DEF 14A 1 d757944ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.    )

 

 

Filed by the Registrant    

Filed by a Party other than the Registrant    

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

REPUBLIC SERVICES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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REPUBLIC(R) SERVICES We'll handle it from here. Notice of the 2020 Annual Meeting of Shareholders and 2020 Proxy Statement


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SUSTAINABILITY AT REPUBLIC SERVICES The Five Elements of Our Sustainability Platform Safety Nothing is more important than safety. The nature of our business model requires us to be uncompromising on safety. A sustainable planet is only possible if everyone works and lives together...safely. People We believe an engaged and diverse workforce is the greatest indicator of our success. Our people make Republic a preferred place to work and help our communities to be strong and vibrant. Operations With one of the largest fleets in the nation and an average of 5 million pickups per day, we known it's important for us to continuously leverage technology to reduce emissions while increasing efficiency. Materials Management Our experience, passion and high ethical standards drive us to do more, solve more, innovate more and turn waste into solutions that deliver a valuable product or service while also protecting our planet. Communities Investing in the communities where we live and work is important to us. We provide financial support, volunteer our time and provide in-kind donations to help our communities thrive. Awards & Recognition for Our Blue Planet Sustainability Initiatives For more information about our Sustainability Platform and our new 2030 Sustainability Goals, please visit RepublicServices.com/sustainability.


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REPUBLIC(R) SERVICES We'll handle it from here(R).


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March 24, 2020

Dear Shareholder:

Republic Services is the second largest solid waste and recycling services company in North America as measured by revenue, and our vision is to be America’s preferred provider and partner. Under the leadership of the Company’s Board of Directors and management team, our 36,000 employees continued to advance our strategy of Profitable Growth through Differentiation throughout 2019. We do this through a consistent focus on strong performance and innovation in five strategic pillars: Market Position, Operating Model, People and Talent Agenda, Customer Zeal, and Digital Platform. Our collective commitment to these strategic pillars has generated sustainable earnings and cash flow growth while continually improving return on invested capital. We remain focused on creating value for all our stakeholders — our customers, employees, communities and shareholders.

 

Our Blue Planet: 2030 Goals

As our business continues to grow, so too does our potential to make a meaningful positive impact on the environment and society. Over the past several years, we have been steadily enhancing the way that we measure and manage our sustainability performance. In 2019, we unveiled a new set of ambitious, long-term sustainability goals that build on the success of the time-bound goals we achieved in 2018. These new goals are designed to significantly benefit the environment and society while enhancing the foundation and profitability of our business for the long term.

We developed our new 2030 goals through a comprehensive assessment that included an analysis of global trends, identification of business model dependencies, and engagement with key stakeholders, including our shareholders. This resulted in an ambitious set of objectives that align with the United Nations’ Sustainable Development Goals, which address critical global macrotrends. Notably, our new greenhouse gas goal has been approved by the Science Based Targets Initiative.

In addition to setting new goals in 2019, we also increased our level of sustainability disclosure and transparency. We released our fifth Sustainability Report in 2019, published our second annual SASB report and updated our GRI report to the latest standard. All of these reports are available on our website at RepublicServices.com/sustainability.

Culture and Human Capital Management

We know that building an engaged workforce requires a commitment that extends throughout the entire organization. We demonstrate our commitment to diversity through our actions and through the people who guide our Company. We are proud to report that seven of the 12 current members of our Board are women or diverse. Our Board is actively involved in overseeing the Company’s human capital management program, which includes talent development, inclusion and diversity, employee wellness, and other important initiatives. We are committed to creating a company that attracts and engages its employees every day. We do this by combining meaningful experiences and programs that develop and motivate employees with attractive total rewards packages.

The bottom line is that we believe an engaged and diverse workforce is vital to our success. We measure employee

engagement annually and compensate many of our leaders based on their teams’ scores. While we continue to outperform industry benchmarks and receive national awards for our accomplishments in these areas, we are committed to raising the bar even higher. We know that our business units with higher employee engagement experience fewer safety incidents, provide better customer service, and deliver better financial performance.

Robust Risk Oversight

Our Board is actively involved in risk oversight and works closely with our executive team to manage and mitigate the risks and opportunities facing the Company. Areas of current focus include:

 

  Cybersecurity and privacy risk

 

  Safety

 

  Environmental risk, including climate change

 

  Compensation

 

  Financial risk

 

  Reputational risk

We also maintain a strong governance profile that aligns with the Investor Stewardship Group’s Corporate Governance Principles. Highlights include an independent Board chairman structure, proxy access right, comprehensive director and management succession planning processes and a best-in-class code of business ethics and conduct.

Shareholder Engagement

Our broad-based shareholder outreach program provides us with valuable feedback throughout the year. During 2019, independent members of our Board and members of our management team engaged with shareholders representing approximately 53% of our investment base. The input we receive from shareholders is shared with our full Board, and informs our best practices around executive compensation, corporate governance and sustainability.

As part of that engagement, it is our pleasure to invite you to our 2020 annual shareholder meeting at 10:30 a.m. local time on Friday, May 8, 2020 at the Scottsdale Marriott at McDowell Mountains, 16770 N. Perimeter Drive, Scottsdale, Arizona 85260.

Thank you for your support and investment in Republic Services.

 

 

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Manuel Kadre

Chairman of the Board

 

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Donald W. Slager

Chief Executive Officer

 

 

For further information about the 2020 Annual Meeting, please call (800) 248-3170    Republic Services, Inc. 2020 Proxy Statement    |    3


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NOTICE OF THE 2020 ANNUAL MEETING OF SHAREHOLDERS

Important notice regarding the availability of proxy materials for the Annual Meeting of Shareholders to be held on May 8, 2020. This Proxy Statement relating to the 2020 Annual Meeting of Shareholders and the Annual Report on Form 10-K for the year ended December 31, 2019 are available at www.proxyvote.com.

To the Shareholders of Republic Services, Inc.:

The 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of Republic Services, Inc., a Delaware corporation, will be held at the Scottsdale Marriott at McDowell Mountains, 16770 N. Perimeter Drive, Scottsdale, Arizona 85260, on May 8, 2020, at 10:30 a.m., local time, for the following purposes:

Items of Business

 

  1.

To elect the 10 directors listed in this proxy statement to serve until the 2021 annual meeting of shareholders or until their respective successors are duly elected and qualified;

 

  2.

To hold an advisory vote to approve our named executive officer compensation;

 

  3.

To ratify the appointment of our independent registered public accounting firm for 2020;

 

  4.

To approve the Republic Services, Inc. 2021 Stock Incentive Plan; and

 

  5.

To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

Record Date

Only shareholders of record at the close of business on March 11, 2020 are entitled to notice of and to vote at the Annual Meeting or any adjournment of it. A list of such shareholders will be available commencing March 24, 2020 and may be examined prior to the Annual Meeting at our corporate headquarters during normal business hours.

Availability of Proxy Materials

We are pleased to utilize Securities and Exchange Commission rules that allow us to furnish these proxy materials and our Annual Report on Form 10-K in digital form online. Shareholders of record will be mailed a Notice of Internet Availability of Proxy Materials, which provides instructions on how to access the proxy materials and our Annual Report on Form 10-K online and, if they prefer, how to request paper copies of these materials. We believe providing these materials online enables us to reduce the environmental impact of our Annual Meeting and lower our printing and delivery costs while providing shareholders with the information they need more quickly and efficiently.

Proxy Voting

Your participation at our Annual Meeting is important. To ensure your representation, if you do not expect to be present at the meeting, please vote your shares as instructed in your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction card at your earliest convenience. Your prompt return of proxies will ensure a quorum and save us the expense of further solicitation.

We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19), and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our Annual Meeting website at https://investor.republicservices.com/annual-meeting for updated information. If you are planning to attend our meeting, please check the website at least ten days prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

By Order of the Board of Directors,

 

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Manuel Kadre

Chairman of the Board

  

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Donald W. Slager

Chief Executive Officer

  

Phoenix, AZ

March 24, 2020

 

Republic Services, Inc. 2020 Proxy Statement    |    5

    


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Proxy Statement Table of Contents

 

Proxy Summary      9-15  
                  
Board of Directors and Corporate Governance      17-43  
                  
Biographical Information Regarding Director Nominees      19  
                  
                     

Director Nominees

     19  
                
 

Board Refreshment

     23  
                
Board of Directors and Corporate Governance Matters      24  
                  
 

Shareholder Engagement

     24  
                
 

Investor Stewardship Group’s Corporate Governance Principles

     25  
                
 

Director Skills and Experience

     26  
                
 

Formal Director Onboarding Process

     26  
                
 

Continuing Education

     26  
                
 

Thoughtful Board Evaluation Process

     26  
                
 

Director Succession Planning

     26  
                
 

Executive Succession Planning

     27  
                
 

Stock Ownership Guidelines and Anti-Hedging and Anti-Pledging Policies

     27  
                
 

Director Nomination Procedures and Diversity Relating to Board Candidacy

     28  
                
 

Director Independence

     28  
                
 

Board Leadership Structure, Role in Risk Oversight, Ethics and Compliance

     29  
                
                       

Board Leadership Structure

     29  
              
   

Role in Risk Oversight

     29  
              
   

Ethics and Compliance

     30  
              
 

Shareholder Director Recommendation Policy

     30  
                
 

Proxy Access Director Nominations

     31  
                
 

Director Resignation Policy

     31  
                
 

Communications with the Board of Directors

     31  
                
 

Attendance at Annual Meetings Policy

     31  
                
 

Additional Information Regarding Corporate Governance

     31  
                
Sustainability, Corporate Responsibility, People and Talent      32  
                  
 

Board and Committee Oversight of Sustainability

     32  
                
 

Sustainability Focus

     32  
                
 

Industry Leadership

     33  
                
 

Human Capital Management

     33  
                
Board Meetings and Committees      35  
                  
 

Meeting Participation

     35  
                
 

Committee Composition

     35  
                
Director Compensation      38  
                  
Certain Relationships and Related Party Transactions      39  
                  
Security Ownership of the Board of Directors and Management      40  
                  
Security Ownership of Five Percent Shareholders      42  
                  
Delinquent Section 16(a) Reports      42  
                  


Table of Contents

 

Executive Compensation      45-85  
          
Compensation Discussion and Analysis   
See separate CD&A Table of Contents      46  
          
2019 Summary Compensation Table      70  
          
All Other Compensation for 2019      71  
          
Grants of Plan-Based Awards in 2019      72  
          
Outstanding Equity Awards at Fiscal Year-End      73  
          
Option Exercises and Stock Vested in 2019      75  
          
Nonqualified Deferred Compensation in 2019      76  
          
Employment Agreements and Post-Employment Compensation      76  
          
CEO Pay Ratio      84  
          
Audit Committee Matters      87-89  
          
Audit Committee Report      88  
          
Audit and Related Fees      89  
          
Proposals to be Voted on at the Meeting      91-99  
          
Proposal 1: Election of Directors      92  
          
Proposal 2: Advisory Vote on Named Executive Officer Compensation      93  
          
Proposal 3: Ratification of Independent Registered Public Accounting Firm      94  
          
Proposal 4: Approval of Republic Services, Inc. 2021 Stock Incentive Plan      95  
          
Information About the Meeting      101-105  
          
Questions and Answers About the Annual Meeting      102  
          
Expenses of Solicitations      104  
          
Proxy Statement Mailing Information and Householding      104  
          
Submission of Shareholder Proposals for our 2021 Annual Meeting      104  
          
Miscellaneous Matters      104  
          
Annex      107-125  
          
Annex A — CD&A Appendix      108  
          
Annex B — Republic Services, Inc. 2021 Stock Incentive Plan      110  
          

Important notice regarding the availability of proxy materials for the Annual Meeting of Shareholders to be held on May 8, 2020: This Proxy Statement relating to the 2020 Annual Meeting of Shareholders and the Annual Report on Form 10-K for the year ended December 31, 2019 are available at www.proxyvote.com.

 

PROXY SUMMARY BOARD GOVERNANCE EXCUTIVE COMPENSATION AUDIT COMMITTEE MATTERS PROPOSALS MEETING INFORMATION ANNEX


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PROXY SUMMARY


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PROXY SUMMARY

 

We are providing this Proxy Statement (“Proxy Statement”) to shareholders in connection with the solicitation by the Board of Directors (the “Board”) of Republic Services, Inc., a Delaware corporation (“Republic,” “Republic Services,” the “Company,” “we,” “us” or “our”), of proxies to be voted at the annual meeting of shareholders to be held in Scottsdale, Arizona on May 8, 2020 (the “Annual Meeting”), and at any adjournment thereof, for the purposes set forth in the accompanying notice. This proxy summary is intended to provide an overview of the items contained in this Proxy Statement. We encourage you to read the entire Proxy Statement for additional information prior to voting your shares.

 

                        

 

Annual Meeting of Shareholders

 

Date and Time: Friday, May 8, 2020, at 10:30 a.m., local time
 
Location:   Scottsdale Marriott at McDowell Mountains, 16770 N. Perimeter Drive, Scottsdale, Arizona 85260
 
Record Date: Shareholders as of March 11, 2020 are entitled to vote

We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19), and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our Annual Meeting website at https://investor.republicservices.com/annual-meeting for updated information. If you are planning to attend our meeting, please check the website at least ten days prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

 

Proposals and Board Recommendations   BOARD’S            
RECOMMENDATION             
  PAGE    
REFERENCE    
   
Proposal 1      Election of the 10 Directors in this Proxy Statement   FOR           92    
             
   
Proposal 2      Advisory Vote on Named Executive Officer Compensation   FOR           93    
             
   
Proposal 3      Ratification of Independent Registered Public Accounting Firm for 2020   FOR           94    
             
   
Proposal 4      Proposal to Approve the Republic Services, Inc. 2021 Stock Incentive Plan   FOR           95    
             
 

 

                              10    |    Republic Services, Inc. 2020 Proxy Statement


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2019 Business and Performance Highlights

During 2019, we continued to create value for our shareholders. Our strong performance reflects our focus on executing our strategy designed to profitably grow our business, manage our cost structure, generate consistent earnings and free cash flow growth, improve return on invested capital, and increase cash returns to our shareholders. Highlights of the year include:

 

    Outperformed our upwardly revised adjusted earnings per share (“EPS”) and adjusted free cash flow (“FCF”) guidance despite continued headwinds from lower recycled commodity prices;

 

    Full-year diluted EPS was $3.33 per share and full-year adjusted EPS1 was $3.34 per share. Adjusted EPS increased 8 percent over the prior year;

 

    Full-year cash provided by operating activities was $2.4 billion and adjusted free cash flow1 was $1.2 billion;

 

    Invested $526 million in acquisitions during 2019;

 

    Returned $891 million to shareholders in 2019 through dividends and share repurchases, representing a cash yield of 3.3 percent;

 

    Total shareholder return was 27 percent for the full year; and

 

    Received numerous notable awards for our continued leadership in Environmental, Social and Governance (ESG) matters in 2019, as discussed in more detail in the “Environmental, Social and Governance (ESG) Leadership” section below.

(1) Adjusted EPS and adjusted free cash flow are non-GAAP financial measures. For a reconciliation of these non-GAAP measures to the comparable measures in accordance with GAAP, see “Reconciliation of GAAP to Non-GAAP Financial Measures” in Annex A on page 108.

Environmental, Social and Governance (ESG) Leadership

Our sustainability goals and practices are core to our business and are integrated into our business strategy as well as our long-term financial targets. Sustainable business practices are embedded in our day-to-day operations, which improve our profitability and support long-term value creation for our shareholders. The Board, through its Sustainability & Corporate Responsibility Committee, is responsible for overseeing our management’s handling of environmental, social and enterprise risks, including environmental and corporate sustainability related risks and opportunities posed to the Company. As a result of this ongoing commitment to sustainable business practices, we have been recognized for our leading performance in several key areas including employee engagement, ethics, innovation, climate change and sustainability.

 

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Shareholder Engagement

We have a well-developed shareholder engagement program that emphasizes year-round shareholder engagement and direct communication with our Board. During 2019, we engaged directly with shareholders representing approximately 53% of shares outstanding, as well as one proxy advisor. Key areas of discussion with shareholders in the past year included:

 

    Our continued commitment to sustainable business practices, including an overview of our new 2030 sustainability goals.

 

    Our Board’s commitment to director refreshment and strong governance practices. This included our ongoing efforts to add new members to our Board — focusing on individuals who provide a diversity of background, skills, and viewpoints to oversee our Company’s strategic direction.

 

    Our Board’s oversight of human capital management, including safety, employee engagement, inclusion and diversity, and talent development. Based on these discussions and the Company’s commitment to these initiatives, we added a new “Human Capital Management” section to our Proxy Statement on page 33.

Our Board and our management team highly value these shareholder discussions and consider this feedback in Board deliberations and decisions. The feedback we received from our shareholders during these discussions was positive, and we look forward to continuing these conversations and engagement efforts.

 

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Republic Services, Inc. 2020 Proxy Statement    |    11                                


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DIRECTOR NOMINEES AND CORPORATE GOVERNANCE HIGHLIGHTS

Board Nominees

The table below lists the names of our director nominees and the standing committees on which they serve as of the mailing date of this Proxy Statement.

 

DIRECTOR NAME               AGE          DIRECTOR SINCE          COMMITTEES          INDEPENDENT
       
Manuel Kadre (Chairman)  

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        54       2014             LOGO
                                             
       

Tomago Collins

 

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        48       2013       Sustainability & Corporate
Responsibility Committee (Chair)
and Audit Committee
      LOGO
                                             
       

Thomas W. Handley

  LOGO         65       2016       Management Development & Compensation
Committee (Chair) and Nominating & Corporate
Governance Committee
      LOGO
                                             
       

Jennifer M. Kirk

 

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        45       2016       Audit Committee (Chair) and
Sustainability & Corporate
Responsibility Committee
      LOGO
                                             
       

Michael Larson

  LOGO         60       2009       Nominating & Corporate Governance
Committee (Chair) and Management
Development & Compensation Committee
      LOGO
                                             
       

Kim S. Pegula

  LOGO         50       2017       Management Development & Compensation
Committee and Sustainability & Corporate
Responsibility Committee
      LOGO
                                             
       

Donald W. Slager (CEO)

  LOGO         58       2010            
                                             
       

James P. Snee

  LOGO         53       2018       Nominating & Corporate Governance
Committee and Management
Development & Compensation Committee
      LOGO
                                             
       

Sandra M. Volpe

  LOGO         52       2016       Nominating & Corporate Governance
Committee and Sustainability & Corporate
Responsibility Committee
      LOGO
                                             
       

Katharine B. Weymouth

 

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        53       2018       Audit Committee and Management
Development & Compensation Committee
      LOGO
                                             
 

 

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Board Highlights

Our Board is comprised of highly engaged and skilled directors with varied experiences and backgrounds who bring diverse perspectives to their oversight of our business while representing the long-term interests of our shareholders.

The Board has a director retirement age of 72; however, the Board retains the discretion to request a member to remain on the Board if circumstances warrant. In 2019, the Board exercised this discretion and requested Ramon A. Rodriguez and John M. Trani remain on the Board for an additional year to ensure optimal expertise and continuity of the Board. Mr. Rodriguez and Mr. Trani are retiring and will not stand for re-election in 2020. Mr. Rodriguez has served on the Board for over twenty years, with prior positions including Chairman of the Board and Chair of the Audit Committee. Mr. Trani has served on the Board of Republic or its predecessor companies for over thirteen years. Messrs. Rodriguez and Trani have been valuable members of the Company’s Board, and we greatly appreciate their many years of service.

We are committed to maintaining a Board that has a balanced mix of skills and attributes, and we accomplish this through our active refreshment and director succession planning process. While the Board did not add any new directors in 2019, we continue to seek highly qualified candidates who will bring additional skills and perspectives to the Board.

Board Practices

Our Board has developed a robust set of practices to help ensure appropriate composition and effective functioning. The Board maintains a regular board evaluation process that is closely linked with ongoing succession planning practices, as well as a commitment to regular board refreshment based on the Company’s current and future needs and strategic priorities.

 

 

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Corporate Governance Practices

We continuously monitor developments and best practices in corporate governance and enhance our practices as warranted and based on shareholder feedback. Key features of our corporate governance practices are noted below:

 

CORPORATE GOVERNANCE HIGHLIGHTS           
 
LOGO   Shareholder Engagement Program    LOGO   Board Sustainability & Corporate Responsibility Committee
 
LOGO   Proxy Access Right    LOGO   Thoughtful Board Evaluation Process
 
LOGO   Independent Board Chairman    LOGO   Formal Onboarding Program for New Directors
 
LOGO   Director and Executive Succession Planning    LOGO   Majority Vote Standard
 
LOGO  

Substantial Majority Independent Board

(9 of 10 director nominees)

   LOGO  

Deferral of Compensation for Directors

(restricted stock units or cash)

 
LOGO   No Supermajority Vote Requirements    LOGO   Code of Business Ethics and Conduct
 
LOGO   Shareholder Action by Written Consent    LOGO   Political Contributions Policy
 
LOGO   Independent Board Committees    LOGO  

 

Stock Ownership Guidelines for Directors and Senior Management

 

 
LOGO   Annual Director Elections    LOGO   Anti-Hedging and Anti-Pledging Policies
 
LOGO   Human Rights Policy    LOGO   One Share, One Vote Structure

 

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Republic Services, Inc. 2020 Proxy Statement    |    13                                


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EXECUTIVE COMPENSATION OVERVIEW

Components of Our Executive Compensation Program

The Management Development & Compensation Committee (the “Compensation Committee”) is committed to a performance-based executive compensation program that enables us to attract, retain and motivate our leadership team in a way that drives financial success and sustained shareholder value creation. The core compensation elements for the executive officers listed in the Summary Compensation Table (referred to as “named executive officers” or “NEOs”) are:

 

    base salary;

 

    annual cash incentive bonus based on target; and

 

    long-term incentive awards based on target, which are delivered in performance shares (“PSUs”) and restricted stock units (“RSUs”).

 

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Executive Compensation Link to Strategy

We maintain rigorous performance goals on a bottom-up basis, reflecting management initiatives and the impact of anticipated external factors. To align management incentives, our metrics and performance targets focus on factors that management can impact, rather than external factors that are outside of management’s control or ability to mitigate.

 

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MANAGEMENT INITIATIVES Profitable Revenue Growth Controllable Operating Expenses Capital Investment M&A (Tuck-in) SELECTED EXTERNAL FACTORS Volume/Macroeconomic Environment CPI Impact on Pricing Diesel/Other Commodity Prices Regulatory and Tax Law Changes FINANCIAL RESULTS EPS Free Cash Flow Cash Flow Value Creation ROIC VALUE CREATION Stock Price Appreciation Shareholder Return Our compensation program is focused on achieving key financial results that support shareholder value creation.

 

 

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2019 METRICS: ALIGNED WITH STRATEGY AND SHAREHOLDER INTERESTS

 

LOGO

ANNUAL CASH BONUS Earnings Per Share 50% Free Cash Flow 50% PERFORMANCE-BASED LTI AWARD Return On Invested Capital 40% Cash Flow Value Creation 40% Relative Total Shareholder Return 20% Our annual incentive metrics are designed to encourage profitable growth and are widely accepted by the investment community as important performance metrics. Our LTI metrics are designed to grow our business with an emphasis on cash flow while maximizing investment returns and aligning interests between our executives and shareholders.

   The Compensation Committee believes that the metrics used in our incentive programs should align with our strategic goals and motivate our executives to drive financial and operational performance that will build long-term value for our shareholders. We believe that the metrics used in our annual and long-term incentive (“LTI”) programs are aligned with our strategic goals.

 

Compensation Governance Practices

We have established a number of compensation best practices that help ensure our compensation program remains aligned with shareholder interests.

 

COMPENSATION GOVERNANCE HIGHLIGHTS            
 
LOGO    Pay-for-Performance Incentive Structures    LOGO    Active Management of Dilution from Equity Plans
 
LOGO    Stock Ownership Guidelines for Directors    LOGO    No Dividends on Unearned PSUs
 
LOGO    Annual Risk Assessment of Compensation Program    LOGO    Limited Perquisites
 
LOGO    Independent Compensation Consultant    LOGO    No Excise Tax Gross-Ups
 
LOGO    Clawback Policy    LOGO    No Hedging, Pledging or Short Sales
 
LOGO    Double Trigger Change in Control Provisions    LOGO   

Updated Stock Ownership Guidelines for Senior

Management

We encourage you to read the entire Proxy Statement for additional information prior to voting your shares.

 

LOGO
 

 

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LOGO


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LOGO

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE


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LOGO

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Republic’s Board of Directors

Republic’s Board currently consists of 12 directors; however, Ramon A. Rodriguez and John M. Trani are retiring and not standing for re-election to the Board at the Annual Meeting. Mr. Rodriguez has served on the Board for over twenty years, with prior positions including Chairman of the Board and Chair of the Audit Committee. Mr. Trani has served on the Board of Republic or its predecessor companies for over thirteen years. Messrs. Rodriguez and Trani have been valuable members of the Company’s Board, and we greatly appreciate their many years of service. Since Messrs. Rodriguez and Trani are not standing for re-election, the Board has adopted a resolution reducing the size of the Board to ten directors effective upon the Annual Meeting date.

 

LOGO

  Our 10 director nominees are each highly engaged and skilled professionals who recognize that strong corporate governance contributes to long-term shareholder value.    The Board’s Nominating and Corporate Governance Committee (the “Governance Committee”) evaluated our director nominees in accordance with the Governance Committee’s charter and our Corporate Governance Guidelines and submitted the nominees to the full Board for approval. We believe that each of our director nominees is highly qualified and collectively they represent the best mix of experience, wisdom, integrity, and ability to advance Republic’s strategy and serve the interests of all our stakeholders.

 

LOGO

Top row, from left to right: Tomago Collins, Michael Larson, Katharine B. Weymouth, Donald W. Slager, John M. Trani, Sandra M. Volpe, James P. Snee, and Manuel Kadre. Bottom row, from left to right: Ramon A. Rodriguez, Jennifer M. Kirk, Thomas W. Handley, and Kim S. Pegula.

 

 

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Biographical Information Regarding Director Nominees

 

 

Director Nominees

 

LOGO   

Manuel Kadre

Chairman of the Board since

2017; Director since June 2014

Committees: None

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Chief Executive and Management experience gained as Chief Executive Officer of Gold Coast Caribbean Importers and MBB Auto, LLC

 

•  Financial and Strategy experience from his leadership roles in acquiring and managing several businesses as well as running successful businesses that are focused on positioning well-known brands in highly regulated markets

 

CAREER HIGHLIGHTS

MBB Auto, LLC, 2012 – Present

    Chief Executive Officer

Gold Coast Caribbean Importers, 2005 – 2014

    Chief Executive Officer

CC1 Companies, 1995 – 2009

    President, Vice President, General Counsel and Secretary

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    Mednax, Inc., 2007 – Present (Lead Independent Director, Member of the Executive Committee, Audit Committee, and Chair of the Nominating and Corporate Governance Committee)
    The Home Depot, Inc., 2018 – Present (Member of the Audit Committee and the Finance Committee)

ADDITIONAL EXPERIENCE AND SERVICE

    Board of Trustees, University of Miami
    Board of Directors, University of Miami Health System
LOGO   

Tomago Collins

Director since August 2013;

Committees: Sustainability &

Corporate Responsibility (Chair), Audit

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Communications and Public Affairs experience gained as the strategic public affairs and communications executive for all Kroenke Sports & Entertainment-owned sports, entertainment, media, real estate, ranch and vineyard products, including Arsenal Football Club, Los Angeles Rams, Denver Nuggets, Altitude Sports & Entertainment network and the Pepsi Center

 

•  Strategy and M&A experience gained from his role with Kroenke, where Mr. Collins works closely with senior management on business development, mergers and acquisitions, and strategic planning

 

CAREER HIGHLIGHTS

Kroenke Sports & Entertainment, 2003 – Present

    Strategic Communications and Public Affairs Executive

The (Louisville) Courier-Journal and CNN International

    Journalist

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    AutoNation, Inc., 2014 – 2019

ADDITIONAL EXPERIENCE AND SERVICE

    Director, Global Down Syndrome Foundation
 

 

    

LOGO
 

 

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LOGO
LOGO   

Thomas W. Handley

Director since July 2016;

Committees: Management

Development & Compensation

(Chair), Nominating &

Corporate Governance

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Operations and Management experience gained as the Chief Operating Officer for the investment operations of William H. Gates III, responsible for Mr. Gates’ non-Microsoft investments as well as the investments of the Bill & Melinda Gates Foundation Trust, and from his former role as the President and Chief Operating Officer of Ecolab, Inc.

 

•  Strategy and Marketing experience from his extensive history with Procter & Gamble, which focused on marketing and strategic planning for a global business unit

 

CAREER HIGHLIGHTS

William H. Gates III, 2019 – Present

    Chief Operating Officer
    Includes management of investment operations for personal assets and for the Bill & Melinda Gates Foundation Trust

Ecolab Inc., 2003 – 2019

    Special Advisor to the CEO responsible for the spin off of Ecolab’s upstream energy business, April 2019 – August 2019
    President and Chief Operating Officer, 2012 – March 2019
    Various executive positions with increasing responsibility

Procter & Gamble, 1981 – 2003

    Vice President, Global Planning, Marketing and Always Global Franchise
    Various positions in general and brand management both in the United States and internationally

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    HB Fuller Company, 2010 – Present (Member of the Compensation Committee and the Audit Committee)

ADDITIONAL EXPERIENCE AND SERVICE

    Board Member, 5th Avenue Theater Association
    Former Director and Member, National Association of Manufacturers Executive Board (organization’s governing board)
    Former Board Member and Former Chair, Ordway Center for Performing Arts
LOGO   

Jennifer M. Kirk

Director since July 2016;

Committees: Audit (Chair),

Sustainability & Corporate

Responsibility

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Accounting and Financial experience gained from over 20 years in finance, accounting and compliance, including her current position as Senior Vice President, Integration and Value Capture at Occidental Petroleum Corporation

 

•  Management experience from her leadership roles in large global organizations

 

CAREER HIGHLIGHTS

Occidental Petroleum Corporation, 1999 – Present

    Senior Vice President, Integration and Value Capture
    Vice President, Controller and Chief Accounting Officer
    Controller, Oil and Gas Division
    Various Operational and HQ positions with increasing responsibility

Arthur Andersen LLP, 1996 – 1999

    Responsibilities encompassed all areas of financial statement audits including planning, supervision and financial statement reporting at both a staff and senior level

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    Western Midstream Partners, LP, 2019 – Present

ADDITIONAL EXPERIENCE AND SERVICE

    Director, Boys and Girls Club of Greater Houston,
2017 – Present
    Director, Women’s Chamber of Commerce Houston,
2017 – Present
    Member, Chief Accounting Officer Network and the American Institute of Certified Public Accountants
    Volunteer, Juvenile Diabetes Research Foundation
 
 

 

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LOGO   

Michael Larson

Director since October 2009;

Committees: Nominating &

Corporate Governance (Chair),

Management Development &

Compensation

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Financial experience gained as Chief Investment Officer to William H. Gates III, responsible for Mr. Gates’ non-Microsoft investments as well as the investments of the Bill & Melinda Gates Foundation Trust

 

•  Investment and Leadership experience gained from over 37 years of making investments and acquiring a broad understanding of the capital markets, business cycles, capital investment and allocation and an appreciation of the interests of long-term shareholders (including the perspective of our largest shareholder, Mr. Gates’ Cascade Investment, L.L.C.)

 

CAREER HIGHLIGHTS

William H. Gates III, 1994 – Present

    Chief Investment Officer
    Includes investment management for personal assets and for the Bill & Melinda Gates Foundation Trust

Additional Experience, Prior to 1994

    Harris Investment Management
    Putnam Investments
    ARCO

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    Ecolab Inc., 2012 – Present (Vice Chair of the Finance Committee and Member of the Safety, Health and Environment Committee)
    Fomento Económico Mexicano, S.A.B.de C.V., 2011 – Present
    AutoNation, Inc., 2010 – 2018

ADDITIONAL EXPERIENCE AND SERVICE

    Chairman of the Board of Trustees of two funds within the Western Asset Management fund complex
    Member of their respective Audit Committees and Governance and Nominating Committees
LOGO   

Kim S. Pegula

Director since July 2017;

Committees: Management

Development & Compensation,

Sustainability & Corporate

Responsibility

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Leadership, Management, and Chief Executive experience gained as President and Chief Executive Officer of Pegula Sports & Entertainment, a multifaceted management company that oversees the business operations of a variety of professional sports, entertainment, real estate, financial and hospitality entities

 

•  Marketing and Strategy experience in creating, developing and operating successful brands and sports franchises that put meaningful customer engagement at the heart of their business model

 

CAREER HIGHLIGHTS

Pegula Sports & Entertainment, 2014 – Present

    President, Chief Executive Officer and Owner

East Management Services and East Asset Management, 2010 – Present

    Chief Operating Officer

East Resources, Inc. (Sold to Royal Dutch Shell in 2010)

    Communications and Investor Relations Director, 1991 – 2010
    Officer, 2000 – 2010

National Hockey League

    Owner and member of the Board of Governors, 2011 – Present

ADDITIONAL EXPERIENCE AND SERVICE

National Football League

    Owner and member of the Business Ventures, 2017 – Present
    Foundation and Special Events Committee, 2015 – Present
 

 

    

LOGO
 

 

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LOGO
LOGO   

Donald W. Slager

Chief Executive Officer since January 2011;

Director since June 2010

Committees: None

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Industry, Management, and Operations experience as a 35-year veteran of the solid waste and recycling industry, including over 27 combined years with Republic Services, Inc. and Allied Waste Industries, Inc.

 

•  Chief Executive experience as Chief Executive Officer of Republic, a role Mr. Slager has held since January 2011

 

CAREER HIGHLIGHTS

Republic Services, Inc., 2008 – Present

    Chief Executive Officer, 2019 – Present
    President and Chief Executive Officer, 2011 – 2019
    President and Chief Operating Officer, 2008 – 2010

Allied Waste Industries, Inc., 1992 – 2008

    President and Chief Operating Officer
    Senior Vice President Operations
    Vice President Operations
    Assistant Vice President Operations
    Regional Vice President, Western Region
    District Manager, Chicago Metro District

National Waste Services, 1985 – 1992

    General Manager, among other management positions

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    Martin Marietta Materials, Inc., 2016 – Present (Chair of the Nominating and Corporate Governance Committee and Member of the Finance Committee)
    UTi Worldwide, Inc., 2009 – 2016 (served as Chairman of the Nominating and Corporate Governance Committee and Member of the Compensation Committee)

ADDITIONAL EXPERIENCE AND SERVICE

    Governing Board Member, Together for Safer Roads
    Board of Directors, Arizona Commerce Authority
LOGO   

James P. Snee

Director since July 2018;

Committees: Management

Development & Compensation,

Nominating & Corporate Governance

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Leadership, Management, and Chief Executive experience gained as Chairman and Chief Executive Officer of Hormel Foods Corporation, a publicly traded international Fortune 500 company

 

•  Strategy and Operations experience gained from senior operational roles at Hormel Foods Corporation, including as Chief Operating Officer from 2015 to 2016

 

CAREER HIGHLIGHTS

Hormel Foods Corporation, 1989 – Present

    Chairman, President and Chief Executive Officer
    President and Chief Operating Officer
    Group Vice President and President, Hormel Foods International Corporation
    Vice President and Senior Vice President, Hormel Foods International Corporation
    Vice President, Affiliated Business Units

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    Hormel Foods Corporation, 2015 – Present (Chairman of the Board)

ADDITIONAL EXPERIENCE AND SERVICE

    Board and Executive Committee Member, Grocery Manufacturers Association
    Executive Board Member, North American Meat Institute
    Board Member, The Hormel Foundation
 
 

 

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LOGO   

Sandra M. Volpe

Director since December 2016;

Committees: Nominating &

Corporate Governance,

Sustainability & Corporate

Responsibility

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Financial experience gained over a 25-year career in financial and strategic planning roles at large global companies including FedEx and Lender’s Service, Inc.

 

•  Strategy and Operations experience as Senior Vice President at FedEx where Ms. Volpe is responsible for strategy across FedEx Ground, internal and external communications, and business development solutions

 

CAREER HIGHLIGHTS

FedEx Ground, 2000 – Present

    Senior Vice President, Strategic Planning, Communications and Business Development Solutions
    Senior Vice President, Strategic Planning, Communications and Contractor Relations
    Vice President, Strategic Planning
    Vice President, Finance

Lender’s Service, Inc., 1993 – 2000

    Director of Financial Planning and Analysis, Associate Vice President

ADDITIONAL EXPERIENCE AND SERVICE

    Executive Leadership Chair, Go Red for Women
    Former Board Chair, American Heart Association
    FedEx 5 Star Award, FedEx Leadership Award, FedEx Corporation Bravo Zulu Award for Service, and Prudential Principle Player Award
LOGO   

Katharine B. Weymouth

Director since October 2018;

Committees: Management

Development & Compensation,

Audit

 

 

RELEVANT SKILLS AND QUALIFICATIONS

 

•  Leadership, Management, and Chief Executive experience gained through numerous leadership positions at The Washington Post, including Publisher and Chief Executive Officer, and as Chief Operating Officer and former CEO of dineXpert, a group buying organization working with independent restaurants

 

•  Strategy and Marketing experience from her eight years in the advertising department at The Washington Post, where as Vice President of Advertising she led the transformation of The Washington Post from a print newspaper business to a digital content business

 

CAREER HIGHLIGHTS

dineXpert, 2017 – Present

    Chief Operating Officer
    Chief Executive Officer

The Washington Post, 1996 – 2014

    Chief Executive Officer and Publisher
    Director of Advertising Sales
    Vice President of Advertising
    Assistant General Counsel, and various other legal and advertising positions with increasing responsibility

OTHER PUBLIC COMPANY DIRECTORSHIPS

(within the past 5 years)

    Cable One, Inc., 2015 – Present (Member of the Audit Committee and the Compensation Committee)
    Graham Holdings Company, 2010 – Present (Member of the Finance Committee and the Compensation Committee)

ADDITIONAL EXPERIENCE AND SERVICE

    Trustee, Philip L. Graham Fund
    Trustee, Greater Washington Community Foundation
 

 

 

Board Refreshment

We are committed to maintaining a Board that has a balanced mix of skills and attributes, and we accomplish this through our active refreshment and director succession planning process. We have added six new directors since 2016, and although the Board did not add any new directors in 2019, we continue to seek highly qualified candidates who will bring additional skills and perspectives to the Board.

 

    

LOGO
 

 

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LOGO

Board of Directors and Corporate Governance Matters

We operate within a comprehensive corporate governance framework that defines responsibilities, sets high ethical standards of professional and personal conduct, and helps ensure compliance with these responsibilities and standards. The Board’s Corporate Governance Guidelines provide the framework for effective governance and are amended by the Board from time to time in response to changing regulations, evolving best practices, and shareholder input.

Shareholder Engagement

We value the perspectives and feedback provided by our shareholders. During 2019, we engaged directly with shareholders representing approximately 53% of shares outstanding as well as one proxy advisor. During these meetings, we discussed Republic’s business strategy, financial performance, new sustainability goals, and human capital management, as well as our governance practices and executive compensation program. The feedback we receive is shared with the Board and considered during deliberations, particularly with regard to Board governance, compensation and sustainability practices.

In these discussions, investors told us that they are pleased with the enhancements the Company has made to the governance, compensation, and sustainability framework over the last several years. We received specific feedback that our governance practices are fully aligned with Investor Stewardship Group’s corporate governance principles for U.S. listed companies.

 

LOGO

 

LOGO

I lead for Earth. Justin is passionate about leadership and innovation, mentoring people to forge new paths and pursue new ideas that make the world a better place. He champions recycling among our customers by inspiring our managers to lead the way. His work has a far-reaching impact, affecting change exponentially throughout the company and beyond. Justin | Senior Manager, Organizational Development Phoenix, Arizona

 

 

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Investor Stewardship Group’s Corporate Governance Principles

Republic follows the corporate governance principles for U.S. listed companies set forth by the Investor Stewardship Group (“ISG”). We are committed to the corporate governance practices set forth below, and continue to monitor and implement developments in best practices that would enhance our governance model.

 

ISG PRINCIPLE    REPUBLIC PRACTICE

PRINCIPLE 1:

Boards are accountable to

shareholders.

  

•  All Board members are elected annually

•  Proxy access bylaw provision

•  In addition to proxy access, shareholders are entitled to recommend director candidates to the Governance Committee

•  Directors elected by majority of votes cast

•  Directors not receiving majority support must tender their resignation for consideration by the Board

•  No poison pill

      

PRINCIPLE 2:

Shareholders should be entitled

to voting rights in proportion to

their economic interest.

  

•  One share, one vote structure

•  No multi-class share structure

      

PRINCIPLE 3:

Boards should be responsive to

shareholders and be proactive

in order to understand their

perspectives.

  

•  Have been conducting annual shareholder outreach since 2014

•  Outreach topics include Board composition, corporate governance practices, sustainability, director education, executive compensation, human capital management, among others

      

PRINCIPLE 4:

Boards should have a strong,

independent leadership structure.

  

•  Independent Chairman of the Board

•  Corporate Governance Guidelines outline the roles and responsibilities of our independent Chairman

      

PRINCIPLE 5:

Boards should adopt structures

and practices that enhance

their effectiveness.

  

•  All Board members other than our CEO are independent directors

•  60% of Director nominees are women or diverse

•  Board committees consist of the Audit Committee, the Compensation Committee, the Governance Committee, and the Sustainability & Corporate Responsibility Committee

•  The Sustainability & Corporate Responsibility Committee is responsible for overseeing environmental, social and governance topics

•  Board committees are comprised entirely of independent directors

•  Each director attended at least 75% of Board meetings in 2019

•  Board and committees have direct access to outside advisors and mid-level management

•  Independent directors meet regularly in executive session

•  Annual Board self-evaluation

•  Director resignation policy upon a change in circumstances impacting the director’s ability to fulfill his or her obligations to the Company

•  Deferral of non-employee director compensation (restricted stock units or cash) to align interests with shareholders

      

PRINCIPLE 6:

Boards should develop

management incentive structures

that are aligned with the long-term

strategy of the company.

  

•  Say-on-pay approval was 97.3% in 2019

•  Short-term and long-term compensation targets are tied to overall Company strategy as well as shareholder interests

•  Significant stock ownership guidelines for directors and senior management

•  Company strategy and compensation metrics are reviewed annually by the Board

•  Clawback policy that applies to all cash- and equity-based incentive compensation that is performance based

      

 

    

LOGO
 

 

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LOGO

Director Skills and Experience

The Board is comprised of directors with broad and varied experience and expertise who are committed to representing the long-term interests of shareholders. The following summarizes the key skills and experiences represented on our Board:

 

Strategic planning   Industry experience  

 

Current and former chief

executive officers

 

  Human capital management

 

Operations and marketing

 

  Logistics   Shareholder perspective   Transportation

 

Finance and capital markets

 

  Communications   Supply chain management   Customer engagement
Public company directorships   Digital sales/online commerce  

 

Capital investment

and allocation

 

  Risk management

 

Business development and

public affairs

 

 

Accounting and internal

controls

  M&A experience   Legal background

Formal Director Onboarding Process

Upon joining our Board, new directors are provided with a comprehensive orientation and participate in a formal onboarding process to facilitate their transition onto our Board. Our onboarding process familiarizes new directors with the Company’s business, strategic plans, governance program, Board policies, and the director’s responsibilities on assigned committees. New directors hold meetings with Republic’s senior leadership and key management representatives to learn about the Company. They also participate in site visits. Based on feedback received, we believe this onboarding program, coupled with participation in regular Board and committee meetings, provides new directors with a strong foundation in our Company’s business, and accelerates their ability to fully engage in Board discussions and decision-making. Additional training is also encouraged when a director assumes a leadership role as either our Chairman or as a committee chair.

Continuing Education

Our directors attend seminars and continuing education programs relating to corporate governance, audit, and compensation matters. In addition, site visits and external and in-house presentations are scheduled as part of the directors’ continuing education. Examples of continuing education programs attended by some of our directors in 2019 include Stanford Law School’s Directors’ College, NACD’s 2019 Global Board Leaders’ Summit, and Corporate Board Member’s Annual Boardroom Summit and Committee Peer Exchange, among others.

Thoughtful Board Evaluation Process

We recognize that Board and committee evaluations play an important role in ensuring the effective functioning of our Board. Therefore, the Board and each of its committees conduct annual self-assessments, which are overseen by the Governance Committee and include written evaluation forms to assess their effectiveness. Periodically, we will employ the services of an external advisor to assist with the evaluation process (as was the case in 2019). Regardless of whether an external advisor is involved in the evaluation process, the results of these assessments are compiled without attribution, into a single form and sent to the directors for a full Board assessment and to each committee member, for those committees on which they serve, to identify areas for future improvement. This feedback is also considered by the Governance Committee when searching for and evaluating potential future Board nominees to help ensure we are adding new directors with the proper mix of subject matter expertise and perspective consistent with the needs of our growing company.

Director Succession Planning

The Board, through the Governance Committee, engages in formal Board succession planning / forward planning discussions at regular intervals throughout the year, in which it considers and evaluates director tenure and the skill-sets of current directors. These discussions are supported by the formal evaluation process that identifies areas for improvement, including the need to add new members with unique expertise and experience that it believes will benefit our Company. These discussion topics are included as quarterly agenda items for the Governance Committee. The Governance Committee utilizes an executive search firm to identify potential director candidates and conducts interviews on an ongoing basis. The Board also established a mandatory director retirement age to promote continual refreshment and the addition of diverse perspectives. In 2019, the retirement age was reduced from 73 to 72. Notwithstanding this retirement age, the Board retains the discretion to request a member to remain on the Board if circumstances warrant. In 2019, the Board exercised this discretion and requested Ramon A. Rodriguez and John M. Trani remain on the Board for an additional year. Neither Mr. Rodriguez nor Mr. Trani will stand for re-election in 2020.

 

 

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Our Board evaluation and succession planning processes are critical components of the Board’s commitment to and execution of its Board refreshment policy. The following graphic illustrates how these processes support our commitment to help ensure we have the right members on our Board:

 

LOGO

 

LOGO    Interconnected evaluation and succession planning practices ensure that our Board composition reflects the skills and experiences that best meet both the current and future needs of our business.

Executive Succession Planning

The Board, through the Governance Committee, also regularly reviews the Company’s executive management succession plan to help ensure business continuity in the event a key executive departs from the Company. This evaluation includes a thorough discussion on the Company’s senior leadership structure and focuses on key executive positions. The Board’s committees also frequently discuss the talent pipeline, and individuals identified as potential future leaders are given exposure to Board members through formal presentations and informal meetings or events. More broadly, the Board, through the Compensation Committee, is regularly updated on key talent indicators for the overall workforce, and recruiting and development programs. Republic is also cognizant of the impact our overall compensation program has on our succession planning process and has designed our program accordingly.

Stock Ownership Guidelines and Anti-Hedging and Anti-Pledging Policies

Our Board believes that ownership of our stock by directors, executive officers, and certain other members of management is important to align their interests with our shareholders’ interests and to demonstrate to the investing public and our employees their commitment to Republic.

Our Corporate Governance Guidelines reflect the Board’s belief that directors should be shareholders and have a financial stake in Republic. To support that philosophy, we pay our non-employee directors a significant portion of their compensation in the form of RSUs. Our non-employee directors receive RSUs that either (1) do not distribute until the director’s termination of service on the Board or (2) distribute three years after their grant date. To further demonstrate the Board’s commitment to align itself with our shareholders, our Board has a formal equity ownership guideline for independent directors, which requires each independent director to hold Republic stock or vested RSUs, or both, having a total value of $750,000 within five years from the date of the director’s first full annual grant. All of our independent directors who have been on the Board for at least five years meet this guideline.

We also maintain stock ownership guidelines for our executive officers and other members of management, and we recently updated these guidelines in February 2020. The new updated stock ownership guidelines for executive officers are: (1) CEO — five times salary; (2) President — four times salary; (3) Executive Officer EVP — three times salary; (4) Non-Executive Officer EVP and SVP — two times salary; and (5) Vice President, Area President and Market Vice President — one times salary. Each member of management has a five-year period from the time of promotion or hire into a covered position to meet the applicable guideline, and interim progress is expected. Members of management may meet their requirement by holding Republic stock or vested Republic stock equivalents in the Deferred Compensation Plan (“DCP”), or both, having the requisite value, and holding shares in the 401(k) plan.

Our insider trading policy prohibits all directors, officers and employees, and their immediate family members, from engaging in the following transactions relating to Republic securities or derivatives thereof: purchasing or selling puts or calls, short sales, placing standing orders (other than under approved 10b5-1 plans), engaging in short-term or “in-and-out” trading, and holding Republic securities or derivatives thereof in a margin account or pledging them.

 

    

LOGO
 

 

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LOGO

Director Nomination Procedures and Diversity Relating to Board Candidacy

The Governance Committee is responsible for soliciting recommendations for candidates for the Board, reviewing background information for such candidates, and making recommendations to the Board with respect to such candidates. In evaluating candidates, the Governance Committee considers, among other things, the following attributes:

 

    Independence (if required);

 

    Personal and professional integrity;

 

    Sound business judgment;

 

    Relevant business and industry experience;

 

    Proper mix of education and skills; and

 

    Potential effectiveness as a director in serving the long-term interests of our shareholders.

With respect to diversity relating to Board candidacy, our Corporate Governance Guidelines state that directors will be selected in the context of assessing the Board’s needs at the time and with the objective of ensuring diversity in the background, experience, and viewpoints of Board members. To assist in promoting such diversity, the Board shall take reasonable steps to ensure that new Board nominees are properly drawn from a pool that includes diverse candidates. The Board and the Governance Committee will continue to assess the need to expand the breadth of experience, expertise, and viewpoints represented collectively by our directors and continue to seek top-quality candidates to fill any identified gaps.

Mr. Slager is nominated for election to our Board at each annual meeting of shareholders pursuant to the terms of his employment agreement.

Director Independence

Our common stock is listed on the New York Stock Exchange (“NYSE”), which requires that a majority of our Board be comprised of “independent directors” according to the NYSE’s independence standards. The Governance Committee considers the “per se” disqualifications from director independence under NYSE rules when assessing the independence of a current director or a nominee for director. In addition, our Board has adopted categorical standards that provide that certain relationships are not material relationships that would prevent a director’s independence. The Board reviews director independence and considers relationships between each of the directors and their immediate family members and Republic and its subsidiaries, both in the aggregate and individually. Mr. Slager is not an “independent director” under the NYSE listing standards because he is an employee of Republic and is nominated for election to our Board at each annual meeting of shareholders pursuant to his employment agreement. The Board determined that the 11 remaining directors meet the NYSE standards for independence and the categorical standards adopted by our Board, and have no material relationships with us that impair their independence. In making its determination, the Board considered, in the case of Mr. Larson, his status as chief investment officer to William H. Gates III, who is the beneficial owner of Cascade Investment, L.L.C., our largest shareholder.

 

 

The following is a list of our independent directors as of the date of this Proxy Statement:

 

Manuel Kadre (Chairman)

  

Jennifer M. Kirk

  

Ramon A. Rodriguez

  

Sandra M. Volpe

Tomago Collins

  

Michael Larson

  

James P. Snee

  

Katharine B. Weymouth

Thomas W. Handley

 

  

Kim S. Pegula

 

  

John M. Trani

 

  
 

 

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Board Leadership Structure, Role in Risk Oversight, Ethics and Compliance

Board Leadership Structure

We have a non-executive Chairman of the Board and a separate CEO. The Board believes that having a non-executive, independent director serving as the Chairman of the Board is in the best interests of Republic and its shareholders because it strengthens the Board’s independence and allows the CEO to focus his talents and attention on managing our business. The Chairman of the Board is also a valuable bridge between the Board and management. His role is to provide leadership to the Board, and his responsibilities include:

 

    setting the agenda and procedures for Board meetings in collaboration with the CEO;

 

    presiding over all Board meetings;

 

    supervising the circulation of information to the directors;

 

    after consulting with the CEO and other directors, providing input to the Governance Committee regarding revisions to our Corporate Governance Guidelines and the appointment of chairs and members of the Board’s committees;

 

    coordinating periodic reviews of senior management’s strategic plan;

 

    consulting with committee chairs about the retention of advisors and experts; and

 

    performing such other duties and services as the Board may require.

The Chairman of the Board also has the authority to request access to any of our employees at any time. Our Board has four standing committees — the Audit Committee, the Compensation Committee, the Governance Committee and the Sustainability & Corporate Responsibility Committee. Each committee consists solely of independent directors and has its own chair who is responsible for directing the committee’s work in fulfilling its responsibilities.

 

LOGO

Board of Directors Chairman of the Board: Manuel Kadre Audit Committee - 4 MEMBERS: All independent Compensation Committee - 6 MEMBERS: All independent Governance Committee - 5 MEMBERS: All independent Sustainability & Corporate Responsibility Committee - 5 MEMBERS: All independent

Role in Risk Oversight

We face a variety of risks, including credit and liquidity, operational, environmental, litigation, compliance, compensation and cyber security risks.

In accordance with NYSE requirements, our Audit Committee charter requires the Audit Committee to, among other things:

 

    meet periodically with management and our independent registered public accounting firm to review our major financial risk exposures and the steps management has taken to monitor and control them;

 

    discuss guidelines and policies with respect to financial risk assessment and financial risk management;

 

    advise the Board with respect to our policies and procedures regarding compliance with applicable laws and regulations and with our Code of Business Ethics and Conduct (“Code of Ethics”);

 

    review with our Chief Legal Officer legal matters that may have a material impact on our financial statements, our compliance policies, and any material reports or inquiries received from regulators or governmental agencies; and

 

    at least annually, and otherwise as necessary, provide new and existing Audit Committee members an overview of our key financial risks and our legal and regulatory requirements.

Our Audit Committee meets at least quarterly and takes various steps to assist the Board in fulfilling its financial risk oversight function. For example, the agenda for each Audit Committee meeting typically includes a report by our Chief Legal Officer, who also serves as our Chief Ethics & Compliance Officer, and reports from our Vice President of Internal Audit and our Chief Accounting Officer.

Before each committee meeting, our Vice President of Internal Audit provides the Audit Committee with a comprehensive report on internal audit matters, including Sarbanes-Oxley Act testing results. At the meeting, the Chief Legal Officer and the Vice President of Internal Audit make oral presentations and respond to questions from committee members. Further, the chair of the Audit Committee reviews, discusses with our Vice President of Internal Audit and concurs in a program for field audits. Under the program, each field audit includes a financial review as well as an operations review. In addition, the Audit Committee also routinely receives a report regarding our employee hotline, the AWARE Line. The AWARE Line is an integral part of our compliance program and provides a way for our employees to confidentially provide information regarding concerns they may have with respect to compliance with policies or ethical and legal requirements. Our Chief Accounting Officer regularly reports on management’s evaluation of the effectiveness of our disclosure controls and procedures. Finally, our Risk Management Department periodically briefs the Audit Committee or the Board on our insurance coverage programs and related risks.

 

    

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LOGO

Our Sustainability & Corporate Responsibility Committee meets at least quarterly and takes various steps to assist the Board in fulfilling its oversight responsibility with respect to enterprise and other risks, including cyber security, climate change, safety, environmental and reputational risks, and the practices by which these risks are managed and mitigated. For example, at each quarterly meeting the Sustainability & Corporate Responsibility Committee receives an update from management on cyber security, and a detailed assessment of the cyber security program is conducted on an annual basis.

Our Board is actively involved in risk oversight. For example:

 

 

BOARD AND COMMITTEE INVOLVEMENT IN RISK OVERSIGHT

      

While the Board and its committees provide risk oversight, management is responsible for the day-to-day risk management processes. We believe our Board’s role is to ensure that:

 

  the risk management processes designed and implemented by management are adapted to the overall corporate strategy;

 

  those processes are functioning effectively;

 

  management communicates material risks to the Board or the appropriate committee; and

 

  actions are being taken to continue to foster a strong culture of compliance and risk-adjusted decision-making throughout Republic.

 

We further believe that the Board and committee leadership structure we have implemented and the division of responsibilities described herein constitute the most effective approach to address the risks we face.

 

Our management annually reports to the Board, through its Sustainability & Corporate Responsibility Committee, the results of its internal survey and analysis of enterprise risk management.

 

   

 

The agendas for our Board meetings include regular reports from our CFO and our Treasurer regarding the financial, credit and liquidity risks we face, including hedging programs.

 

   

 

Our management regularly discusses with the Board, and its committees, various operational and compliance risks, including pricing, recycled commodity prices, safety, environmental, and fleet risks.

 

   

 

Our independent registered public accounting firm provides regular reports to the Audit Committee on risk issues, and the Audit Committee then provides regular reports to the Board.

 

   

 

The Compensation Committee considers, evaluates, and addresses risks that may be raised by our compensation program.

 

   

 

The Board and individual Board members engage in periodic discussions with management regarding risks as they deem appropriate.

 

   

Ethics and Compliance

At Republic, it is our responsibility to lead by example and hold ourselves to the highest ethical standards and practices in all that we do. Our Code of Ethics, “Leading with Integrity,” applies to all of our directors, officers, employees, independent contractors, consultants, and other third parties acting on behalf of Republic. The Code of Ethics is an integral part of Republic’s ethics and compliance program and serves as the cornerstone of our commitment to conduct business with the highest ethical and legal standards. We do this by staying true to our values and embracing our priorities, as well as leading with integrity in every aspect of our business.

Our commitment to a strong ethical and compliant culture was recently acknowledged by being named to the 2020 World’s Most Ethical Companies® List by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices. This is the fourth consecutive year that Republic received this honor. The World’s Most Ethical Companies’ assessment is based upon the Ethisphere Institute’s Ethics Quotient® (EQ) framework which offers a quantitative way to assess a company’s performance in an objective, consistent, and standardized manner. Scores are generated in five key categories: ethics and compliance program (35%), culture of ethics (20%), corporate citizenship and responsibility (20%), governance (15%), and leadership and reputation (10%), and provided to all companies who participate in the process.

If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the Code of Ethics that applies to our CEO, Chief Financial Officer, Controller or Chief Accounting Officer, we will disclose the nature of such amendment or waiver in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”). The Code of Ethics can be viewed on the “Investors” section of our website at www.RepublicServices.com.

Shareholder Director Recommendation Policy

The Governance Committee will consider director candidates recommended by our shareholders unrelated to a recommendation under our proxy access bylaw provision, described below. A shareholder may propose a nominee to serve as a director before a meeting of shareholders by giving timely written notice and meeting the other requirements set forth in Section 2.12 of our Amended and Restated Bylaws (“Bylaws”).

 

 

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The Governance Committee determines the eligibility of a proposed nominee to serve as a director, and may require additional information to determine such eligibility. Director candidates proposed by shareholders are evaluated on the same basis as all other director candidates. The Governance Committee may, in its discretion, interview any director candidate proposed by a shareholder.

Shareholders wishing to recommend director candidates for consideration by the Governance Committee may do so by sending the required information in writing to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. To consider a candidate for nomination at the 2021 annual meeting of shareholders, we must receive the shareholder’s written notice no earlier than January 8, 2021 and no later than February 7, 2021. Refer to our Bylaws for additional information and notice requirements.

Proxy Access Director Nominations

In addition to the right to recommend directors to the Governance Committee, qualifying shareholders also have the right to nominate and include director candidates in our proxy materials by giving adequate and timely notice to the Corporate Secretary pursuant to the procedures and requirements contained in our proxy access bylaw. Any shareholder or group of up to 20 shareholders who have maintained continuous qualifying ownership of at least 3% of the shares of our outstanding common stock for at least the previous 3 years are permitted to include up to 25% of the number of director nominees in our proxy materials for our annual meeting of shareholders, provided that the shareholders and nominees satisfy the requirements specified in our Bylaws. In order for such nominees to be included in our proxy statement and form of proxy, shareholders and nominees must submit a notice of proxy access nomination together with certain related information required by our Bylaws.

Shareholders wishing to recommend director candidates using our proxy access bylaw may do so by sending the required information in writing to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. To provide adequate time to assess shareholder-nominated candidates, requests to include these candidates in our proxy materials for our 2021 annual meeting of shareholders must be delivered or mailed and received at our principal executive offices no earlier than October 25, 2020 and no later than November 24, 2020.

Director Resignation Policy

Republic is a Delaware corporation. Under Delaware law, if an incumbent director is not elected, that director remains in office until the director’s successor is duly elected and qualified or until the director’s death, resignation or retirement. To address this potential outcome, we have a director resignation policy in our Bylaws. Under this policy, the Board will nominate for further service on the Board only those incumbent candidates who tender, in advance, irrevocable resignations. Each irrevocable resignation is contingent on the failure to receive the required vote at any annual meeting at which the nominee is nominated for re-election and on Board acceptance of the resignation. The Governance Committee will recommend to the Board whether to accept or reject the tendered resignation. The Board will publicly disclose its decision within 90 days after certification of the election results. If the Board does not accept the resignation, the director will continue to serve until the next annual meeting and until his or her successor is duly elected, or until his or her earlier resignation or removal. If the Board accepts the resignation, then the Board, in its sole discretion, may fill any resulting vacancy or reduce the size of the Board.

Communications with the Board of Directors

Any shareholder or other interested party who wishes to communicate with the Board, a Board committee, the Chairman of the Board or the non- management directors (as a group or individually) may send correspondence to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. The Corporate Secretary will compile and submit such correspondence on a periodic basis to the entire Board or, if designated in the communication, to the appropriate Board committee, the Chairman of the Board or the non-management directors (as a group or the appropriate individual member(s)). The independent directors have approved this process.

Attendance at Annual Meetings Policy

We do not have a formal policy requiring our directors to attend the Annual Meeting. Mr. Slager attended and chaired our 2019 annual meeting of shareholders.

Additional Information Regarding Corporate Governance

Shareholders may obtain, free of charge, the current charters for the Audit Committee, Compensation Committee, Governance Committee, and Sustainability & Corporate Responsibility Committee, as well as our Certificate of Incorporation, Bylaws, Corporate Governance Guidelines, Code of Ethics, and Political Contributions Policy by written request to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. These documents also are available at the “Investors” section of our website at www.RepublicServices.com.

 

    

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LOGO

Sustainability, Corporate Responsibility, People and Talent

In addition to being committed to our customers, employees, and shareholders, we are also committed to the communities we serve and to the environment. As part of our ongoing Blue Planet® sustainability initiative, we continue to build durable practices and programs across our sustainability platform with the goal of a cleaner, safer, and healthier world.

Board and Committee Oversight of Sustainability

Our Board is directly involved in the oversight of Republic’s environmental and sustainability initiatives and conducts a comprehensive review of the Company’s recycling and sustainability performance on an annual basis. Republic’s commitment to corporate sustainability also led to the formation of a dedicated Sustainability & Corporate Responsibility Committee of the Board in 2015. This committee has oversight responsibility with respect to our sustainability performance, our corporate responsibilities, our role as a socially responsible organization, and our enterprise risk, including cyber security, climate change, safety, environmental, and reputational risks. The Sustainability & Corporate Responsibility Committee is focused on reviewing the Company’s sustainability performance and progress toward sustainability strategic goals and objectives as well as providing guidance to management with respect to significant sustainability and corporate responsibility initiatives.

Sustainability Focus

We are passionate about our role as responsible stewards of our nation’s waste, and we have been steadily building on our sustainability performance for several years. In 2018 we announced the achievement of our time-bound sustainability goals set in 2014. As a result of these achievements, we added more than 150,000 tons per year of recycling capacity; reduced absolute fleet emissions by three percent through the use of Compressed Natural Gas and Renewable Natural Gas; and brought multiple new landfill gas-to-energy projects online. We also continue to outperform the industry average for Occupational Safety and Health Administration recordable safety rates.

Building on the momentum from the achievement of our 2014 sustainability goals, in 2019 we unveiled a new set of ambitious, long-term goals. These new 2030 goals are designed to significantly benefit the environment and society while enhancing the foundation and profitability of our business for the long term. As we did with our prior sustainability goals, we focused our new 2030 goals on the five elements of our sustainability platform: Safety, People, Operations, Materials Management and Communities. These elements support and enable our business strategy of Profitable Growth through Differentiation. When we manage these elements of our sustainability program, we strengthen the foundation of our business for the long term and create value for all stakeholders.

 

LOGO

In 2019 we unveiled a new set of ambitious, long-term goals. These new goals are designed to significantly benefit the environment and society while enhancing the foundation and profitability of our business for the long term. Safety Amplified 0 Zero employee fatalities Reduce our OSHA Total Recordable Incident Rate (TRIR) to 2.0 or less by 2030 Engaged Workforce 88% Achieve and maintain employee engagement scores at or above 88% by 2030 Climate Leadership 35% Reduce absolute Scope 1 and 2 greenhouse gas emissions 35% by 2030 (2017 baseline year) SBTi1 APPROVED* Circular Economy 40% Increase recovery of key materials by 40% on a combined basis by 2030 (2017 baseline year) Regenerative Landfills 50% Increase biogas sent to beneficial reuse by 50% by 2030 (2017 baseline year) Charitable Giving 20M Positively impact 20 million people by 2030

 

(1)

Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact (UNGC), World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).

 

 

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We developed our new 2030 goals through a comprehensive assessment that included an analysis of global trends, identification of business model dependencies and engagement with key stakeholders, including shareholders. This resulted in an ambitious platform that aligns with the United Nations’ Sustainable Development Goals, which address critical global macrotrends. Notably, our greenhouse gas goal has been approved by the Science Based Targets Initiative.

Industry Leadership

We have been steadily building on our sustainability progress and performance. We were named to the North American and World Dow Jones Sustainability Indices (“DJSI”) for a fourth consecutive year in 2019. We believe the DJSI is the gold standard for corporate sustainability. In addition, we were named to the CDP Climate A List, recognizing the Company’s commitment to sustainability, including the new goals, increased disclosures and achievements. These achievements demonstrate our ability to connect financial performance with environmental and social performance, including addressing various risks and opportunities posed by climate change. The rankings also highlight Republic’s leadership in corporate governance, environmental, social and financial aspects of sustainability. Finally, we released our fifth Sustainability Report in 2019, published our second annual SASB report and updated our GRI report to the latest standard. All of these reports are available on our website at RepublicServices.com/sustainability.

 

LOGO

To view these reports and for more information about our Sustainability Platform and our new 2030 Sustainability Goals, visit RepublicServices.com/sustainability.

Human Capital Management

We believe our efforts around human capital management add long-term value to our business, differentiate us from our peers, and foster an inclusive culture for our employees. Building an engaged workforce starts at the top, and we have demonstrated a commitment to diversity through the people who guide our Company — seven of the 12 current members of our Board are women or diverse. Our Board and each committee plays a role in the active oversight of the Company’s human capital management program. This is accomplished by focusing on seven key areas: safety, talent development programs, inclusion and diversity, community engagement, ethics and compliance, talent acquisition and onboarding, and employee wellness.

 

    Our Board receives annual updates and provides guidance on the Company’s talent development programs and the pipeline of future leaders within our Company.

 

    Our Sustainability & Corporate Responsibility Committee engages in quarterly deep dives related to safety, employee wellness, inclusion and diversity, and community engagement.

 

    Our Compensation Committee receives quarterly updates related to our learning and talent development programs, which includes talent acquisition and onboarding, talent development, and talent assessment.

 

    Our Audit Committee receives quarterly updates on our ethics and compliance programs.

 

    Our Governance Committee ensures that we are seeking director candidates who will bring a diversity of background, experience and viewpoints to our Board.

 

LOGO

Board Oversight of Human Capital Management Our Board and committees are actively involved in overseeing the Companys human capital management program. BOARD AND COMMITTEESTalent Development Program Inclusion and Diversity Community Engagement SafetyTalent Acquisition and Onboarding Ethics and Compliance Employee Wellness

 

    

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LOGO

Our Commitment to Safety

Safety always tops our list of Company priorities, and we believe the success of our safety program is directly dependent on our people: employees with strong operational know-how, attention to detail and a consistent focus. We reinforce our Company’s safety culture through comprehensive safety management programs, which include our Focus Together foundational safety training program, new driver training programs, our non-negotiable absolutes and standards, as well as many others. As part of our continued commitment to the safety of our employees and communities, we included two specific safety goals in our 2030 sustainability goals under “Safety Amplified.” For more information on these goals and our plans for how we will achieve them, please see our 2018 Sustainability Report available at RepublicServices.com/sustainability.

An Engaged and Diverse Workforce

We believe an engaged and diverse workforce is vital to our success. We measure employee engagement annually and compensate many of our leaders based on their teams’ scores. In 2019, we improved our overall employee engagement score by over 100 basis points to 86 percent, which is well above national norms and is high-performing for the industry. We know that our business units with higher employee engagement have fewer safety incidents, better customer service and better financial performance. We continue to receive national awards for our accomplishments in these areas, and we aim to raise the bar even higher.

 

LOGO

We are committed to creating a company where the best people come to work and are engaged every day, and we do this by combining meaningful experiences and programs that develop and motivate employees with attractive total rewards packages. Our engagement and retention programs are designed to sustain our high engagement levels. Through learning and talent development programs, we focus on ensuring our employees have the skills necessary to be successful in their current roles through targeted onboarding and experiential learning. We also provide our employees the opportunity to learn new skills and advance within the organization through our leadership training and development programs. Finally, we are proud of the progress we have made in creating a more inclusive culture for our employees. One way we have done this is through our active business resource groups, which are intended to connect, develop and empower our employees. These business resource groups include Women of Republic, VALOR (Veteran, Advocacy, Learning, Outreach and Recruiting), and the Black Employee Network.

 

LOGO

ENGAGEMENT AND RETENTION PROGRAMS Measure and drive engagement and actions Bi-Annual ROAD-EO celebrating the best of the best LEARNING AND TALENT DEVELOPMENT Driver Training Center Supervisor Onboarding Sales Acceleration Program Leadership Fundamentals Republic Leadership Academy Leadership Trainee Program General Manager Acceleration Programs INCLUSION AND DIVERSITY PROGRAMS Inclusive Leadership Behaviors Recruiting Strategy Commitment to Veterans Prioritizing Female Drivers Business Resource Groups

 

 

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Board Meetings and Committees

Meeting Participation

The Board held five meetings during 2019. Each director attended at least 75% of the total number of Board meetings and the total number of meetings of all Board committees on which he or she served and held during his or her term of service. The non-employee directors met regularly in executive sessions during 2019.

Committee Composition

The Board has four standing committees: the Audit Committee, the Compensation Committee, the Governance Committee, and the Sustainability & Corporate Responsibility Committee. Each committee operates under a written charter adopted by the Board and reviews its charter at least annually. Messrs. Kadre and Slager are not members of any of our standing committees. Additional information regarding each of the current standing committees and their composition as of the mailing date of this Proxy Statement appears in the table below.

 

DIRECTOR NAME   

AUDIT     

COMMITTEE     

  

COMPENSATION     

COMMITTEE     

  

GOVERNANCE     

COMMITTEE     

  

SUSTAINABILITY     

& CORPORATE     

RESPONSIBILITY     

COMMITTEE     

     
Tomago Collins    LOGO                CHAIR     
                     
     
Thomas W. Handley       CHAIR         LOGO         
                     
     
Jennifer M. Kirk*    CHAIR               LOGO      
                     
     
Michael Larson       LOGO          CHAIR        
                     
     
Kim S. Pegula       LOGO             LOGO      
                     
     
Ramon A. Rodriguez*    LOGO                LOGO      
                     
     
James P. Snee       LOGO          LOGO         
                     
     
John M. Trani       LOGO          LOGO         
                     
     
Sandra M. Volpe          LOGO          LOGO      
                     
     
Katharine B. Weymouth    LOGO          LOGO            
                     

* Audit Committee Financial Expert

 

    

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LOGO

Audit Committee

 

 

MEMBERS

 

   KEY RESPONSIBILITIES
   

Jennifer M. Kirk*, CHAIR

 

Tomago Collins

 

Ramon A. Rodriguez*

 

Katharine B. Weymouth

 

*Audit Committee Financial Expert

 

LOGO

THE COMMITTEE HELD FIVE MEETINGS AND MET REGULARLY IN EXECUTIVE SESSIONS DURING 2019

 

  

•  Assists the Board in monitoring:

•  The integrity of financial statements;

•  Our compliance with legal and regulatory requirements; and

•  The independence and performance of our internal and external auditors on an annual basis.

•  Has the ultimate authority and responsibility to select, evaluate, terminate and replace our independent registered public accounting firm; and

•  Approves the Audit Committee Report on page 88.

•  Audit Committee Financial Experts: Our Board has determined that Ms. Kirk and Mr. Rodriguez qualify as an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K under the Securities Act.

 

Management Development & Compensation Committee

 

 

MEMBERS

 

   KEY RESPONSIBILITIES
   

Thomas W. Handley, CHAIR

 

Michael Larson

 

Kim S. Pegula

 

James P. Snee

 

John M. Trani

 

Katharine B. Weymouth

 

LOGO

THE COMMITTEE HELD FIVE MEETINGS AND MET REGULARLY IN EXECUTIVE SESSIONS DURING 2019

 

  

•  Establishes and regularly reviews our compensation and benefits philosophy and program in a manner consistent with corporate financial goals and objectives;

•  Determines the salaries and incentive compensation payable to executive officers, including annual and long-term incentive compensation under our shareholder-approved pay-for-performance program;

•  Administers our shareholder-approved stock incentive plan;

•  Evaluates our CEO’s performance and sets his compensation and in conjunction with this process, reviews the executive succession plan overseen by the Governance Committee;

•  Periodically reviews our talent acquisition and management development process to support Republic in maintaining a strong and diverse portfolio of talent to further our business strategy;

•  Approves the Compensation Committee Report on page 69;

•  Oversees the completion of an annual assessment of any risks that may be associated with our compensation policies and practices; and

•  Determines the breadth and scope of the external compensation consultant’s services and may engage the compensation consultant of its choice and terminate the engagement at any time.

 

The Committee retains Pearl Meyer & Partners (“Pearl Meyer”) as its compensation consultant, as further discussed on page 67.

 

 

 

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Nominating & Corporate Governance Committee

 

 

MEMBERS

 

   KEY RESPONSIBILITIES
   

Michael Larson, CHAIR

 

Thomas W. Handley

 

James P. Snee

 

John M. Trani

 

Sandra M. Volpe

 

LOGO

THE COMMITTEE HELD FOUR MEETINGS AND MET REGULARLY IN EXECUTIVE SESSIONS DURING 2019

 

  

•  Identifies:

•  Director candidates that it recommends to our Board for selection as the director nominees for the next annual meeting or to fill vacancies; and

•  Candidates that it recommends to our Board for selection as the Chairman of the Board.

•  Develops and recommends our corporate governance principles and reviews and provides oversight of the effectiveness of our governance practices;

•  Oversees the annual evaluation of the Board and its committees;

•  Makes recommendations to the Board related to the compensation of non-employee directors, and monitors the talent management and succession planning program for executive management; and

•  Considers nominations for the Board from shareholders that are entitled to vote for the election of directors, as described under “Shareholder Director Recommendation Policy.”

 

Sustainability & Corporate Responsibility Committee

 

 

MEMBERS

 

   KEY RESPONSIBILITIES
   

Tomago Collins, CHAIR

 

Jennifer M. Kirk

 

Kim S. Pegula

 

Ramon A. Rodriguez

 

Sandra M. Volpe

 

LOGO

THE COMMITTEE HELD FOUR MEETINGS AND MET REGULARLY IN EXECUTIVE SESSIONS DURING 2019

 

  

•  Assists the Board in fulfilling its oversight responsibility and acts in an advisory capacity to management with respect to significant issues, strategic goals, objectives, policies and practices that pertain to:

•  Safety;

•  Republic’s sustainability performance;

•  Republic’s corporate responsibilities that are of significance to the Company and its role as a socially responsible organization, including charitable giving and community support;

•  Political contributions;

•  Enterprise and other risks, including cyber security, environmental and reputational risks facing Republic and the practices by which these risks are managed and mitigated;

•  Business continuity and crisis management;

•  Inclusion and diversity;

•  Employee wellness; and

•  Corporate security.

 

    

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Director Compensation

When establishing and reviewing our directors’ compensation, we consider the level of work and involvement the directors have with our business. We also consider compensation paid to directors in the marketplace generally and at our peer group companies (“Peer Group”). In 2019, we compensated our directors as follows:

 

    we paid each non-employee director an annual retainer of $100,000, plus an additional $165,000 in the case of our Chairman of the Board;

 

    we paid each committee chair an annual retainer of $20,000; and

 

    we granted each non-employee director RSUs based on a fair market value of $230,000 as of the date of grant (prorated for directors serving less than a full year).

Cash retainers are prorated if a director serves less than a full year in the applicable position. The annual grant of RSUs to a newly appointed, non- employee director is prorated to the number of days remaining in the year. We also reimburse our non-employee directors for their reasonable out-of-pocket costs and travel expenses in connection with their attendance at Board and committee meetings.

All RSUs granted to non-employee directors are fully vested upon grant. RSUs granted before 2012 will be settled upon the director’s termination of service from the Board. Beginning with grants in 2012, the RSUs are settled upon the earlier of the director’s termination of service from the Board or three years after they are granted, unless they are deferred into our DCP. RSUs are settled through the issuance of shares of our common stock. After any quarter in which dividends are distributed to shareholders, the non-employee directors receive additional RSUs with a value equal to the value of dividends they would have received had they owned the shares of stock underlying the RSUs on the dividend record date. The number of additional RSUs to be received by directors due to the declaration of dividends is based on the closing price of our stock on the dividend payment date.

All compensation paid by us during 2019 to our non-employee directors is detailed below. Mr. Slager’s compensation is reflected in the executive compensation tables contained in this Proxy Statement, and he received no additional compensation from us for his duties as a director.

Director Compensation in 2019

 

DIRECTOR NAME   

FEES EARNED OR PAID             

IN CASH ($)(1)             

  

STOCK AWARDS             

($)(2)              

  

        TOTAL                      

($)             

   
Tomago Collins    120,000                     230,040                 350,040             
                
   
Thomas W. Handley    120,000                     230,040                 350,040             
                
   
Manuel Kadre (Chairman)    265,000(3)                 230,040                 495,040             
                
   
Jennifer M. Kirk    117,945(4)                 230,040                 347,985             
                
   
Michael Larson    120,000                     230,040                 350,040             
                
   
Kim S. Pegula    100,000                     230,040                 330,040             
                
   
Ramon A. Rodriguez    105,000(4)                 230,040                 335,040             
                
   
James P. Snee    100,000                     230,040                 330,040             
                
   
John M. Trani    100,000                     230,040                 330,040             
                
   
Sandra M. Volpe    100,000                     230,040                 330,040             
                
   
Katharine B. Weymouth    100,000                     230,040                 330,040             
                

 

(1)

Includes annual cash retainers and Board and committee chairmanship retainers. We do not pay meeting fees for Board or committee meetings.

(2)

The amounts shown in this column represent the grant-date fair value of RSUs granted in 2019 calculated in accordance with FASB ASC Topic 718. See Note 12 to our Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in making such calculations. This does not include the value of additional RSUs received in lieu of dividends. Each non-employee director received an annual grant of 3,216 RSUs on January 2, 2019 with a grant-date fair value of $71.53 per share, which was the closing price of our stock on the date of grant.

(3)

Mr. Kadre elected to defer a portion of his cash compensation in accordance with the DCP.

(4)

Mr. Rodriguez was Chair of the Audit Committee until February 2019. Ms. Kirk became Chair of the Audit Committee in February 2019. Their annual committee chair retainers were prorated to reflect this transition.

 

 

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Certain Relationships and Related Party Transactions

Our Related Party Transactions Policy stipulates that any transaction for which disclosure is required under Item 404 of Regulation S-K (an “S-K Transaction”) be approved by both our CEO and the Audit Committee. Generally speaking, an S-K Transaction is any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) in which Republic is a participant, the amount involved exceeds $120,000 in the aggregate, and a director, director nominee, executive officer, 5% shareholder, or immediate family member of any of the foregoing has a material interest in the transaction. The related party must disclose in writing to the Chief Legal Officer the material facts of the proposed S-K Transaction and the Chief Legal Officer (or designee) will then submit the written disclosure to the CEO and the Audit Committee for approval. If the proposed S-K Transaction involves the Chief Legal Officer, the written disclosure must be provided to the CEO. As part of its due diligence, the Audit Committee will review and determine, with the advice and assistance of such advisors as it deems appropriate, whether the S-K Transaction would present an improper conflict of interest. In making this determination, the Audit Committee may consider the following factors, among others: (1) whether the transaction terms are at least as favorable to us as those that could be obtained in a transaction between us and an unrelated party; (2) whether there are any compelling business reasons for us to enter into the transaction; and (3) whether the transaction would impair the independence of an otherwise independent director.

Entities Affiliated with Kim S. Pegula

During 2016, Allied Waste Services of North America LLC, a subsidiary of the Company, entered into separate multi-year sponsorship agreements with HarborCenter Operating, LLC (“HOC”) and Buffalo Bills, LLC (“Buffalo Bills”), two entities that are co-owned by Ms. Pegula and her husband. Each of the multi-year sponsorship agreements relate to a sustainability initiative whereby the Company promotes various sustainability projects and provides recycling and waste services in exchange for certain promotional rights. In July 2017, Ms. Pegula became a member of our Board. Pursuant to the agreements with HOC and Buffalo Bills, the Company paid these entities an aggregate of $252,000 in 2019 for in-stadium signage, sponsorship, hospitality and all other services received in 2019.

In addition, through several of the Company’s subsidiaries, the Company provides waste and/or recycling collection services to nine facilities in which Ms. Pegula or her immediate family members have an ownership interest. In 2019, the Company received an aggregate of approximately $477,356 for services provided to these facilities. Ms. Pegula did not initiate or negotiate any of the arrangements we have with the affiliated entities, all of the business dealings were entered into in the ordinary course of business prior to Ms. Pegula assuming her role on our Board, and our arrangements with such entities are on terms no more favorable to them than terms that would be available to unaffiliated third parties under the same or similar circumstances.

 

 

 

LOGO

I replenish for earth. Not only does Alton's role provide a meaningful service to his community, but in his own home as well. Alton hauls the organic byproducts of food waste to a compost facility that turns it into organic topsoil. He's part of a process that supports and renews our environment - and he gets a first-hand look at the results of this work while enjoying his hobbies of gardening and cooking the food he's grown for his family. Alton Driver Lillington, North Carolina

 

    

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LOGO

Security Ownership of the Board of Directors and Management

The following table shows certain information as of March 11, 2020 with respect to the beneficial ownership of common stock and RSUs by (1) our current directors, (2) each of the named executive officers, and (3) all of our current directors and all executive officers as a group. We have adjusted share amounts and percentages shown for each individual in the table to give effect to shares of common stock that are not outstanding but which the individual may acquire upon exercise of options exercisable within 60 days after March 11, 2020. However, we do not deem these shares to be outstanding for the purpose of computing the percentage of outstanding shares beneficially owned by any other individual listed on the table.

RSUs and PSUs are not considered common stock that is beneficially owned for SEC disclosure purposes. We have included RSUs in this table because they are similar to or track our common stock, they represent an investment risk in the performance of our common stock, they are settled through the issuance of shares of our common stock, and they receive dividend equivalents in the form of additional RSUs each time a dividend is paid on our common stock. The Board has considered the use of RSUs as opposed to common stock for directors and believes that RSUs align the directors with our shareholders’ long-term interests as much as common stock would.

 

   
 

SHARES BENEFICIALLY OWNED(a)

 

RESTRICTED STOCK UNITS(d)(e)

NAME OF BENEFICIAL OWNER NUMBER(b) PERCENT(c)
   
Manuel Kadre   4,245 (1)      27,617
   
Tomago Collins   14,819 (2)      13,599
   
Thomas W. Handley   1,949 (3)      13,599
   
Jennifer M. Kirk   3,449 (4)      13,599
   
Michael Larson   42,430 (5)      42,786
   
Kim S. Pegula       11,033
   
Ramon A. Rodriguez       68,939 *
   
Donald W. Slager   518,594 (6)      89,507
   
James P. Snee       7,441
   
John M. Trani   10,058 (7)      113,977
   
Sandra M. Volpe       13,599
   
Katharine B. Weymouth       6,685
   
Catharine D. Ellingsen   15,919 (8)      16,943
   
Jeffrey A. Hughes   6,770 (9)      83,045
   
Charles F. Serianni   71,220 (10)      44,370
   
Timothy E. Stuart   18,965 (11)      71,656
   
Jon Vander Ark   16,246 (12)      119,061
   

All current directors and all current

executive officers as a group (18 persons)

  738,168 (13)    0.2 %   827,093
 

 

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(a) 

Excludes the units in the last column of this table.

(b) 

All share numbers have been rounded to the nearest whole share number and include any restricted shares.

(c) 

Calculated in accordance with Rule 13d-3 under the Exchange Act, and based on 319,153,454 shares of common stock issued and outstanding at the close of business on March 11, 2020. Each of our directors and named executive officers beneficially owns less than 1% of our outstanding common stock.

(d) 

The numbers in this column represent outstanding RSUs, both vested and unvested, including RSUs represented as units in the DCP’s Stock Unit Fund, and earned PSUs held in the DCP. For further discussion of RSUs and PSUs refer to “Director Compensation” and “Executive Compensation — Components of Executive Compensation.” RSUs noted with an asterisk (*) include units held under a limited liability partnership rather than directly by the beneficial owner.

(e) 

Excluded from this column are units in the DCP’s stock investment fund, a measurement fund under which units are equal in value to shares of the Company’s common stock and are settled in cash. These units apply for purposes of our stock ownership guidelines, and Ms. Ellingsen and Messrs. Hughes, Serianni and Stuart hold 19,201, 7,346, 7,312 and 13,413 units, respectively.

(1) 

The aggregate amount of common stock beneficially owned by Mr. Kadre consists of 4,245 shares owned directly by him.

(2) 

The aggregate amount of common stock beneficially owned by Mr. Collins consists of 14,819 shares owned directly by him.

(3) 

The aggregate amount of common stock beneficially owned by Mr. Handley consists of 1,949 shares owned directly by him.

(4) 

The aggregate amount of common stock beneficially owned by Ms. Kirk consists of 3,449 shares owned directly by her.

(5) 

The aggregate amount of common stock beneficially owned by Mr. Larson consists of 42,430 shares owned directly by him.

(6) 

The aggregate amount of common stock beneficially owned by Mr. Slager consists of 342,279 shares owned directly by him, exercisable options to purchase 176,057 shares and 258 shares owned through our 401(k) Plan.

(7) 

The aggregate amount of common stock beneficially owned by Mr. Trani consists of 10,058 shares owned directly by him.

(8) 

The aggregate amount of common stock beneficially owned by Ms. Ellingsen consists of 15,919 shares owned directly by her.

(9) 

The aggregate amount of common stock beneficially owned by Mr. Hughes consists of 6,770 shares owned directly by him.

(10) 

The aggregate amount of common stock beneficially owned by Mr. Serianni consists of 48,656 shares owned directly by him, exercisable options to purchase 18,685 shares, 1,426 shares owned through our Employee Stock Purchase Plan (“ESPP”) and 2,453 shares owned through our 401(k) Plan.

(11) 

The aggregate amount of common stock beneficially owned by Mr. Stuart consists of 13,008 shares owned directly by him, exercisable options to purchase 5,282 shares, and 675 shares owned through our ESPP.

(12) 

The aggregate amount of common stock beneficially owned by Mr. Vander Ark consists of 16,246 shares owned directly by him.

(13) 

The aggregate amount of common stock beneficially owned by all current directors and all executive officers as a group consists of (a) 533,332 shares owned directly, (b) exercisable options to purchase 200,024 shares, (c) 2,101 shares owned through our ESPP, and (d) 2,711 shares owned through our 401(k) Plan.

 

    

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LOGO

Security Ownership of Five Percent Shareholders

The following table shows certain information as of March 11, 2020 with respect to the beneficial ownership of common stock by each of our shareholders who we know is a beneficial owner of more than 5% of our outstanding common stock.

 

  SHARES BENEFICIALLY OWNED
 
NAME OF BENEFICIAL OWNER     NUMBER         PERCENT(1)    
   

William H. Gates III

Cascade Investment, L.L.C.

2365 Carillon Point, Kirkland, WA 98033

  108,802,519 (2)        34.1 %
   

BlackRock, Inc.

55 East 52nd Street, New York, NY 10055

  23,156,870 (3)        7.3 %
   

The Vanguard Group

100 Vanguard Boulevard, Malvern, PA 19355

  19,071,686 (4)        6.0 %

 

(1)

Calculated in accordance with Rule 13d-3 under the Exchange Act, based on 319,153,454 shares of common stock outstanding at the close of business on March 11, 2020.

(2)

Based on a Schedule 13D/A and Form 4s filed with the SEC by Mr. Gates and Cascade Investment, L.L.C. (“Cascade”). All shares of our common stock held by Cascade may be deemed to be beneficially owned by Mr. Gates as the sole member of Cascade. Mr. Gates’ address is 500 5th Ave North, Seattle, WA 98109.

(3)

Based on a Schedule 13G/A filed with the SEC, BlackRock, Inc. (“BlackRock”), 55 East 52nd Street, New York, NY 10055, is the beneficial owner of 23,156,870 shares through various of its subsidiaries: BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock (Singapore) Limited, BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management North Asia Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd, BlackRock Institutional Trust Company, National Association, BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd, BlackRock Investment Management, LLC, BlackRock Japan Co, Ltd., and BlackRock Life Limited. BlackRock has sole voting power with respect to 21,063,667 shares and sole dispositive power with respect to 23,156,870 shares.

(4)

Based on a Schedule 13G/A filed with the SEC, The Vanguard Group, 100 Vanguard Boulevard, Malvern, PA 19355, is the beneficial owner of 19,071,686 shares. The Vanguard Group has sole voting power with respect to 316,370 shares and sole dispositive power with respect to 18,631,564 shares.

Delinquent Section 16(a) Reports

Based solely upon a review of (1) Forms 3 and 4 and amendments to each form furnished to us pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during our fiscal year ended December 31, 2019, (2) any Form 5’s and amendments to each form furnished to us with respect to such fiscal year, and (3) any written representations referred to us under subparagraph (b)(1) of Item 405 of Regulation S-K under the Exchange Act with respect to such fiscal year, no person who at any time during such fiscal year was a director, Section 16(a) officer or, to our knowledge, a beneficial owner of more than 10% of our common stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during such fiscal year.

 

 

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LOGO


Table of Contents

LOGO


Table of Contents

LOGO

EXECUTIVE COMPENSATION


Table of Contents

    

    

LOGO

CD&A Table of Contents

 

Executive Officers    48-49
          
Executive Summary    50-57
          

Business and Strategy Overview

  

50

 
                     

Business Profile

  

50

   
 

Business Strategy

  

50

   
 

2019 Business and Performance Highlights

  

51

   

Structural Alignment of Pay and Performance

  

52

 

Performance Metrics Used and Why We Use Them

  

53

 

Setting Robust Performance Targets

  

54

 

Compensation Committee Consideration of 2019 Shareholder Vote on Executive Compensation

  

56

 

Key Compensation Governance Practices

  

57

 
Executive Compensation Goals and Objectives    58
          
Components of Executive Compensation    59-65
          

Variable and Performance-Based Compensation Overview

  

59

 

Long-Term Incentive (Performance-Based and Equity) Awards

  

59

 
 

Equity Compensation

  

59

   
 

Restricted Stock Units

  

59

   
 

Performance Shares

  

60

   

Annual Cash Bonus

  

62

 

Fixed Compensation and Benefits

  

63

 
 

Base Salary

  

63

   
 

Other Benefits

  

64

   
 

Deferred Compensation Plan and Deferred Compensation Savings Program Contributions

  

64

   
 

Modest Perquisites

  

64

   

Other Compensation Policies

  

65

 
 

Stock Ownership Guidelines

  

65

   
 

Securities Trades by Employees

  

65

   
 

Compensation Recoupment (Clawback) Policy

  

65

   
 

 

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LOGO
 

 

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LOGO

This Compensation Discussion and Analysis (“CD&A”) provides a detailed description of our executive compensation program for 2019. This CD&A focuses on the compensation of the named executive officers listed in the Summary Compensation Table.

EXECUTIVE OFFICERS

Our executive officers serve at the Board’s pleasure and are subject to annual appointment by the Board. Our current executive officers are as follows:

 

EXECUTIVE NAME    AGE    POSITION HELD
 

Donald W. Slager

  

58

  

Chief Executive Officer

           
 

Charles F. Serianni

  

58

  

Executive Vice President, Chief Financial Officer

           
 

Brian A. Bales

  

57

  

Executive Vice President, Chief Development Officer

           
 

 

Catharine D. Ellingsen

  

 

55

   Executive Vice President, Chief Legal Officer, Chief Ethics & Compliance Officer, and Corporate Secretary
           
 

Jeffrey A. Hughes

  

63

  

Executive Vice President, Chief Administrative Officer

           
 

Timothy E. Stuart

  

52

  

Executive Vice President, Chief Operating Officer

           
 

Jon Vander Ark

  

44

  

President

           

 

LOGO   

Donald W. Slager

For biographical information about Mr. Slager, see “Board of Directors and Corporate Governance — Biographical Information Regarding Director Nominees.”

  
LOGO   

Charles F. Serianni

Mr. Serianni was appointed Executive Vice President, Chief Financial Officer in August 2014. Mr. Serianni has over 30 years of experience in a variety of roles of increasing responsibility. He was named Vice President, Region Controller for the Company’s former West Region in July 2013. Before that, Mr. Serianni served as our Assistant Controller starting in June 1998 and progressed to Senior Vice President, Chief Accounting Officer in December 2008. He served as the Accounting Operations Director for Republic Industries, Inc. (AutoNation) from February 1997 to June 1998. Before that, Mr. Serianni served as the Accounting Operations Director for Sunglass Hut International, Inc. from May 1993 to February 1997, and as Manager, Accounting and Auditing Services for Deloitte & Touche from September 1984 to May 1993. Mr. Serianni serves on the Board of Directors of Daseke, Inc.

  
LOGO   

Brian A. Bales

Mr. Bales was named Executive Vice President, Chief Development Officer in February 2015. Mr. Bales has been with Republic for over 20 years, serving as Executive Vice President, Business Development from December 2008 to February 2015, and Vice President, Corporate Development from 1998 until the acquisition by Allied Waste Industries, Inc. (“Allied”) in December 2008. Prior to his time at Republic, Mr. Bales held roles of increasing responsibility in finance and business development for Ryder System, Inc. from 1993 to 1998, and served as chief financial officer for EDIFEX & VTA Communications from 1988 through 1993. Prior to that, Mr. Bales was an accountant for PwC (formerly Price Waterhouse) from 1986 to 1988. Mr. Bales serves on the Board of Directors of Insurance Auto Auctions, Inc.

  
 

 

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LOGO   

Catharine D. Ellingsen

Ms. Ellingsen was named Executive Vice President, Chief Legal Officer, Chief Ethics & Compliance Officer, and Corporate Secretary in June 2016. Ms. Ellingsen joined Allied as Corporate Counsel in August 2001 and has experience in a variety of roles of increasing responsibility. She was named Managing Corporate Counsel in January 2003, Director, Legal and Associate General Counsel in January 2005, and Vice President and Deputy General Counsel in June 2007. Ms. Ellingsen continued as Vice President and Deputy General Counsel at Republic following the Allied acquisition in December 2008. She was then named Senior Vice President, Human Resources in August 2011 and served in that position until June 2016. Before joining Allied, Ms. Ellingsen was an attorney at Steptoe & Johnson LLP from 1996 to 2001 and at Bryan Cave LLP from 1993 to 1996. Ms. Ellingsen serves on the Boards of Directors of AMCON Corporation and Nebraska Distributing Company.

  
LOGO   

Jeffrey A. Hughes

Mr. Hughes was named Executive Vice President, Chief Administrative Officer in December 2008. Before that, Mr. Hughes served as Senior Vice President, Eastern Region Operations for Allied from 2004 until the Allied acquisition in December 2008. Mr. Hughes served as Assistant Vice President of Operations Support for Allied from 1999 to 2004 and as a District Manager for Allied from 1988 to 1999. Mr. Hughes has over 30 years of experience in the solid waste industry. On February 27, 2020, Mr. Hughes submitted notice of his intent to retire from his current position effective March 1, 2021.

  
LOGO   

Timothy E. Stuart

Mr. Stuart was named Executive Vice President, Chief Operating Officer in May 2019. Prior to his current role, Mr. Stuart served as Executive Vice President, Operations from January 2016 to May 2019, where he was responsible for maximizing field performance, executing the operating plan, and achieving financial and operational results across the Company. Mr. Stuart previously served as the Company’s East Region President from September 2013 to January 2016. He joined Republic in April 2006 as Director of Operations, and has held a variety of roles with the Company, including Area President, Vice President of Customer Experience, and Region Vice President. Mr. Stuart has over 20 years of experience in the waste industry.

  
LOGO   

Jon Vander Ark

Mr. Vander Ark was named President in May 2019, and is responsible for overseeing the Company’s operations, sales, marketing and business development. Mr. Vander Ark served as the Company’s Executive Vice President, Chief Operating Officer from January 2018 to May 2019. Prior to that, Mr. Vander Ark served as the Company’s Executive Vice President, Operations from March 2016 to January 2018. Mr. Vander Ark joined the Company in January 2013 as Executive Vice President, Chief Marketing Officer. Prior to joining the Company, he served as a partner at McKinsey & Company’s Detroit office, managing clients across a variety of industries, including transportation, logistics, manufacturing and consumer products.

 

 

    

    

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LOGO

EXECUTIVE SUMMARY

Business and Strategy Overview

Republic is a leading provider of non-hazardous solid waste collection, transfer, disposal, recycling, and energy services in the United States. As of December 31, 2019, we operated facilities in 41 states and Puerto Rico through 340 collection operations, 212 transfer stations, 189 active landfills, 79 recycling processing centers, seven treatment, recovery and disposal facilities, 15 salt water disposal wells, and four deep injection wells. We are engaged in 75 landfill gas-to-energy and renewable energy projects and had post-closure responsibility for 130 closed landfills.

 

Business Profile    LOGO   Our strategy is designed to generate consistent earnings and cash flow growth, while continually improving ROIC.
Republic provides an essential service in the recycling and solid waste industry. Some of our unique strengths include:

 

  a national vertically integrated operating platform;

  strong visibility into future earnings streams with approximately 80% of our revenue secured through multi-year contracts;

  the ability to expand margins through increasing route density and implementing fleet-based productivity initiatives;

  a business culture centered around return on invested capital (“ROIC”) and FCF growth, which we believe are the drivers of long-term shareholder value; and

  dedication to an efficient cash utilization strategy that includes increasing cash returns to shareholders, with a long-term commitment
to investment-grade credit ratings.

Business Strategy

We believe our products and services are valuable, and by developing a superior team and delivering best-in-class products, we differentiate ourselves from our competitors. Differentiation allows us to attract and retain the best talent, win more customers, increase loyalty, and drive increased revenue, profits, and cash flow, which ultimately creates long-term shareholder value. Our strategy of Profitable Growth through Differentiation is built on five key pillars, outlined below:

Driving Profitable Growth Through Differentiation

 

         
          

MARKET

POSITION

     

OPERATING

MODEL

     

PEOPLE AND

TALENT AGENDA

     

CUSTOMER

ZEAL

     

DIGITAL

PLATFORM

LOGO  

 

Develop the
best vertically
integrated
infrastructure to
build density,
expand margins
and improve
returns

   

 

Deliver the
Republic Way:
standardized
best practices
to deliver a
consistent, high
level of service
to all of our
customers

 

   

 

Create an
environment
to attract and
retain the best
talent

   

 

Drive customer
loyalty by offering
differentiated
products and
services that
specifically meet
their needs

   

 

Provide consistent
experience across
our business
and enable
customers to do
business with
us the way they
prefer

 

 

•  Focus on tuck-in
acquisitions in
existing markets

 

•  Managing the
evolving ton
(growth in
diversion)

   

 

•  Taking advantage
of alternative fuel
technology

 

•  Automating
portions of our
business

 

•  Piloting new
in-cab fleet
technology

   

 

•  Industry-leading
safety training

 

•  Learning and
development
opportunities for
employees

 

•  Programs to
drive inclusion
and diversity

   

 

•  Understand
wants/needs
of customer
segments

 

•  Expand products
through suite
of services and
alliance partners

 

•  Increase net
promoter score
and retention

 

   

 

•  Website and
app to enhance
customer
connectivity

 

•  eCommerce
capabilities

 

•  Digital pricing
tool to enhance
revenue quality

 

 

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2019 Business and Performance Highlights

During 2019, we continued to create value for our shareholders. Our strong performance reflects our focus on executing our strategy designed to profitably grow our business, manage our cost structure, generate consistent earnings and free cash flow growth, improve return on invested capital, and increase cash returns to our shareholders. Highlights of the year include:

 

    Outperformed our upwardly revised adjusted earnings per share (“EPS”) and adjusted free cash flow (“FCF”) guidance despite continued headwinds from lower recycled commodity prices;

 

    Full-year diluted EPS was $3.33 per share and full-year adjusted EPS1 was $3.34 per share. Adjusted EPS increased 8 percent over the prior year;

 

    Full-year cash provided by operating activities was $2.4 billion and adjusted free cash flow1 was $1.2 billion;

 

    Invested $526 million in acquisitions during 2019;

 

    Returned $891 million to shareholders in 2019 through dividends and share repurchases, representing a cash yield of 3.3 percent;

 

    Total shareholder return was 27 percent for the full year; and

 

    Received many notable awards for our continued leadership in Environmental, Social and Governance (ESG) matters in 2019, including:

 

    Named to Barron’s 2019 “100 Most Sustainable Companies” list

 

    Earned the RobecoSAM Sustainability Yearbook “Bronze Class” award

 

    Included in the Dow Jones Sustainability World and North America Indices for the fourth consecutive year

 

    Listed as one of the “World’s Most Ethical Companies” by the Ethisphere Institute

 

    Named to the Forbes 2019 list of Best Employers for Women

 

(1) 

Adjusted EPS and adjusted free cash flow are non-GAAP financial measures. For a reconciliation of such non-GAAP measures to the comparable measures calculated in accordance with GAAP, see “Reconciliation of GAAP to Non-GAAP Financial Measures” in Annex A on page 108.

 

 

LOGO

 

(1) 

See “Reconciliation of GAAP to Non-GAAP Financial Measures” in Annex A on page 108.

(2) 

Annualized Q4 dividend per share declared.

 

    

    

LOGO
 

 

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LOGO
   

 

Focused Capital Allocation Strategy to Increase Shareholder Value Creation

 

Our balanced capital allocation practices prioritize reinvesting into the business and then returning cash to shareholders while maintaining an investment-grade credit rating.

 

  

LOGO

Internal Growth and Acquisitions Dividends Share Repurchase Strong Capital Structure INCREASE SHAREHOLDER VALUE

Structural Alignment of Pay and Performance

In 2019, we compensated each NEO using three key forms of compensation:

 

    base salary;

 

    annual cash incentive bonus based on target; and

 

    long-term incentive awards based on target (PSUs and RSUs).

The annual and long-term incentives are variable and the amount realized is based on achieving specific performance objectives or on the performance of Republic’s stock.

 

LOGO

 

    

Long-term(1)

 

    

Base Salary

 

    

Annual Bonus(2)        

 

  

(1)   PSU target award for the performance cycle beginning in 2019 and target value of RSU awards, as approved by the Compensation Committee.

(2)   Variable annual bonus target award for 2019.

(3)   For Messrs. Hughes, Serianni, Stuart and Vander Ark and Ms. Ellingsen, the percentages reflect their 2019 Target TDCs, as approved by the Committee. Due to their promotions in May 2019, the percentages for Messrs. Vander Ark and Stuart were increased to reflect their base salaries and annual bonus targets as of the end of the fiscal year.

 

 

 

LOGO

I advocate for Earth. Kristin is inspired by environmental sustainability - motivated to help revitalize and regenerate our natural resources. She's especially interested in waste diversion, figuring out the best ways to gather recyclable and organic material that would otherwise go into landfills, and reuse them to nourish the soil, and replenish our supply. The action she takes every day affects the environment right now - and has a lasting impact on our future. Kristin | General Manager Bend, Oregon

 

 

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Performance Metrics Used and Why We Use Them

We believe the performance metrics we use for our executive compensation program are strongly aligned with shareholder interests and support our business strategy. For the past several years, our executive compensation program has used an EPS measure (“EPS Measure”) and a FCF measure (“FCF Measure”) as metrics for our annual cash incentive plan, and ROIC, cash flow value creation (“CFVC”), and relative total shareholder return (“RTSR”) as metrics for our long-term incentives. Our shareholders have told us that these metrics align well with their interests. The following describes the performance metrics applied to both the annual and LTI plans in 2019 as well as how they align with our strategic goals:

2019 Metrics and Alignment with Strategy

 

 

LOGO

ANNUAL CASH BONUS Earnings Per Share 50% Free Cash Flow 50% Our annual incentive metrics are designed to encourage profitable growth and are widely accepted by the investment community as important performance metrics. PERFORMANCE-BASED LTI AWARD Return On Invested Capital 40% Cash Flow Value Creation 40% Relative Total Shareholder Return 20% Our LTI metrics are designed to grow our business with an emphasis on cash flow while maximizing investment returns and aligning interests between our executives and shareholders.

 

    Annual bonus metrics are designed to encourage profitably growing the business, and are widely accepted by the investment community as two important ways to measure a company’s worth. They are:

 

    EPS Measure (50%):

 

    focused on growth drivers that management can control or influence; and

 

    computed on a per-share basis, which incorporates the dilutive impact to shareholders from issuing equity.

 

    FCF Measure (50%):

 

    emphasizes the quality of earnings; and

 

    incorporates the level of capital expenditures deployed to generate future growth.

 

    Long term incentive compensation metrics are designed to grow our capacity to generate future earnings rather than “harvesting the business.” This is accomplished by focusing on three-year goals rather than short-term gains as follows:

 

    ROIC (40% in 2019):

 

    emphasizes maximizing investment returns;

 

    focuses management on cost controls and margin expansion; and

 

    incentivizes management to make better use of existing assets.

 

    CFVC – a measure of economic value added (40% in 2019):

 

    focuses on building the business with an emphasis on cash flow;

 

    includes a capital charge to promote disciplined capital spending; and

 

    ensures alignment of goals and objectives at all levels of the organization.

 

    RTSR (20% in 2019):

 

    aligned with the investment community; and

 

    a relative measure so management is not rewarded or penalized for broader market conditions.

 

    

    

LOGO
 

 

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LOGO

Although the FCF Measure used for our annual bonus and the CFVC used for our LTIs may appear similar, the measures are discrete and support different objectives.

 

      FREE CASH FLOW    CASH FLOW VALUE CREATION
 

Calculation

   FCF = Cash Flow from Operations – Net Capital Expenditures    CFVC = Net Operating Profit After Tax – (Average Net Assets x Capital Charge)
           
 

Rationale for Use as

Performance Metric

  

•  Reflects strength of Company’s cash flows on an annual basis and quality of Company’s earnings

 

•  Measures Company’s ability to generate cash flow in excess of capital expenditures

  

•  Includes a capital charge on net assets to promote business growth through disciplined investments

 

•  Reflects creation of value over the long term

           

Please refer to the CD&A Appendix in Annex A on page 108 for details regarding the calculation of our actual results for 2017, 2018, and 2019 for the EPS Measure, FCF Measure, CFVC, and ROIC.

Setting Robust Performance Targets

We develop rigorous performance metrics on a bottom-up basis – reflecting both management initiatives and the impact of external factors. To align management incentives, our metrics and performance targets focus on factors that management can impact rather than on external factors not under management’s control or ability to mitigate.

The performance metrics used in the annual bonus plan and the PSUs (other than the RTSR metric used for the PSUs and weighted at 20%) are directly tied to management’s ability to increase shareholder value. In setting performance targets for the annual bonus plan and for the three-year PSU performance cycle, the Compensation Committee considers the macro-economic environment, industry-specific conditions, prior-year actual performance, and changes in regulations and laws. The Compensation Committee also considers recent trends and developments in the business that are expected to impact financial results. It confirms that performance targets align with our published earnings guidance, which assures that they are transparent and reward management only if management is successful in achieving financial results that align with the expectations we communicate externally. Based on this due diligence, the Compensation Committee sets rigorous, but reasonable, performance goals for the business.

The following table sets forth the process for setting rigorous performance targets that are aligned closely with shareholder value creation.

 

 

LOGO

MANAGEMENT INITIATIVES Profitable Revenue Growth Controllable Operating Expenses Capital Investment M&A (Tuck-in) SELECTED EXTERNAL FACTORS Volume/Macroeconomic Environment CPI Impact on Pricing Diesel/Other Commodity Prices Regulatory and Tax Law Changes FINANCIAL RESULTS EPS Free Cash Flow Cash Flow Value Creation ROIC VALUE CREATION Stock Price Appreciation Shareholder Return Our compensation program is focused on achieving key financial results that support shareholder value creation.

 

 

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The tables below compare targeted metrics with actual outcomes for each performance measure in the 2017 through 2019 NEO compensation program.

 

LINKING PAY TO MANAGEMENT PERFORMANCE                   
           2017     2018     2019  

•  Republic’s financial performance is driven by both management performance and external factors

•  We use performance metrics that ensure alignment between management and shareholders by primarily focusing on value-creating measures within management’s control

•  Majority of CEO’s total compensation is performance-based

•  Our goal is to create shareholder value, regardless of the business environment

 

   

 

EPS MEASURE

TARGET

 

  $2.34     $3.08     $3.25  
   

 

EPS MEASURE

ACTUAL

 

  $2.41     $3.13     $3.33  
        $875M     $1,065     $1,130  

LOGO

 

   

FCF MEASURE

TARGET

 

     

 

GOAL SETTING PROCESS

 

   

FCF MEASURE

ACTUAL

  $934M     $1,152     $1,173  

•  Metrics with proven record of driving shareholder value are selected for annual and long-term incentive plans, including EPS, FCF, ROIC, CFVC and RTSR

•  Budget, strategy, long-term performance history, macro-economic and other external factors are considered in setting each year’s targets

•  Input from shareholders, the Compensation Committee, and management is considered in setting incentive performance targets and ranges

 

 
 
   

 

ANNUAL BONUS

PAYOUT

 

  144%     125%     140%  
         
         

 

 

LOGO

ANNUAL CASH BONUS Earnings Per Share Measure Free Cash Flow Measure ($M) PERFORMANCE BASED LTI AWARD Cash Flow Value Creation ($M) Return on Invested Capital (3-year Average) Relative Total Shareholder Return

The annual bonus for our NEOs has paid out at 143.75% of target in 2017, 125.0% of target in 2018, and 140.0% of target in 2019. Please refer to the CD&A Appendix in Annex A on page 108 for details regarding the calculation of our actual results for 2017, 2018 and 2019 for the EPS Measure, FCF Measure, CFVC and ROIC.

 

    

    

LOGO
 

 

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LOGO

Shareholder Engagement and Compensation Committee Consideration of 2019 Shareholder Vote on Executive Compensation

Republic has an active shareholder outreach program and regularly engages with shareholders on a number of matters, including executive compensation, governance and sustainability. The Compensation Committee continues to consider feedback received from shareholders on executive compensation when designing and reviewing our compensation program.

Although the Compensation Committee was pleased that our 2019 non-binding advisory vote on named executive officer compensation (“say-on-pay vote”) received support from 97.3% of the shares voted, we continued our shareholder outreach program in fall 2019 to seek shareholders’ views on various executive compensation, governance and sustainability issues. Throughout 2019, we engaged directly with shareholders representing approximately 53% of shares outstanding, as well as one proxy advisor. Members of our Board actively participated in this outreach, including the independent Chairman of the Board, an independent member of our Compensation Committee, and an independent member of our Sustainability & Corporate Responsibility Committee. Specific areas of discussion included our new sustainability goals, director refreshment and education, human capital management, and our executive compensation practices.

Our shareholders, both via the say-on-pay vote at the 2019 Annual Meeting and in our engagement sessions, spoke favorably of both our overall compensation program and of the changes we previously made to it as a direct result of prior shareholder feedback. Accordingly, the Compensation Committee has decided not to make further changes to the structure of the compensation program in 2020. The Compensation Committee continues to seek shareholder input on our compensation program to ensure that it is well-designed to incentivize our management team to drive shareholder value.

 

 

 

 

LOGO

I serve for Earth. Paul is a six-year veteran in the Army Reserves. At Republic Services, he wears a different uniform but the mission is the same: reporting for duty and working with pride to protect the environment and keep our neighborhoods healthy, safe, and clean. As a driver, he's able to connect with his community to serve them in an important new way. Paul | Driver Savannah, Georgia

 

 

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Key Compensation Governance Practices

The Compensation Committee independently governs the executive compensation program with the support of an independent compensation consultant and management. Our compensation program demonstrates strong governance through the following principles and characteristics:

 

COMPENSATION PRACTICE         REPUBLIC POLICY
Pay-for-Performance   LOGO    A significant percentage of both the target total direct compensation opportunity and the LTI opportunity is performance-based.
          
Relevant Performance
Metrics
 

 

LOGO

  

 

Annual bonus awards and LTI awards are based on value-driving financial metrics and are capped.

          
Benchmarking   LOGO    The Compensation Committee uses a well-structured Peer Group, consisting of companies with which Republic competes for business or key executive talent.
          
Stock Ownership Guidelines  

LOGO

  

We have stock ownership guidelines of 5x salary for our CEO, 4x salary for our President, and 3x salary for other NEOs.

          
Annual Shareholder
Say-on-Pay Vote
  LOGO    We value our shareholders’ input on our named executive officer compensation program. Our Board seeks an annual non-binding advisory vote from shareholders to approve the named executive officer compensation program disclosed in our CD&A.
          

 

Annual Risk Assessment of
Compensation Programs

 

 

LOGO

  

 

The Compensation Committee annually reviews our compensation program, including our incentive program, to ensure that they do not encourage excessive or inappropriate risk-taking.

          
Independent
Compensation Consultant
  LOGO    The Compensation Committee retains an independent compensation consultant to advise on the executive compensation program and practices.
          
Compensation Recoupment
(Clawback) Policy
  LOGO    Our clawback policy allows recovery of certain incentive cash and equity compensation that is performance-based if it is earned based on inaccurate financial statements.
          
Double Trigger Provisions   LOGO    We have double trigger provisions for all severance and equity awards following a change in control.
          
Consideration of Shareholder
Dilution and Burn Rates
  LOGO    We consider overall dilution and burn rates when determining annual equity awards to manage the impact of dilution on our shareholders.
          
No Dividends on
Unearned PSUs
  LOGO    We do not pay dividends on unearned PSU awards.
          
Modest Use of Perquisites   LOGO    Our NEOs and other executives receive the same benefits as other employees, with a limited exception for airplane use for the CEO.
          
No Excise Tax Gross-Up   LOGO    We do not provide a gross-up for excise tax payments made in the event of a change in control.
          
No Hedging, Pledging or
Short Sales of Republic Stock
  LOGO    Our Insider Trading Policy prohibits all directors, officers and employees, and their immediate family members, from engaging in the following transactions related to Republic securities (or derivatives): purchasing or selling puts or calls, short sales, placing standing orders (other than under an approved 10b5-1 plan), short-term trading, and holding Republic securities (or derivatives) in a margin account or pledging them.
          
No Repricing or Exchange
of Underwater Options
  LOGO    Our Stock Incentive Plan does not permit repricing or exchange of underwater options without shareholder approval.
          

 

    

    

LOGO
 

 

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LOGO
LOGO   

Our strong compensation governance structure helps ensure management and Board accountability while encouraging long-term value creation.

EXECUTIVE COMPENSATION GOALS AND OBJECTIVES

Our executive compensation philosophy and practices reflect our strong commitment to paying for performance — both short-term and long-term. A primary component of our human resources strategy is to identify, recruit, place, develop and retain key management talent to help ensure that we have the highest caliber leadership. The Compensation Committee and the executive management team believe that a critical aspect of being able to successfully execute this strategy is maintaining a comprehensive, integrated and well-balanced executive compensation program. We believe such a program provides competitive and differentiated levels of pay based on corporate performance and aligns executives’ interests with shareholders’ interests.

EXECUTIVE COMPENSATION PROGRAM GOALS

 

     

ATTRACT

AND RETAIN

EXECUTIVES

 

 

Attract and retain the highest caliber executives by providing compensation opportunities comparable to those offered by other companies with which we compete for business and talent

      

 

We define performance as the achievement of results against our challenging internal financial targets, which take into account industry and market conditions.

 

Our executive compensation program has an integrated focus on short- and long-term financial metrics and provides an effective framework by which progress against strategic goals may be appropriately measured and rewarded.

 

The Compensation Committee continues to place great emphasis on performance indicators that executive management can influence or control, including profitability and sound financial management of our capital, to drive sustained shareholder value creation and reward executives when they are successful.

 

ACHIEVE BUSINESS

GOALS

 

 

Communicate, support and drive achievement of our business strategies and goals

    

MOTIVATE

PERFORMANCE

 

 

Motivate strong performance from executive management in an incentive-driven culture by delivering greater rewards for superior performance and reduced rewards for underperformance

    

REWARD

ACHIEVEMENT

 

 

Reward achievement of both short-term results and long-term shareholder value creation

    
ALIGN INTERESTS  

 

Closely align executives’ interests with our shareholders’ interests and foster an equity-based ownership environment

    
 

 

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COMPONENTS OF EXECUTIVE COMPENSATION

For 2019, the target total direct compensation (“Target TDC”), comprised of annualized base salary, annual bonus and LTI awards (consisting of PSUs and RSUs), but not including retirement contributions, for Republic’s current NEOs was as follows:

 

LOGO     

Long-term(1)

 

    

Base Salary

 

    

Annual Bonus(2)        

 

  

(1)   PSU target award for the performance cycle beginning in 2019 and target value of RSU awards, as approved by the Compensation Committee.

(2)   Variable annual bonus target award for 2019.

(3)   For Messrs. Hughes, Serianni, Stuart and Vander Ark and Ms. Ellingsen, the percentages reflect their 2019 Target TDCs, as approved by the Committee. Due to their promotions in May 2019, the percentages for Messrs. Vander Ark and Stuart were increased to reflect their base salaries and annual bonus targets as of the end of the fiscal year.

 

The Compensation Committee set Mr. Slager’s Target TDC significantly below the median of his peers when he was promoted to CEO in 2011. The Compensation Committee has increased Mr. Slager’s Target TDC over time to reflect his strong performance and increasing tenure in the position. For 2019, Mr. Slager’s Target TDC was at the 76th percentile when compared to his peers. The Compensation Committee believes that Mr. Slager has done an excellent job since he became CEO, and intends to manage his Target TDC to provide award opportunities relative to the external market that are appropriate for his tenure and performance.

Variable and Performance-Based Compensation Overview

The annual bonus plan, equity award program and PSUs link the majority of compensation to management’s performance against the plans’ financial metrics and the performance of Republic stock over the vesting periods of the equity-based awards. The performance metrics for the annual bonus and the PSUs and the range of opportunity relative to target payouts are consistent for all NEOs, including the CEO. These programs have both minimum performance thresholds below which no payments will be made and capped maximum payments.

Each year, management recommends that the Board approve financial performance targets that are challenging and, if achieved, can deliver superior value to shareholders. Consistent with the setting of ambitious performance targets, Republic looks to have its aggregate total Target TDC for its NEOs near or at the median of our Peer Group, taking into account experience, tenure and overall position responsibility. The Compensation Committee believes it is appropriate to reward the executive management team with compensation above the target opportunity within the performance-based incentive plan if the rigorous financial targets associated with the variable pay programs are exceeded. Conversely, if those targets are not met, awards are reduced to levels that result in variable compensation below target. Thus, our NEOs generally may be paid above the median of our Peer Group only if the targets are exceeded.

Long-Term Incentive (Performance-Based and Equity) Awards

The Compensation Committee strongly believes in using LTI compensation to reinforce key objectives that drive financial progress and sustained shareholder value creation:

 

    focus on the importance of shareholder returns;

 

    promote the achievement of long-term performance goals;

 

    encourage executive retention; and

 

    promote meaningful levels of Republic stock ownership by executives.

To determine the overall opportunity and appropriate mix of LTI awards, the Compensation Committee considers a variety of factors, including competitive market positioning against comparable executives in the Peer Group, Peer Group LTI award practices, potential economic value realized, timing of vesting, and taxation. The key components of our LTI program are an annual RSU grant and PSU grant that reward financial successes over a three-year performance period.

Equity Compensation

The Compensation Committee believes that long-term, stock-based incentive compensation contributes to our ability to attract and retain high-caliber executive talent and motivates executives to sustain our long-term financial performance and increase shareholder value. We also believe that equity awards offer significant motivation to our executives and other employees and align their interests with shareholders’ interests. Beginning in 2015, our LTI awards for NEOs consist of (1) an RSU grant that vests ratably over four years and (2) a PSU grant that vests based on performance over a three-year period and is payable half in cash and half in shares of common stock.

Restricted Stock Units

In February 2019, the Compensation Committee approved equity awards to our NEOs in the form of RSUs that vest ratably over four years. The full grant date fair value of RSUs granted to each NEO during 2019 is shown in the Summary Compensation Table on page 70.

 

    

    

LOGO
 

 

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LOGO

Additional information, including the number of shares subject to each award, is shown in the Grants of Plan-Based Awards in 2019 table on page 72.

Generally, our executives and other employees who receive grants of RSUs receive dividend equivalents for any dividends we declare on our common stock following the date on which they are granted RSUs. The dividend equivalents are in the form of additional RSUs with a value equal to the value of dividends they would have received on the shares of the common stock underlying the RSUs they hold on the dividend record date.

Performance Shares

In addition to RSUs, we also grant PSUs. The PSUs are performance-based because the number of shares of common stock ultimately earned depends on performance against pre-determined goals over a three-year period and the value of the PSUs fluctuates based on our stock price. The opportunity to earn PSUs is based on two key financial metrics — CFVC and ROIC — plus the addition of RTSR as a third metric.

The Compensation Committee previously established the performance and payout targets for PSU grants for the 2017-2019, 2018-2020 and 2019-2021 performance periods. We believe that the CFVC and ROIC targets for these performance periods are rigorous and appropriately reflect the Compensation Committee’s consideration of the business, and operational and regulatory environment as it existed when the targets were set. Additionally, we believe the RTSR target established by the Compensation Committee ensures that management is not rewarded or penalized for broader market conditions. Each of the components align all NEOs to performance against the financial metrics and to increasing shareholder value. Additional information, including the threshold, target, and maximum awards payable to each of the NEOs for the 2019-2021 performance period, is shown in the Grants of Plan-Based Awards in 2019 table on page 72.

Dividends on PSUs are accrued but not earned and granted to the executives until the shares of common stock underlying the PSUs are earned, if at all, based on the achievement of the performance metrics as determined following the end of the three-year performance period.

The target award value for RSUs and PSUs granted to each NEO in 2019, as approved by the Compensation Committee, are shown below and may be different from the amounts reflected in the Summary Compensation Table in the “Stock Awards” column.

 

EXECUTIVE NAME

RSU AWARDS(1)

TARGET VALUE

PSU AWARDS(2)

TARGET VALUE

 
Donald W. Slager $2,800,000 $5,900,000
 
Charles F. Serianni $   620,000 $   900,000
 
Catharine D. Ellingsen $   500,000 $   650,000
 
Jeffrey A. Hughes $   500,000 $   650,000
 
Timothy E. Stuart $   560,000 $   840,000
 
Jon Vander Ark $   675,000 $1,425,000

 

(1)

The target value of RSUs will differ from the grant date fair value of RSUs shown in the Summary Compensation Table, as we do not grant fractional shares.

(2)

The target value of PSUs will differ from the grant date fair value of PSUs shown in the Summary Compensation Table. A portion of the grant date fair value of PSUs shown in the Summary Compensation Table reflect total shareholder return relative to the S&P 500, and are based on a Monte Carlo valuation model.

Eighty percent of the PSU payout is based on the CFVC and ROIC performance to target. In 2017, the Compensation Committee set the CFVC and ROIC performance targets for the 2017-2019 performance period. In 2018, the Compensation Committee, in accordance with the performance targets originally established, modified the performance targets to address the impacts of tax reform and accounting standards changes to prevent any unintended windfall to NEOs that otherwise may have occurred without such adjustments. As modified, the performance targets for CFVC and ROIC for the 2017-2019 performance period were $3,260 million and 7.9%, respectively.

 

 

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The chart below shows the performance targets and the potential payouts for PSUs granted in 2017 with a performance period of 2017–2019, for performance above and below target. It also shows the actual performance of CFVC and ROIC during the performance period of $3,277 million and 7.8%, respectively. Because our actual CFVC was above the target, and our actual ROIC was slightly below target, the resulting payout based on CFVC and ROIC was 98.8% of the target payout amount. We will disclose the performance targets, potential payouts, and actual results for the 2018–2020 and 2019–2021 performance periods once the applicable performance period has concluded.

2017-2019 CFVC/ROIC EARNED PERCENTAGE

 

LOGO

     

T = Target level for 100% payout | A = Actual results for 2017-2019  Performance Period

CUMULATIVE 3-YEAR CFVC ($ IN MILLIONS) $3,749 or greater 75% 100% 125% 150% 98.8% (A); CFVC $3,277; ROIC: 7.8% $3,260 (T) 50% 75% 100% 125% $2,771 25% 50% 75% 100% < $2,771 0% 25% 50% 75% < 6.7% 6.7% 7.9% (T) 9.1% AVERAGE ROIC% T = Target level for 100% payout | A = Actual results for 2017-2019 Performance Period

 

Twenty percent of the PSU payout is based on the RTSR
performance to target. In 2017, the Compensation
Committee set the RTSR performance target for the 2017-
2019 performance period at the 56th percentile.

 

The chart to the right shows the performance target and
the potential payouts for performance above and below
target. It also shows the actual performance of RTSR
during the performance period of 68th percentile. Because
our actual performance was above the target level of
performance, consistent with our pay-for-performance
philosophy, the resulting payout based on RTSR was
124.3% of the target payout amount.

2017-2019 RTSR EARNED PERCENTAGE

 

RTSR ATTAINED DURING

THE PERFORMANCE PERIOD

RTSR EARNING PERCENTAGE

Less than 20th Percentile

           0%

20th Percentile

         25%

40th Percentile

         67%

56th Percentile (T)

       100%

60th Percentile

       108%

68th Percentile

124.3%(A)

80th Percentile or higher

       150%

T = Target level for 100% payout

A = Actual results for 2017-2019 Performance Period

Taking into consideration the combined performance of CFVC, ROIC and RTSR for the 2017-2019 performance period, the combined PSU payout was 103.9% of target. The actual payout amounts are reflected in the Option Exercises and Stock Vested in 2019 table on page 75.

 

    

    

LOGO
 

 

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LOGO

Annual Cash Bonus

Republic maintains an annual bonus program for its NEOs and certain other members of management. This reflects our pay-for-performance philosophy by linking a significant portion of the NEOs’ compensation to Company performance. Actual annual bonus awards earned are a function of performance relative to Compensation Committee-approved financial targets. The Compensation Committee may apply (and in some years has applied) negative discretion to adjust actual performance downward if it believes that actual results reflect the benefit of matters that, although valuable to Republic, are not the type of benefit the annual bonus plan was designed to reward.

The annual bonus program rewards the NEOs based on performance relative to predetermined targets for the EPS Measure and the FCF Measure. For 2019 compensation purposes, we defined the EPS Measure, which is not a measure determined in accordance with GAAP, as our reported EPS, adjusted to remove the impact of: (a) the loss on extinguishment of debt; (b) gains or losses (or related impairments) from divestitures, net of tax; (c) costs associated with withdrawal from or termination of multi-employer pension plans; and (d) restructuring charges. We defined the FCF Measure, which is not a measure determined in accordance with GAAP, as cash provided by operating activities, less property and equipment received in 2019, plus proceeds from sales of property and equipment, adjusted to remove the impact of: (1) cash taxes arising from debt extinguishment; (2) tax payments related to business unit divestitures; (3) costs associated with withdrawal from or termination of multi-employer pension plans; and (4) restructuring payments, net of tax.

The tables below illustrate our 2019 targets, threshold and maximum awards for the annual bonus. For performance at and below target, the two measures are equally weighted and a participant may earn a percentage of the target award for each measure based on performance for that measure. If the EPS Measure target is exceeded, and the FCF Measure at least meets target, the annual bonus award earned may be increased above target (up to a maximum of 200% of the target amount), based on the extent to which the EPS Measure target is exceeded. No additional amount above target will be earned based on exceeding the FCF Measure target.

2019 PERCENT OF ANNUAL BONUS AWARD EARNED IF EITHER MEASURE IS LESS THAN TARGET

 

LOGO

     T = Target level for 100% payout
 

(Actual results for both measures in 2019 were above Target and therefore the table above did not govern the payout determination.)

FCF MEASURE ($ IN MILLIONS) >$1,130 (T) 50% 62.5% 75% 87.5% 100% $1,073 37.5% 50% 62.5% 75% 87.5% $1,017 25% 37.5% 50% 62.5% 75% $960 (threshold) 12.5% 25% 37.5% 50% 62.5% < $960 0% 12.5% 25% 37.5% 50% <$3.05 (threshold) $3.10 $3.15 $3.20 >$3.25 (T) EPS MEASURE (PER SHARE) T = Target level for 100% payout (Actual results for both measures in 2019 were above Target and therefore the table above did not govern the payout determination.)

2019 PERCENT OF ANNUAL BONUS AWARD EARNED IF BOTH MEASURES ARE AT OR ABOVE TARGET

 

FCF MEASURE

($ IN MILLIONS)

   ³$1,130 (T)    100%    125%    140% (A)    150%    175%    200%
                                  
      $3.25 (T)    $3.30    $3.33    $3.35    $3.40   

$3.45

(maximum)

                                
     

 

EPS MEASURE (PER SHARE)

 

  

T = Target level for 100% payout | A = Actual achievement in 2019

FCF Measure was $1,173 million and EPS Measure was $3.33 per share

 

 

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For 2019, the actual EPS Measure performance was $3.33 per share against a target of $3.25 per share. The actual FCF Measure performance was $1,173 million against a target of $1,130 million. The above target performance on both the EPS Measure and the FCF Measure resulted in the NEOs receiving a bonus payment of 140% of target. Please refer to the CD&A Appendix in Annex A on page 108 for details regarding the calculation of our actual results for 2017, 2018 and 2019 for the EPS Measure and the FCF Measure.

The following table shows the NEOs’ 2019 annual bonus opportunity as a percentage of salary at various performance levels and the actual payout as a percentage of salary and in dollars. The payout amount is also reflected in the Summary Compensation Table under the column titled “Non-Equity Incentive Plan Compensation.” Further, the annual cash incentive payouts that would have been earned if the minimum, target and maximum performance level were achieved are reflected in the Grants of Plan-Based Awards in 2019 Table under the column titled “Estimated Future Payouts under Non-Equity Incentive Plan Awards” and associated footnotes.

2019 ANNUAL BONUS OPPORTUNITY AS A PERCENTAGE OF SALARY AND ACTUAL PAYOUT AS A PERCENTAGE OF SALARY AND IN DOLLARS

 

NAME

Below

Threshold

Performance

Level

At Threshold

Performance

Level

At Target

Performance

Level

At Maximum

Performance

Level

Actual Annual

Bonus Payout

as a Percentage

of Salary(1)

Actual Annual

Bonus Payout

in $

         
Donald W. Slager 0% 16.9% 135% 270% 189%   $2,211,300
         
Charles F. Serianni 0%   10%   80% 160% 112%   $   688,800
         
Catharine D. Ellingsen 0%   10%   80% 160% 112%   $   576,800
         
Jeffrey A. Hughes 0%   10%   80% 160% 112%   $   576,800     
         
Timothy E. Stuart 0% 10.6%   85% 170% 115%   $   715,983 (2) 
         
Jon Vander Ark 0% 11.9%   95% 190% 129%   $   997,500 (2) 

 

(1)

Percentage is calculated utilizing base salary as of the end of the fiscal year.

(2)

Due to their promotions in May 2019, Messrs. Stuart’s and Vander Ark’s actual annual bonus payouts for the 2019 performance period is the sum of their annual bonus and supplemental bonus payments. Their annual bonus and supplemental bonus payments were prorated based on their base salaries for their time in their respective roles during the year.

For 2020, the annual bonus plan design remains very similar to prior years with the measures again consisting of the EPS Measure and the FCF Measure.

Fixed Compensation and Benefits

Base Salary

We believe a competitive base salary attracts and retains high-caliber executive talent while providing a fixed level of compensation commensurate with the position’s responsibilities and level. The Compensation Committee annually reviews each NEO’s base salary to determine if any adjustment is warranted. This review consists of a comparison of the compensation paid to incumbents in comparable positions in our Peer Group, taking into account individual qualifications and responsibilities, internal salary levels, and individual and company performance. Base salary levels may be adjusted when the Compensation Committee believes there is a competitive need to do so, in light of an individual’s promotion or taking into account an individual performance. In 2019, increases to base salaries for each of the NEOs (except for Messrs. Vander Ark and Stuart) were based on Peer Group benchmarking as well as individual performance. Messrs. Vander Ark’s and Stuart’s base salary increases were a result of their promotions to President and Chief Operating Officer, respectively, in May 2019. The table below shows the annual base salary for each NEO in 2018 and 2019, as approved by the Compensation Committee, which may be different from the amounts reflected in the Summary Compensation Table in the “Salary” column.

 

NAME

2018

BASE SALARY

2019

BASE SALARY

 
Donald W. Slager $1,135,000 $1,170,000
 
Charles F. Serianni $   600,000 $   615,000
 
Catharine D. Ellingsen $   480,000 $   515,000
 
Jeffrey A. Hughes $   500,000 $   515,000
 
Timothy E. Stuart $   535,000 $   625,000
 
Jon Vander Ark $   625,000 $   775,000

 

    

    

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Other Benefits

Republic makes available medical, dental and vision insurance, life insurance and short- and long-term disability insurance programs for our employees. The NEOs are eligible to participate in these programs on the same basis and with the same level of financial subsidy as our general employee population (other than those employees who are subject to different terms under a collective bargaining agreement). Like our other employees, our NEOs may participate in our 401(k) plan and may defer a portion of their base salary and annual bonus, to the maximum defined level specified by the IRS, which in 2019 was $19,000 plus an additional $6,000 for those age 50 and above. Republic matches 100% of the first three percent of pay contributed and 50% of the next two percent of pay contributed by an employee. Republic’s matching contributions into the 401(k) plan for the NEOs who participated are reported in the All Other Compensation for 2019 table on page 71.

Deferred Compensation Plan and Deferred Compensation Savings Program Contributions

Eligible employees are limited by federal law as to the amount they may contribute to their 401(k) accounts. Accordingly, we have established a Deferred Compensation Plan that permits participants, including the NEOs, to defer additional amounts of compensation, including RSUs and PSUs, in a tax efficient manner for retirement savings. Under the DCP, most participants are eligible for matching contributions. The matching contribution under the DCP is equal to the lesser of two percent of the participant’s eligible compensation over the established 401(k) limit ($280,000 in 2019) or 50% of the participant’s annual deferrals, excluding deferred RSUs and stock-settled PSUs.

In addition, we make discretionary retirement contributions to certain of our senior executives’ deferred compensation accounts (“DCSP Contributions”). The Compensation Committee reviews the DCSP Contributions annually, and may change the amounts or discontinue the contributions at any time. Each DCSP Contribution is a fixed dollar amount that depends on the participant’s title and position in the organization, among other considerations. Unless otherwise specified, DCSP Contributions vest in one of four ways: (1) upon a participant satisfying the age and service requirements necessary to qualify for retirement; (2) in the event of death or disability, the retirement contributions vest immediately; (3) if a participant’s employment is terminated “without cause,” the retirement contributions vest immediately but are not available to the participant until the earlier of the fifth anniversary of the termination date or the date the participant would have become eligible for retirement; or (4) if we complete a transaction that is deemed a change in control, all retirement contributions vest immediately and may be paid out depending upon the original election of the participant. Messrs. Serianni, Hughes, Stuart and Vander Ark and Ms. Ellingsen each received a contribution of $65,000 in each of 2017, 2018 and 2019.

Mr. Slager did not receive a DCSP Contribution in 2019. He is, however, entitled to a Supplemental Retirement Benefit, which was preserved in his employment agreement with Republic from previous agreements with Allied and which requires us to pay him a specified amount after termination of his employment for any reason. This payment is an amount equal to $2,287,972, increased at an annual rate of 6%, compounded annually from December 5, 2008 until his date of termination. In 2019, the Supplemental Retirement Benefit increased by $246,848. As of December 31, 2019, Mr. Slager’s Supplemental Retirement Benefit equaled $4,360,980.

The individual contributions of the participating NEOs, including earnings on those contributions and total account balances as of the end of 2019, are shown in the Nonqualified Deferred Compensation in 2019 table on page 76. Republic’s matching contributions and the DCSP contributions are shown in the All Other Compensation for 2019 table on page 71.

Modest Perquisites

With the exception of (1) certain gross-up payments pursuant to our relocation policy that is applicable to all eligible employees, (2) a stipend to cover a portion of monthly health club dues that is offered on the same terms to all employees at our corporate office, and (3) concierge medical services available to vice presidents, senior vice presidents, and executive vice presidents in our corporate office for a nominal charge paid by the Company, Republic generally does not offer perquisites or other personal benefits other than the aircraft usage discussed below. All associated relocation expenses, if any, are reported in the All Other Compensation for 2019 table on page 71. We also do not provide any additional cash compensation to any of the NEOs to reimburse them for income tax liability as a result of the receipt of any cash or equity compensation, benefit or perquisite.

Our CEO may use our airplane for personal travel. Other NEOs may use it for personal use if the CEO is aboard. On a quarterly basis, the Audit Committee reviews the personal use of our airplane by our CEO and other NEOs for reasonableness. The amount reflected in the All Other Compensation for 2019 table as “Perquisites and Other Personal Benefits” includes the incremental cost of providing aircraft to an NEO for personal travel.

 

 

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Other Compensation Policies

Stock Ownership Guidelines

The Board recognizes the importance of equity ownership by our executives to further link their interests with shareholders’ interests. Accordingly, the Board maintains stock ownership guidelines for all senior management employees (defined as CEO, President, Chief Operating Officer, CFO, Chief Legal Officer, Executive Vice President, Senior Vice President, Vice President, Area President, and Market Vice President), and recently updated these guidelines in February 2020, as set forth below. The guidelines require that senior management employees achieve compliance with the ownership guidelines within five years of becoming a covered employee and maintain their ownership level thereafter. Shares included in the calculation to assess compliance with the ownership guidelines include shares owned outright, shares held in the 401(k) plan, and vested stock equivalents held in the DCP. The Compensation Committee believes that these requirements emphasize the importance of equity ownership for management employees, which reinforces alignment with our shareholders’ interests.

 

NAME

MULTIPLE OF

SALARY REQUIRED

    (PRIOR GUIDELINES)    

MULTIPLE OF

SALARY REQUIRED

    (UPDATED GUIDELINES)    

    IN COMPLIANCE    

OR ON TRACK

   
Donald W. Slager 5x 5x Yes
   
Charles F. Serianni 3x 3x Yes
   
Catharine D. Ellingsen 3x 3x Yes
   
Jeffrey A. Hughes 2x 3x Yes
   
Timothy E. Stuart 3x 3x Yes
   
Jon Vander Ark 3x 4x Yes

Securities Trades by Employees

Executive management and the Board take seriously their responsibilities and obligations to exhibit the highest standards of behavior relative to buying and selling Republic stock. All transactions by any director or NEO (“Insiders”) must be pre-cleared by the Chief Legal Officer. Further, Insiders generally are prohibited from trading any Republic stock during quarterly blackout periods or while in possession of material non-public information.

Additionally, our insider trading policy prohibits all Insiders, and members of their immediate family, from engaging in the following transactions relating to Republic securities or derivatives of Republic securities:

 

    purchasing or selling puts or calls

 

    short sales

 

    placing standing orders, other than under approved 10b5-1 plans

 

    engaging in short-term or “in-and-out” trading

 

    holding Republic securities or derivatives of Republic securities in a margin account

 

    pledging Republic securities or derivatives of Republic securities

Compensation Recoupment (Clawback) Policy

Our Board has established a Clawback Policy to encourage sound financial reporting and increase individual accountability. As more fully described in the Clawback Policy, which was filed as an exhibit to the Form 8-K filed with the SEC on October 30, 2014:

 

    the policy applies to Republic’s Section 16 officers (“Covered Officers”);

 

    the policy applies to all cash and equity-based incentives that are performance-based;

 

    the policy is triggered by an accounting restatement we must make due to material noncompliance with any financial reporting requirement under the securities laws (a “Restatement”);

 

    if a Restatement occurs, the Compensation Committee generally must seek to claw back both vested and unvested performance-based awards, including gains on equity, during the 3-year period preceding the restatement date to the extent they exceed what would have been paid to the Covered Officer under the restated financial statements; and

 

    this clawback applies if either (1) the applicable Covered Officer engaged in fraud or intentional misconduct that materially contributed to the need for the Restatement or (2) future SEC or NYSE rules require Republic to seek forfeiture.

 

    

    

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COMPENSATION PROCESS

Peer Group and Competitive Benchmarking

The Compensation Committee, in consultation with its independent compensation consultant, annually reviews the composition of the Peer Group used as a reference for executive compensation decisions to ensure that the companies included are comparable in terms of business mix and complexity, revenue, market capitalization, geographic footprint, assets and number of employees. The following table reflects the Peer Group used by the Compensation Committee to establish 2019 compensation. Our Peer Group remained unchanged from 2018 except for the removal of Hertz Global Holdings, Inc.

 

   
Air Products and Chemicals, Inc.    Norfolk Southern Corporation
      
 
Canadian National Railway Company    Praxair, Inc.
      
 
Canadian Pacific Railway Limited    Ryder System, Inc.
      
 
CSX Corporation    Stericycle, Inc.
      
 
FedEx Corporation    Sysco Corporation
      
 
W.W. Grainger, Inc.    Waste Connections, Inc.
      
 
J.B. Hunt Transport Services, Inc.    Waste Management, Inc.
      

The Compensation Committee considers data and analyses prepared by its independent compensation consultant based on our current and prior performance, and the historical NEO pay and the appropriateness of that compensation compared to the NEO compensation in the Peer Group. The Compensation Committee also considers general compensation surveys compiled by external consulting firms and takes into account recommendations of our CEO for executives other than himself. The Compensation Committee uses the Peer Group and other surveys as a reference, but does not target a specified percentile of compensation to be paid. After taking into account all data, and factors such as company performance and an individual’s contribution, experience and potential, the Compensation Committee makes compensation decisions. Based on the independent consultant’s analysis, our CEO’s 2019 Target TDC placed 5th out of 15 companies in the Peer Group and was at the 76th percentile.

Evaluating Company and Executive Performance

The Compensation Committee has established a process for evaluating Republic’s performance, as well as the performance of each of the NEOs. Each year, the Compensation Committee approves strategic and financial objectives for the NEOs for the upcoming year and for the long term. It also reviews and evaluates the performance against these strategic and financial objectives for the prior year, and reviews the interim progress on all open three-year performance periods under the PSUs. Our CEO provides his assessment of the performance against the strategic objectives and on the individual contributions of the NEOs. The Compensation Committee considers all of these factors in reaching its compensation decisions. The Compensation Committee routinely meets in executive session without the presence of any management when considering compensation matters.

EVALUATING COMPANY AND EXECUTIVE PERFORMANCE

 

 

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COMPENSATION COMMITTEE Approves strategic and financial objectives Reviews and evaluates performance from prior year Reviews interim progress on open 3-year performance periods under the PSUs CEO Provides assessment of NEO performance against strategic objectives and individual contributions COMPENSATION COMMITTEE Considers all factors when making compensation decisions Makes final compensation decisions

 

 

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Role of the Independent Compensation Consultant and Other Advisors

Since 2003, the Compensation Committee has retained Pearl Meyer to assist with its review of compensation for the NEOs and other related matters. The Compensation Committee retains Pearl Meyer directly, supervises all work done by Pearl Meyer, and reviews and approves all work invoices. While Pearl Meyer provides data and analyses and makes recommendations on the form and amount of compensation, the Compensation Committee makes all decisions regarding the compensation of our NEOs.

During 2019, Pearl Meyer advised the Compensation Committee on a variety of subjects, including compensation plan design and trends, pay-for-performance analytics, peer group benchmarking and other related matters. Pearl Meyer reports directly to the Compensation Committee, participates in meetings as requested and communicates with the Compensation Committee chair between meetings, as necessary. Pearl Meyer also provides advice to the Governance Committee and its chair regarding director compensation. Pearl Meyer did not provide any other services during 2019 and is considered independent and free from conflict under the Dodd-Frank Wall Street Reform and Consumer Protection Act and associated standards set forth by the SEC and NYSE.

The Compensation Committee also may use market data provided by Equilar and Aon Hewitt for benchmarking and other purposes. This benchmark data consists of information that is generally available to other Towers Watson, Aon Hewitt and Mercer clients. None of these consulting firms made recommendations to the Compensation Committee or management on peer group composition or on the form, amount or design of executive compensation in 2019.

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OTHER CONSIDERATIONS

Employment Agreements and Executive Separation Policy

Except in limited circumstances, Republic does not enter into employment agreements. Messrs. Slager and Hughes have employment agreements, which the Board and the Compensation Committee believe are in the best interest of Republic and its shareholders given, among other things, their importance to Republic and the fact that they had legacy agreements with Allied before the Republic/Allied merger in December 2008. These agreements help ensure the continued leadership of the executives, clarify their employment rights and responsibilities, and impose certain post-employment limitations on their right to compete with us or solicit our customers or employees. Ms. Ellingsen and Messrs. Serianni, Stuart and Vander Ark do not have employment agreements but instead are eligible to participate in the Executive Separation Policy. They also have non-competition and non-solicitation agreements with Republic. For more information regarding the employment agreements and Executive Separation Policy, see “Executive Compensation — Employment Agreements and Post-Employment Compensation.”

Annual Risk Assessment

We believe our compensation programs effectively align our corporate and field management teams with our overall goals. Our programs do this by motivating employees to increase shareholder value on both an annual and a long-term basis, primarily by improving our earnings and ROIC and generating increasing levels of free cash flow. We achieve this alignment by using simple and measurable metrics to determine incentive pay. We do not believe our compensation programs for our NEOs or other employees encourage excessive or inappropriate risk-taking or create risks that would be reasonably likely to have a material adverse effect on us.

Our annual incentives for executives and corporate managers are based on achieving the EPS Measure and the FCF Measure established by the Compensation Committee, which is comprised solely of independent directors. LTI compensation for executives and senior managers is based on achieving ROIC and CFVC goals established by the Compensation Committee. Beginning with 2016, PSUs for executive officers and executive vice presidents are based on achieving ROIC, CFVC and RTSR goals established by the Compensation Committee. In addition, PSUs for senior vice presidents and vice presidents are based on achieving ROIC and CFVC goals established by the Compensation Committee. We also provide executives and senior managers equity awards that are approved by the Compensation Committee to reinforce each manager’s commitment to shareholder return.

Area Presidents and other key managers participate in the management incentive plan and receive equity awards as their LTI. Their annual bonus compensation is tied to corporate financial results and the financial and operating metric results for the areas they manage. Their primary financial performance measure is area incentive operating income. Key area operating metrics may include safety, employee engagement, pricing, customer service and net sales growth. PSUs for Area Presidents and other key managers are based on achieving ROIC and CFVC goals established by the Compensation Committee. We also provide them equity awards that are approved by the Compensation Committee to reinforce commitment to shareholder return.

General Managers in our field organizations receive equity awards as their LTI to align them with our shareholders. General Managers and their teams also receive salary and annual bonus tied to achieving incentive operating income and operating metrics defined during our budget process. Operating metrics may include any combination of safety, employee engagement, employee turnover, price increase, productivity improvements, net sales growth, environmental compliance, customer service and capital budget management, depending on the current year priorities as set by their senior managers and approved by executive management.

We compensate our field sales organization with salary and sales commissions tied to selling or retaining profitable business.

All of our annual bonus plans and LTI plans contain maximum payout limits to ensure that windfall gains in business outcomes do not lead to exaggerated compensation results or to inappropriate risk-taking. The majority of our sales employees are compensated under commission plans that have mechanisms in place to cap payments. In addition, for all sales employees, the Company has the ability to adjust sales goals based on business changes.

In addition, we maintain stock ownership guidelines for our executive officers and other members of senior management, along with anti-hedging and anti-pledging policies, all of which emphasize long-term performance rather than short-term windfalls.

Equity Usage (Burn Rate and Dilution)

Under our current Amended and Restated 2007 Stock Incentive Plan, as approved by our shareholders in May 2013 (the “SIP”), the total number of shares of equity-based awards issued in 2019 was approximately 0.20% of the diluted weighted average number of shares outstanding for the year and within the limitations set by the SIP. As of December 31, 2019, the total number of shares that could be issued under the SIP, and all predecessor plans, was approximately 4.0% of the diluted weighted average number of shares outstanding for the year. Republic’s diluted EPS reflects all potentially dilutive shares.

Tax Considerations

Beginning in 2018, Section 162(m) of the Internal Revenue Code limited the federal income tax deduction for annual individual compensation

 

 

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to $1 million for the NEOs, subject to a transition rule for written binding contracts in effect on November 2, 2017 and not materially modified after that date. In the past, Section 162(m)’s deduction limit included an exception for “performance-based” compensation. Certain elements of the Company’s compensation programs were generally designed to qualify for this performance-based exception. To accomplish this, the Company previously asked shareholders to approve equity and incentive compensation plans that included limitations and provisions required to be included under Section 162(m). Now that the performance-based compensation exception is no longer available, the Company will no longer include Section 162(m)-related limitations or provisions or request shareholder approval for this purpose, and may not generally attempt to meet the requirements previously included in our plans related to the exception; however, the Company intends to comply with the transition rule for written binding contracts in effect on November 2, 2017 as long as the Compensation Committee determines that to be in the Company’s best interest. However, given the ambiguities and uncertainties as to the application of that rule, no assurances can be made that compensation, including compensation that was previously intended to satisfy the requirements for deductibility, would, in fact, be deductible.

Compensation Committee Interlocks and Insider Participation

Messrs. Handley, Larson, Snee and Trani and Mses. Pegula and Weymouth served as members of the Compensation Committee during 2019. No member of the Compensation Committee is, or has ever been, an officer or employee of Republic. During 2019, none of our named executive officers served as a member of the compensation committee (or other board committee performing equivalent functions) or as a director of another entity where an executive officer of such entity served either on our Board or on our Compensation Committee.

Compensation Committee Report

The following statement made by the Compensation Committee shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act and shall not otherwise be deemed filed under either of these Acts.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board that this CD&A be included in this Proxy Statement.

Submitted by the Compensation Committee as of March 13, 2020:

Thomas W. Handley (Chair)

Michael Larson

Kim S. Pegula

James P. Snee

John M. Trani

Katharine B. Weymouth

 

 

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I care for Earth. Having grown up on a farm, Katina cares about protecting the environment. As a swing driver, she can drive any truck and covers a lot of ground. Keeping our planet clean while driving for Republic Services is a match that allowed her passion and profession to coexist in way that satisfies her - and benefits our planet for years to come. Katina | Driver Winston-Salem, North Carolina

 

    

    

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2019 Summary Compensation Table

The following Summary Compensation Table shows information about the compensation we paid to our CEO, CFO and other named executive officers during 2019, 2018 and 2017. We refer to the individuals shown in the table below as the NEOs.

 

NAME AND PRINCIPAL

2019 POSITIONS

Year

Salary

($)(1)

Bonus

($)

Stock

Awards

($)(2)

Options

Awards

($)(2)

Non-Equity

Incentive Plan

Compensation

($)(3)

All Other

Compensation

($)(4)

Total ($)
               

Donald W. Slager

Chief Executive Officer

 

 

2019

 

 

 

 

1,169,192

 

 

 

 

 

 

 

 

8,652,410

 

 

 

 

 

 

 

 

2,211,300

 

 

 

 

584,392

 

 

 

 

12,617,294

 

 

 

2018

 

 

1,134,327

 

 

8,319,389

 

 

1,915,313

 

477,720

 

11,846,749

 

2017

 

 

1,100,000

 

 

8,048,044

 

 

2,055,625

 

411,393

 

11,615,062

               

Charles F. Serianni

Executive Vice President,

Chief Financial Officer

 

 

2019

 

 

 

 

614,654

 

 

 

 

 

 

 

 

1,512,826

 

 

 

 

 

 

 

 

688,800

 

 

 

 

109,140

 

</