CVA » Topics » Compensation Philosophy and Objectives

This excerpt taken from the CVA DEF 14A filed Apr 1, 2008.
Compensation Philosophy and Objectives
 
The Compensation Committee believes that a significant portion of annual and long-term compensation paid to named executive officers should be closely aligned with our operating and financial performance on both a short-term and long-term basis. The goal of our executive compensation programs is to provide our named executive officers with compensation and benefits that are fair, reasonable and competitive in the marketplace. The programs are intended to help us recruit and retain qualified executives, and provide rewards that are linked to performance while also aligning the interests of these individuals with those of our stockholders.
 
Our incentive programs are generally egalitarian. We have no compensation or benefits programs which are available exclusively to named executive officers. Our philosophy is that in order to achieve a greater level of fairness and consistency across the organization, named executive officers should participate in the same compensation and benefits programs as are available to other officers and management-level employees. Accordingly, under our long-term incentive plan we granted awards of restricted stock and stock options during 2007 to 234 participants. Participants in the long-term incentive plan include both domestic and international employees, ranging from our Chief Executive Officer to plant operators in our facilities.
 
The Compensation Committee has the following objectives in designing the programs:
 
Performance
 
  •  The compensation and benefits we offer to named executive officers are structured to ensure that a significant portion of compensation opportunities are directly related not only to our stock performance but also our operating and financial performance and other factors, such as environmental, health and safety compliance and the creation of growth opportunities, that directly and indirectly influence stockholder value.
 
  •  A portion of each named executive officer’s incentive compensation is based on his or her individual performance in contributing to our corporate goals so that the named executive officer’s incentive compensation can vary if his or her individual performance exceeds or lags our company-wide performance. We refer to these measures as “Individual Performance Measures.” Incentive compensation awards are also based in part on company financial performance measures. We refer to these measures as “Covanta Performance Measures.”
 
  •  Covanta Performance Measures for 2007, as used in our cash incentive and equity incentive award programs, consisted of adjusted EBITDA and free cash flow. Neither adjusted EBITDA nor free cash flow are terms defined under United States generally accepted accounting principles, referred to as “GAAP”. Both of these


31


Table of Contents

  measures, together with a discussion of how those measures are used in our compensation awards, are described in greater detail below.
 
  •  Individual Performance Measures for both our cash incentive and equity incentive award programs in 2007 measured performance in the following four major categories: (1) operational excellence; (2) asset management and growth strategy; (3) process and management improvement; and (4) improved capital structure. The process and management improvement category was further broken down in 2007 in order to measure process improvements, people development and communications strategy. These categories were generally similar to the categories measured in 2006 with the addition of improving our capital structure to reflect the benefits received by us from a simplified capital structure, which materially reduced our interest expense and increased our financial flexibility. The categories were also generally chosen to reflect the different areas of importance to us in order to implement our business plan and enhance our value to our stockholders. Within these major categories, individual performance is further measured by individually weighted business goals specific to each named executive officer and reflecting their respective areas of responsibility and their ability to influence or effect results in such areas.
 
    As our business objectives develop and change over time, the Compensation Committee may incorporate those changes into the award structure in order to align incentives with our corporate goals and policies.
 
Alignment
 
  •  In order to align the interests of our named executive officers with our stockholders, a significant component of total compensation each year is in the form of equity awards. In addition to annual restricted stock grants, from time to time we also will grant awards of stock options vesting over a period of time based upon our future performance in order to provide additional long-term incentives.
 
  •  We also have implemented, and continued to monitor and adjust, stock ownership guidelines for our officers, including our named executive officers, to create structural and objective means of assuring equity ownership and retention of shares of our common stock in value equal to a specified multiple of their base salary, increasing with levels of responsibility.
 
Retention
 
  •  To create retention incentives, portions of our equity awards are earned over a period ranging from three to five years, with vesting generally conditioned upon the employee’s continued employment with us on the vesting date.
 
This excerpt taken from the CVA DEF 14A filed Apr 25, 2007.
Compensation Philosophy and Objectives
 
The Compensation Committee believes that a significant portion of annual and long-term compensation paid to named executive officers should be closely aligned with our operating and financial performance on both a short-term and long-term basis. The goal of our executive compensation programs is to provide our named executive officers with compensation and benefits that are fair, reasonable and competitive in the marketplace. The programs are intended to help us recruit and retain qualified executives, and provide rewards that are linked to performance while also aligning the interests of these individuals with those of our stockholders.
 
Our incentive programs are egalitarian. We have no compensation or benefits programs which are available exclusively to named executive officers. Our philosophy is that in order to achieve a greater level of fairness and consistency across the organization, named executive officers should participate in the same compensation and benefits programs as are available to other officers and management-level employees. Accordingly, under our long-term incentive plan we granted awards of restricted stock during 2006 to 228 participants. Participants in the long-term incentive plan include both domestic and international employees, ranging from our Chief Executive Officer to plant operators in our facilities.
 
The Compensation Committee has the following objectives in designing the programs:
 
Performance
 
  •  The compensation and benefits we offer to named executive officers are structured to ensure that a significant portion of compensation opportunities are directly related not only to our stock performance but also our operating and financial performance and other factors, such as environmental, health and safety compliance and the creation of growth opportunities, that directly and indirectly influence stockholder value.
 
  •  A portion of each named executive officer’s incentive compensation is based on his individual performance in contributing to our corporate goals so that the named executive officer’s incentive compensation can vary if his or her individual performance exceeds or lags our company-wide performance.
 
  •  Performance measures for both our cash incentive and equity incentive programs are specific and set forth in advance so that the named executive officers can understand how their efforts can affect their compensation.
 
Alignment
 
  •  In order to align the interests of our named executive officers with our stockholders, a significant component of total compensation each year is in the form of equity awards. In addition, stock ownership guidelines for our officers contemplate that our officers, including our named executive officers, retain shares of our common stock equal in value to a specified multiple of their base salary.


18


Table of Contents

 
Retention
 
  •  To create retention incentives, our equity awards are earned over a period ranging from three to five years, with vesting generally conditioned upon the employee’s continued employment with us on the vesting date.
 
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki