8-KLeadership Changes

REPUBLIC SERVICES, INC. 8-K Report, Executive Changes (May 5, 2009)

Filed May 5, 2009For Securities:RSG

Summary

Republic Services, Inc. (RSG) filed an 8-K on May 4, 2009, to disclose new employment agreements with its CEO, James O’Connor, and CFO, Tod Holmes. These agreements are crucial as they aim to retain key leadership post-merger with Allied Waste Industries, Inc. and the company's relocation of headquarters from Florida to Arizona. The new agreements require stockholder approval of the Executive Incentive Plan, including the Synergy Incentive Plan, at the upcoming annual meeting. If approved, Messrs. O’Connor and Holmes will waive certain termination rights tied to the relocation, but will receive additional benefits and compensation, particularly related to synergy achievement and severance, designed to align their interests with long-term stockholder value. The new agreements supersede prior ones and involve several key changes to compensation and termination provisions. Notably, both executives will receive substantial benefits upon retirement or termination under specific conditions, including significant deferred compensation and a portion of their Synergy Incentive Plan payout. The agreements also introduce a new restricted stock grant for each executive and define stricter terms for termination for 'cause'. These changes reflect the company's strategy to ensure leadership stability and incentivize performance during the critical integration phase following the merger.

Key Highlights

  • 1New employment agreements have been entered into with CEO James O’Connor and CFO Tod Holmes, effective upon stockholder approval of the Executive Incentive Plan.
  • 2Both executives waive their right to terminate employment for 'good reason' due to the company's headquarters relocation from Florida to Arizona.
  • 3The agreements introduce additional benefits and compensation packages for both O'Connor and Holmes, particularly related to future terminations or retirement.
  • 4Key financial terms include a fixed $5.2 million tax payment for O'Connor and $3.1 million for Holmes related to pre-2007 deferred compensation, and severance payments of $4.8 million and $1.9 million respectively.
  • 5Both executives will receive a grant of restricted stock/units valued at $2.0 million for O'Connor and $500,000 for Holmes, vesting under specific conditions.
  • 6The agreements stipulate that neither executive will receive a payout from the Synergy Incentive Plan if they retire or quit without good reason before January 1, 2011 (subject to change of control exceptions).
  • 7The definition of 'cause' for termination has been clarified and made more stringent for both executives.

Frequently Asked Questions

The primary purpose is to retain key executives, CEO James O’Connor and CFO Tod Holmes, following the merger with Allied Waste Industries, Inc. and the company's relocation. These agreements aim to ensure leadership stability and align executive interests with long-term stockholder value by providing specific incentives and benefits tied to performance and continued service.

The new employment agreements are contingent upon stockholder approval of the Executive Incentive Plan, which includes the Synergy Incentive Plan, at the company's upcoming annual meeting. If this plan is not approved, the executives will continue under their prior employment agreements.

Under the new agreements, both executives will receive enhanced benefits upon retirement or termination under specific circumstances. This includes payments for pre-2007 deferred compensation ($5.2 million for O'Connor, $3.1 million for Holmes), substantial severance payments ($4.8 million for O'Connor, $1.9 million for Holmes), and grants of restricted stock. They also gain eligibility for 100% of their Synergy Incentive Plan payout under certain termination conditions.

The new agreements ensure that if Messrs. O’Connor or Holmes are terminated without cause, or resign for good reason, or due to death or disability, they will be eligible to receive 100% of their Synergy Incentive Plan payout, rather than a pro-rata amount. However, they will not be eligible for any Synergy Incentive Plan payout if they retire or quit without good reason before January 1, 2011, unless a change of control occurs.