EXHIBIT 10.9
Republic Services, Inc.
Executive Incentive Plan
Introduction
On April 26, 2001, the Board
of Directors adopted the Republic Services, Inc. Long Term
Incentive Plan, effective January 1, 2001. Though designed in
general to comply with the requirements of “performance-based
compensation” for purposes of Code Section 162(m)(4),
the Plan was not submitted for shareholder approval. Effective
January 1, 2003, the Long Term Incentive Plan has been
amended, restated and renamed the “Executive Incentive
Plan” to provide not only for awards designed to encourage
and recognize long term performance by participants, but also to
include annual awards previously made pursuant to the
Company’s Corporate Bonus Program. It is the intention of the
Board of Directors to submit the amended and restated Plan for
shareholder approval.
1. Purpose.
The purposes of the Plan are to
promote the success of the Company; to provide designated Executive
Officers with an opportunity to receive incentive compensation
dependent upon that success; and to attract, retain and motivate
such individuals.
2. Definitions.
“ Award ”
means an incentive award, either a Long Term Award or an Annual
Award made pursuant to the Plan.
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Annual Award (formerly made pursuant to the
Corporate Bonus Program) — is designed to recognize the
annual contribution of Participants to the achievement of certain
short term goals and objectives of the Company.
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Long Term Award — is designed to
recognize the impact by Participants upon the achievement by the
Company of longer term success in enhancing shareholder value.
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“ Award Formula
” means one or more objective formulas or standards
established by the Committee for purposes of determining an Award
based on the level of performance with respect to one or more
Performance Goals. Award Formulas may vary from Performance Period
to Performance Period and from Participant to Participant and may
be established on a stand-alone basis, in tandem or in the
alternative. The Award Formula for each Performance Period shall be
established in writing by the Committee.
“ Award Schedule
” means the Award Schedule established pursuant to Section
4.1.
“ Beneficiary
” means the person(s) designated by the Participant, in
writing on a form provided by the Committee, to receive payments
under the Plan in the event of his or her death while a Participant
or, in the absence of such designation, the Participant’s
estate.
“ Board of Directors
” means the Board of Directors of the Company.
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“ Change of Control
” means any change in control of the Company of a nature
which would be required to be reported (i) in response to
Item 6(e) of Schedule 14A of Regulation 14A, as in effect
on the date of this Agreement, promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
(ii) in response to Item 1 of the Current Report on
Form 8-K, as in effect on the date of this Agreement,
promulgated under the Exchange Act, or (iii) in any filing by
the Company with the Securities and Exchange Commission; provided,
however, that without limitation, a Change of Control of the
Company shall be deemed to have occurred if:
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(a)
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Any “person” (as such term is
defined in Sections 13(d)(3) and Section 14(d)(3) of the
Exchange Act), other than the Company, any majority-owned
subsidiary of the Company, or any compensation plan of the Company
or any majority-owned subsidiary of the Company, becomes the
“beneficial owner” (as such term is defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more
of the combined voting power of the Company;
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(b)
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During any period of three consecutive years
during the term of this Agreement, the individuals who at the
beginning of such period constitute the Board of Directors of the
Company cease for any reason to constitute at least a majority of
such Board of Directors, unless the election of each director who
was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds
of the directors then in office who were directors at the beginning
of such period; or
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(c)
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The shareholders of the Company approve
(1) a reorganization, merger, or consolidation with respect to
which persons who were the shareholders of the Company immediately
prior to such reorganization, merger, or consolidation do not
immediately thereafter own more than 50% of the combined voting
power entitled to vote generally in the election of the directors
of the reorganized, merged or consolidated entity; (2) a
liquidation or dissolution of the Company; or (3) the sale of
all or substantially all of the assets of the Company or of a
subsidiary of the Company that accounts for 30% of the consolidated
revenues of the Company, but not including a reorganization, merger
or consolidation of the Company.
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“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Committee ”
means the Compensation Committee of the Board of Directors. The
Committee shall be composed of not fewer than two directors, each
of whom shall be an “outside director” (within the
meaning of Code Section 162(m)).
“ Company ”
means Republic Services, Inc. and its successors.
“ Determination
Period ” means, with respect to a Performance Period
applicable to any Award under the Plan, the period commencing with
the first day of such Performance Period and ending 90 days
after the commencement of the Performance Period.
“ Disability ”
means disability as defined under the Company’s long term
disability plan or, if no such plan is in force at the time, as
determined by the Committee.
“ Executive Officer
” means a Person who is the chief executive officer, chief
operating officer, chief financial officer, general counsel,
controller, corporate vice president, regional vice president,
controller or manager, or area president of the Company.
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“ Participant
” means an Executive Officer selected from time to time by
the Committee to participate in the Plan.
“ Performance Goal
” means the level of performance established by the Committee
as the Performance Goal with respect to a Performance Measure.
Performance Goals may vary from Performance Period to Performance
Period and from Participant to Participant and may be established
on a stand-alone basis, in tandem or in the alternative. Initially,
Performance Goals shall include minimum, target and maximum
performance levels.
“ Performance
Measure ” means one or more of the following selected by
the Committee to measure Company and/or business unit performance
for a Performance Period: net income; basic or diluted earnings per
share; net revenues; gross profit; free cash flow, income before
income taxes; economic profit; return on assets; return on funds
employed and return on equity; each as determined in accordance
with generally accepted accounting principles, where applicable, as
consistently applied by the Company and, if so determined by the
Committee prior to the expiration of the Determination Period,
adjusted, to the extent permitted under Section 162(m) of the
Code, to omit the effects of extraordinary items, the gain or loss
on the disposal of a business segment, unusual or infrequently
occurring events and transactions and cumulative effects of changes
in accounting principles. Performance Measures may vary from
Performance Period to Performance Period and from Participant to
Participant and may be established on a stand-alone basis, in
tandem or in the alternative. Initial Performance Measures for
Annual Awards and Long Term Awards are set forth on Schedule A
and Schedule B, respectively.
“ Performance Period
” means one or more periods of time, as the Committee may
designate, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a
Participant’s right to payment in respect of an Award. Unless
otherwise determined by the Committee in advance, the Performance
Period for an Annual Award shall be one calendar year beginning
January 1, 2003. Unless otherwise determined by the Committee
in advance, a Performance Period for a Long Term Award shall be
three calendar years, with the first such Period beginning
January 1, 2003.
“ Plan ” means
the Republic Services, Inc. Executive Incentive Plan, which
combines the Long Term Incentive Plan and the Corporate Bonus
Program, both as amended and restated, effective January 1,
2003. Prior to such date, “Plan” means the Republic
Services, Inc. Long Term Incentive Plan (effective, January 1,
2001).
“ Plan Year ”
means the calendar year.
“ Retirement ”
means retirement at the Company’s normal retirement age or
early retirement with the prior written approval of the
Company.
3. Participation.
3.1 Participants shall
be selected by the Committee from among the Executive Officers. The
selection of an Executive Officer as a Participant for a
Performance Period shall not entitle such individual to be selected
as a Participant with respect to any other Performance Period;
provided, however, that once an Executive Officer becomes a
Participant, he shall continue as a Participant until the Committee
terminates his participation or an event occurs under the Plan
which causes termination of participation.
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4. Awards.
4.1 Award
Schedules. With respect to each Performance Period with respect
to which an Award may be earned by a Participant under the Plan,
prior to the expiration of the Determination Period the Committee
shall establish in writing for such Performance Period an Award
Schedule for each Participant. The Award Schedule shall set forth
the applicable Performance Period, Performance Measure(s),
Performance Goal(s), and Award Formula(s) and such other
information as the Committee may determine. Once established for a
Plan Year, such items shall not be amended or otherwise modified to
the extent such amendment or modification would cause the
compensation payable pursuant on the Award to fail to constitute
performance- based compensation under Code Section 162(m). Award
Schedules may vary from Performance Period to Performance Period
and from Participant to Participant.
4.2
Determination of Awards. A Participant shall be eligible to
receive payment in respect of an Award only to the extent that the
Performance Goal(s) for such Award are achieved and the Award
Formula as applied against such Performance Goal(s) determines that
all of some portion of such Participant’s Award has been
earned for the Performance Period. As soon as practicable after the
close of each Performance Period, the Committee shall meet to
review and certify in writing whether, and to what extent, the
Performance Goals for the Performance Period have been achieve
