AW Allied Waste Inds

WASHINGTON, Sept. 11 /PRNewswire/ -- The CtW Investment Group sent the following letter yesterday to James Crownover, Chairman of the Governance Committee of the Allied Waste Industries (NYSE:AW) board of directors, calling on the board to immediately take all necessary steps to rescind increases to golden parachutes for Allied executives approved in connection with the company's proposed merger with Republic Services. CtW's previous letter to Mr. Crownover, dated August 25, and management's August 27 response are available at http://www.ctwinvestmentgroup.com/. The text of the letter follows: September 10, 2008 Mr. James W. Crownover Chair, Governance Committee Allied Waste Industries, Inc. 18500 N. Allied Way Phoenix, Arizona 85054 Dear Mr. Crownover: The apparent decision by the Allied Waste board of directors to supplement already generous golden parachutes for the top five Allied executives in connection with the proposed Republic Services merger casts a troubling cloud over the transaction. With Allied's definitive merger proxy expected any day, it is incumbent on the company's independent directors to demonstrate that they acted solely in the interests of Allied shareholders, not management, in approving the merger. We therefore call on the board to immediately take all necessary steps to rescind any provisions of the employment agreement amendments dated June 22, 2008 that had the effect of increasing change-in- control payments for Allied executives. As you know, we first raised these issues in our letter of August 25 and were disappointed by your failure to respond. We had hoped that Allied's independent directors would have taken the opportunity to allay investor concerns regarding inadequate valuation, lack of diligent process, and extraordinary change-in-control payouts to executives in connection with the proposed merger. Instead we received a perfunctory response from management that further called into question the independence of the board. While our August 25 letter questions whether Allied shareholders will receive full value in the proposed merger, there is no question that the transaction is a good deal for the five Allied executives who now stand to receive change of control payments totaling almost $52 million. It also appears to be a good deal for Republic shareholders, assuming that the attendant regulatory concerns can be addressed without significantly impacting the projected synergies. (Whether Waste Management's $37 per share is a better deal for Republic shareholders is a separate question that we are seeking to address with those boards.) The Allied board only exacerbated shareholder concerns regarding the terms, process and motives involved in the proposed merger by simultaneously approving the merger agreement and amending employment agreements for top executives in ways that appear to have materially increased golden parachute payouts for these executives. Our analysis of Allied's 2008 annual meeting proxy and the preliminary proxy for the proposed merger with Republic indicates that the aggregate change-in-control payments for the top five Allied executives increased by over $21 million between December 31, 2007 and August 1, 2008. We assume some portion of the $21 million increase represents the increase in value of equity-related compensation due to the control premium included in the merger agreement. While disclosure regarding the aggregate effects of the June 22 employment agreement amendments is woefully lacking in the preliminary proxy, it appears that certain provisions may have also had the effect of increasing executive change-in-control payouts. Of particular concern are the changes made to the Tax Gross-Up and Supplemental Retirement Benefits provisions - provisions that many institutional investors would find problematic even before the amendments. The board may have had legitimate reasons for amending the executive employment agreements in connection with the merger, but most shareholders would not consider supplementing already generous golden parachute payments to be among them. To the extent that the June 22 amendments included provisions that increased golden parachute payments to executives, therefore, the board should immediately seek to rescind those provisions. We believe this is a necessary predicate to an objective review by Allied shareholders. We look forward to your response. Sincerely, Michael Garland Director of Value Strategies Cc: Directors of Allied Waste Industries DATASOURCE: Change to Win CONTACT: Michael Garland of Change to Win, +1-212-471-1317 Web site: http://www.ctwinvestmentgroup.com/

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