8-KLeadership Changes

REPUBLIC SERVICES, INC. 8-K Report, Executive Changes (Feb 27, 2007)

Filed February 27, 2007For Securities:RSG

Summary

Republic Services, Inc. (RSG) announced significant amendments to the employment agreements of its key executive officers on February 21, 2007. These changes, approved by the Compensation Committee, primarily involve adjustments to salary, bonus targets, and severance provisions. While certain financial planning reimbursements were eliminated, they were offset by a two percent increase in base salary for each executive. The target annual bonus percentages have also been elevated for Messrs. O'Connor, Cordesman, Holmes, and Barclay. Furthermore, the severance packages in the event of termination without cause have been modified to include a multiple of 'Adjusted Salary,' which incorporates the value of restricted stock grants. A notable change also impacts the tax gross-up provision for deferred compensation, which will no longer apply to amounts attributable to periods starting January 1, 2007, in cases of termination without cause. These adjustments aim to align executive compensation with the Company's Executive Incentive Plan and provide enhanced clarity on incentive payouts upon specific life events such as death, disability, or retirement.

Key Highlights

  • 1Amended and Restated Employment Agreements approved for key executives including CEO James E. O'Connor.
  • 2Elimination of financial, tax, and estate planning reimbursement (up to 2% of salary) for officers.
  • 3Two percent salary increase implemented for each officer to offset the eliminated reimbursement.
  • 4Increased target annual bonus percentages for Messrs. O'Connor (120%), Cordesman (100%), Holmes (70%), and Barclay (60%).
  • 5Severance payments upon termination without cause will be based on a multiple of 'Adjusted Salary,' including restricted stock grants.
  • 6Removal of tax gross-up on deferred compensation for periods commencing January 1, 2007, in termination without cause scenarios.
  • 7New provisions for accelerated incentive payments upon death, disability, or retirement, assuming 100% performance target achievement.

Frequently Asked Questions

The primary changes involve the elimination of financial planning reimbursements, offset by a 2% salary increase. Target annual bonus percentages have been increased, and severance packages upon termination without cause now include restricted stock value. Tax gross-up on certain deferred compensation has been modified, and accelerated incentive payouts are now provided upon death, disability, or retirement.

The reimbursement for financial, tax, and estate planning, previously capped at 2% of salary, has been removed. However, each officer's base salary was increased by 2% to compensate for this change, keeping the overall cash compensation from this specific benefit neutral.

'Adjusted Salary' for severance purposes includes the officer's base salary plus the value of any restricted stock grants that were issued in lieu of salary increases. This broadens the base upon which severance multiples are calculated.

Yes, the agreements now stipulate that upon the death, disability, or retirement of an executive, they (or their estate) will receive payment for all open annual and long-term incentive programs. This payment is calculated as if all performance goals were met at 100% of target and employment continued through the end of the period.