STEPHEN SINGERJames E. O'Connor, chief executive of Republic Services Inc., received a 2008 compensation package valued at $10.6 million last year, according to Associated Press calculations of data filed with regulators. That's up 53 percent from what he received in 2007, before the waste hauler bought rival Allied Waste Inc. to create the industry's second-largest company. O'Connor, 59, was paid a salary of $925,634, according to a filing with the Securities and Exchange Commission Friday. That was up 8 percent from 2007 due to his performance and changes in salaries for similar positions at peer companies, Republic Services said. He also got a performance-related bonus of $3.1 million, up nearly 50 percent from 2007. And O'Connor received $525,103 in other compensation, mainly consisting of matching contributions to 401(k) and deferred compensation plans and use of the company's plane. The bulk of his pay package came in the form of stock awards and options the company valued at $6.06 million on the days they were granted, a 71 percent increase year-over-year. However, about $1 million worth of his stock options are currently "underwater" since their exercise price of $23.74 is above the stock's Friday closing price of $18.18. That means the options are of little value unless Republic's stock price rebounds.
Republic Services said long-term incentive payout targets for a performance period of 2008 to 2010 targeted cash flow value creation of $1.5 billion and return on invested capital at 14.8 percent. Citing a feature that provides for a payout at target upon a change in control, the Phoenix-based company said the merger with Allied Waste was considered such a change. All awards were paid at target last December. Republic Services said it will seek shareholder approval of a plan to provide bonuses intended to motivate management to find cost savings in the merger. Combined, Republic Services, previously the third-largest trash hauler, and Allied Waste, the second biggest, are now the main competitor to No. 1 Waste Management Inc. of Houston. The company reported in February that earnings in 2008 fell 75 percent to $73.8 million, or 37 cents per share, from $290.2 million, or $1.51 per share, in the prior year. Revenue climbed 16 percent to $3.69 billion from $3.18 billion. The company's stock fell 21 percent during 2008 to end the year at $24.79, and has since declined another 27 percent amid the weak global economic climate. Republic Services provides solid waste collection, transfer, disposal and recycling services for commercial, industrial, municipal and residential customers.