US ECOLOGY, INC. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On
2021 Base Salary
The 2021 annual base salary of each named executive officer will remain
unchanged from the prior year;
2021 Management Incentive Plan
The Board approved the 2021 MIP under which each Executive will be eligible to
receive a cash incentive payment for fiscal year 2021 ("Plan Year") based upon
the achievement of four independent objectives: (1) financial; (2) individual
performance; (3) health and safety; and (4) compliance (each, a "Plan
Objective"). The payout available for achievement of 100% of each Plan Objective
is a percentage of an Executive's annual base salary ("Target Incentive"). The
Target Incentive is 105% of base salary for
The portion of an Executive's Target Incentive based on financial performance ("Finance Target Incentive") increases with every percentage point over 89% of each of the Company's target (i) earnings before interest, taxes, depreciation and amortization ("EBITDA Target") and (ii) free cash flow ("FCF Target") (each, a "Base MIP Target") and are weighted at 40% and 20%, respectively, of an Executive's Target Incentive and 67% and 33% respectively of the Finance Target Incentive. Upon achievement of 90% of a Base MIP Target, the Executive will earn 50% of the Finance Target Incentive, multiplied by the corresponding weight; 67% in the case of the EBITDA Target and 33% in case of the FCF Target (each, a "Target Weight"). For every percentage point achievement over 90% of a Base MIP Target, up to and including 100%, an Executive will earn 5% of the Finance Target Incentive, multiplied by the Target Weight. Upon 100% achievement of a Base MIP Target, 100% of the Finance Target Incentive, multiplied by the Target Weight, will be available to an Executive. In the event the Company exceeds 100% of a Base MIP Target, an Executive will be eligible for an additional incentive payment in an amount calculated by multiplying his Target Incentive by 10% for every 1% increase over 100% of a Base MIP Target and multiplied further by the Target Weight. The additional incentive payments are capped at one times an Executive's Target Incentive (achieved at 110% of each Base MIP Target) for a maximum potential incentive payment of two times the Executive's Target Incentive.
Up to 20% of an Executive's Target Incentive will be awarded based on the Executive's individual performance, including teamwork, achievement of established annual priorities, effective use of Company resources and other evaluative factors.
Up to 10% of an Executive's Target Incentive will be awarded based on achieving Company-wide health and safety objectives as set and approved by the Committee.
The metric for the compliance objective is the avoidance of Notices of Violation or Enforcement with monetary penalties during the Plan Year and is weighted at 10% of an Executive's Target Incentive. The Target Incentive related to compliance will be earned based on a determination by the Committee, taking into consideration, among other things, the dollar amount of a monetary penalty paid (or accrued under generally accepted accounting principles) in the Plan Year, severity of the Notices of Violation or Enforcement, regulatory basis for penalty and respective fact patterns.
2 2021 Equity Awards
Given the significant economic uncertainty and business disruption created by
the COVID-19 pandemic, the Committee, in consultation with its executive
compensation advisor, reviewed the Company's long-term incentive program to
determine whether it appropriately aligns compensation with the Company's goals
and ensures the stability of the Company's executive team. Following its review,
the Committee, and the Board in the case of
Executive Stock Restricted Total
Options Stock
Jeffrey R. Feeler $900,000 $900,000 $1,800,000
President and Chief Executive Officer
Simon G. Bell
Executive Vice President and Chief $325,000 $325,000 $650,000
Operating Officer
Steven D. Welling
Executive Vice President of Sales and $312,500 $312,500 $625,000
Marketing
Eric L. Gerratt
Executive Vice President and Chief $312,500 $312,500 $625,000
Financial Officer
Andrew P. Marshall
Executive Vice President of Regulatory $187,500 $187,500 $375,000
Compliance and Safety
The Board elected not to award performance stock units ("PSUs) at this time because the COVID-19 pandemic continues to present significant business uncertainty. The Board believes it does not have sufficient visibility to the timing of the Company's recovery that would be necessary to set meaningful multi-year financial performance targets. The Board considers this a temporary decision and anticipates a return to a long-term incentive program that consists of at least 40% PSUs (equal to the weight given PSUs in the 2020 program), in fiscal year 2022. The Board believes that the options awarded, increased from 20% to 50% of the total equity award value, aligns management's interest with that of shareholders and the performance element of the award adequately addresses the unprecedented uncertainty and lack of visibility given that a recipient will not realize any value of the award unless the share price exceeds a certain value.
Amended and Restated Executive Employment Agreements
On
Executive Base Salary Target Annual
Incentive % of
Base Salary
Jeffrey R. Feeler $625,000 100%
President and Chief Executive Officer
Simon G. Bell
Executive Vice President and Chief Operating $453,000 75%
Officer
Steven D. Welling Executive Vice President of Sales and$425,000 75%
Marketing
Eric L. Gerratt Executive Vice President and Chief Financial$425,000 75%
Officer
Andrew P. Marshall Executive Vice President of Regulatory$320,000 75% Compliance and Safety 3
Upon a termination of employment by the Company without cause or by the
Executive for good reason, each Executive would be entitled to receive an amount
equal to the sum of (x) two years' base salary and (y) two times target bonus
("Severance Payment"). In addition to the Severance Payment, each Executive
would be entitled to (i) reimbursement of medical, dental and vision insurance
premiums for a period up to 18 months ("COBRA Reimbursements"); (ii) six monthly
payments each equal to the greater of (x) two times the monthly COBRA medical,
dental and vision insurance premiums as of the termination date and (y)
Upon a "change of control" (as defined in each Restated Agreement) and
subsequent termination of the Executive's employment by the Company without
cause or by the Executive for good reason, in either case, within 24 months
after such change of control, each Executive would be entitled to receive, in
lieu of the Severance Payment, a payment equal to two times (or three times for
The Restated Agreements also provide that upon certain terminations of employment by the Company or by the Executive, certain of their unvested equity awards may become fully or partially vested, with vesting being fully accelerated in some cases or on a continued basis in other cases.
The severance benefits in the Restated Agreements generally are subject to the Executive executing and not revoking a general release of claims against the Company and certain other persons and entities.
The non-compete and non-solicit restricted periods for each Executive after a termination of employment are (i) 18 months upon a termination of employment by the Company without cause (including non-renewal of the employment term) or by the Executive for good reason or (ii) 12 months upon a termination of employment by the Executive without good reason.
The foregoing description is not a complete description of the Restated Agreements and is qualified in its entirety by reference to the full text of the Restated Agreements.
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