated under the Securities Act of 1933, as amended. None of the Company's executive officers serves as a member of the board of directors or as a member of a compensation committee of any other company that has an executive officer serving as a member of the Company's Board or Compensation Committee.
Communications to the Independent Directors
Shareholders and other interested parties may communicate with the Board of Directors by mail or electronically. To communicate with independent members of the Company's Board, correspondence should be addressed to Daniel J. McCarthy, Lead Director, c/o Michael McDonald, General Counsel, Clean Harbors, Inc., 42 Longwater Drive, Norwell, MA 02061-9149, or mcdonaldm@cleanharbors.com. All correspondence received as such will be opened by the office of the General Counsel for the sole purpose of determining whether the contents represent a message to the independent directors. Any communication that is not in the nature of advertising, promotion of a product or service, or patently offensive material, will be forwarded promptly to the Lead Director for distribution to the other independent members of the Board.
Board Oversight of Risk Management
The Board of Directors has an active role, as a whole and also at the committee level, in overseeing management of the Company's risks. The Board regularly reviews reports from senior management and other information regarding the Company's credit, liquidity and operations and compliance with environmental, health and safety laws and policies, as well as the risks associated with each such matter. The Compensation Committee oversees management of risks relating to the Company's executive compensation plans and arrangements. The Audit Committee oversees management of financial risks, the Company's policies with respect to risk assessment and risk management, and any potential conflicts of interest arising from related party transactions. The Corporate Governance Committee oversees risks associated with maintaining the independence of the Board of Directors. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks. The Board also periodically asks the Company's executives to discuss the most likely sources of material future risks and how the Company is addressing and plans to address any significant potential vulnerability.
12
DIRECTOR COMPENSATION
For 2015, the Company's policy was to pay in cash to each non-employee director an annual cash retainer fee of $60,000, plus $7,500 for serving on the Compensation Committee, $6,000 for serving on the Corporate Governance Committee, $10,000 for serving on the Audit Committee, $20,000 for serving as the Chairman of the Audit Committee, $12,000 for serving as the Chairman of the Compensation Committee or Corporate Governance Committee, and $20,000 for serving as the Lead Director. Directors are also reimbursed for the expenses they incur in connection with service on the Board and its Committees. The Company does not provide any pension, deferred compensation, or charitable award programs to any of its directors.
In addition to the cash compensation described above, the Company's policy for 2015 was to grant under the Company's 2010 Stock Incentive Plan promptly following the annual meeting of shareholders to each of the non-employee directors then elected or then serving as continuing directors such number of restricted shares of the Company's common stock as would have a market value of $100,000 determined based on the date of such meeting. Promptly following the Company's annual meeting on June 10, 2015, the Company therefore issued 1,786 restricted shares to each of the nine non-employee directors, with such restricted shares having a market value of
$100,016
on grant date. All of the restricted shares granted to the non-employee directors on June 10, 2015, will vest at the start of the 2016 annual meeting of shareholders provided such directors continue to serve as directors through such date.
The following table describes the compensation paid by the Company to each of the persons who served as non-employee directors during 2015:
|
Name
|
Fees Earned
|
Stock Awards
(1)
|
Option Awards
(2)
|
All Other
Compensation |
Total
|
|||||||||||||
|
Eugene Banucci
|
$
|
82,000
|
|
$
|
100,016
|
|
$
|
—
|
|
—
|
$
|
182,016
|
|
|||||
|
John P. DeVillars
|
$
|
67,500
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
167,516
|
|
||||||
|
Edward G. Galante
|
$
|
72,000
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
172,016
|
|
||||||
|
Rod Marlin
|
$
|
60,000
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
160,016
|
|
||||||
|
Daniel J. McCarthy
|
$
|
87,500
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
187,516
|
|
||||||
|
John T. Preston
|
$
|
66,000
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
166,016
|
|
||||||
|
Andrea Robertson
|
$
|
77,500
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
177,516
|
|
||||||
|
Thomas J. Shields
|
$
|
86,000
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
186,016
|
|
||||||
|
John R. Welch
|
$
|
60,000
|
|
$
|
100,016
|
|
—
|
|
—
|
$
|
160,016
|
|
||||||
_____________________________
|
(1)
|
The fair value of stock awards is calculated based on the value of the awards on the respective dates of grant using the closing price of the Company's common stock on such dates. The aggregate number of unvested restricted shares held by each non-employee director as of December 31, 2015 was as follows: Dr. Banucci (1,786 shares), Mr. DeVillars (1,786 shares), Mr. Galante (1,786 shares), Mr. Marlin (1,786 shares), Dr. McCarthy (1,786 shares), Mr. Preston (1,786 shares), Ms. Robertson (1,786 shares), Mr. Shields (1,786 shares) and Mr. Welch (1,786 shares).
|
|
(2)
|
None of the non-employee directors were granted any stock options during 2015, nor were any stock options held by them repriced or otherwise modified. The aggregate number of shares subject to stock options (vested and unvested) held by each non-employee director as of December 31, 2014 was as follows: Mr. McCarthy (8,000 shares), Ms. Robertson (4,000 shares) and Mr. Shields (12,000 shares).
|
At their meeting on September 8-9, 2015, the Company’s Board of Directors voted to change the compensation arrangements for non-employee directors effective as of the Company’s 2016 annual meeting of shareholders. Under the new arrangement, (i) each non-employee director (other than the Lead Director) who qualifies as an independent director will serve on two Committees, (ii) the annual retainer for each non-employee director will be increased from $60,000 to $70,000, but the separate fee for serving as a member of any of the three Committees of the Board will be eliminated, (iii) the annual fee for serving as the Chairman of the Audit Committee will be increased from $20,000 to $24,000, (iv) the annual fee for serving as the Chairman of the Compensation Committee will be increased from $12,000 to $15,000, (v) the annual fee for serving as the Chairman of the Corporate Governance Committee will remain at $12,000, (vi) the annual fee for serving as the Lead Director will be increased from $20,000 to $25,000, and (vii) the market value of restricted shares issued to each of the non-employee directors at the time of the annual meeting of shareholders will be increased from $100,000 to $120,000.
13
EXECUTIVE OFFICERS
The Company’s current executive officers and their respective ages as of March 4, 2016, are as follows:
|
Name
|
Age
|
Position
|
||
|
Alan S. McKim
|
61
|
Chairman of the Board of Directors and Chief Executive Officer
|
||
|
James M. Rutledge
|
63
|
Vice Chairman of the Board and President
|
||
|
Michael L. Battles
|
47
|
Executive Vice President and Chief Financial Officer
|
||
|
Mark G. Bouldin
|
56
|
President, Kleen Performance Products*
|
||
|
George L. Curtis
|
57
|
Executive Vice President, Pricing and Proposals*
|
||
|
Kirk Duffee
|
36
|
President, Oil and Gas Field Services*
|
||
|
Eric J. Dugas
|
37
|
Vice President, Corporate Controller and Chief Accounting Officer
|
||
|
Eric W. Gerstenberg
|
47
|
Chief Operating Officer
|
||
|
Eric A. Kraus
|
54
|
Executive Vice President, Corporate Communications and Public Affairs
|
||
|
Marvin Lefebvre
|
58
|
President and Country Manager, Clean Harbors Canada*
|
||
|
David M. Parry
|
50
|
President, North America Sales and Regional Operations*
|
||
|
Michael J. Twohig
|
53
|
Executive Vice President and Chief Administrative Officer*
|
||
|
Brian P. Weber
|
48
|
Executive Vice President, Corporate Planning and Development*
|
||
_________________________
|
*
|
Officer of a wholly-owned subsidiary of the parent holding company, Clean Harbors, Inc.
|
Alan S. McKim founded the Company in 1980 and is Chairman of the Board of Directors and Chief Executive Officer. He has been a director of the Company since its formation and serves as a director of most of the Company's subsidiaries. Mr. McKim holds an MBA from Northeastern University.
James M. Rutledge is Vice Chairman of the Board of Directors and President. Mr. Rutledge joined the Company in August 2005 as Executive Vice President and Chief Financial Officer and was appointed by the Board on June 9, 2011 as an additional director of the Company and Vice Chairman of the Board and on August 20, 2012 as President. From 2002 to 2005, he was the Chief Financial Officer of Rogers Corporation, a publicly-held producer of highly engineered specialty materials sold in a broad range of technology markets. From 2000 to 2001, he was the Chief Financial Officer of Baldwin Technology Company, Inc., a publicly-held manufacturer of controls, accessories and handling equipment for the printing industry. From 1999 to 2000, he was Vice President of Finance and Tax of Rayonier Inc., a publicly-held manufacturer of pulp, timber and wood products. From 1979 to 1999, he held a variety of positions, including Vice President and Treasurer, with Witco Corporation, a publicly-held manufacturer of specialty chemicals. From 1976 to 1979, he was a certified public accountant with Price Waterhouse & Co. He holds a BA from Assumption College and an MBA from Rutgers University.
Michael L. Battles is Executive Vice President and Chief Financial Officer. He was appointed to that position in January 2016. Mr. Battles joined the Company in September 2013 as Senior Vice President, Corporate Controller and Chief Accounting Officer. Mr. Battles previously served in a variety of senior financial positions at PerkinElmer Inc., a global leader in human and environmental health. Most recently, he was Vice President and Chief Financial Officer of PerkinElmer’s Human Health business, directing financial planning across each of the business units within Human Health. Prior to his role in Human Health, he served as Chief Accounting Officer for several years and Acting Chief Financial Officer during a one-year search period. Mr. Battles holds a BS in Business Administration with a concentration in Accounting from the University of Vermont and is a certified public accountant.
Mark G. Bouldin is President, Kleen Performance Products. Prior to being appointed to that position in 2016, he was Safety-Kleen’s Executive Vice President of Supply & Refinery Economics. He joined Safety-Kleen in April 2014 as Senior Vice President Oil Re-Refining Specialty Products. Prior to Safety-Kleen, Mr. Bouldin held several sales and management positions at Shell Oil Company and Sunoco, as well as being President of PebbleCrest Materials for a seven-year period. He earned a Masters of Technical Chemistry from Braunschweig University of Technology in Germany and PhD in Chemical Engineering from the University of Hamburg, Germany.
George L. Curtis is Executive Vice President, Pricing and Proposals. Mr. Curtis joined the Company in 1980, and has served in a variety of management positions, the most recent of which were Senior Vice President of Pricing and Proposals and Vice President of Marketing. Mr. Curtis holds a BA in Biology from Columbia University and an MBA from Northeastern University.
14
Kirk Duffee is President, Oil & Gas Field Services. He was appointed to that position in July 2015 as part of the Company’s plan to carve out its energy-related segments. He was previously Senior Vice President, Lodging Services. He joined Clean Harbors in 2009, following the Company’s acquisition of Eveready, Inc. (“Eveready”). He served in executive positions in finance before assuming his leadership role in Lodging Services. Kirk earned a Bachelor of Commerce, Accounting and Finance from University of Alberta and is a Certified Internal Controls Auditor (“CICA”).
Eric Dugas is Vice President, Corporate Controller and Chief Accounting Officer. He was appointed to that position in January 2016. Prior to joining the Company in March 2014 as Director of External Reporting and Technical Accounting, Mr. Dugas spent 13 years with Deloitte & Touche LLP where he held several positions of increasing management responsibility. Mr. Dugas earned a Bachelor of Science in Accounting from Boston College and is a certified public accountant.
Eric W. Gerstenberg is Chief Operating Officer. He was appointed to that position in January 2015
.
Mr. Gerstenberg rejoined the Company in June 1999 as Executive Vice President - Environmental Services and became President, Environmental Services in June 2014. From 1997 to 1999, Mr. Gerstenberg was the Vice President of Operations for Pollution Control Industries, a privately-owned environmental services company. From 1989 to 1997, Mr. Gerstenberg held a variety of positions with the Company, including General Manager of the Natick, Baltimore and Chicago facilities. Mr. Gerstenberg holds a BS in Engineering from Syracuse University.
Eric A. Kraus is Executive Vice President, Corporate Communications and Public Affairs. Prior to joining Clean Harbors in December 2014, Mr. Kraus was Senior Vice President, Chief Communications and Corporate Affairs Officer for Bacardi Ltd. Previously, Mr. Kraus was Senior Vice President, Corporate Communications and Public Affairs, at Covidien plc. Mr. Kraus also was Vice President, External Relations, Gillette, for The Procter & Gamble Company, a position he assumed following the October 2005 merger of Procter & Gamble and The Gillette Company, where he served as Vice President, Corporate Communications and Public Affairs. Mr. Kraus graduated from Boston University.
Marvin Lefebvre is President and Country Manager, Clean Harbors Canada. He was previously President, Oil & Gas Field Services. Prior to the Company’s acquisition of Eveready on July 31, 2009, Mr. Lefebvre was Vice President, Operations of Eveready since March 2005. Prior to March 2005, Mr. Lefebvre was the President and Chief Executive Officer of the former River Valley Energy Services Ltd., the predecessor to River Valley Income Fund, from July 2002 until the completion of the reorganization of that entity into River Valley Income Fund. Mr. Lefebvre was also the director and sole shareholder of River Valley Construction Ltd. from 1988 to 2000 and the President and a director of River Valley Contracting Ltd. and River Valley Drilling Inc. from 2000 until its amalgamation with its parent company, the former River Valley Energy Services Ltd.
David M. Parry is President, North America Sales and Regional Operations. Mr. Parry joined the Company in 1988 and has served in a variety of management positions including most recently President, Industrial and Field Services. He also previously held the positions of Executive Vice President - Energy and Industrial Services, Senior Vice President of Eastern Operations, Regional Vice President, Northeast Region, District Sales Manager, Regional Manager of CleanPack® and T&D Services, Plant Manager and CleanPack Chemist. Mr. Parry holds a BS in Engineering from the Massachusetts Maritime Academy.
Michael J. Twohig is Executive Vice President and Chief Administrative Officer. Mr. Twohig joined the Company in 1999 and has served in a variety of management positions, the most recent of which was Senior Vice President and Chief Information Officer. From 1996 to 1999 he served as Vice President of Business Operations for Internet Commerce Expo, an International Data Group company. Prior to that he was the Controller for Tocco Corporation, a building systems company. Mr. Twohig holds a BS in Accounting from Boston College and an MBA from Rivier College.
Brian P. Weber is Executive Vice President, Corporate Planning and Development. Mr. Weber joined the Company in 1990. He has served in a variety of management positions with the Company including, prior to his current position, Senior Vice President of Transportation, Vice President of Strategic Initiatives, Vice President of Central Services, and Vice President, Technical Services. Mr. Weber holds a BS degree in Business Management from Westfield State College.
15
RELATED PARTY TRANSACTIONS
During the fiscal year from January 1 to December 31, 2015, the Company entered into the following transactions with entities or persons affiliated with a director or executive officer of the Company and made payments of:
(i) approximately $4.45 million to McKinsey & Company, an international consulting firm for which John R. Welch, a director of the Company, and was until June 2015 a Director (Senior Partner) and is now an Emeritus Director, for project-based consulting services relating to the Strategic Review of Clean Harbors, which fees represented significantly less than 1.0% of McKinsey & Company’s total revenues for 2015;
(ii) approximately $0.27 million to ENTREC Corporation, a publicly-held company of which Rod Marlin, a director of the Company, was from 2009 until January 2014 the Chairman and Chief Executive Officer, is now the Executive Chairman and of which he beneficially owns approximately 2.0% of the outstanding common shares, for crane and transport services, which fees represented approximately less than 1.0% of ENTREC’s total revenues for 2015;
(iii) approximately $0.51 million to companies controlled or influenced by Marvin Lefebvre, the President and Country Manager, Clean Harbors Canada, or by members of his family, for real property rental and related costs and equipment rental and repair costs, with one of those companies controlled by Mr. Lefebvre or his family making payment of $0.7 million to the Company for water/sewer servicing work; and
(iv) approximately $181,000 to William McKim (the son of Alan S. McKim, the Company’s Chief Executive Officer), and approximately $164,000 to Ryan Lefebvre (the son of Marvin Lefebvre, President and Country Manager, Clean Harbors Canada), as compensation for their respective employment by subsidiaries of the Company.
All of the transactions described above in this paragraph occurred in the Company's normal course of operations and were at rates comparable to those which would have been obtainable from unaffiliated third parties.
Except as described in the preceding paragraph, the Company did not participate during 2015 in any transactions involving amounts exceeding $120,000 in which any of the Company's directors, executive officers or beneficial holders of more than 5% of the Company's common stock, nor any of their immediate family members, had a direct or indirect material interest.
Under the written charter of the Audit Committee of the Company’s Board of Directors, the Committee reviews and approves all related party transactions which are required to be disclosed in the Company’s filings with the Securities and Exchange Commission. The Audit Committee is composed solely of directors who satisfy the independence requirements of the New York Stock Exchange for membership on such Committee.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The Company's executive compensation programs are designed to attract and retain talented executives and align executive performance with the creation of shareowner value.
The Compensation Committee of the Company's Board of Directors believes in pay-for-performance. Except for relatively modest base salaries and benefits and limited portions of long-term equity incentives provided in the form of time-vesting restricted shares (with the majority of restricted shares being performance-based), the Company's cash bonus and equity incentive programs are performance-based. In establishing on an annual basis the goals for performance-based cash bonuses and restricted stock grants, the Committee has set those goals at a fairly high level. The Committee obtains advice from CFS Consulting, Inc. (“CFS”) concerning the structuring of the Company’s executive compensation plans. CFS has advised the Committee that, while the Company’s incentive plans are generally comparable to those of other companies of similar size and industry group, the actual payouts which the Company has made to its executive officers in recent years have been significantly less than for a majority of comparable companies.
The Compensation Committee designs the Company's compensation programs so that if all performance goals for cash bonuses and equity incentives are satisfied, approximately 60% of total compensation for each executive officer will be
16
performance-based and the remaining 40% will be in the form of base salary, benefits and time-vesting restricted shares. However, for years in which the Company’s overall performance results in a significant portion of the performance goals established by the Committee not being satisfied, the Company’s executives receive less total compensation and the base salary, benefits and time-vesting restricted shares represent more than 40% of such total. The Company’s business faced significant headwinds during 2015, including dramatically lower oil prices resulting in a corresponding reduction of the base oil price; the effect of the lower value of the Canadian dollar on the Company’s Canadian business; and a significant decline in investment and business in the oil sands region of Canada resulting in increasingly competitive pricing. These external factors all contributed significantly to lower than targeted performance-based compensation. Because of the Company’s overall performance during 2015, only 10.6% of the cash bonus which could potentially have been received for that year under the Company's CEO Annual Incentive Bonus Plan was paid, only 4.7% of the cash bonuses which could potentially have been received for that year under the Company's Management Incentive Plan (for senior managers other than the CEO) were paid, and only 25.0% and none, respectively, of the total performance-based restricted stock awards granted under the Company's 2014/15 and 2015/16 Long-Term Equity Incentive Programs became vested (subject to continued employment) during 2015. Furthermore, the Company has not granted stock options to any of its executive officers in the past ten years.
Some of the key factors which related to performance-based compensation for 2015 were as follows:
|
•
|
The Company's total revenue for 2015 decreased 3.7% to $3.28 billion, compared with $3.40 billion for 2014.
|
|
•
|
The Company's reported “Adjusted EBITDA” for 2015 decreased 3.4% to $504.2 million, compared with $521.9 million for 2014. The Company's Adjusted EBITDA is reported and reconciled to the Company's net income on pages 39-40 of the Company's Annual Report on Form 10-K for the year ended December 31, 2015 which accompanies this proxy statement. Adjusted EBITDA consists of net income, as determined in accordance with generally accepted accounting principles (“GAAP”), plus accretion of environmental liabilities, depreciation and amortization, net interest expense and provision for income taxes. Also excluded are other expense (income), non-cash goodwill impairment charges, and pre-tax, non-cash acquisition accounting inventory adjustments, as these amounts are not considered part of normal business operations.
|
|
•
|
The Company’s Return on Invested Capital, or “ROIC,” consisting of the Company’s “Net Operating Profit” (Adjusted EBITDA less the amounts of depreciation, amortization and taxes which were added to net income for purposes of calculating Adjusted EBITDA), divided by the Company’s average “Invested Capital” (the Company’s total equity and debt less excess cash) during the year, was 5.4% for 2015, which was the same as for 2014.
|
|
•
|
The Company’s health and safety performance, as measured by the total recordable incident rate (“TRIR”), improved to 1.33 for 2015, compared with 1.57 for 2014.
|
This Compensation Discussion and Analysis is intended to provide context for the decisions underlying the compensation reported in the Summary Compensation Table included below in this proxy statement for the Company's Chief Executive Officer (the “CEO”), Chief Financial Officer (the “CFO”), and the three other executive officers who had the highest total compensation for 2015 as set forth in such Table (these five executive officers being collectively referred to below as the “Named Executive Officers”). This Compensation Discussion and Analysis will discuss corporate and individual performance goals for senior executive officers, including the Named Executive Officers. These goals are disclosed in the limited context of the Company's executive compensation programs. You should not interpret them as statements of the Company's expectations or as any form of guidance, and we caution you not to apply the statements or disclosures in the Compensation Discussion and Analysis in any other context.
Role of the Compensation Committee
The Compensation Committee of the Board of Directors (the “Committee”) currently consists of four independent directors. The Committee's major responsibilities are to recommend to the full Board the base salary for the Company's CEO, review and approve the base salaries for the other senior executive officers, administer the Company's management incentive cash bonus and equity incentive plans, review and approve of the Company’s other management compensation policies, and oversee the trustees of the Company's 401(k) Plan (for U.S. citizens) and Registered Retired Savings Plan (for Canadian citizens). The Committee also considers issues relating to executive succession. As part of such responsibilities, the Committee administers the Company's CEO Annual Incentive Bonus Plan, Management Incentive Plan, and equity incentive plans described below.
17
On March 3, 2013, the Committee delegated to Alan S. McKim, the Company's CEO, authority to issue (primarily to newly hired employees) each year up to a total of 40,000 performance-based restricted stock awards under the Company's Long-Term Equity Incentive Programs and up to a total of 40,000 time-vesting restricted stock awards under the Company's 2010 Stock Incentive Plan, each as described below, provided that no one individual would receive more than 3,000 performance-based restricted stock awards and 3,000 time-vesting restricted stock awards and no grants (without specific Committee approval) would be made to any Named Executive Officer. All other cash bonuses and equity incentive awards for the CEO and other senior executive officers are granted by the Committee. The Committee works with the CEO near the beginning of each year to establish criteria and performance goals for awards under the Company's incentive bonus and equity incentive plans and then determines over the course of each year whether any modifications to such goals are appropriate to adjust for the effects of extraordinary events (such as a major acquisition or change in GAAP). Following the end of each year, the Committee determines the extent (if any) to which the performance goals for the year have been achieved and the amount (if any) of bonuses which the Company will pay to the CEO and other executive officers for that year. The Committee also considers proposals from the CEO for determination of executive compensation for members of senior management other than the CEO.
Consideration of Recent Shareholder Advisory Vote on Executive Compensation
At the Company's annual meeting of shareholders held on June 10, 2015, the Company's shareholders approved by a favorable vote of 99.0% of the shares cast on such proposal an advisory proposal to approve the executive compensation paid by the Company to its Named Executive Officers as described in the Company's proxy statement for such annual meeting. The Compensation Committee considered the results of that advisory vote in connection with its determination of compensation for 2015 by continuing the "pay-for-performance" philosophy and objectives used in prior years.
Compensation Philosophy and Objectives
The Compensation Committee's fundamental philosophy regarding executive compensation is to (i) offer competitive compensation opportunities in order to attract and retain a talented and motivated work force and (ii) align individual compensation with the goals, values and priorities of the Company and the interests of its shareholders by making up to 60% of total potential compensation performance-based. Compensation for executive officers currently consists of three basic elements: base salary and benefits, performance-based cash bonuses, and awards of long-term equity incentives primarily through performance-based restricted stock awards.
Use of Compensation Consultants
Under its charter, the Compensation Committee has authority to select and retain its own executive compensation consultants, legal counsel and other advisors to assist the Committee in its determinations and, in connection with each such selection and retention, the Committee considers factors that could bear on the independence of each such advisor from the management of the Company. In order to evaluate the competitiveness and appropriateness of the Company's total compensation and mix of compensation for executive officers, the Compensation Committee in August 2012 engaged CFS Consulting, Inc. (“CFS”), a firm specializing in development and implementation of executive compensation systems, to perform a market survey and prepare a report on compensation for executive officers. That review updated the market survey and report which CFS had performed for the Committee in 2010 and 2011.
CFS delivered its report to the Compensation Committee in November 2012 and, in August 2013, the Compensation Committee also hired CFS to prepare a further update on executive compensation, which CFS delivered to the Committee dated September 10, 2013. The Committee considered those reports from CFS for purposes of the Committee’s decisions relating to compensation as described in this Compensation Discussion and Analysis. In light of those two recent reports by CFS, the Committee concluded it was not appropriate to incur the cost of obtaining in either 2014 or 2015 any additional independent report relating to executive compensation, although the Committee did have less formal discussions with CFS during each of 2014 and 2015 relating to overall developments concerning executive compensation. Except as described above, CFS did not provide any services to the Company or any of its affiliates during the three years ended December 31, 2015, and the Committee believes that the work of CFS described above did not result in any conflicts of interest.
For purposes of the CFS report delivered in November 2012, in addition to evaluation of larger regional and national surveys, CFS compiled a list of 19 peer companies from similar industries and, to the extent practicable, with similar market capitalization and revenues to those of the Company. These companies are representative of the companies with whom the Company competed during 2011-2012 for business and executive talent, and except for three significantly larger companies
18
(Peabody Energy Corporation, Republic Services, Inc. and Waste Management, Inc.) and five significantly smaller companies (Perma-Fix Environmental Services, Inc., US Ecology, Inc., WCA Waste Corporation, TRC Companies, Inc. and MGE Energy Inc.), those peer companies generally had annual revenues for 2011 ranging from approximately 0.5 to 2.0 times the Company's pro forma (after giving effect to the Company’s acquisition of Safety-Kleen, Inc. (“Safety-Kleen”) in December 2012) annual revenue of approximately $3.2 billion for 2011. The companies selected by CFS for purposes of its report were:
|
Perma-Fix Environmental Services, Inc.
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Waste Connections, Inc.
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Consolidated Energy Inc.
|
|
US Ecology, Inc.
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Stericycle, Inc.
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NuStar Energy L.P.
|
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WCA Waste Corporation
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EnergySolutions, Inc.
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Cliffs Natural Resources Inc.
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TRC Companies, Inc.
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American Water Works Company, Inc.
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Alpha National Resources, Inc.
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MGE Energy Inc.
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El Paso Corp.
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Peabody Energy Corporation
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|
Casella Waste Systems
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Spectra Energy Corp.
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Republic Services, Inc.
|
|
Waste Management, Inc.
|
||
Base Salary
The Compensation Committee seeks to set the executive officers' base salaries, together (except in the case of the CEO) with limited amounts of time-vesting restricted shares, at no more than 40% of each officer's total potential compensation. In addition to base salaries and benefits available to all employees, the Committee provides the Named Executive Officers the opportunity to receive up to approximately 60% of their total compensation through performance-based cash bonuses and (except, prior to 2015, in the case of the CEO) performance-based restricted stock awards.
As described above under “Use of Compensation Consultants,” the Compensation Committee retained CFS in 2012 to prepare a report on how the Company's compensation program for 2011 (on a pro forma basis giving effect to the Safety-Kleen acquisition) compared to the programs of the comparable companies described in that report. The report delivered in November 2012 pointed out, in particular, the significant increase in responsibilities of the Named Executive Officers because of the increase in the Company’s revenues and because, in the case of Mr. Rutledge, he had become on August 20, 2012, the Company’s President as well as continuing as the Company's Chief Financial Officer. The Committee determined at a meeting on March 3, 2013, to increase the 2013 base salaries (effective as of June 1, 2013) of certain of the Named Executive Officers, other than the CEO, in order to bring those base salaries into approximately the middle third of the comparable companies identified in the CFS report. The Committee therefore increased the 2013 base salaries of Mr. Rutledge from $435,000 to $500,000, Mr. Gerstenberg from $395,000 to $450,000, and Mr. Weber from $300,000 to $325,000, while continuing the base salary of Mr. Parry at $395,000. Based on its review of the factors described above, the Committee also recommended to the full Board that the 2013 base salary of Alan S. McKim, the CEO, be continued at $950,000. The Board approved that recommendation on March 4, 2013.
On June 10, 2014, the Committee increased (effective as of June 1, 2014) the base salary of Eric Gerstenberg, then President, Environmental Services (and who was subsequently appointed on January 20, 2015 to become the Company’s Chief Operating Officer), from $450,000 to $500,000 to reflect Mr. Gerstenberg’s increased responsibilities. Accordingly, the base salaries of the five Named Executive Officers (other than the CEO and Mr. Gerstenberg) for 2014 were $500,000 for Mr. Rutledge, $395,000 for Mr. Parry and $325,000 for Mr. Weber.
On March 10, 2015, the Committee further increased (effective as of March 1, 2015) the base salary of Mr. Gerstenberg from $500,000 to $575,000 and Mr. Weber from $325,000 to $375,000, while keeping in place the base salary of Mr. Rutledge at $500,000 and Mr. Parry at $395,000.
Benefits
The Named Executive Officers and other senior executive officers receive the same benefits as other employees of the Company. In the US, these benefits consist of medical and dental coverage, paid 73% by the Company and 27% by the employee; life insurance equal to one times base salary with a cap of $1,000,000 (x1 for accidental death); long- and short-term disability insurance; and participation in the Company's 401(k) Plan. In Canada, these benefits consist of medical and dental coverage, life insurance equal to two times base salary with a cap of $500,000 (x2 for accidental death); long- and short-term disability insurance with an overall cost share of 73% by the Company and 27% by the employee; and participation in the Company's Registered Retirement Savings Plan.
19
Performance-Based Cash Bonuses
The Company maintained for 2015 two plans under which the Compensation Committee was authorized to grant cash bonuses to members of senior management based upon satisfaction of performance goals approved by the Committee during the first quarter of 2015. As described below, because of the Company’s overall performance during 2015, only a minor portion of those potential bonuses were subsequently paid during the first quarter of 2016.
The first such plan was the 2014 CEO Annual Incentive Bonus Plan (the “CEO Annual Incentive Bonus Plan”), which was approved by the Company's shareholders at the 2013 annual meeting and amended at the 2014 annual meeting, under which potential bonuses for the CEO were calculated for 2014 and 2015 and will be calculated for 2016-2018. The purpose of the CEO Annual Incentive Bonus Plan is to provide an incentive for the CEO and the Company to achieve specific goals for the year, and to do so in a manner which will allow full deductibility of the bonus under Section 162(m) of the Internal Revenue Code (the “Code”). More information about the CEO Annual Incentive Bonus Plan and the cash bonus which the CEO could potentially receive and did receive thereunder for 2015 is set forth below under “Chief Executive Officer Compensation.”
The second such plan was the Management Incentive Plan (the “MIP”) under which the Compensation Committee can award cash bonuses to members of senior management other than the CEO. Acting on the recommendation of the Committee, the Company's Board of Directors adopted the MIP on December 8, 2008, and amended and restated that Plan on each of May 10, 2010 and March 5, 2012. The amended and restated MIP was approved by the shareholders at the 2012 annual meeting, and bonuses paid pursuant to the MIP are intended to be fully deductible under Section 162(m) of the Code.
The terms of potential cash bonuses for 2015 under the MIP, which were approved by the Committee on March 10, 2015, covered 64 managers. Such managers included all of the Named Executive Officers other than the CEO. Participants were potentially eligible to earn a bonus (payable in the first quarter of 2016) equal to up to between 10% and 100% of their base salaries (depending on their level of management responsibility) if the Company achieved or exceeded certain goals based on the level of the Company's “MIP EBITDA” and “ROIC.” For purposes of calculating bonuses under the MIP, MIP EBITDA consists of the Company's Adjusted EBITDA (as defined above under “Overview”) with certain adjustments established by the Committee for amounts which are not derived from the Company's normal operations and over which the participants in the MIP do not exercise control, and “ROIC” consists of the Company’s ROIC (as defined above under “Overview”) but with the same adjustments to the Company’s Adjusted EBITDA, and therefore to “Net Operating Profit,” as used in calculating MIP EBITDA. For 2015, those adjustments included acquisition and integration expenses (including related fees paid to third party consultants), amounts based on changes in environmental liability estimates, foreign currency conversion rates, and adjustments to accrued compensation expense to reflect the amount of bonuses actually paid.
The table below describes the respective amounts of the potential bonuses that could have been received for 2015 under the MIP at the threshold, midpoint and maximum levels for each of the goals established by the Committee, as well as the Committee's determination at its meeting held March 8, 2016 of the extent (if any) to which each of those goals was achieved during 2015.
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Threshold
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|
Midpoint
|
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Maximum
(1)
|
|
Achievement
|
|||
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MIP EBITDA
|
|
|
|
|
|
|
|
|
||
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Goal
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$530 Million
|
|
|
$570 Million
|
|
$630 Million
|
|
|
$506 Million
|
|
|
Bonus (% of Base Pay)
|
1.67-16.67%
|
|
|
5.0-50.0%
|
|
7.0-70.0%
|
|
|
—
|
%
|
|
ROIC
|
||||||||||
|
Goal
|
6.0
|
%
|
7.0%
|
|
8.3
|
%
|
|
5.5%
|
|
|
|
Bonus (% of Base Pay)
|
1.67-16.67%
|
|
|
5.0-50.0%
|
|
7.0-70.0%
|
|
|
—
|
%
|
|
Total
(1)
|
3.34-33.34%
|
|
10.0-100.0%
|
14.0-140.0%
|
|
—
|
%
|
|||
|
(1)
|
Assuming, except in the case of the actual achievement, that both the MIP EBITDA and ROIC goals were satisfied at the Threshold, Midpoint and Maximum Levels, respectively.
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In addition to their right to potentially receive bonuses along with the other members of senior management who participated in the MIP during 2015, the members of the Company's executive staff who reported directly to the CEO throughout 2015, including each of the other Named Executive Officers, also participated during 2015 in a Senior Executive Incentive Program (the “SEIP”) under the MIP. On March 10, 2015, the Committee selected ten members of the executive
20
staff (two of whom subsequently left the Company) to participate in the SEIP and, on July 20, 2015, the Committee added one additional participant upon the promotion of such executive to become President of the Company’s Oil & Gas Field Services business. Under the SEIP, each member of the executive staff who was selected as a SEIP participant had a potential right to receive (in addition to the bonus potentially available to all participants in the MIP for 2015 based on achievement of the MIP EBITDA and ROIC goals described above) a bonus based on satisfaction of certain personal goals established by the Committee during the first quarter of 2015. Potential bonuses under the SEIP were between 3.0% and 70.0% of base salary for achievement of each personal goal, subject to an aggregate maximum of 30% to 100% (depending on the executive involved) of base salary for each SEIP participant if all such personal goals were fully satisfied.
During 2015, each of the Named Executive Officers (other than the CEO) was successful in satisfying certain of his respective personal goals established by the Committee under the SEIP. However, the terms of the MIP (which includes the SEIP) provide that, in deciding whether to grant bonuses under the MIP to any participant for any year, the Committee has discretion, if it deems it to be in the best interests of the Company, to decrease, but not increase, amounts which would otherwise be payable for such year. At its meeting held on March 8, 2016, the Committee determined, because of the Company’s overall performance during 2015, to pay to each of the nine participants in the SEIP for 2015 bonuses which were less than would otherwise be payable under the SEIP based upon achievement of their respective personal goals. Of those reduced bonuses, $70,000 was paid to each of Mr. Rutledge, Mr. Parry and Mr. Weber, and $40,000 was paid to Mr. Gerstenberg. In addition, the Committee awarded, effective as of April 1, 2016, to each of Mr. Gerstenberg, Mr. Parry and Mr. Weber 10,000 shares of restricted common stock which will vest, subject to continued employment, over the next three years. Such restricted shares had a market value of $498,300 for each such executive officer on the effective date of grant and, because of the continued employment requirement for vesting, will serve as a retention incentive.
The Committee believes that the MIP EBITDA and ROIC goals and SEIP personal goals established under the MIP for 2015 were sufficiently difficult to achieve in order to provide a significant incentive for the participants to improve the Company's performance during that year. The Committee also believes that such goals did not encourage any of the participants to cause the Company to take excessive risks in connection with achieving the goals. By including improvements in health and safety in the SEIP personal goals of certain of the Named Executive Officers, the goals were consistent with reducing the Company's overall risks.
Long-Term Equity Incentives
The final element of compensation for senior executives is long-term equity incentives, designed to align the interests of participants with those of the Company's shareholders and to encourage retention of senior executives through periodic vesting. Because of his substantial holding of the Company’s shares derived from being the Company's founder, Alan S. McKim, the CEO, always refused prior to 2015 to accept any grant of an equity incentive. However, on June 19, 2015, the Committee (with Mr. McKim’s consent) did grant 19,490 performance-based restricted shares for the reasons described below. Since 2005, the Compensation Committee has also not provided stock options to any executive officers and all of the equity incentives provided to any executive officers have been in the form of awards of restricted stock.
Prior to 2010, awards of non-performance-based restricted stock, with vesting contingent upon continued employment over a specific term, were generally limited to newly-hired or promoted employees. In 2010, the Committee commenced granting to certain executive officers and other senior managers, in addition to performance share awards as described below, some non-performance restricted stock awards which vest over time depending on continued employment. Because of the continued employment requirement for vesting, such time-vesting restricted shares serve as a retention incentive. During 2015, the Committee granted a total of 122,580 restricted stock awards to a total of 48 executive officers and other senior managers with vesting generally over either a three-year or a five-year period, in each case subject to continued employment. Pursuant to such grants, Mr. Rutledge, the Vice Chairman, President and CFO, received 4,430 shares, Mr. Gerstenberg, the Chief Operating Officer, received 32,641 shares, Mr. Parry, President, Industrial and Field Services, received 3,499 shares, and Mr. Weber, Executive Vice President - Corporate Planning and Development, received 6,658 shares.
The Committee has also since 2005 granted performance-based restricted stock awards as a form of long-term equity incentive under the Company's Stock Incentive Plans. Under Long-Term Equity Incentive Programs (“LTEIPs”) established annually by the Committee pursuant to such Plans, the Committee grants to members of the Strategic Leadership Team (“SLT”) performance-based restricted stock awards with two-year performance goals and certain additional vesting requirements.
21
On March 10, 2014, the Committee established the following four performance goals for the 2014/15 LTEIP, with each such goal to be given an equal weight of 25% of the total and each goal having a target and threshold: a revenue target of $3.75 billion and threshold of $3.65 billion, Adjusted EBITDA Margin target of 16.4% and threshold of 16.0%, return on invested capital, or "ROIC," target of 7.7% and threshold of 7.3%, and safety performance, as measured by TRIR, target of no more than 1.35 and threshold of 1.39. Each of those four performance goals would be determined independently. If any one or more of the targets for those performance goals were achieved by December 31, 2014, 50% of the shares which could potentially vest based on achievement of that target would vest on March 15, 2015 and 50% would vest on December 31, 2015, in each case subject to continued employment on that respective date. For any performance target which was not satisfied by December 31, 2014 but became satisfied by December 31, 2015, the respective number of shares which could potentially vest based on achievement of that particular goal would vest in three equal installments on March 15, 2016, December 15, 2016, and December 15, 2017, subject to continued employment on those dates. If the Company did not achieve a particular performance target, but did achieve the threshold for that goal by 2015, the shares for that particular goal would vest in three installments; 33% on March 15, 2016, 33% on December 15, 2016 and 34% on December 15, 2017. If any or all of the thresholds were not satisfied by December 31, 2015, all of the shares which could potentially vest based on achievement of that goal under the 2014/15 LTEIP would be forfeited.
On June 17, 2014, the Committee granted a total of 130,107 performance-based restricted stock awards under the 2014/2015 LTEIP to a total of 112 members of the SLT, not including the CEO. Depending upon the level of responsibility of a particular executive within the SLT, he or she was eligible to receive performance-based restricted shares valued at December 31, 2013 at between 10% and 70% of base salary. Each of the Named Executive Officers, other than the CEO, then received the maximum 70% except for Mr. Weber, who received 60%. On December 1, 2014, one additional member of the SLT (who is not a Named Executive Officer) received 1,846 performance-based restricted stock awards on joining the Company.
At its meeting held on March 6 and 10, 2015, the Committee determined that the Company’s revenue for 2014 was $3.40 billion, Adjusted EBITDA Margin for 2014 was 15.3%, ROIC for 2014 was 5.8%, and TRIR for 2014 was 1.57. Because each of these results was below the targets established by the Committee in March 2014 for the 2014/2015 LTEIP, none of the restricted shares which had been issued under the 2014/15 LTEIP then vested. At its meeting held on March 8, 2016, the Committee determined that the Company’s revenue for 2015 was $3.28 billion, Adjusted EBITDA Margin for 2015 was 15.4%, ROIC for 2015 was 5.4%, and TRIR for 2015 was 1.33. Accordingly, as of December 31, 2015, because the TRIR threshold under the 2014/15 LTEIP had been satisfied during 2015, 25% of the total shares which could potentially vest under the 2014/15 LTEIP either vested or will become vested in three equal installments on March 31, 2016, December 15, 2016, and December 15, 2017 subject to continued employment, and the balance have been forfeited.
On March 6, 2015, the Committee established the following four performance goals for the 2015/16 LTEIP, with each goal having a relative weight (indicated in parenthesis) of the total and each goal having a target and threshold: revenue (20%) target of $3.75 billion and threshold of $3.55 billion, Adjusted EBITDA Margin target (30%, defined as Adjusted EBITDA divided by revenue) of 17.4% and threshold of 17.1% , ROIC target of 8.4% and threshold of 7.4%, and safety performance target (20%), measured by TRIR of no more than 1.30 and threshold of no more than 1.39. Each of the four performance goals is to be determined independently. If any one or more of those performance goal targets were achieved by December 31, 2015, 50% of the shares which could potentially vest based on achievement of that goal would vest on March 15, 2016 and 50% would vest on December 31, 2016, in each case subject to continued employment on that respective date. For any performance target which was not satisfied by December 31, 2015 but is satisfied by December 31, 2016, the respective number of shares which could potentially vest based on achievement of that goal would vest in three equal installments on March 15, 2017, December 15, 2017, and December 15, 2018, subject to continued employment on those dates. If the Company did not achieve a particular performance target but did achieve the threshold for that goal by 2016, 50% of the shares allocated to that particular goal would vest in three installments; 33% on March 15, 2017, 33% on December 15, 2017, and 34% on December 15, 2018. If the Company does not achieve the threshold for a particular goal by 2016, all of the shares which could potentially vest based on achievement of that goal under the 2015/16 LTEIP would be forfeited.
On June 9, 2015, the Committee granted a total of 165,778 performance-based restricted stock awards under the 2015/2016 LTEIP to a total of 115 members of the SLT. Depending upon the level of responsibility of a particular executive within the SLT, he or she was eligible to receive performance-based restricted shares valued at December 31, 2014 at between 10% and 70% of base salary. Each of the Named Executive Officers then received the maximum 70% except for Mr. Weber, who received 60%. On August 1, 2015, September 1, 2015 and November 1, 2015 four additional members of the SLT
22
(neither of whom is a Named Executive Officer) also received 598, 806, 724 and 280 performance-based restricted stock awards, respectively.
On March 8, 2016, the Committee determined, as described above, that the Company’s revenue for 2015 was $3.28 billion, Adjusted EBITDA Margin for 2015 was 15.4%, ROIC for 2015 was 5.4%, and TRIR for 2015 was 1.33. Because each of the 2015 results for revenue, Adjusted EBITDA Margin, ROIC and TRIR were below the respective targets established by the Committee in March 2015 for the 2015/16 LTEIP, none of the restricted shares which had been issued under the 2015/16 LTEIP vested. However, depending upon the Company’s performance during 2016, such shares remain subject to potential future vesting or forfeiture.
Chief Executive Officer Compensation
Mr. McKim founded the Company in 1980 and has served as its Chief Executive Officer for the past 35 years. He is also the largest individual shareholder and now holds approximately 8% of the Company’s total outstanding shares.
Prior to 2015, he consistently refused to accept equity grants and often turned down recommendations for an increase in his base pay or incentive compensation. However, as the Company’s size and profitability grew over the years, the absence of equity compensation for Mr. McKim caused his total potential compensation to be significantly lower than that for CEOs in other comparable companies and his actual total compensation in recent years to be less than that for certain other executives of the Company. Commencing with 2015, a goal of the Compensation Committee has been to bring Mr. McKim’s potential compensation to parity with his peer group within the next three years.
Acting on the recommendation of the Compensation Committee, the Company's Board of Directors sets the annual base salary of the CEO and determines whether any cash bonus, in addition to any bonus earned under the Company's CEO Annual Incentive Bonus Plan, should be payable. In addition, the Committee sets during the first quarter of each year the performance goals and bonuses which may potentially be earned by the CEO for that year under the Company's Annual CEO Incentive Plan and determines in the first quarter of the following year the extent, if any, to which a bonus has been earned based upon those performance goals.
For each of the three years ended December 31, 2014, the Board of Directors set Mr. McKim’s base salary at $950,000. However, based upon advice from CFS that Mr. McKim’s compensation was significantly below that being paid by comparable companies, the Board of Directors, on March 10, 2015, increased Mr. McKim’s base salary for 2015 (effective March 1, 2015) to $1,100,000, and on March 10, 2015, the Compensation Committee established the terms of the potential CEO annual incentive bonus for 2015 under the CEO Annual Incentive Bonus Plan. The terms provided that the CEO would potentially be able to earn a cash bonus for 2015 of between $880,000 and $3,330,000, based upon whether the Company achieved 2015 revenues of between $3.197 and $3.70 billion, Adjusted EBITDA of between $530.0 million and $630.0 million, ROIC of between 6.0% and 8.3%, and improvements in health and safety statistics based on the Company's TRIR of not more than between 1.42 and 1.35. The table below describes the respective amounts of the potential bonus that could be earned for 2015 at the threshold, midpoint and maximum levels for each of those goals established by the Committee, as well as the Committee's determination at its meeting held on March 8, 2016 of the extent (if any) to which each of those goals were achieved during 2015.
|
Threshold
|
Midpoint
|
Maximum
|
Achievement
|
||||||||||||
|
Revenue [w/o acquisitions]
|
|||||||||||||||
|
Goal
|
$3.197 Billion
|
|
$3.365 Billion
|
|
$3.701 Billion
|
|
$3.275 Billion
|
|
|||||||
|
Bonus
|
$
|
220,000
|
|
$
|
440,000
|
|
$
|
660,000
|
|
$
|
323,806
|
|
|||
|
EBITDA
|
|||||||||||||||
|
Goal
|
$530 Million
|
|
$570 Million
|
|
$630 Million
|
|
$504 Million
|
|
|||||||
|
Bonus
|
$
|
330,000
|
|
$
|
661,000
|
|
$
|
990,000
|
|
$
|
—
|
|
|||
|
ROIC
|
|||||||||||||||
|
Goal
|
6.0
|
%
|
7.0
|
%
|
8.3
|
%
|
5.4
|
%
|
|||||||
|
Bonus
|
$
|
330,000
|
|
$
|
660,000
|
|
$
|
990,000
|
|
$
|
—
|
|
|||
|
TRIR
|
|||||||||||||||
|
Goal
|
N/A
|
|
1.42
|
|
1.35
|
|
1.33
|
|
|||||||
|
Bonus
|
$
|
—
|
|
$
|
440,000
|
|
$
|
660,000
|
|
$
|
660,000
|
|
|||
|
Total
|
$
|
880,000
|
|
$
|
2,201,000
|
|
$
|
3,300,000
|
|
$
|
983,806
|
|
|||
23
The terms of the CEO Annual Incentive Bonus Plan provide (as is also true for the MIP as described above) that, in deciding whether to grant a bonus under the Plan for any year, the Committee had discretion, if it deems it to be in the best interests of the Company, to decrease, but not increase, amounts which would otherwise be payable based upon satisfaction of the goals established under the Plan for such year. At their meeting on March 8, 2016, the Committee determined, because of the Company’s overall performance during 2015, to award to Mr. McKim only $350,000 of the $983,806 that would have been payable based on the Company’s results in 2015.
The Committee believes that the performance goals established under the CEO Annual Incentive Bonus Plan for 2015 were sufficiently difficult to achieve in order to provide a significant incentive for the CEO to improve the Company's performance during that year. The Committee also believes that such goals did not encourage the CEO to cause the Company to take any excessive risks in connection with achieving those goals and that, by selecting improvements in health and safety statistics as one of the four goals for 2015, the goals were consistent with reducing the Company's overall risks.
As described above under “Long-Term Equity Incentives,” the Committee granted to Mr. McKim on June 19, 2015, 19,490 performance-based restricted shares which on the grant date had a market value of $1,101,380. Such performance shares were granted under the Company’s 2015/2016 LTEIP and will vest, if at all, only if and to the extent the performance goals established by the Committee on March 10, 2015, for that Program are satisfied on the same terms as are applicable to other participants in the 2015/2016 LTEIP.
Accounting and Tax Considerations
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to publicly-held companies for compensation paid to their “covered employees” to the extent that the annual compensation paid to any such employee exceeds $1.0 million unless such excess qualifies as “performance-based compensation” as defined in Section 162(m). Section 162(m) defines “covered employees” to include the CEO and the three next highest paid executives (other than the CFO) in the most recently completed fiscal year. In order to facilitate the Company's ability to fully deduct compensation paid to its executive officers, the Company’s Board of Directors has adopted, and the shareholders have approved as described above under “Performance-Based Cash Bonuses” and “Chief Executive Officer Compensation,” the Management Incentive Plan and the CEO Annual Incentive Bonus Plan, each of which is structured to cause cash bonuses payable to the covered employees pursuant to those Plans to qualify as “performance-based compensation” under Section 162(m) and therefore be fully deductible for federal income tax purposes. The Company's 2010 Stock Incentive Plan, as approved by the Company's shareholders in May 2010, also permits the Compensation Committee to structure stock option grants and restricted stock awards in a manner intended to allow the compensation arising from such grants and awards to qualify as “performance-based compensation” as defined under Section 162(m). Since 2005, the Compensation Committee has structured, and intends to continue to structure, cash bonuses paid under the CEO Annual Incentive Bonus Plan, the MIP or as any supplemental bonuses and any stock option grants and restricted stock awards in a manner which will allow full deductibility unless the Committee determines that such limitation would not be in the best interests of the Company or its shareholders.
Stock Ownership Guidelines
The Board of Directors has established stock ownership guidelines for executive officers. Named Executive Officers and certain other high level executive officers are expected to hold stock valued at 150% of their base salary after having received five years of long-term equity awards; and other executive officers are expected to hold stock valued at 50% of their base salary within the same time period. As of March 1, 2016, all of the Company's Named Executive Officers were in compliance with the Company's stock ownership guidelines.
Employment, Termination of Employment and Change of Control Agreements
The Company does not have employment agreements with any of its executive officers. However, the Company does provide “change of control” protection under certain restricted stock award agreements granted to executive officers. Some of those agreements provide that restricted stock will fully vest upon a change of control, while others provide that if an employee is involuntarily terminated or experiences a change of position and a reduction in salary or relocation within 12 months of a change of control, the employee's restricted stock awards become fully vested.
In 1998, the Company adopted an Executive Retention Plan (the “Retention Plan”) for certain members of senior management. If designated to participate in the Retention Plan, each such member must sign a severance agreement and a
24
confidentiality and non-competition agreement under which, among other matters, such member agrees not to compete with the Company for one year following termination of employment. For termination other than for cause and not related to a Change in Control (as defined in the Retention Plan and the severance agreement), the severance agreements provide for payment to the executive of severance equal to base salary, offset by the amount of earnings from other employment obtained, for various periods of time, typically up to a maximum of one year after termination of employment. The amount of such severance will be at the rate of the executive's base salary in effect at the time of termination of employment, payable periodically in accordance with the Company's normal executive salary payment polices, plus continued medical, dental, life insurance and other benefits, if any, available to the executive at the time of his or her termination of employment for a similar period as the payment of severance.
Under the Retention Plan, in the event of a Change in Control, an executive who participates in the Retention Plan will receive the same severance benefits as those described above if either (i) such executive's employment with the Company is terminated for any reason within 30 days after the Change in Control, (ii) such executive does not receive a position equal to the position that the executive held prior to the Change in Control, or (iii) such executive's primary work location is not within 30 miles of such location prior to the Change in Control. If the executive accepts a position with the successor corporation after the Change in Control, and, within two years of the Change in Control, the executive's position changes so as not to be equal to his or her position prior to the Change in Control, then the executive shall be entitled to the same severance benefits.
Report of Compensation Committee
The following independent directors, who constitute the Compensation Committee, have reviewed the foregoing Compensation Discussion and Analysis with the Company's management and recommended that it be included in this proxy statement.
|
Eugene Banucci, Chairman
Daniel J. McCarthy John P. DeVillars Andrea Robertson |
|
25
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for (i) the Chief Executive Officer, (ii) the Chief Financial Officer, and (iii) the three other most highly compensated executive officers of the Company and its subsidiaries that were serving as executive officers at the end of 2015 (such five executives being collectively the “Named Executive Officers”). The “Stock Awards” and “Total” columns in the table include values for restricted shares which are subject to performance and/or time vesting and which, in the case of such performance awards, are valued based on the probable outcome of the performance conditions as of the respective grant dates. However, the Named Executive Officers may never realize any value from those awards, or the amounts realized may differ materially from the amounts listed in the Summary Compensation Table and related footnotes. In addition, such restricted shares are reported in several different tables in this proxy statement. For that reason, investors should take care to not “double count” the value of such awards.
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
(1)
|
Stock
Awards (2) |
Option
Awards (3) |
Non-Equity
Incentive Plan Compensation (1) |
All Other Compensation
|
Total
|
|||||||||||||||||||||
|
Alan S. McKim
|
2015
|
$
|
1,075,000
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
$
|
350,000
|
|
$
|
7,128
|
|
$
|
1,432,128
|
|
||||||||
|
Chairman of the Board
|
2014
|
$
|
950,000
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
$
|
412,196
|
|
$
|
4,644
|
|
$
|
1,366,840
|
|
||||||||
|
and Chief Executive Officer
|
2013
|
$
|
950,000
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
$
|
1,032
|
|
$
|
951,032
|
|
||||||||
|
James M. Rutledge (4)
|
2015
|
$
|
500,000
|
|
$
|
—
|
|
$
|
250,339
|
|
—
|
|
$
|
70,000
|
|
$
|
3,564
|
|
$
|
823,903
|
|
||||||||
|
Vice Chairman, President
|
2014
|
$
|
500,000
|
|
$
|
—
|
|
$
|
251,723
|
|
—
|
|
$
|
290,268
|
|
$
|
3,564
|
|
$
|
1,045,555
|
|
||||||||
|
and Chief Financial Officer
|
2013
|
$
|
500,000
|
|
$
|
175,000
|
|
$
|
1,781,246
|
|
—
|
|
$
|
—
|
|
$
|
1,584
|
|
$
|
2,457,830
|
|
||||||||
|
Eric W. Gerstenberg
|
2015
|
$
|
562,500
|
|
$
|
—
|
|
$
|
1,805,543
|
|
—
|
|
$
|
40,000
|
|
$
|
810
|
|
$
|
2,408,853
|
|
||||||||
|
President, Environmental Services
|
2014
|
$
|
479,167
|
|
$
|
—
|
|
$
|
1,184,723
|
|
—
|
|
$
|
335,681
|
|
$
|
720
|
|
$
|
2,000,291
|
|
||||||||
|
and Chief Operating Officer*
|
2013
|
$
|
450,000
|
|
$
|
175,000
|
|
$
|
1,015,753
|
|
—
|
|
$
|
—
|
|
$
|
240
|
|
$
|
1,640,993
|
|
||||||||
|
David M. Parry
|
2015
|
$
|
395,000
|
|
$
|
—
|
|
$
|
197,728
|
|
—
|
|
$
|
70,000
|
|
$
|
621
|
|
$
|
663,349
|
|
||||||||
|
President, Industrial and Field Services*
|
2014
|
$
|
395,000
|
|
$
|
—
|
|
$
|
198,853
|
|
—
|
|
$
|
245,112
|
|
$
|
621
|
|
$
|
839,586
|
|
||||||||
|
2013
|
$
|
395,000
|
|
$
|
175,000
|
|
$
|
1,015,753
|
|
—
|
|
$
|
—
|
|
$
|
360
|
|
$
|
1,586,113
|
|
|||||||||
|
Brian P. Weber
|
2015
|
$
|
366,667
|
|
$
|
—
|
|
$
|
370,004
|
|
—
|
|
$
|
70,000
|
|
$
|
495
|
|
$
|
807,166
|
|
||||||||
|
Executive Vice President -
|
2014
|
$
|
325,000
|
|
$
|
—
|
|
$
|
130,931
|
|
—
|
|
$
|
247,174
|
|
$
|
495
|
|
$
|
703,600
|
|
||||||||
|
Corporate Planning and Development*
|
2013
|
$
|
325,000
|
|
$
|
250,000
|
|
$
|
336,656
|
|
—
|
|
$
|
—
|
|
$
|
360
|
|
$
|
912,016
|
|
||||||||
__________________________
|
*
|
Clean Harbors Environmental Services, Inc.
|
|
(1)
|
Except for the bonuses described under “Bonus” which were paid for 2013 to certain of the Named Executive Officers, the Compensation Committee granted all cash bonuses for 2015, 2014 and 2013 to Named Executive Officers (as described under “Non-Equity Incentive Plan Compensation”) pursuant to (i) in the case of Mr. McKim, the CEO Annual Incentive Bonus Plan, or (ii) in the case of the other Named Executive Officers, the Management Incentive Plan (the “MIP”). Except for the CEO Annual Incentive Bonus Plan and the MIP, the Company did not have during 2015, 2014 or 2013 any non-equity incentive plan, long-term cash incentive plan, pension plan or deferred compensation plan under which any of the Named Executive Officers participated.
|
|
(2)
|
The fair value of stock awards is computed in accordance with FASB ASC Topic 718. For the non-performance awards vesting over time, the full grant date fair value was reported in the grant year. For the performance awards granted in 2015, 2014 and 2013, management believed at the respective grant dates that it was not then probable the two-year performance targets would be achieved in either the grant year or the following year and therefore no grant date fair value was reported. If all of the performance criteria included in the 2015, 2014 and 2013 grants were to be satisfied, the maximum value of the stock awards on the grant date (based on the closing price of the Company's common stock on such dates) would have been $1,101,380 for Mr. McKim, $350,419, $352,425 and $297,562 for Mr. Rutledge, $431,793, $352,425 and $270,161 for Mr. Gerstenberg, $276,842, $278,407 and $270,161 for Mr. Parry, and $225,305, $196,365 and $175,857 for Mr. Weber.
|
|
(3)
|
The Company did not grant any stock options to any of the Named Executive Officers during 2015, 2014 and 2013.
|
|
(4)
|
Mr. Rutledge served as the Company’s Chief Financial Officer throughout the three years ended December 31, 2015. On January 5, 2016, the Company’s Board of Directors appointed Michael C. Battles as the Company’s Chief Financial Officer, with Mr. Rutledge remaining as the Company’s Vice Chairman and President.
|
26
GRANTS OF PLAN-BASED AWARDS
The following table sets forth, for each of the Named Executive Officers, (i) the threshold, midpoint and maximum potential cash bonuses which the Compensation Committee approved, subject to achievement of certain performance criteria and personal goals, for payment during the first quarter of 2016 for the year ended 2015 under either the CEO Annual Incentive Bonus Plan or the MIP, and (ii) the restricted and performance shares granted during 2015 under the Company's 2010 Stock Incentive Plan. The actual amounts of the cash bonuses (if any) which were paid for 2015 under the CEO Annual Incentive Bonus Plan and the MIP, based on the extent of such achievement, to each of the Named Executive Officers are described above in the Summary Compensation Table. During 2015, there were no stock options, stock appreciation rights or other similar plan-based equity awards granted to the Named Executive Officers, and the only grants awarded to such officers under non-equity incentive plans potentially providing for future payouts were the rights described in the table to receive potential cash bonuses during the first quarter of 2016 pursuant to the CEO Annual Incentive Bonus Plan or the MIP for 2015. Furthermore, no stock options or other awards to the Named Executive Officers were repriced or otherwise modified during 2015.
|
Potential Cash Bonuses Under CEO Annual Incentive Bonus Plan or MIP
|
Restricted and Performance
Stock Awards |
||||||||||||||||||||
|
Grant Date Fair
Market Value of Stock Awards (1) |
|||||||||||||||||||||
|
Name
|
Grant Date
|
Threshold
|
Midpoint
|
Maximum
|
No. Shares
|
||||||||||||||||
|
Alan S. McKim
|
N/A
|
$
|
880,000
|
|
$
|
2,201,000
|
|
$
|
3,300,000
|
|
—
|
|
—
|
|
|||||||
|
6/9/2015
|
19,490
|
|
$
|
1,101,380
|
|
||||||||||||||||
|
James M. Rutledge
|
N/A
|
$
|
165,000
|
|
$
|
575,000
|
|
$
|
850,000
|
|
—
|
|
—
|
|
|||||||
|
6/9/2015
|
10,631
|
|
$
|
600,758
|
|
||||||||||||||||
|
Eric W. Gerstenberg
|
N/A
|
$
|
189,750
|
|
$
|
718,750
|
|
$
|
1,092,500
|
|
—
|
|
—
|
|
|||||||
|
3/10/2015
|
25,000
|
|
$
|
1,373,750
|
|
||||||||||||||||
|
6/9/2015
|
15,282
|
|
$
|
863,586
|
|
||||||||||||||||
|
David M. Parry
|
N/A
|
$
|
67,150
|
|
$
|
395,000
|
|
$
|
671,500
|
|
—
|
|
—
|
|
|||||||
|
6/9/2015
|
8,398
|
|
$
|
474,571
|
|
||||||||||||||||
|
Brian P. Weber
|
N/A
|
$
|
123,750
|
|
$
|
431,250
|
|
$
|
637,500
|
|
—
|
|
—
|
|
|||||||
|
3/10/2015
|
4,000
|
|
$
|
219,800
|
|
||||||||||||||||
|
6/9/2015
|
6,645
|
|
$
|
375,509
|
|
||||||||||||||||
_______________________
|
(1)
|
The fair value of the awards is computed in accordance with FASB ASC Topic 718. For a description of the assumptions used in determining these values, see Note 15, “Stock-Based Compensation and Employee Benefit Plans,” to the consolidated financial statements contained in the Company's Form 10-K for the year ended December 31, 2015.
|
27
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth the equity awards held at December 31, 2015 by each of the Named Executive Officers.
|
Option Awards
|
|||||||||||||||
|
Number of
Shares |
Number of
Shares |
Stock Awards
|
|||||||||||||
|
Name
|
Underlying
Unexercised Stock Options Exercisable |
Underlying
Unexercised Options Unexercisable |
Option
Exercise Price |
Option
Expiration Date |
Number of
Shares that Have Not Vested |
Market Value
of Shares that Have Not Vested |
|||||||||
|
Alan S. McKim
|
—
|
—
|
—
|
—
|
19,490
|
|
$
|
811,759
|
|
||||||
|
James M. Rutledge
|
—
|
—
|
—
|
—
|
36,195
|
|
$
|
1,507,522
|
|
||||||
|
Eric W. Gerstenberg
|
—
|
—
|
—
|
—
|
72,791
|
|
$
|
3,031,745
|
|
||||||
|
David M. Parry
|
—
|
—
|
—
|
—
|
26,817
|
|
$
|
1,116,928
|
|
||||||
|
Brian P. Weber
|
—
|
—
|
—
|
—
|
20,801
|
|
$
|
866,362
|
|
||||||
OPTION EXERCISES AND STOCK VESTED
The following table shows for each of the Named Executive Officers the aggregate number of any options exercised, the value realized (market value of underlying shares on exercise minus the exercise price), and the number of restricted shares and the fair value of restricted shares vested during 2015. The high and low sales prices of the Company's Common Stock in 2015 were $59.29 and $39.89, respectively. The last sale price at December 31, 2015 was $41.65. No stock appreciation rights (“SARs”) were exercised during 2015 or held by such individuals at year-end.
|
Options
|
Stock Awards
|
||||||||||
|
Name
|
Number of
Shares Acquired on Exercise |
Value
Realized on Exercise |
Number of
Shares Vested |
Value
Realized on Vesting |
|||||||
|
Alan S. McKim
|
—
|
—
|
—
|
|
$
|
—
|
|
||||
|
James M. Rutledge
|
—
|
—
|
12,937
|
|
$
|
703,179
|
|
||||
|
Eric W. Gerstenberg
|
—
|
—
|
11,150
|
|
$
|
611,436
|
|
||||
|
David M. Parry
|
—
|
—
|
8,100
|
|
$
|
440,699
|
|
||||
|
Brian P. Weber
|
—
|
—
|
3,300
|
|
$
|
179,718
|
|
||||
28
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The following table sets forth for each of the Named Executive Officers the amounts which would potentially become payable under existing plans and arrangements if the executive's employment had been terminated or a change of control had occurred on
December 31, 2015
. These potential payments reflect the executive's level of compensation and term of service as of such date.
|
Name
|
Benefit
(1)
|
Before Change
in Control Termination w/o Cause or for Good Reason (2) |
Voluntary
Termination |
Change in
Control (3) |
|||||||||
|
Alan S. McKim
|
—
|
—
|
—
|
—
|
|||||||||
|
—
|
—
|
—
|
—
|
||||||||||
|
—
|
—
|
—
|
—
|
||||||||||
|
James M. Rutledge
|
Stock Option Vesting Acceleration
|
—
|
—
|
—
|
|||||||||
|
Restricted Stock Vesting Acceleration
|
—
|
—
|
|
$1,507,522
|
|
||||||||
|
Key Employee Retention Plan
|
|
$500,000
|
|
—
|
|
$500,000
|
|
(4)
|
|||||
|
Eric W. Gerstenberg
|
Stock Option Vesting Acceleration
|
—
|
—
|
—
|
|||||||||
|
Restricted Stock Vesting Acceleration
|
—
|
—
|
|
$3,031,745
|
|
||||||||
|
Key Employee Retention Plan
|
|
$575,000
|
|
—
|
|
$575,000
|
|
(4)
|
|||||
|
David M. Parry
|
Stock Option Vesting Acceleration
|
—
|
—
|
—
|
|||||||||
|
Restricted Stock Vesting Acceleration
|
—
|
—
|
|
$1,116,928
|
|
||||||||
|
Key Employee Retention Plan
|
|
$395,000
|
|
—
|
|
$395,000
|
|
(4)
|
|||||
|
Brian P. Weber
|
Stock Option Vesting Acceleration
|
—
|
—
|
—
|
|||||||||
|
Restricted Stock Vesting Acceleration
|
—
|
—
|
|
$866,362
|
|
||||||||
|
Key Employee Retention Plan
|
|
$375,000
|
|
—
|
|
$375,000
|
|
(4)
|
|||||
__________________________
|
(1)
|
The fair value of the restricted stock is computed using the December 31, 2015 stock price of $41.65.
|
|
(2)
|
Executive is eligible for payment of base salary until the first to occur of one year or earlier employment, as well as up to one year of continued medical, dental, life insurance and other benefits, if any, and $15,000 in out-placement services.
|
|
(3)
|
Executive is also eligible for up to one year of continued medical, dental, life insurance, other benefits, if any, and $15,000 in out-placement services.
|
|
(4)
|
Assumes employment is terminated either (i) for any reason within 30 days after a change of control or (ii) without cause within one year after a change of control.
|
29
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item 2 on Proxy Form)
The Company's Board of Directors is seeking an advisory vote from the Company's shareowners to approve the compensation of the Company's Named Executive Officers, as described in the “Compensation Discussion and Analysis,” the executive compensation tables and other executive compensation disclosures in this proxy statement. Acting in response to the advisory vote taken by the Company's shareholders at the 2011 annual meeting, the Company's Board of Directors has determined to hold such a “say-on-pay” advisory vote on an annual basis.
As discussed under “Compensation Discussion and Analysis” in this proxy statement, the Board's Compensation Committee, with assistance from its independent consultant, has structured the Company's compensation programs to emphasize pay for performance. The compensation opportunities provided to the Company's Named Executive Officers, as well as the Company's other executives, are highly dependent on the Company's and the individual's performance, which in turn drives the enhancement of shareowner value. The Compensation Committee will continue to emphasize responsible compensation arrangements designed to attract, motivate, reward and retain executive talent required to achieve the Company's corporate objectives and to align with the interests of the Company's long-term shareowners.
Shareholders have the opportunity to vote for or against or to abstain from voting on the following non-binding resolution relating to executive compensation:
“Resolved, that the shareowners approve the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the executive compensation tables and other executive compensation disclosures in this proxy statement.”
In deciding how to vote on this proposal, shareholders are encouraged to consider the description of the Compensation Committee's executive compensation philosophy and its decisions in “Compensation Discussion and Analysis,” as well as the following items:
|
•
|
All members of the Company's Compensation Committee are independent directors. The Compensation Committee has established a thorough process for the review and approval of compensation program designs, practices and amounts awarded to the Company's executive officers. The Compensation Committee has engaged and received advice from CFS Consulting, Inc., an independent third-party compensation consulting firm which has not provided other services to the Company. The Committee selected a peer group of companies, taking into account the compensation consultant's recommendations, to compare to the Company's executive officers' compensation.
|
|
•
|
The Compensation Committee has established an executive compensation program that attracts and retains talented executives and aligns executive performance with the creation of shareowner value.
|
|
•
|
The Company has not granted stock options to any of its executive officers in the past ten years.
|
|
•
|
The Compensation Committee believes in pay-for-performance. Except for relatively modest base salaries and benefits and a relatively small portion of long-term equity incentives provided in the form of non-performance based restricted shares which vest over time subject to continued employment (with the majority of restricted shares being performance-based), the long-term incentive program is entirely performance-based. Performance shares awarded to the Named Executive Officers become vested only if performance is achieved and shares will not become vested simply with the passage of time.
|
|
•
|
The Compensation Committee's actions reflect its pay-for-performance philosophy. Because the Company’s performance during 2015, only 10.6% of the cash bonus which could potentially have been received for that year under the Company's CEO Annual Incentive Bonus Plan was paid, only 4.7% of the cash bonuses which could potentially be received for that year under the Company's Management Incentive Plan (for senior managers other than the CEO) were paid, and only 25.0% and none, respectively, of the total performance-based restricted shares granted under the Company's 2014/2015 and 2015/2016 Long-Term Equity Incentive Programs became vested (subject to continued employment) during 2015.
|
|
•
|
The Company has not entered into employment agreements with any of its executive officers.
|
|
•
|
Tax gross-ups are not provided to any executive officers.
|
|
•
|
Under the Company's Key Employee Retention Plan, the CEO has no right to severance payments upon a Change of Control of the Company and each of the other Named Executive Officers would be entitled to receive such
|
30
payments only on a “double trigger” basis (which requires that an actual loss of employment or significant change of position occur as a result of the Change of Control). Although the restricted stock awards which have been granted to the Company's Named Executive Officers would provide for acceleration of vesting upon a Change of Control, those awards define “Change of Control” to require an actual change in ownership of at least 50% of the Company's outstanding shares or of a majority of the Company's Board of Directors.
|
•
|
The Company has stock ownership guidelines for directors and executive officers.
|
|
•
|
The Compensation Committee values the shareowners’ opinions on executive compensation matters and will take the results of this advisory vote into consideration when making future decisions regarding its executive compensation program.
|
The foregoing advisory resolution on approval of executive compensation will require the affirmative vote of the holders of a majority of the shares represented at the meeting and voted on such proposal. Unless otherwise specified therein, shares represented by the accompanying form of proxy will be voted at the meeting in favor of such proposal.
The Board of Directors recommends that shareholders vote “FOR” such advisory proposal.
31
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Item 3 on Proxy Form)
Selection of the Company's Independent Registered Public Accountant
Under applicable law and the procedures adopted by the Company's Board of Directors, the Audit Committee of the Company's Board of Directors selects the Company's independent registered public accounting firm for each fiscal year. The Audit Committee has selected Deloitte & Touche LLP (“Deloitte”) to serve as the Company's independent registered public accounting firm for the year ending December 31, 2016. Deloitte has previously served as the Company's independent registered public accounting firm commencing with the year ended December 31, 2006. Representatives of Deloitte are expected to be present at the annual meeting to respond to appropriate questions and have the opportunity to make a statement if they so desire.
In deciding to engage Deloitte, the Audit Committee reviewed auditor independence issues and existing commercial relationships with Deloitte and concluded that Deloitte has no commercial relationship with the Company that would impair its independence.
During the two most recent fiscal years of the Company ended December 31, 2015 and 2014, the Company did not consult with Deloitte regarding any of the matters or events set forth in Item 304(a)(2)(i) or (ii) of the SEC’s Regulation S-K.
Although shareholder ratification of the Audit Committee's selection of the independent registered public accounting firm is not required by law or the procedures adopted by the Company's Board of Directors, the Committee's selection of Deloitte as the Company's independent registered public accounting firm for 2016 is being submitted for ratification by the shareholders at the annual meeting because the Company's Board of Directors has determined that such ratification is a matter of good corporate governance practice. If this proposal is not approved at the annual meeting, the Audit Committee may reconsider its selection of Deloitte. Even if the selection of Deloitte is ratified, the Audit Committee, in its discretion, may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
Audit and Related Fees
The Company retained Deloitte to audit the Company's consolidated financial statements and provide certain other services for the two years ended December 31,
2015
and
2014
. The aggregate fees and expenses billed for
2015
and
2014
for these services were as described in the following table:
|
For the Year
|
|||||||
|
2015
|
2014
|
||||||
|
Audit Fees
|
$
|
2,953,800
|
|
$
|
3,278,214
|
|
|
|
Audit-Related Fees
|
1,598,700
|
|
—
|
|
|||
|
Tax Fees
|
—
|
|
10,000
|
|
|||
|
All Other Fees
|
2,600
|
|
2,600
|
|
|||
|
$
|
4,555,100
|
|
$
|
3,290,814
|
|
||
Audit Fees (
$2,953,800
for
2015
and
$3,278,214
for
2014
) include fees and expenses for services rendered in connection with the audits of the Company's consolidated annual financial statements and internal controls over financial reporting, reviews of quarterly financial statements included in the Company's Form 10-Q reports, and services that are normally provided by independent auditors for those fiscal years.
Audit-Related Fees (
$1,598,700
for
2015
and
$0
for
2014
) include fees and expenses for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported above under “Audit Fees.” In 2015, audit-related fees were primarily related to the Company's planned carve-out of its Oil and Gas Field Services and Lodging Services segments for the years ended December 31, 2013, 2014 and 2015.
Tax Fees (
$0
for
2015
and
$10,000
for
2014
) include fees and expenses for tax planning, U.S. and foreign tax compliance, and other general consultation and advice.
32
All Other Fees (
$2,600
for
2015
and
$2,600
for
2014
) include fees and expenses for services which do not fall within the categories described above. In
2015
and
2014
, the fees disclosed under this category included subscription to Deloitte's Accounting and Research Tool.
The Audit Committee of the Board of Directors follows procedures designed to ensure that all audit and permitted non-audit services provided by the Company's independent registered public accounting firm are pre-approved by the Audit Committee. All of the services described above for 2015 and 2014 were pre-approved by the Audit Committee. The Audit Committee has discussed these matters with the Company's independent registered public accounting firm. The Audit Committee also monitors the Company's compliance with restrictions put in place to continue to ensure that the services provided by the Company's independent registered public accounting firm are consistent with the maintenance of that firm's independence in the conduct of its auditing functions.
Audit Committee Report
The Audit Committee of the Board of Directors (the “Committee”) is now comprised of the three directors named below. The Company's Board of Directors has determined that each member of the Committee is an independent director (as independence is defined in the listing standards of the New York Stock Exchange applicable to membership on audit committees). In addition, the Company's Board of Directors has determined, based upon their education and experience, that each of Andrea Robertson and Thomas J. Shields is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K under the Securities Exchange Act of 1934. The Audit Committee has adopted a written charter, which has been approved by the Board of Directors. A copy of that charter, as most recently revised by the Board of Directors on December 9, 2008, is available on the Company's website at www.cleanharbors.com. The Committee has reviewed and discussed the Company's audited financial statements with management, which has primary responsibility for the financial statements, and with the Company's independent registered public accounting firm. The Company's independent registered public accounting firm is responsible for expressing opinions on the Company's audited financial statements in accordance with generally accepted accounting principles and on the Company's internal controls over financial reporting based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Committee has discussed with the Company's independent registered public accounting firm, which was Deloitte & Touche LLP for 2015 and 2014, the matters that are required to be discussed by applicable standards of the Public Company Accounting Oversight Board (“PCAOB”) and Rule 2-07 of Regulation S-X of the SEC - “
Communication with Audit Committees
.” Deloitte & Touche LLP has also provided to the Committee their letter required by PCAOB Ethics and Independence Rule 3526, “
Communications with Audit Committees Concerning Independence
,” and the Committee discussed with Deloitte & Touche LLP the firm's independence. The Committee also considered whether the provision by Deloitte & Touche LLP of non-audit related services, which for 2015 and 2014 consisted primarily of tax services, is compatible with the independence standard.
Based on the considerations referred to above, the Committee recommended to the Board of Directors that the financial statements audited by Deloitte & Touche LLP for 2015 and 2014 be included in the Company's Annual Report on Form 10-K for 2015, and the Committee has appointed Deloitte & Touche LLP as the Company's independent registered public accounting firm for 2016. The foregoing report is provided by the following independent directors, who constitute the Audit Committee.
|
Thomas J. Shields, Chairman
|
|
|
Eugene Banucci
|
|
|
Andrea Robertson
|
|
Ratification of the Audit Committee's selection of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the current fiscal year will require the affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and voted on such proposal. Unless otherwise specified therein, shares represented by the accompanying form of proxy will be voted at the meeting in favor of such ratification. The Board recommends that shareholders vote “FOR” such ratification.
33
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons (except for certain institutional investors) who beneficially own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes of ownership with the SEC. Copies of those reports are to be furnished to the Company. Based solely on its review of copies of the reports received by it, or written representations from certain reporting persons, the Company believes that during 2015 such filing requirements were satisfied on a timely basis.
SHAREHOLDER PROPOSALS
Proposals which qualified shareholders intend to present at the 2017 Annual Meeting and request be included in the Company’s proxy statement for that meeting in accordance with Rule 14a-8 (“Rule 14a-8”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be delivered to the Company prior to the close of business on January 2, 2017. Any such proposal must be delivered to the Company’s Secretary at Clean Harbors, Inc., 42 Longwater Drive, Norwell, MA 02061, Attention: Executive Office. Shareholders are referred to Rule 14a-8 for a description of the relevant requirements for proposal submission.
Shareholders of record who do not submit proposals for inclusion in the proxy statement but who intend to submit a proposal at the 2017 Annual Meeting, and shareholders of record who intend to submit nominations for directors at the meeting, must provide advance written notice. Such notice must be delivered to the Company’s Secretary at the address described above (i) in the case of director nominations, not less than 60 days nor more than 90 days prior to the date of the 2017 Annual Meeting (which the Company will announce early in 2017) and (ii) in the case of other proposed business, no later than January 8, 2017. The written notice must satisfy certain requirements specified in the Company's By-Laws. A copy of the Company's Amended and Restated By-Laws as now in effect is available over the Internet at the SEC's website at http://www.sec.gov as Exhibit 3.4D to the Company's Report on Form 8-K filed on December 22, 2014, and may also be obtained without cost by writing to Clean Harbors, Inc., 42 Longwater Drive, Norwell, MA 02061, Attention: Executive Office.
OTHER INFORMATION
Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, including the financial statements and financial statement schedule, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through the Company's website (
www.cleanharbors.com
) as soon as reasonably practicable after the Company electronically files the material with or furnishes it to the SEC. The Company's filings are also available on the website maintained by the SEC at
www.sec.gov.
The Company's Corporate Governance Guidelines, the charters of the Committees of the Board, and Code of Conduct, which applies to all of the Company's directors, employees and officers, including the Chief Executive Officer and Chief Financial Officer, are also available on the Company's website. Printed copies of these materials are available free of charge (except for the costs of duplication and mailing in the case of exhibits to such documents) to shareholders who request them in writing from Clean Harbors, Inc., 42 Longwater Drive, Norwell, Massachusetts 02061-9149, Attention: Executive Offices. Information on the Company's website or connected to it is not incorporated by reference into this proxy statement.
34
OTHER MATTERS
Except for the matters set forth above, management knows of no other matter which is to be brought before the meeting, but if any other matter shall properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote such proxy in accordance with their judgment on such matter.
|
By Order of the Board of Directors,
|
|
|
|
|
C. Michael Malm, Secretary
|
|
April 27, 2016
THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE ANNUAL MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND, PLEASE AUTHORIZE YOUR PROXY TO VOTE YOUR SHARES BY TELEPHONE, VIA THE INTERNET, OR BY MAIL AS DESCRIBED IN THE E-PROXY NOTICE OR PROXY CARD YOU RECEIVE.
35
TABLE OF CONTENTS