SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-12154
USA WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-1309529
(State or other jurisdiction (I.R.S. Employer
of Identification No.)
incorporation or organization)
1001 FANNIN STREET, SUITE 4000 77002
HOUSTON, TEXAS (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (713) 512-6200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Common Stock, $.01 par value New York Stock Exchange
5% Convertible Subordinated
Debentures Due 2006
4% Convertible Subordinated
Debentures Due 2002
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
The aggregate market value of the voting stock held by non-affiliates of
the registrant at March 25, 1997, was approximately $5,044,347,000. The
aggregate market value was computed by using the closing price of the common
stock as of that date on the New York Stock Exchange. (For purposes of
calculating this amount only, all directors and executive officers of the
registrant have been treated as affiliates.)
The number of shares of Common Stock, $.01 par value, of the Registrant
outstanding at March 25, 1997, was 154,110,368.
DOCUMENTS INCORPORATED BY REFERENCE
None
FORM 10-K/A (AMENDMENT NO. 1)
REPORT INDEX
PART III Page
Item 10 Directors and Executive Officers of the Registrant. . . . . . . . .
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . .
Item 12 Security Ownership of Certain Beneficial Owners
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13 Certain Relationships and Related Transactions . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Explanatory Note:
The Registrant ("USA Waste") is filing this Form 10-K/A to include the
information required by Part III of Form 10-K pursuant to General Instruction
G(3) of Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the executive officers of USA Waste is set forth in
USA Waste's Annual Report on Form 10-K for the year ended December 31, 1996
under the caption "Executive Officers of the Registrant."
BOARD OF DIRECTORS OF USA WASTE
The USA Waste Restated Certificate of Incorporation and the USA Waste
Bylaws provide that, subject to the rights of holders of any class or series of
USA Waste Preferred Stock to elect additional directors under specified
circumstances, the number of directors will be fixed from time to time by
resolution of the USA Waste Board of Directors; provided, however, that unless
approved by at least two-thirds of the incumbent directors, the number of
directors which shall constitute the whole USA Waste Board of Directors shall be
no fewer than three and no more than nine. The Board of Directors of USA Waste
currently consists of 12 members. The USA Waste Restated Certificate of
Incorporation and the USA Waste Bylaws also provide that the Board of Directors
of USA Waste be divided into three classes of directors, as nearly equal in
number as possible. At each annual meeting of the stockholders, one class of
directors is elected for a three-year term. The terms of the existing Class II
directors expire at the annual meeting of the stockholders of USA Waste to be
held in 1997, the terms of the existing Class III directors expire at the annual
meeting of the stockholders of USA Waste to be held in 1998, and the terms of
the existing Class I directors expire at the annual meeting of the stockholders
of USA Waste to be held in 1999.
Set forth below is certain information concerning the current directors of
USA Waste.
Director Director
Name Description Age Since Class
John E. Drury(1) . . . . . . . . Chairman of the Board and Chief 53 1994 III
Executive Officer
Donald F. Moorehead, Jr.(1) . . . Vice Chairman of the Board 46 1990 II
David Sutherland-Yoest . . . . . Vice Chairman of the Board 41 1994 I
Richard J. Heckmann(3) . . . . . Director 53 1994 I
William E. Moffett(2) Director 66 1995 II
Alexander W. Rangos(1)(2) . . . . Vice Chairman of the Board 36 1995 III
John G. Rangos, Sr.(1) . . . . . Director 67 1995 II
Kosti Shirvanian(1) . . . . . . . Vice Chairman of the Board 67 1996 I
Rodney R. Proto(1) . . . . . . . President, Chief Operating 48 1996 III(4)
Officer and Director
Ralph F. Cox(3) . . . . . . . . . Director 64 1996 I
Larry J. Martin(3) . . . . . . . Director 66 1996 III
Savey Tufenkian(2) . . . . . . . Director 68 1996 II
______________
(1) Member of the Executive Committee
(2) Member of the Compensation and Stock Incentive Plan Committee
(3) Member of the Audit Committee
(4) To be renominated at expiration of term with term expiring in the year 2000
or thereafter
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1997 (CLASS II DIRECTORS)
William E. Moffett (Class II) has served as a director of USA Waste since
June 1995. In 1992, Mr. Moffett retired as Chairman of the Board and Chief
Executive Officer of Chatham Enterprises, Inc. (real estate development) and
Hazmed, Inc. (environmental services). In May 1985, he retired as President of
Gulf Oil Foundation and as Vice President--Public Affairs of Gulf Oil
Corporation, having joined Gulf Oil Corporation in 1969 and served in a number
of managerial assignments for that company and its subsidiaries. Mr. Moffett
also serves as a director of Calvin Exploration Company, Inc.
Donald F. Moorehead, Jr. (Class II) has been Vice Chairman since 1995.
Prior to such time, Mr. Moorehead served as Chairman of the Board and Chief
Development Officer since 1994. From October 1, 1990 to May 27, 1994, he was
also Chief Executive Officer. Mr. Moorehead was Chairman of the Board and Chief
Executive Officer of Mid-American Waste Systems Inc. ("Mid-American") from the
inception of Mid-American in December 1985 until August 1990 and continued as a
director until February 1991. From 1977 until 1984, Mr. Moorehead served in
various management positions with Waste Management Inc.
John G. Rangos, Sr. (Class II) served as Vice Chairman of the Board of
Directors of USA Waste from June 1995 until December 1995. Prior to such time,
Mr. Rangos served as Chief Executive Officer of Chambers Development Company,
Inc. ("Chambers") from 1973 to June 1995. Mr. Rangos is the father of
Alexander W. Rangos, a Vice Chairman of USA Waste. In connection with the
settlement of a Commission investigation with respect to Chambers' accounting
method and the accuracy of its financial statements, the Commission, in May
1995, instituted administrative proceedings against Chambers and certain of
its employees and outside auditors whose conduct the Commission found caused
Chambers' violations of the reporting, internal controls and recordkeeping
provisions of the Exchange Act. The Commission, while not finding that Mr.
Rangos knew of those violations, found that he had not exercised sufficient
oversight over the company's recordkeeping, internal accounting controls, and
financial reporting functions to assure that Chambers complied with the
applicable provisions of the Exchange Act. Mr. Rangos consented to the
issuance of a cease and desist order without admitting or denying the
Commission's findings.
Savey Tufenkian (Class II) helped to establish Western Waste Industries
("Western") in 1955 and has served as the Secretary and Treasurer of Western
since its incorporation in 1964. In 1988, she was elected as Executive Vice
President, Secretary and Treasurer of Western and served in those positions
until May 1996, at which time she became a director of USA Waste.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1998 (CLASS III DIRECTORS)
John E. Drury (Class III) has been Chief Executive Officer since 1994 and
Chairman of the Board since 1995. From 1992 to May 1994, Mr. Drury served as a
Managing Director of Sanders Morris Mundy Inc. ("SMMI"), a Houston based
investment banking firm. Mr. Drury served as President and Chief Operating
Officer of Browning-Ferris Industries, Inc. ("BFI") from 1982 to 1991, during
which time he had chief responsibility for worldwide operations.
Larry J. Martin (Class III) was a co-founder and Vice Chairman of the
Board of Directors of Sanifill, Inc. ("Sanifill"). From October 1989 to
July 1991, Mr. Martin was President and Co-Chief Executive Officer of
Sanifill and from July 1991 to February 1992, he was President of Sanifill.
For more than five years before the acquisition of Sanifill, Mr. Martin was
the president of a group of companies involved in the waste disposal business.
Rodney R. Proto, (Class III) has been President and Chief Operating Officer
of USA Waste since August 1996. Prior thereto, he was President, Chief
Operating Officer and a Director of Sanifill. Mr. Proto joined Sanifill in
February 1992. Before joining Sanifill, he was employed by BFI for 12 years
where Mr. Proto served, among other positions, as Chairman of BFI Overseas from
1985 to 1987 and President of Browning-Ferris Industries Europe, Inc. from 1987
through 1991.
Alexander W. Rangos (Class III) has been a director of USA Waste since June
1995. From June 1995 to December 1995, he was Executive Vice President--
Corporate Development of USA Waste. Prior to such time, he served as President
and Chief Operating Officer of Chambers since January 1994. Prior thereto, he
served with Chambers as Executive Vice President -- Operations and Corporate
Development from 1990 to 1994, as Executive Vice President -- Corporate
Development from 1985 to 1990, and as Manager of the Southern Region from 1984
to 1985. Mr. Rangos is a son of John G. Rangos, Sr.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1999 (CLASS I DIRECTORS)
Ralph F. Cox (Class I) was a Director of Sanifill from September 1993 until
December 1996. Since February 1, 1994, Mr. Cox has been a management
consultant. For four years prior thereto, Mr. Cox was President of Greenhill
Petroleum Corporation, a subsidiary of United Mining Corporation. From 1985
through 1990, he served as President and Chief Operating Officer of Union
Pacific Resources Company, a petroleum exploration and production company.
Before 1985, Mr. Cox spent 31 years with Atlantic Richfield Company ("ARCO"),
joining the ARCO board in 1978, assuming responsibility for ARCO's worldwide
petroleum exploration and production activities and minerals exploration and
production activities in 1984, and culminating with his election as Vice
Chairman of ARCO in 1985. Mr. Cox serves as a director of Bonneville Pacific
Corporation, an independent power company, of Daniel Industries, Inc., which
manufactures oil and gas measurement and flow control equipment, of Rio Grande,
Inc., a petroleum exploration and production company, and CH2M Hill, a
consulting engineering firm. He also serves as an Independent Trustee for The
Fidelity Group of funds. Mr. Cox holds a Bachelor of Science in Petroleum
Engineering and a Bachelor of Science in Mechanical Engineering from Texas A&M
University.
Richard J. Heckmann (Class I) is Chairman, President, and Chief Executive
Officer of United States Filter Corporation ("U.S. Filter"), a position he
assumed in July 1990. Prior to joining U.S. Filter, Mr. Heckmann was a Senior
Vice President -- Investments and Branch Manager of Prudential-Bache Securities
in Rancho Mirage, California. Mr. Heckmann is also a director of Air Cure, Inc.
Kosti Shirvanian (Class I) founded Western in 1955 as a sole
proprietorship. He has served as Western's Chairman of the Board of Directors,
President and Chief Executive Officer since Western's incorporation in 1964.
David Sutherland-Yoest (Class I) has been Vice Chairman since August 1996.
Prior to joining USA Waste, he was President, Chief Executive Officer and a
director of Envirofil, Inc. ("Envirofil"). He joined Envirofil in January 1993
and was elected a director in March 1993. From September 1989 to June 1992,
Mr. Sutherland-Yoest served as President of Browning-Ferris Industries, Ltd.
("BFI Ltd."), the Canadian subsidiary of BFI. From January through September
1989, Mr. Sutherland-Yoest served as Vice-President, Corporate Development, for
Laidlaw Waste Systems, Inc. From 1987 to September 1989, Mr. Sutherland-Yoest
was Laidlaw's Regional Vice-President -- Atlantic Region, located in Columbus,
Ohio. From 1981 to 1987, Mr. Sutherland-Yoest served as District Manager --
Vancouver and District Manager -- Calgary for BFI Ltd.
The Board of Directors of USA Waste has not yet nominated individuals for
election as directors at the Annual Meeting of Stockholders to be held in 1997.
DIRECTOR COMPENSATION
For 1996 directors who were not employed by USA Waste received a grant of
options to purchase 10,000 shares of USA Waste Common Stock. In addition, USA
Waste reimburses directors for their travel and out-of-pocket expenses incurred
in attending Board or committee meetings.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Under the federal securities laws, USA Waste's directors, executive (and
certain other) officers and any person holding more than ten percent of the
outstanding USA Waste Common Stock are required to report their beneficial
ownership of USA Waste Common Stock to USA Waste and the Commission. Specific
due dates for these reports have been established by regulation and USA Waste is
required to report any failure to file by these dates during 1996. All of these
filings were satisfied by USA Waste's directors, officers and ten percent
holders, except that Messrs. Martin, Moorehead, Sutherland-Yoest and Sangalis
and Ms. Tufenkian each failed to file on a timely basis one report concerning
one transaction.
As of April 30, 1997, USA Waste believes that all directors, officers and
ten percent holders are current in their filings. In making these statements,
USA Waste has relied on the written representations of its directors, officers
and ten percent holders and copies of reports that they have filed with the
Commission.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information
with respect to persons serving as USA Waste's Chief Executive Officer during
1996 and the four most highly compensated executive officers other than the
Chief Executive Officer whose total annual salary and bonus for 1996 exceeded
$100,000 ("named executive officers").
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Restricted Securities
Stock Underlying All Other
Name and Principal Position Year Salary Bonus Awards($) Options Compensation(1)
John E. Drury . . . . . . . 1996 $563,000 $625,000 725,000 $4,750
Chairman of the Board and 1995 500,000 625,000 425,000 5,192
Chief Executive Officer(2) 1994 290,217 200,000 850,000 ---
Rodney R. Proto . . . . . . 1996 $317,700 $360,000 822,500 $8,807
President and Chief 1995 269,791 260,000 51,000 11,784
Operating Officer(4) 1994 248,083 225,000 $500,010(3) 34,000 10,279
Donald F. Moorehead, Jr. . 1996 $335,000 $330,000 200,000 4,750
Vice Chairman and Chief 1995 300,000 375,000 180,000 4,154
Development Officer 1994 260,000 130,000 25,000 ---
David Sutherland-Yoest . . 1996 $328,850 $330,000 200,000 4,750
Vice Chairman and 1995 300,000 375,000 180,000 4,154
Vice President - 1994 251,597 65,000 --- ---
Atlantic Region(4)
Earl E. DeFrates . . . . . 1996 $238,450 $275,000 150,000 4,750
Executive Vice President 1995 187,500 200,000 95,000 2,769
and Chief Financial Officer 1994 155,000 70,000 25,000 ----
______________
(1) Includes contributions by the Company under its 401(k) plan.
(2) Mr. Drury joined the Company in May 1994.
(3) Represents the aggregate value of restricted stock holdings as of
December 31, 1996. Mr. Proto received an award of 23,810 shares
of restricted common stock of Sanifill pursuant to the Sanifill,
Inc. 1994 Long-Term Incentive Plan (the "Sanifill Plan") in 1994.
Such shares of restricted stock became fully vested and were
converted into 40,477 shares of USA Waste common stock in connection
with the merger of Sanifill with a subsidiary of USA Waste (the
"Sanifill Merger"). The Sanifill Plan is no longer in existence.
(4) Mr. Proto joined USA Waste in August 1996 in connection with the
Sanifill Merger, at which time he became President and Chief
Operating Officer of USA Waste. Mr. Sutherland-Yoest joined
the Company in May 1994 in connection with USA Waste's acquisition
of Envirofil and served as President and Chief Operating Officer
of USA Waste until August 1996.
The following table sets forth information concerning the grant of stock
options during 1996 to the named executive officers:
OPTION GRANTS IN 1996
Percentage Potential Realizable Value
of Total at Assumed Annual Rate of
Number of Options Stock Price Appreciation For
Shares Granted to Exercise Option Term(1)
Underlying Employees Price Expiration
Name Options in (per share) Date 5% 10%
Granted Fiscal 1996
John E. Drury . . . . . 300,000 3.84% $17.750 01/22/06 $7,983,407.18 $10,234,589.32
425,000 5.45% $27.125 08/30/06 $14,999,553.30 $19,229,166.77
Rodney R. Proto . . . . 212,500 2.72% $21.250 02/16/06 $11,590,563.91 $14,858,901.59
610,000 7.82% $27.125 08/30/06 $21,528,770.62 $27,599,509.95
Donald F. Moorehead, Jr. 150,000 1.92% $17.750 01/22/06 $3,991,703.58 $5,117,294.65
50,000 0.64% $27.125 08/30/06 $1,764,653.33 $2,262,254.91
David Sutherland-Yoest 150,000 1.92% $17.750 01/22/06 $3,991,703.58 $5,117,294.65
50,000 0.64% $27.125 08/30/06 $1,764,653.33 $2,262,254.91
Earl E. DeFrates . . . 50,000 0.64% $17.750 01/22/06 $1,330,567.86 $1,705,764.88
100,000 1.28% $27.125 08/30/06 $3,529,306.66 $4,524,509.83
______________
(1) The potential realizable value of each grant of options assuming that the
market price of the underlying security appreciates in value from the date
of grant to the end of the option term at the rates of 5% and 10%
compounded annually.
The following table sets forth information concerning the exercise of stock
options during 1996 by USA Waste's named executive officers:
OPTION EXERCISES AND YEAR-END VALUE TABLE(1)
Value of Unexercised In-
Number of Unexercised the-Money Options at
Shares Options at December 31, 1996 December 31, 1996(2)
Acquired (Shares)
Name on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
John E. Drury . . . . . 510,000 1,490,000 $9,740,950.00 $19,086,800.00
Rodney R. Proto . . . . 807,500 610,000 $12,504,676.40 $2,894,450.00
Donald F. Moorehead,Jr. 193,500 369,000 $3,370,282.50 $4,711,521.13
David Sutherland-Yoest 209,029 $3,256,391 0 459,353 $0.00 $5,979,255.00
Earl E. DeFrates . . . 104,000 251,000 $722,180.00 $2,484,595.00
______________
(1) Includes exercise of warrants that were granted to such officers as
compensation.
(2) Computed based upon the difference between aggregate fair market value
based on NYSE Composite Tape closing price on December 31, 1996 (of $31.875
per share) and the aggregate exercise price.
Employment Agreements. Messrs. Drury, Proto, Moorehead and
Sutherland-Yoest are each parties to employment agreements with USA Waste, which
have continuously renewing terms of five years until age 65 and which provide
for the payment of minimum annual base salaries and for the participation by the
employee in all USA Waste benefit plans and programs. In addition, Mr. Drury's
employment agreement provided that USA Waste would purchase his former residence
in Houston, Texas for $1,375,000, the fair market value of such residence at
June 1, 1994.
The employment agreements include provisions governing compensation and
severance benefits upon termination of employment with USA Waste and upon
certain changes of control of USA Waste. The agreements may be terminated by USA
Waste other than for cause (as defined in the agreements) on the date five years
after such notice is given. During that ensuing period, the employee would
continue his employment on a part-time basis and be available to consult with
USA Waste. Generally, the employee's compensation while on part-time status
would be 75% of the average of the employee's compensation (including salary and
bonus) for the two highest of the three years prior to the employee going on
part-time status.
In the event of a change of control of USA Waste, the employee may elect to
receive a lump sum payment equal to three times the employee's average
annualized base compensation includable in gross income over the five taxable
years preceding the tax year in which the change of control occurs if, following
such change in control, USA Waste seeks to terminate such officer without cause
or takes any action adverse to such officer without his or her consent with
respect to, among other things, his or her duties, level of compensation or
benefits. The election by the employee to take the change of control payment
would be in lieu of other benefits and rights under such employee's agreement
except, generally, amounts payable under pension, insurance, and similar plans,
reimbursement for legal and other advisory expenses and certain stock option and
indemnification rights.
Mr. DeFrates also currently has an employment agreement with USA Waste.
Pursuant to the terms of his agreement, Mr. DeFrates has agreed to serve as a
full-time employee of USA Waste for a period of three years (until September 26,
1997) with automatic three-year extensions thereafter unless the agreement is
terminated by either party. The agreement provides for a minimum annual salary
and for the participation by Mr. DeFrates in all USA Waste benefit programs. The
employment agreement includes provisions governing termination and changes in
control of USA Waste.
The employment agreement entered into by Mr. DeFrates provides that if
Mr. DeFrates voluntarily terminates his employment with USA Waste, USA Waste
will pay him severance pay equal to 70% of his base salary in effect at
termination for a period of three years. In addition, in the event there is a
change in control of USA Waste after which USA Waste seeks to terminate him
without cause or takes any action adverse to him without his consent with
respect to, among other things, his duties, level of compensation or benefits,
USA Waste is required to pay Mr. DeFrates a lump sum equal to three times the
sum of his base salary in effect at termination and the highest bonus he
received in the three-year period prior to termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During 1996, Ms. Tufenkian, Mr. Moffett and Mr. Alexander Rangos served on
the Compensation Committee of the Board of Directors. During 1996, no executive
officer of USA Waste served as (i) a member of the compensation committee (or
other board committee performing equivalent functions) of another entity, one of
whose executive officers served on the Compensation Committee, (ii) a director
of another entity, one of whose executive officers served on the Compensation
Committee or (iii) a member of the compensation committee (or other board
committee performing equivalent functions) of another entity, one of whose
executive officers served as a director of USA Waste.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information with respect to the beneficial
ownership of USA Waste Common Stock as of April 30, 1997 by (1) each owner of
more than 5% of such common stock, (2) each director of USA Waste, (3) certain
executive officers of USA Waste, including its Chief Executive Officer and the
four most highly compensated officers other than the Chief Executive Officer who
were serving as officers at December 31, 1996, and (4) all executive officers
and directors of USA Waste, as a group. Except as otherwise indicated below,
each of the entities and persons named in the tables has sole voting and
investment power with respect to all shares of common stock beneficially owned.
Unless otherwise indicated, the address for each of the individuals or entities
named in the table below is the principal executive offices of USA Waste.
Number of Percentage of
Name Shares Class
American Express Company and . . . . . . 7,953,335(1) 5.2%
American Express Financial Corporation
200 Vesey Street
New York, New York 10285
Ralph F. Cox . . . . . . . . . . . . . . 51,000(2) *
John E. Drury . . . . . . . . . . . . . . 1,669,115(3) 1.1
Donald F. Moorehead, Jr. . . . . . . . . 1,967,945(4) 1.2
David Sutherland-Yoest . . . . . . . . . 355,691(5) *
Earl E. DeFrates . . . . . . . . . . . . 165,755(6) *
Richard J. Heckmann . . . . . . . . . . . 20,439(7) *
Larry J. Martin . . . . . . . . . . . . . 1,577,940(8) 1.0
William E. Moffett . . . . . . . . . . . 16,665(9) *
Rodney R. Proto . . . . . . . . . . . . . 869,599(10) *
John G. Rangos, Sr. . . . . . . . . . . . 7,373,911 4.8
Alexander W. Rangos . . . . . . . . . . . 1,822,131(11) 1.3
Kosti Shirvanian . . . . . . . . . . . . 9,501,061(12) 5.9
Savey Tufenkian . . . . . . . . . . . . . 998,746(13) *
All directors and executive officers
as a group (16 persons) . . . . . . . . . 26,450,594 16.9
_________________________________
* Less than 1%
(1) As of December 31, 1996 according to a Schedule 13G filed with the
Securities and Exchange Commission by the named stockholders.
(2) Includes 42,500 shares issuable pursuant to options exercisable within 60
days.
(3) Includes 580,001 shares issuable pursuant to options exercisable within 60
days and 5,176 shares owned by Mr. Drury's spouse.
(4) Includes 239,501 shares issuable pursuant to options exercisable within 60
days and 239,323 shares owned by Mr. Moorehead's spouse.
(5) Includes 93,678 shares issuable pursuant to options exercisable within 60
days and 5,000 shares owned by Mr. Sutherland-Yoest's daughter.
(6) Includes 128,001 shares issuable pursuant to options exercisable within 60
days.
(7) Includes 10,000 shares issuable pursuant to options exercisable within 60
days.
(8) Includes 21,250 shares issuable pursuant to options exercisable within 60
days.
(9) Includes 16,665 shares issuable pursuant to options exercisable within 60
days.
(10) Includes 807,500 shares issuable pursuant to options exercisable within 60
days.
(11) Includes 90,709 shares issuable pursuant to options exercisable within 60
days and 1,210,008 shares held by John Rangos Development Corporation, Inc.
(12) Includes 2,787,000 shares issuable pursuant to options exercisable within
60 days.
(13) Includes 611,084 shares issuable pursuant to options exercisable within 60
days and 16,901 shares owned by Ms. Tufenkian's spouse.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with USA Waste's merger (the "Western Merger") with Western
in May 1996, Kosti Shirvanian became a Vice Chairman of USA Waste and a member
of the Executive Committee of the USA Waste Board of Directors. USA Waste and
Mr. Shirvanian entered into an employment agreement effective as of the
effective time of the Western Merger providing for an annual salary of
$500,000 (to be increased by a minimum of 10% per year), a guaranteed annual
bonus of $250,000 and a discretionary annual bonus of up to $250,000. Pursuant
to his employment agreement, Mr. Shirvanian is also entitled to receive
additional compensation from USA Waste as its compensation committee
may determine.
In addition, USA Waste assumed, pursuant to the employment agreement with
Mr. Shirvanian, certain obligations with respect to a split dollar life
insurance agreement (the "Insurance Agreement") entered into in 1995 by Western
and Mr. and Mrs. Kosti Shirvanian and Ms. Linda Shirvanian, as trustee for the
Kosti and Marian Shirvanian Family 1995 Irrevocable Trust (the "Trust"). The
Insurance Agreement provides for life insurance on the life of Mr. Shirvanian or
the lives of Mr. and Mrs. Shirvanian. The beneficiary of the policy is the
Trust. The beneficiaries of the Trust are the descendants of Mr. and
Mrs. Shirvanian. Under the Insurance Agreement, the premium payment obligations
are split between Western and the Trust. The estimated discounted single
premium payment required to pay in full the obligations under the Insurance
Agreement would be approximately $7 million, of which approximately $2.35
million represents the Trust's share of such premium. In connection with the
Western Merger, USA Waste assumed the payment obligations of both Western and
the Trust. All premium payments made by USA Waste or Western are recoupable out
of the death benefits of such policy.
Pursuant to his employment agreement, Mr. Shirvanian was granted options to
purchase 900,000 shares of USA Waste Common Stock at an exercise price equal to
the closing trading price on the NYSE for USA Waste Common Stock on the
effective date of the Western Merger. On each of the first four anniversary
dates of the effective date of the Western Merger, Mr. Shirvanian is entitled to
additional grants of options to purchase 162,500 shares of USA Waste Common
Stock at an exercise price equal to the fair market value of the USA Waste
Common Stock at the date of grant. The options will expire 10 years from the
date of grant and will vest at a rate of 20% annually.
The agreement provides that upon a change of control of USA Waste while
Mr. Shirvanian is still an employee or within 12 months after Mr. Shirvanian is
placed on part-time status, Mr. Shirvanian will be entitled, at his election, to
receive a lump sum amount equal to three times the sum of his then base salary
and guaranteed bonus, less $1.00.
Mr. Shirvanian's employment agreement is for a continually renewing term of
five years from the effective date of the Western Merger, subject to termination
under certain circumstances. At all times during the term of the employment
agreement, and for a period of two years after the termination of his
employment, Mr. Shirvanian has agreed not to compete with the business of USA
Waste.
In January 1996, Western's Board of Directors approved the payment of a
$750,000 bonus to Mr. Shirvanian prior to the Western Merger which payment was
made to Mr. Shirvanian in January 1996.
Pursuant to the terms of the Western Merger, USA Waste and the Shirvanian
Family Investment Partnership (the "Partnership"), of which Kosti
Shirvanian, a director of USA Waste, is a general partner, transferred to USA
Waste the Partnership's interests in the land and improvements constituting a
portion of a transfer station in Carson, California, in exchange for the
issuance by USA Waste of 337,500 shares of USA Waste Common Stock.
In connection with USA Waste's merger with Chambers, USA Waste entered into
an employment agreement with Alexander W. Rangos similar to the employment
agreements with Messrs. Moorehead and Drury, and into consulting and non-compete
agreements with each of John G. Rangos, Sr. and John G. Rangos, Jr. The
employment agreement with Alexander Rangos is for a five-year term at a base
salary of $275,000 per year. The consulting and non-compete agreements with each
of John G. Rangos, Sr. and John G. Rangos, Jr. provide for annual compensation
of $450,000 and $250,000, respectively, and are for a term of five years. In
connection with the Sanifill Merger, USA Waste agreed to accelerate
payments under such employment and consulting agreements, John G. Rangos, Sr.
resigned as Vice Chairman (but remains a director of USA Waste), and Alexander
W. Rangos became Vice Chairman of the Board of Directors and resigned as an
Executive Vice President of USA Waste. On December 29, 1994, Chambers made
unconditional promises to contribute $3,000,000 to certain charitable
organizations at the direction of John G. Rangos, Sr. On December 18, 1995, USA
Waste agreed that an additional $2,000,000 would be funded in connection with
charitable contributions pursuant to such arrangements. In addition, USA Waste
filed a shelf registration statement relating to 4,000,000 shares of USA Waste
Common Stock held by John G. Rangos, Sr., Alexander W. Rangos and John G.
Rangos, Jr. and one of their affiliates.
In August 1995, USA Waste exercised an option to purchase real estate from
Mr. John Rangos, Sr. and Mr. Michael J. Peretto, a former director of Chambers,
and certain members of his family. The real estate is adjacent to USA Waste's
Monroeville, Pennsylvania landfill. The option to purchase the real estate was
originally granted to Chambers pursuant to an agreement among the parties dated
July 8, 1993. The total consideration paid by USA Waste for the real estate was
$2,986,118, of which $2,103,585 was paid to Mr. Rangos and $882,533 was paid to
Mr. Peretto and members of his family.
In connection with USA Waste's acquisition of Envirofil in May 1994, SMMI,
in its capacity as financial advisor to Envirofil received a fee of $850,000. In
1995, USA Waste called for redemption its 8% Convertible Subordinated
Debentures, and in connection with such transaction, entered into a standby
agreement with SMMI, pursuant to which SMMI received $200,000 and reimbursement
for its legal fees. Prior to joining USA Waste, Mr. Drury was a Managing
Director and shareholder of SMMI and remains a director thereof.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.
USA WASTE SERVICES, INC.
By: /s/ Earl E. DeFrates
Earl E. DeFrates, Executive Vice
President and Chief Financial Officer
