**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-K/A**

 

**Amendment No. 1**

 

| **(Mark One)** | ** ** | ** **                                                                                                                                                                                        |
|----------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **x**          | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                          |
| ** **     | ** ** | ** **                                                                                                                                                                                        |
| ** **     | ** ** | **For the fiscal year ended  December 31, 2007**                                                                                                                                             |
| ** **     | ** ** | ** **                                                                                                                                                                                        |
| ** **     | ** ** | **or**                                                                                                                                                                                            |
| ** **     | ** ** | ** **                                                                                                                                                                                        |
| **o**          | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                      |
| ** **     | ** ** | ** **                                                                                                                                                                                        |
| ** **     | ** ** | **For the transition period from              to             ** |

 

**Commission file number 001-33830**

 

**Energy*Solutions*, Inc.**

(Exact name of registrant asspecified in its charter)

 

| **Delaware**                                                                                              | ** ** | **51-0653027**                           |
|-----------------------------------------------------------------------------------------------------------|------------|------------------------------------------|
| (State or Other  Jurisdiction of Incorporation or Organization)                                           | ** ** | (I.R.S. Employer  Identification Number) |
|                                                                                                      | ** ** |                                     |
| **423 West 300 South,  Suite 200**                                                                   | ** ** | ** **                               |
| **Salt Lake City, Utah**                                                                                  | ** ** | **84101**                                |
| (Address of principal  executive offices)                                                                 | ** ** | (Zip Code)                               |
|                                                                                                      | ** ** |                                     |
|     Registrant’s  telephone number, including area code: **(801) 649-2000** |
|                                                                                                           |            |                                          |  |  |

 

Securities registeredpursuant to Section 12(b) of the Act:

 

| **Title of Class**             | ** ** | **Name of Exchange on which registered** |
|------------------------------------------|------------|-------------------------------------------------------------------|
| Common Stock, $0.01 par  value per share |       | The New York Stock  Exchange                                      |

 

Securities registeredpursuant to Section 12(g) of the Act: **None**

 

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No x

 

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act. Yes o No x

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes x No o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (§ 229.405 of this chapter) is not contained herein,and will not be contained, to the best of registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of “largeaccelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2of the Exchange Act. (Check one):

 
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
|--------------------------------|--------------------------|------------------------------|----------------------------------|

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct). Yes o No x

 

The aggregate market valueof the voting and non-voting common equity held by non-affiliates of theregistrant on June 30, 2007 is not applicable because the registrant wasnot publicly traded as of June 30, 2007. The aggregate market value of thevoting and non-voting common equity held by non-affiliates of the registrant,as of March 31, 2008, was approximately $763.4 million based upon theclosing price reported for such date on the New York Stock Exchange. Forpurposes of this disclosure, shares of common stock held by persons who holdmore than 5% of the outstanding shares of common stock and shares held byexecutive officers and directors of the registrant have been excluded because suchpersons may be deemed to be affiliates. This determination of executive officeror affiliate status is not necessarily a conclusive determination for otherpurposes.

 

As of March 31, 2008,88,303,500 shares of registrant’s common stock were outstanding.

 

 

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**EXPLANATORY NOTE**

 

This amendment on Form 10-K/Ato the Annual Report of Energy*Solutions*, Inc.(the “Company”, “we”, “our” or “us”) on Form 10-K for the fiscal yearended December 31, 2007 (the “Annual Report”) filed on March 28, 2008with the Securities and Exchange Commission (“SEC”) is being filed solely forthe purpose of including information required by Items 11, 12, 13 and 14 of Part IIIof Form 10-K. In addition, in connection with the filing of this Amendmentand pursuant to Rules 13a-14(a) or 15d-14(a) under theSecurities Exchange Act of 1934, we are including with this Amendment certaincurrently dated certifications. Except as described above, no other amendmentsare being made to the Annual Report. This Form 10-K/A does not reflectevents occurring after the March 28, 2008 filing of our Annual Report, anddoes not modify or update the disclosure contained in the Annual Report in anyway other than as required to reflect the amendments discussed above andreflected below.

 

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**ENERGY*SOLUTIONS*, INC.**

**ANNUAL REPORT ON FORM 10-K/A**

**For Fiscal Year Ended December 31, 2007**

 

**INDEX**

 
| **PART III.**                                                                                             |   |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------|
| ** **                                                                                                     |   |   |
| Item 11.  Executive Compensation                                                                          |   | 1      |
| Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related  Stockholder Matters |   | 12     |
| Item 13.  Certain Relationships and Related Transactions and Director Independence                        |   | 14     |
| Item 14.  Principal Accountant Fees and Services                                                          |   | 16     |
| Signatures                                                                                                     |   | 16     |

 

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**PART III**

 

**Item 11. Executive Compensation.**

 

**COMPENSATIONDISCUSSION AND ANALYSIS**

 

The goal of ournamed executive officer compensation program is the same as our goal foroperating the company—to create long-term value for our stockholders. To thisend, we have designed and implemented our compensation programs for our namedexecutives to reward them for sustained financial and operating performance andleadership excellence, to align their interests with those of our stockholdersand to encourage them to remain with the Company for long and productivecareers. Most of our compensation elements simultaneously fulfill one or moreof our performance, alignment and retention objectives. These elements consistof salary and annual bonus, equity incentive compensation, a long-termperformance program driven by the achievement of objective financialperformance criteria, retirement and other benefits. In deciding on the typeand amount of compensation for each executive, we focus on both current pay andthe opportunity for future compensation. We combine the compensation elementsfor each executive in a manner we believe optimizes the executive’scontribution to the Company.

 

**ExecutiveSummary**

 

This section explains theexecutive compensation program of Energy*Solutions*, Inc.as it relates to the following “named executive officers:”

 
| R Steve Creamer        |   | Chief Executive  Officer                              |
|------------------------|--------|-------------------------------------------------------|
| Philip O.  Strawbridge |   | Executive Vice  President and Chief Financial Officer |
| J.I.  Everest, II |   | Vice Chairman                                         |
| Raul J. Deju           |   | President and  Chief Administrative Officer           |
| Alan M. Parker         |   | Executive Vice  President and Chief Operating Officer |

 

In 2005, Lindsay Goldberg &Bessemer L.P., Peterson Partners, L.P., Creamer Investments, Inc., andcertain of our senior employees formed a limited liability company, ENVHoldings LLC (“ENV”).  ENV acquiredEnvirocare of Utah, Inc., predecessor in interest to Energy*Solutions*, LLC, which thereafter acquired severalenterprises engaged in the nuclear waste and nuclear fuel industries.  The acquired companies now comprise thebusiness operations of Energy*Solutions*, Inc.  In late 2007, the Company was formed and ENVconverted its ownership of Energy*Solutions,* LLCinto Company shares, selling a portion of its shares in the Company’s initialpublic offering in November 2007 (the “IPO”). ENV currently ownsapproximately 62% of the Company’s common stock and ENV’s sole asset is itsshares of Company common stock, other than cash which is used to pay for legal,accounting and other administrative expenses and to make tax distributions tocertain members.

 

Prior to the IPO, each ofthe named executive officers was employed by Energy*Solutions*,LLC, 100% of whose equity was owned by ENV. In 2005 and 2006, the named executive officers acquired Membership Unitsor were granted Profit Interests in ENV pursuant to their individual EmploymentAgreements (defined below). “Membership Units” refers to the number ofpartnership units an individual owns in ENV, i.e., one Membership Unit isessentially the equivalent of one share of ownership in ENV. “Profit Interests”refers to ownership interests in ENV that entitle an individual only to apercentage of the future profits and future appreciation of ENV. The ProfitInterests allocate a percentage of the cash distributions above certaincumulative cash distribution thresholds. Therefore, the aggregate economic ownership by each member varies basedon the Company’s stock price, which will determine if certain thresholds aremet.  While these Membership Units andProfit Interests are not directly convertible into common stock of the Companyor any other equity security of the Company, it is likely that upon liquidationof ENV, the Company’s stock could be distributed to holders of Membership Unitsand Profit Interests.  The Board ofDirectors of the Company considered each of the named executive officer’scurrent Membership Units and/or Profit Interests in ENV in determining theequity awards to be granted to each such executive officer at the time of theIPO.

 

1

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Since the named executiveofficers hold significant Membership Units and/or Profit Interests in ENVand/or in entities above ENV whose only asset is ownership of ENV, their equityinterests in the Company are substantial. The following table identifies eachnamed executive officer’s percentage equity ownership in ENV, includingownership in entities above ENV whose only asset is ownership in ENV, and theresulting percentage beneficial ownership of the Company’s common stock:

 
| ** **            | ** ** | **Equity Ownership  in ENV** | ** ** | **Approximate Beneficial  Ownership in Company  Stock** | ** ** |
|-----------------------|------------|-----------------------------------|------------|------------------------------------------------------------------------|------------|
| **Name**              | ** ** | **(%)  (1)(2)**                   | ** ** | **(%)  (3)**                                                           | ** ** |
| R Steve Creamer       |       | 10.29                             | (4)        | 6.41                                                                   |       |
| Philip O. Strawbridge |       | 0.39                              |       | 0.24                                                                   |       |
| J.I. Everest, II |       | 5.37                              | (4)        | 3.35                                                                   |       |
| Raul J. Deju          |       | 0.68                              |       | 0.42                                                                   |       |
| Alan M. Parker        |       | 0.36                              |       | 0.22                                                                   |       |

 

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| (1) |   | Percentage  of equity interests in ENV calculated using the closing share price of the  Company’s common stock as of December 31, 2007, which was $26.99.                                                                                                                                                                  |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Includes  beneficial ownership in entities whose only asset is ownership in ENV.                                                                                                                                                                                                                                                     |
| (3) |   | Calculated  based on the number of common shares outstanding as of December 31,  2007.                                                                                                                                                                                                                                          |
| (4) |   | Mr. Creamer’s  and Mr. Everest’s Membership Units are held by Creamer  Investments, Inc., of which Mr. Creamer owns 35%, Mr. Creamer’s  children own a total of 45%, and Mr. Everest owns 20%.  Mr. Creamer’s and Mr. Everest’s Profit Interests are held in trust. |

 

Due to their significantinterest in ENV, the named executive officers have a large beneficial ownershipin the Company which encourages them to drive performance of the Company andcreate stockholder value.  The interestsof the named executive officers are directly linked to how well the Companyperforms and, thus, are directly tied to stockholders’ interests.

 

The components formingthe Company’s executive compensation program for the named executive officersconsist of Membership Units and/or Profit Interests in ENV, equity awards (“EquityAwards”) pursuant to the Energy*Solutions*, Inc.2007 Equity Incentive Plan (the “2007 Plan”), other incentive compensation, andbase salaries. Prior to the Company’s IPO, compensation for the named executiveofficers was determined by the board of managers of Energy*Solutions*,LLC, the Company’s predecessor, subject to an individual employment agreementwith each named executive officer.  Foreach year subsequent to 2007, the Compensation Committee of the Board ofDirectors of the Company (the “Compensation Committee”) will determine, subjectto the Employment Agreements, the compensation for the named executiveofficers, including Equity Awards, if any, that each will be granted pursuantto the 2007 Plan and annual incentive compensation pursuant to the Company’sExecutive Bonus Plan, if approved by stockholders.  At the time of this report, the only EquityAwards granted to the named executive officers have been non-qualified stockoptions (the “Option Grants”) granted at the time of the IPO.

 

**ExecutiveCompensation Objectives**

 

The Company’s goal forexecutive compensation is to attract and retain a talented, entrepreneurial andcreative team of executives who will provide the leadership for the Company’sgrowth and success in its dynamic, highly-specialized markets.

 

**Executive Compensation Overview**

 

***Four Components***

 

The compensation program for the named executiveofficers consists of the following four components:

 

·                  Membership Units and/or Profit Interests held in ENV;

·                  Equity Awards issued pursuant to the 2007 Plan;

·                  Other incentive compensation; and

·                  Base salary.

 

The named executive officers are also eligible toparticipate in the Company’s health and welfare programs, 401(k) Plan, andother employee recognition programs on the same basis as other employees. Messrs. Creamer,Everest and Strawbridge were also paid an automobile allowance in fiscal 2007.  These market competitive perquisites wereprovided as part of the negotiation to hire and retain these individuals intheir current positions.

 

2

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***Employment Agreements with Named Executive Officers***

 

The Company entered into the Employment Agreements toattract the named executive officers to their current positions and assuretheir continued employment to provide stability in executive management throughthe infancy and high-growth phase of the Company.    Each agreement identifies a minimum basesalary to be paid to the officer in each of the Company’s fiscal years coveredby the agreement and the maximum percentage of annual incentive compensationthe officer is eligible to receive based on the Company’s performance. Thefollowing table sets forth the base salary and maximum percentage of annualincentive compensation for 2007 allowed pursuant to each named executiveofficer’s Employment Agreement, and the respective date of expiration:

 
| **Name**              | ** ** | **Base Salary ($)** | ** ** | **Maximum Annual  Incentive  Compensation as a  Percentage of Base  Salary** | ** ** | **Expiration Date** | ** ** |
|-----------------------|------------|--------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **            | ** ** | ** **               | ** ** | ** **                                                                                            | ** ** | ** **               | ** ** |
| R Steve Creamer       |       | 500,000                  |       | 200                                                                                                   |       | 1/31/2010                |       |
| Philip O. Strawbridge |       | 450,000                  |       | 120                                                                                                   |       | 3/23/2009(1)             |       |
| J.I. Everest, II |       | 300,000                  |       | 200                                                                                                   |       | 1/31/2010                |       |
| Raul J. Deju          |       | 450,000                  |       | 100                                                                                                   | (2)        | 10/9/2009(1)             |       |
| Alan M. Parker        |       | 450,000                  |       | 120                                                                                                   |       | 11/14/2009(1)            |       |

 

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| (1) |   | In April 2008, the Compensation Committee approved an amendment  to Messrs. Strawbridge’s, Deju’s and Parker’s Employment Agreements to  extend the term through December 31, 2011.                  |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | In April 2008, the Compensation Committee approved an amendment  to Dr. Deju’s Employment Agreement to increase the maximum percentage of  base salary that could be paid as annual incentive compensation to 120%. |

 

As further incentive to attract and retain the namedexecutive officers, each named executive officer’s Employment Agreementprovides that if his employment is terminated without cause or if he terminateshis employment for good reason (as defined in his Employment Agreement), hewill be entitled to receive his then current base salary for 12 months (otherthan Mr. Parker, who will receive his current base salary for 18 monthsand Mr. Strawbridge, who will receive his current base salary for 24months), a pro-rata portion of his annual incentive compensation for the yearof termination, and continued coverage for 12 months (18 months in the case of Mr. Parkerand 24 months in the case of Mr. Strawbridge) under the Company’s medical,dental and life insurance plans. Table 1.1 under Executive Compensation setsforth the base salary, incentive compensation, and other compensation paid toeach named executive officer in 2007.

 

***CEO Compensation***

 

Mr. Creamer beneficially owns Membership Unitsand Profit Interests that equate to a beneficial ownership interest in theCompany of approximately 6.4%, which incentivizes him to drive stockholdervalue and align his interests with those of stockholders.  Mr. Creamer’s compensation programs aredesigned to reward Mr. Creamer for excellent performance, recognizing Mr. Creamer’sunique leadership in successfully acquiring and integrating multiple companies,orchestrating the Company’s negotiation and execution of significantcontractual relationships, and successfully completing the IPO in 2007.

 

**Executive Compensation Program Design and Implementation**

 

***Compensation Committee Determines All Executive Compensation***

 

Prior to the IPO in November 2007, the board ofmanagers of Energy*Solutions*, LLC determined thecompensation for the named executive officers. Beginning with fiscal year 2008, the Compensation Committee, subject tothe terms of each officer’s Employment Agreement, will determine allcompensation for the named executive officers.

 

Beginning in 2009, the Compensation Committee willperiodically conduct an evaluation of the performance of each named executiveofficer to determine if any changes in the officer’s compensation areappropriate based on the considerations described below. The CEO will notparticipate in the Compensation Committee’s deliberations or decision withregard to his own compensation. At the Compensation Committee’s request, theCEO will review with the Compensation Committee the performance of the otherfour named executive officers, but no other named executive officer has anyinput into executive compensation decisions. The Compensation Committee willgive considerable weight to the CEO’s evaluation of the other named executiveofficers because of his direct knowledge 

 

3

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of each officer’s performance and contributions. Foreach officer, the Compensation Committee members will independently determineany adjustments to base salary, the incentive compensation, subject to theterms of the officer’s Employment Agreement, and whether any Equity Awardsshould be made based on their collective assessment of the officer’sperformance as well as the Company’s overall financial performance.

 

***The Important Role of Equity Holdings and Long-Term EquityAwards***

 

*Overview.*  As reflected in theirsubstantial ownership through their holdings in ENV and Option Grants awardedat the IPO, the Compensation Committee believes that equity holdings and EquityAwards are the most effective way to attract and retain a strong executiveteam.  As a result, executivecompensation is heavily weighted toward equity ownership and long-term EquityAwards rather than cash compensation.

 

In granting long-term Equity Awards, the CompensationCommittee seeks to maximize their effectiveness in accomplishing the Company’scompensation objectives while recognizing the Board’s duty to the Company’sstockholders to limit equity dilution. The Compensation Committee believes thisbalance has been achieved as follows:

 

·                  *The Named Executive Officers’Membership Units and Profit Interests in ENV Align Their Interests with theInterests of Stockholders.*  ENV is the Company’s largest andcontrolling stockholder.  Other than cashused to pay expenses and taxes, ENV’s only asset is the shares of Companycommon stock that it owns.  The financialperformance of the Company has a direct impact on the value of each namedexecutive officer’s Membership Units and/or Profit Interests in ENV, whichcreates an incentive on the part of each named executive officer to achievestrong financial performance that will increase the value of the Company’sshares. Membership Units are owned and are not subject to a vestingperiod.  Currently, 33 1/3% of Mr. Strawbridge’sProfit Interests and 66 2/3% of Messrs. Deju’s and Parker’s ProfitInterests, respectively, are unvested.

 

·                  *Option Grants Align Officers’Actions with Stockholder Interests. *The Company utilizes Equity Awards toensure that the named executive officers have a continuing stake in the Company’slong-term success and to align their interests with the interests of theCompany’s stockholders. Because the Option Grants were issued with an exerciseprice equal to the fair market value of the Company’s common stock on the dateof grant, the determination of which is discussed below, these options willhave value to the named executive officers only if the market price of theCompany’s common stock increases after the grant date.

 

In determining the number of Option Grants awarded toeach named executive officer in 2007, the Compensation Committee considered theCompany’s performance against the strategic plan, individual performanceagainst the individual’s objectives, the individual’s Membership Units and/orProfit Interests in ENV, and the recommendation of the Chief Executive Officerwith respect to other members of management. Because of their substantial ownership interests in ENV, theCompensation Committee decided not to award Messrs. Creamer and EverestOption Grants in 2007.

 

All Option Grants to the named executive officers andother employees were and will be granted with exercise prices equal to orexceeding the fair value of the Company’s common stock on the grant date.  The Company does not have any program, planor practice that requires it to grant equity-based awards to the namedexecutive officers on specified dates and the Company has not made grants ofsuch awards that were timed to precede or follow the release or withholding ofmaterial non-public information. The Company does not have any equity securityownership guidelines or requirements for the named executive officers.

 

·                  *Long Vesting Intervals to MaximizeRetention.*  Sinceall unvested options are forfeited upon the named executive officer’stermination of employment for any reason, the four-year vesting schedule of theOption Grants awarded to the named executive officers in 2007 is designed toincentivize the named executive officer to continue his employment at leastthrough the vesting period.  With theexception of a special Option Grant awarded to Philip Strawbridge pursuant tohis Employment Agreement, which provided for the immediate vesting on the grantdate of one-sixth of the Option Grant shares (the “Strawbridge Vested Options”),Option Grants to each of the named executive officers vest ratably on eachanniversary of the grant date over a period of four years, with all sharesbecoming fully vested on the fourth anniversary of the grant date.  Vesting the options over a four year periodis intended to create a strong incentive for the named executive to continuehis employment with the Company.

 

4

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·                  *Frequency and Size of Equity Awards.*  The Compensation Committeewill periodically review Option Grants previously awarded to the namedexecutive officers and determine whether additional Option Grants should beawarded. To determine the size of any additional Option Grant awards, theCompensation Committee will first establish a target compensation value that itwants to deliver to the named executive officers through Equity Awards. Indoing so, the Compensation Committee considers various factors, including thefollowing:

 

·                  The heavy weight placed on equity in themix of total compensation

·                  The officer’s experience and performance

·                  The scope, responsibility and businessimpact of the officer’s position

·                  The perceived retention value of thetotal compensation package in light of the competitive environment

 

Once the target value has been established, theCompensation Committee will determine the number of shares by reference to thecurrent fair market value of the Company’s common stock.

 

·                  *Limited Acceleration of OptionVesting.* In theevent of a termination without cause, in the case of Option Grants a change incontrol, the unvested portion of the named executives Profit Interests andOption Grants will vest immediately. This acceleration of vesting encourages the executives to support a successful change incontrol, while easing the administrative burden of converting outstandingawards to the new company stock. These are the only circumstances where thevesting of Profit Interests or Option Grants will be accelerated.

 

***The Role of Cash Compensation***

 

*Base Salaries.*  The Compensation Committeebelieves that base salaries are less important than incentive compensation andEquity Awards in meeting the Company’s compensation objectives. Base salariesare a market competitive practice that is used to compensate the namedexecutives for services rendered during the fiscal year.  No named executive officer’s base salary wasincreased in 2007, except for Mr. Strawbridge, whose base salary wasincreased upon his acceptance of the position of Chief Financial Officer.  The increased base salary for Mr. Strawbridgewas based on the increase in responsibilities in his role, market competitivepractices, and internal equity considerations.

 

*Incentive Compensation*.  In fiscal 2007 prior to theIPO, the Board approved discretionary incentive payments to Messrs. Everest,Strawbridge, Deju and Parker to compensate them for their success in, amongother things, acquiring and merging several entities important to the long-termstrategy of the Company.  In addition tothe discretionary incentive payments described above, the Company paid Messrs. Creamerand Everest the one-time, lump-sum contractual payments of $2,344,000 and$2,051,000, respectively, as consideration for their agreement to terminatetheir participation in the Excess Performance Bonus Pool previously set forthin their Employment Agreements.  Noadditional incentive compensation for 2007 was paid to the named executive officerssince the IPO.

 

Going forward, the Compensation Committee intends topay future incentive compensation pursuant to the Executive Bonus Plan (the “BonusPlan”), which is being presented for the approval of the stockholders of theCompany at our next Annual Meeting and would authorize the CompensationCommittee to issue plan-based cash incentive awards to compensate officers forachieving specific financial objectives that are established by theCompensation Committee. The Compensation Committee believes that incentivecompensation aligns the officer’s interests with those of the Company’sstockholders and is an important component of executive compensation, asreflected by the following:

 

·                  Payment of incentive compensation would be determinedbased on attainment of specific written performance goals approved by theCompensation Committee and the Board of Directors.

 

·                  The performance goals would generally be based uponthe Company achieving a specified EBITDA (earnings before interest, taxes,depreciation and amortization) target, but may include other criteria such asnet income, operating income, earnings per share of the Company’s common stock,book value per share of the Company’s common stock, and return on stockholders’equity.

 

·                  Officers would not receive 100% of their incentivecompensation if the Company’s target goals are not met, as shown in the tablebelow.

 

·                  Officers would be eligible for above targetopportunities should the Company exceed its target performance goals.

 

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At the end of the year, the Compensation Committeewould determine the amount of the incentive compensation to be paid to eachofficer by comparing actual results to the performance goals. The CompensationCommittee may adjust the amount paid to any individual based on the officer’soverall performance or unique and specific events that may have occurred duringthe year as described in the Bonus Plan. The Bonus Plan will not provide forthe adjustment or recovery of an award paid to a named executive officer if theresults in a previous year are subsequently restated or adjusted in a mannerthat would have originally resulted in a smaller or larger award.

 

Pursuant to the Bonus Plan, the Compensation Committeeexpects to establish an EBITDA or adjusted EBITDA performance goal for fiscal2008, which will entitle each of the named executive officers to receiveincentive compensation equal to a percentage of base salary as set forth in thefollowing table:

 
| ** **            | ** ** | **EBITDA Performance for Fiscal Year**

**(payout as a % of base salary)** | ** ** |
|-----------------------|------------|------------------------------------------------------------------------------------------------------------------------------|------------|
| **Name**              | ** ** | **Threshold (%)**                                                                                                            | ** ** | **Target (%)** | ** ** | **Maximum (%)** | ** ** |
| ** **            | ** ** | ** **                                                                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| R Steve Creamer       |       | 25                                                                                                                           |       | 100 |   | 200 |   |
| Philip O. Strawbridge |       | 20                                                                                                                           |       | 80 |   | 120 |   |
| J.I. Everest, II |       | 25                                                                                                                           |       | 100 |   | 200 |   |
| Raul A. Deju          |       | 20                                                                                                                           |       | 80 |   | 120 |   |
| Alan M. Parker        |       | 20                                                                                                                           |       | 80 |   | 120 |   |

 

The incentive compensation payable to the namedexecutive officer will be interpolated for actual EBITDA between threshold andtarget or between target and maximum.  Ifthe Company fails to achieve the threshold of the 2008 EBITDA performance goal,the named executive officers will receive no incentive compensation under theBonus Plan.  There is considerable riskthat payments will not be made at all or will be made at less than 100%.  The uncertainty of meeting target goalsensures that any payments under the Bonus Plan are truly performance-based,consistent with the Committee’s objectives.

 

***The Role of Peer Groups, Surveys and Benchmarking***

 

The Compensation Committee may review compensationpractices of peer companies to determine whether the Company’s total compensationfor the named executive officers is within a reasonably competitive range. TheCommittee, however, does not attempt to set compensation components to meetspecific benchmarks, such as salaries “above the median” or equity compensation“at the 75th percentile.” Furthermore, the Compensation Committeebelieves that excessive reliance on compensation surveys is detrimental tostockholder interests because it can result in compensation that is unrelatedto the value delivered by the named executive officers.

 

***Tax and Accounting Considerations***

 

*Tax Deductibility of CompensationExpense.*  Section 162(m) ofthe Internal Revenue Code places a limit of $1,000,000 on the amount ofcompensation to certain officers that may be deducted by the Company as abusiness expense in any tax year unless, among other things, the compensationis performance-based and has been approved by the stockholders. TheCompensation Committee will propose to stockholders at the 2008 annual meetingto approve the Bonus Plan, whereupon it will qualify as performance-basedcompensation under Section 162(m).

 

*Accounting Considerations.*  The Compensation Committeealso considers the accounting and cash flow implications of various forms ofexecutive compensation. In its financial statements, the Company recordssalaries and performance-based compensation as expenses in the amount paid, orto be paid, to the named executive officers. Accounting rules also requirethe Company to record an expense in its financial statements for ProfitInterests in ENV and Equity Awards, even though Profit Interests in ENV andEquity Awards are not paid as cash to employees. The accounting expense ofMembership Units and Profit Interests in ENV and Equity Awards to employees iscalculated in accordance with Statement of Accounting Standards (“SFAS”) No. 123(R),*Share-Based Payment*. The CompensationCommittee believes, however, that the many advantages of equity compensation,as discussed above, more than compensate for the non-cash accounting expenseassociated with them.

 

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**Fiscal 2008 Compensation Decisions**

 

***Salary Changes***

 

The Employment Agreements of all named executiveofficers were amended to provide a cost-of-living increase in the event theCompany grants a cost-of-living increase to employees of the Company generally.In 2008, each of the named executive officers received a cost-of-livingadjustment to base salary equal to 3.5% of the officer’s base salary.

 

***Changes to Incentive Compensation***

 

In April 2008, Dr. Deju’s EmploymentAgreement was amended to increase the maximum percentage of base salary that hecould be paid as incentive compensation from 100% to 120% based on marketcompetitive practices and internal equity considerations.

 

***Extensions to Employment Agreements***

 

In April 2008, the Compensation Committeeapproved an amendment to Messrs. Strawbridge’s, Deju’s and Parker’sEmployment Agreements to extend the term through December 31, 2011.

 

**Executive****Compensation**

 

The following table setsforth the compensation paid to the named executive officers in 2007 in theforms of base salary, Membership Units and/or Profit Interests in ENV,incentive compensation, Equity Awards and other compensation.

 

**Summary Compensation Table**

 
| **Name and Principal**                  | ** ** | ** ** | ** ** | **Salary** | ** ** | **Bonus**  | ** ** | **Stock  Awards** | ** ** | **Option  Awards** | ** ** | **Nonequity  Incentive Plan  Compensation** | ** ** | **All Other  Compensation** | ** ** | **Total**  | ** ** |
|---------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|-------------------|------------|--------------------|------------|--------------------------------------------------|------------|----------------------------------|------------|------------|------------|
| **Position**                                      | ** ** | **Year**   | ** ** | **($)**    | ** ** | **($)**    | ** ** | **($)(1)**        | ** ** | **($)(2)**         | ** ** | **($)**                                          | ** ** | **($)**                          | ** ** | **($)**    | ** ** |
| ** **                                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **        | ** ** | ** **         | ** ** | ** **                                       | ** ** | ** **                       | ** ** | ** ** | ** ** |
| **R Steve Creamer**Chief Executive  Officer       |       | 2007       |       | 500,000    |       | 2,344,000  | (3)        | 735,751           |       | —             |       | —                                           |       | 19,750                           | (4)        | 3,599,501  |       |
| ** **                                        |       |       |       |       |       |       |       |              |       |               |       |                                             |       |                             |       |       |       |
| **Philip O. Strawbridge**Chief Financial  Officer |       | 2007       |       | 421,569    |       | 117,000    |       | 35,000            |       | 614,652            |       | —                                           |       | 18,583                           | (5)        | 1,206,804  |       |
| ** **                                        |       |       |       |       |       |       |       |              |       |               |       |                                             |       |                             |       |       |       |
| **J.I. Everest, II**Vice Chairman            |       | 2007       |       | 300,000    |       | 2,171,000  | (6)        | 367,998           |       | —             |       | —                                           |       | 19,750                           | (7)        | 2,858,748  |       |
| ** **                                        |       |       |       |       |       |       |       |              |       |               |       |                                             |       |                             |       |       |       |
| **Raul A. Deju**President                         |       | 2007       |       | 450,000    |       | 208,985    |       | 143,472           |       | 48,363             |       | —                                           |       | 5,372                            | (8)        | 856,192    |       |
| ** **                                        |       |       |       |       |       |       |       |              |       |               |       |                                             |       |                             |       |       |       |
| **Alan M. Parker**Chief Operating  Officer        |       | 2007       |       | 450,000    |       | 180,000    |       | 114,132           |       | 96,726             |       | —                                           |       | 4,769                            | (9)        | 845,627    |       |

 

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(1) The amounts reported in this column reflect the aggregatedollar amounts recognized for Membership Units and/or Profit Interests in ENVfor financial statement reporting purposes (disregarding any estimate of forfeituresrelated to service-based vesting conditions) for fiscal year 2007, inaccordance with SFAS No. 123(R).

 

(2) The amounts reported in this column reflect the aggregatedollar amounts recognized for Option Grants for financial statement reportingpurposes (disregarding any estimate of forfeitures related to service-basedvesting conditions) for fiscal year 2007, in accordance with SFAS No. 123(R).Detailed information about the amount recognized for specific awards isreported in the table under “Outstanding Equity Awards at Fiscal Year-End”below. For a discussion of the assumptions and methodologies used to value thestock awards reported in this table, please see the discussion of Option Grantscontained in Part II Item 8, “Financial Statements and Supplementary Data”of the Company’s Annual Report on Form 10-K in Notes to ConsolidatedFinancial Statements at Note 14, “Equity-Based Compensation.”

 

(3) This amount reflects the one-time, lump-sum contractual paymentto Mr. Creamer in consideration of his agreement to terminate the ExcessPerformance Bonus previously set forth in his Employment Agreement.

 

(4) This amount reflects a car allowance of $12,000 and the Company’smatching contributions to Mr. Creamer’s account under its 401(k) planof $7,750.

 

(5) This amount reflects a car allowance of $12,000 and the Company’smatching contributions to Mr. Strawbridge’s account under its 401(k) planof $6,583.

 

(6) This amount reflects the one-time, lump-sum contractual paymentto Mr. Everest of $2,051,000 in consideration of his agreement toterminate the Excess Performance Bonus previously set forth in his EmploymentAgreement, and a discretionary bonus of $120,000.

 

(7) This amount reflects a car allowance of $12,000 and the Company’smatching contributions to Mr. Everest’s account under its 401(k) plan of $7,750.

 

(8) This amount reflects the Company’s matching contributions to Dr. Deju’saccount under its 401(k) plan of $5,372.

 

(9) This amount reflects the Company’s matching contributions to Mr. Parker’saccount under its 401(k) plan of $4,769.

 

7

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** **

**Grantsof Plan-Based Awards Table**

 

Thefollowing table sets forth the option grants made to the named executiveofficers in 2007:

 
| ** **            | ** ** | ** **          | ** ** | **All Other  Option  Awards:  Number of   Securities  Underlying  Option** | ** ** | **Exercise of  Base Price or  Option  Awards** | ** ** | **Grant Date Fair  Value of Stock  and Option  Awards** | ** ** |
|-----------------------|------------|---------------------|------------|-------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| **Name**              | ** ** | **Grant Date** | ** ** | **(#)**                                                                                   | ** ** | **($/share)**                                                 | ** ** | **($)**                                                                          | ** ** |
| R. Steve Creamer      |       | —              |       | —                                                                                    |       | —                                                        |       | —                                                                           |       |
| Philip O. Strawbridge |       | 11/14/2007          |       | 522,000                                                                                   |       | 23.00                                                         |       | 3,593,809                                                                        |       |
| J.I.Everest, II  |       | —              |       | —                                                                                    |       | —                                                        |       | —                                                                           |       |
| Raul A. Deju          |       | 11/14/2007          |       | 217,500                                                                                   |       | 23.00                                                         |       | 1,547,614                                                                        |       |
| Alan M. Parker        |       | 11/14/2007          |       | 435,000                                                                                   |       | 23.00                                                         |       | 3,095,228                                                                        |       |

 

**OutstandingEquity Awards at Fiscal Year-End Table**

 

The following tablepresents information regarding the outstanding equity awards held by each ofthe named executive officers as of December 31, 2007, including thevesting dates for the portions of these awards that had not vested as of thatdate.

 
| **Name**              | ** ** | **Option  Grant Date** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  (#)  Exercisable** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  (#)  Unexercisable(1)** | ** ** | **Option  Exercise  Price  ($)** | ** ** | **Option  Expiration  Date** | ** ** |
|-----------------------|------------|-----------------------------|------------|------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|----------------------------------|------------|------------------------------|------------|
| R Steve Creamer       |       | —                      |       | —                                                                             |       | —                                                                                  |       | —                           |       | —                       |       |
| Philip O. Strawbridge |       | 11/14/2007                  |       | 87,000                                                                             |       | 435,000                                                                                 |       | $                                | 23.00      |                         | 11/14/2012 |   |
| J.I. Everest, II |       | —                      |       | —                                                                             |       | —                                                                                  |       | —                           |       | —                       |       |
| Raul A. Deju          |       | 11/14/2007                  |       | —                                                                             |       | 217,500                                                                                 |       | $                                | 23.00      |                         | 11/14/2012 |   |
| Alan M. Parker        |       | 11/14/2007                  |       | —                                                                             |       | 435,000                                                                                 |       | $                                | 23.00      |                         | 11/14/2012 |   |

 

----

(1)   Twenty-five percent of all Option Grants (25% of theunvested Option Grants in the case of Mr. Strawbridge) vest each year overa four-year period.

 

**PotentialPayments upon Termination or Change in Control**

 

***Severance***

 

Each named executive officer’s employment agreementprovides for the following payments upon termination of employment:

 

*Termination by the Company without Cause or by theOfficer for Good Reason*.  If theCompany terminates the officer’s employment without Cause (as defined in theEmployment Agreements), or the officer terminates his employment for GoodReason (as defined in the Employment Agreements), the officer will receivepayment of (a) all monies earned or due through the date of termination (“AccruedObligations”), (b) a pro-rated incentive compensation payment, (c) basesalary for a period of 12 months (18 months in the case of Mr. Parker and24 months in the case of Mr. Strawbridge), and (d) subject to theConsolidated Omnibus Budget Reconciliation Act, continuation of medical, dentaland life insurance coverage existing at the time of termination for 12 months(18 months in the case of Mr. Parker and 24 months in the case of Mr. Strawbridge).

 

8

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*Termination upon Death or Permanent Disability*. In the event of the officer’s death or permanent disability, the officeror the officer’s heirs, executors, administrators or other legalrepresentatives (as the case may be) will receive a payment of (a) allAccrued Obligations, plus (b) a pro-rated incentive compensation payment.

 

*Termination by the Company for Cause*. If the officer’s employment is terminated for Cause (as defined in theEmployment Agreements), the officer will receive payment of all AccruedObligations.

 

*Termination by the Officer*. If the officer voluntarily terminates his employment, excluding atermination for Good Reason (as defined in the Employment Agreements), theofficer will receive payment of all Accrued Obligations.  Under termination of the officer’s employmentfor any reason, payment of any amount other than Accrued Obligations isdependent upon the officer (or his heirs as the case may be) executing ageneral release in favor of the Company.

 

*Change in Control**. *TheEmployment Agreements do not provide for any payments upon a change in control.However, the accelerated vesting of Option Grants does occur upon a Change inControl (as defined in the 2007 Plan) as discussed in Section 2 below.

 

The following table sets forth the severance paymentand the value of continued insurance coverage in the event each named executiveofficer’s employment was terminated on December 31, 2007 by the Companywithout Cause (as defined in the Employment Agreements) or by the officer forGood Reason (as defined in the Employment Agreements):

 
| ** **            | ** ** | **Severance  Payment** | ** ** | **Value of  Continued  Insurance  Coverage** | ** ** |
|-----------------------|------------|------------------------|------------|---------------------------------------------------|------------|
| **Name**              | ** ** | **($)**                | ** ** | **($)**                                           | ** ** |
| R Steve Creamer       |       | 500,000                |       | 14,272                                            |       |
| Philip O. Strawbridge |       | 900,000                |       | 28,545                                            |       |
| J.I. Everest, II |       | 300,000                |       | 18,646                                            |       |
| Raul A. Deju          |       | 450,000                |       | 18,646                                            |       |
| Alan M. Parker        |       | 675,000                |       | 21,408                                            |       |

 

***Accelerationof Unvested Profit Interests in ENV and Option Grants***

 

All unvested Option Grants are forfeited upontermination of a named executive officer’s employment for any reason.  All unvested Profit Interests are immediatelyvested upon termination of a named executive officer’s employment for anyreason other than for “cause” as that term is defined in ENV’s limitedliability operating agreement.  In theevent of a Change of Control (as defined in the 2007 Plan) all unvested optionsbecome immediately vested. The following table identifies the value of theunvested Profit Interests and Option Grants to Messrs. Strawbridge, Dejuand Parker as of December 31, 2007:

 
| ** **            | ** ** | **Number of  Securities  Underlying  Unvested  Options** | ** ** | **Value of  Unvested  Options** | ** ** | **Value of  Unvested  Profit  Interests** | ** ** |
|-----------------------|------------|---------------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------------------|------------|
| **Name**              | ** ** | **(#)**                                                       | ** ** | **($)(1)**                           | ** ** | **($)(2)**                                     | ** ** |
| Philip O. Strawbridge |       | 435,000                                                       |       | 1,735,650                            |       | 3,595,883                                      |       |
| Raul A. Deju          |       | 217,500                                                       |       | 867,825                              |       | 6,722,745                                      |       |
| Alan M. Parker        |       | 435,000                                                       |       | 1,735,650                            |       | 3,560,056                                      |       |

 

----

(1) Valueis calculated as the difference between the closing stock price of $26.99 on December 31,2007 and the exercise price of $23.00 per share, times the number of optionsgranted.

 

(2) Valueis calculated based on the closing stock price as of December 31, 2007,which was $26.99.

 

 

9

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**CompensationCommittee Interlocks and Insider Participation**

 

During 2007, Messrs. Hirt,Clements and Roriston served on our Compensation Committee. None of them was anofficer or employee of the Company in 2007 or any time prior thereto. During2007, none of the members of the Compensation Committee had any relationship withthe Company requiring disclosure under Item 404 of Regulation S-K. None of ourexecutive officers served as a member of the Board of Directors or CompensationCommittee, or similar committee, of any other company whose executive officer(s) served as a member of our Board of Directors or our CompensationCommittee.

 

**CompensationCommittee Report**

 

The CompensationCommittee has certain duties and powers as described in its charter. TheCompensation Committee is currently composed of the three non-employeedirectors named at the end of this report.

 

The CompensationCommittee has reviewed and discussed with management the disclosures containedin the Compensation Discussion and Analysis section. Based upon this review anddiscussion, the Compensation Committee has recommended to the Board ofDirectors that the Compensation Discussion and Analysis be included in thisAnnual Report on Form 10-K/A for the year ended December 31, 2007 andthe definitive proxy statement of the Company for its 2008 Annual Meeting ofStockholders. This report is provided by the following directors, who comprisethe committee:

 

Lance L. Hirt, CommitteeChair

Jordan W. Clements

Robert J.S. Roriston

 

**Non-managementDirectors’ Compensation for Fiscal 2007**

 

The CompensationCommittee has the responsibility for reviewing and recommending to the Boardcompensation and benefits for “non-management directors.” Non-managementdirectors are those directors who are not executive officers of Energy*Solutions* or its affiliates. Accordingly, Dr. dePlanque and Mr. Winder are regarded as non-management directors.

 

Pursuant to itscharter, the Compensation Committee conducts an annual review of non-managementdirector compensation and recommends any changes to the Board of Directors forthe Board’s consideration. The Compensation Committee determined not torecommend to the Board any changes to our non-management director compensationin 2007.

 

The currentcompensation and benefit program for non-management directors has been ineffect since the Company’s initial public offering in November 2007, andis designed to achieve the following goals: compensation should fairly paydirectors for work required for a company of Energy*Solutions*’size and scope; compensation should align directors’ interests with thelong-term interests of stockholders; and the structure of the compensationshould be simple, transparent and easy for stockholders to understand. Thetable below on non-management directors’ compensation includes the followingcompensation elements:

 

*CashCompensation.*

 

Eachnon-management director is paid annual cash compensation of $50,000, with$12,500 being paid each fiscal quarter. In 2007, the non-management directorswere paid $12,500 in cash compensation, representing the fourth quarter paymentfollowing their election to the Board in conjunction with the Company’s initialpublic offering in November 2007.

 

*EquityCompensation.*

 

Upon election andeach year thereafter for so long as the director continues to serve, eachnon-management director is granted shares of the Company’s common stock havinga value of $75,000 on the grant date pursuant to a restricted share purchaseagreement. Restricted shares vest overthree years.  Any unvested restrictedshares immediately and automatically vest:

 
| (i)    |   | if the director is not  reelected to the Board following the expiration of any term of office for  which the director is elected;                                                                                                                                                                                                                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                               |
| (ii)   |   | if the director is  involuntarily removed from the Board for any reason other than the director (a) having been convicted  of, or pleading guilty or *nolo contendere*  to, any felony; (b) having engaged in any gross or willful misconduct,  including the commission of any fraud, or (c) having perpetrated any  fraud against the Company or any third party; |

 

10

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| (iii)  |   | if the director dies or  because of sickness or disability is no longer able to complete a term of  office for which director has been elected; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                            |
| (iv)   |   | if the director is at least 60  years of age and elects to resign from the Board or not stand for reelection;  or                               |
|   |   |                                                                                                                                            |
| (v)    |   | upon a Change of Control (as  defined in the 2007 Plan).                                                                                        |

 

*Committee Meeting Compensation.*

 

Eachnon-management director who chairs a committee is paid an additional $10,000for each year he or she chairs a committee, and each non-management directorwho serves on a committee is paid $1,250 for each committee meeting attended.

 

The followingtable presents information regarding the compensation paid during fiscal year2007 to non-management directors:

 
| ** **         | ** ** | **Fees Earned  or Paid  in Cash** | ** ** | **Stock  Awards** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
|--------------------|------------|--------------------------------------------------|------------|-------------------|------------|----------------------------------|------------|-----------|------------|
| **Name**           | ** ** | **($)**                                          | ** ** | **($)(1)**        | ** ** | **($)**                          | ** ** | **($)**   | ** ** |
| E. Gail de Planque |       | 15,000                                           |       | 3,125             |       | 0                                |       | 18,125    |       |
| David B. Winder    |       | 15,000                                           |       | 3,125             |       | 0                                |       | 18,125    |       |

 

----

| (1) |   | The amounts reported in this column reflect the aggregate dollar  amounts recognized as expense for stock awards for financial statement  reporting purposes (disregarding any estimate of forfeitures related to  service-based vesting conditions) for fiscal year 2007 in accordance with  SFAS No. 123(R). For a discussion of the assumptions and methodologies  used to calculate the amounts referred to above, please see the discussion of  stock awards and option awards contained in Part II Item 8, “Financial  Statements and Supplementary Data” of the Company’s Form 10-K in Notes  to Consolidated Financial Statements at Note 14, “Equity-Based  Compensation.” |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The followingtable presents the number of unvested stock awards held by each of thenon-management directors as of December 31, 2007.

 
| **Director**       | ** ** | **Number of Unvested  Shares of Restricted  Stock as of December 31, 2007** | ** ** |
|--------------------|------------|----------------------------------------------------------------------------------------------------------------|------------|
| E. Gail de Planque |       | 3,261                                                                                                          |       |
| David B. Winder    |       | 3,261                                                                                                          |       |

 

*No OtherCompensation.*

 

Non-managementdirectors do not receive any non-equity incentive compensation and are notentitled to participate in or receive compensation from the Company’s employeebenefit programs.

 

*Stock Ownership Requirement.*

 

So long as a director serves on the Board of Directors of the Company, heor she shall continue to retain the ownership of and shall not sell, assign,transfer or pledge any of the restricted shares granted to the director duringthe first two years of his or her service on the Board of Directors.

 

*Insurance.*

 

Energy*Solutions* provides liability insurance for its directors andofficers. National Union Fire Insurance Company of Pittsburgh, Pennsylvania isthe principal underwriter of thecurrent coverage, which extends until November 2008. The annual cost ofthis coverage is approximately $1.175 million.

 

11

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*Meetings of Non-Management and IndependentDirectors.*

 

Our CorporateGovernance Guidelines and Principles provide that the non-management directorswill meet without management present no less frequently than four times peryear. Additionally, if any of the non-management directors do not qualify as an“independent director” as set forth in the Corporate Governance Guidelines andPrinciples, at least two additional executive sessions are held annually,attended only by independent directors. The non-management and independentdirectors may meet without management present at such other times as determinedby the non-management and independent directors.

 

**Item 12. Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters.**

 

**EquityCompensation Plan Information**

 

The followingtable sets forth certain information, as of December 31, 2007, concerningshares of common stock authorized for issuance under all of the Company’sequity compensation plans.

 
| ** **                                                 | ** ** | **Number of  Securities to be  Issued Upon  Exercise of  Outstanding  Options, Warrants  and Rights** | ** ** | **Weighted Average  Exercise Price of  Outstanding  Options, Warrants  and Rights** | ** ** | **Number of  Securities  Remaining for  Future Issuance  Under Equity  Compensation  Plans (1)** | ** ** |
|------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------|------------|
| Equity compensation plans approved by stockholders         |       | 5,851,382                                                                                                                                | (2)        | $                                                                                                            | 23.00      |                                                                                                                      | 4,588,618  |   |
| Equity compensation plans not approved by stockholders (3) |       | —                                                                                                                                   |       | —                                                                                                       |       | —                                                                                                                    |       |
| Total equity compensation plans                            |       | 5,851,382                                                                                                                                |       | $                                                                                                            | 23.00      |                                                                                                                      | 4,588,618  |   |

 

----

| (1) |   | Excludes shares to be issued upon the exercise of outstanding options,  warrants and rights.         |
|-----|--------|------------------------------------------------------------------------------------------------------|
| (2) |   | This number reflects the grant of 6,522 restricted stock units.                                      |
| (3) |   | The Company currently has no equity compensation plans that have not  been approved by stockholders. |

 

**SecurityOwnership of Certain Beneficial Owners**

 

The followingtable sets forth information regarding the beneficial ownership of our commonstock of each of our directors, named executive officers, ENV Holdings, LLC,the Company’s largest and controlling stockholder, and all directors andexecutive officers as a group. Beneficial ownership is determined under the rules of the SEC andgenerally includes voting or investment power with respect to securities.Except in cases where community property laws apply or as indicated in the footnotesto this table, we believe that each stockholder identified in the tablepossesses sole voting and investment power over all shares of common stockshown as beneficially owned by the stockholder. Percentage of beneficialownership is based on 88,303,500 shares of common stock outstanding as of March 31,2008. Shares of common stock subject to options that are currently exercisableor exercisable within 60 days of the date of March 31, 2008 are deemed tobe outstanding and beneficially owned by the person holding the options for thepurposes of computing the percentage ownership of that person and any group ofwhich that person is a member, but are not deemed outstanding for the purposeof computing the percentage ownership of any other person. In addition, anyMembership Units and/or Profit Interests of our management in ENV Holdings LLCthat vest within 60 days of the date of this Annual Report on Form 10-K/Aare deemed to be outstanding and beneficially owned by the person holding suchMembership Units and/or Profit Interests for the purpose of computing thepercentage ownership of that person and any group of which that person is amember, but are not deemed outstanding for the purpose of computing thepercentage ownership of any other person. Unless indicated otherwise, theaddress of each individual listed in the table is c/o Energy*Solutions*, Inc., 423 West 300 South, Suite 200,Salt Lake City, Utah 84101.

 

12

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| ** **                                                         | ** ** | **Shares Beneficially Owned  As of March 31, 2008** | ** ** |
|--------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|
| **Name and Address of  Beneficial Owner**      | ** ** | **Number of  Shares**                                              | ** ** | **Percentage** | ** ** |
| ** **                                                         | ** ** | ** **                                                              | ** ** | ** ** | ** ** |
| ENV Holdings LLC (1)                                               |       | 55,003,500                                                              |       | 62.3 | % |
|                                                               |       |                                                                    |       |   |   |
| R Steve Creamer (2)(3)                                             |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| J.I. Everest, II (2)(3)                                       |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Raul A. Deju                                                       |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Alan M. Parker                                                     |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Philip O. Strawbridge (4)                                          |       | 87,000                                                                  |       | * |   |
|                                                               |       |                                                                    |       |   |   |
| Jordan W. Clements (1)(2)                                          |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Alan E. Goldberg (1)(2)                                            |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Lance L. Hirt (2)(5)                                               |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Robert D. Lindsay (1)(2)                                           |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| Andrew S. Weinberg (2)(5)                           |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| E. Gail de Planque (6)                                             |       | 3,261                                                                   |       | * |   |
|                                                               |       |                                                                    |       |   |   |
| Robert J.S. Roriston (5)                                           |       | —                                                                  |       | — |   |
|                                                               |       |                                                                    |       |   |   |
| David B. Winder (6)                                                |       | 3,261                                                                   |       | * |   |
|                                                               |       |                                                                    |       |   |   |
| All directors and named executive officers as a group (13 persons) |       | 93,522                                                                  |       | * |   |

 

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*   Representsbeneficial ownership of less than one percent (1%) of the outstandingshares of our common stock.

 
| (1)    |   | All  of the members’ interests in ENV Holdings LLC are owned either by affiliates  of Lindsay Goldberg & Bessemer L.P. (“Lindsay Goldberg”), Peterson  Partners L.P. (“Peterson Partners”) and Creamer Investments, Inc. or by  our senior employees. Lindsay Goldberg has sole voting power and investment  power with respect to shares of our common stock owned by ENV Holdings LLC.  Additional information with respect to ENV Holdings LLC and its material  relationship with us is provided under “Certain Relationships and Related  Party Transactions.” Messrs. Goldberg and Lindsay have dispositive  voting or investment control over the entities or funds affiliated with  Lindsay Goldberg that control ENV Holdings LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   | The  percentage of economic interest in the Company held by each of Lindsay  Goldberg, Peterson Partners and Creamer Investments, Inc. or our senior  employees, as a result of their interests in ENV Holdings LLC, depends on the  value of the Company at any particular time. Based on the share price of  $22.94 on March 31, 2008, and assuming a sale or liquidation of the  Company at an implied equity valuation based on such price, LGB ENV LLC, an  affiliate of Lindsay Goldberg, Peterson Partners and members of management  hold 69.4%, 5.6% and 25.0%, respectively, of the economic interest in ENV  Holdings LLC. Messrs. Goldberg and Lindsay, through intermediate  entities, indirectly have shared control over Lindsay Goldberg. Messrs. Goldberg  and Lindsay expressly disclaim beneficial ownership of the shares of our  common stock held by ENV Holdings LLC through LGB ENV LLC, except with  respect to the shares in which such individual holds a pecuniary interest.  The address for Lindsay Goldberg and for Messrs. Goldberg and Lindsay is  c/o Lindsay Goldberg, 630 Fifth Avenue, 30th Floor, New York, NY 10111.  Mr. Clements, through intermediate entities, indirectly has shared  control over Peterson Partners. Mr. Clements expressly disclaims  beneficial ownership of the shares of our common stock held by ENV Holdings  LLC through such intermediate entities, except with respect to the shares in  which such individual holds a pecuniary interest. The address for Peterson  Partners and for Mr. Clements is c/o Peterson Partners, 2825 East  Cottonwood Parkway, Suite 400, Salt Lake City, UT 84121. The address for  Creamer Investments is c/o Energy*Solutions*, Inc.,  423 West 300 South, Suite 200, Salt Lake City, Utah 84101. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (2)    |   | Each  of the noted directors is a member of the board of managers of ENV Holdings  LLC, and, therefore, may be deemed to beneficially own all the shares of  common stock held of record by ENV Holdings LLC. Each of our directors  disclaims beneficial ownership of such common stock (except to the extent of  any pecuniary interest therein) as the result of his membership on the board  of managers of ENV Holdings LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

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| (3)    |   | Each  of Messrs. Creamer and Everest is a stockholder of Creamer  Investments, Inc. Mr. Creamer beneficially owns 35% of the common  stock of Creamer Investments, and Mr. Everest beneficially owns 20% of  the common stock of Creamer Investments. In addition to their interests in  the Company through Creamer Investments, Inc., Messrs. Creamer and  Everest also hold, based on the share price of $22.94 on March 31, 2008,  8.6% and 4.9%, respectively, of the economic interest in ENV Holdings LLC,  directly or indirectly. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (4)    |   | Includes  shares of common stock issuable upon the exercise of vested stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (5)    |   | By  virtue of their affiliation with Lindsay Goldberg, an affiliate of ENV  Holdings LLC, each of Messrs. Hirt, Roriston and Weinberg may be deemed  to have or share beneficial ownership of all the shares of common stock held  of record by ENV Holdings LLC. Each of Messrs. Hirt, Roriston and  Weinberg expressly disclaims beneficial ownership of the shares of our common  stock held of record by ENV Holdings LLC, except with respect to the shares  in which such individual holds a pecuniary interest.                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (6)    |   | Shares  granted pursuant to a restricted share agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

**Item 13.  Certain Relationships and RelatedTransactions, and Director Independence.**

 

Setforth below is a description of certain relationships and related partytransactions between the Company and our directors, executive officers andholders of more than 5% of our voting securities. We believe that all of thefollowing transactions were executed with terms as favorable as could have beenobtained from unaffiliated third parties. However, our interests may conflictwith those of Lindsay Goldberg, Peterson Partners and Creamer Investments, Incwith respect to our past and ongoing business relationships, and because ofLindsay Goldberg, Peterson Partners and Creamer Investments, Inc controllingownership in the Company, we may not be able to resolve these conflicts onterms commensurate with those possible in arms-length transactions.

 

*LLCAgreement.*

 

Prior to ourinitial public offering, our operations were governed by the limited liabilitycompany operating agreement of Energy*Solutions*, LLC(the LLC Agreement). Under the LLC Agreement, ENV Holdings LLC was our solemember and owned all of the outstanding membership interests. Our parentcreated a board of managers of six persons to manage our company and ourbusiness affairs, and our parent had sole authority to designate each of themembers of the board of managers.  Theseagreements were terminated in connection with the completion of our initialpublic offering on November 20, 2007.

 

Distributions weremade by us to our parent at such times and in such amounts as were determinedin our parent’s sole discretion.  Duringthe years ended December 31, 2007 and 2006 and the eleven months ended December 31,2005 we made distributions of $9.0 million, $4.7 million and $327.0 million,respectively, to ENV Holdings LLC.

 

Included inprepaid expenses and other current assets as of December 31, 2007 is areceivable from ENV Holdings LLC of $1.0 million.

 

*Advisory Services Agreements.*

 

On January 31,2005, we entered into three separate advisory service agreements with GoldbergLindsay & Co. LLC (“Goldberg Lindsay”), an affiliate of LindsayGoldberg, Peterson Capital Inc. (“Peterson Capital”), an affiliate of PetersonPartners, and Creamer Investments, Inc. (“Creamer Investments”), anaffiliate of our Chief Executive Officer, R Steve Creamer, and our ViceChairman, J.I. Everest, II. Each advisory services agreement includesindemnification provisions by us in favor of ENV Holdings and its affiliates.Pursuant to these respective advisory services agreements, Goldberg Lindsay,Peterson Capital and Creamer Investments each agreed to provide us withfinancial advisory, monitoring and oversight services.

 

We incurred feesto Goldberg Lindsay of $2.0 million for management advisory services for eachof the years ended December 31, 2007 and 2006 and $1.8 million for theeleven months ended December 31, 2005. We incurred fees to PetersonCapital of $350,000 for management advisory services for each of the yearsended December 31, 2007 and 2006 and $321,000 for the eleven months ended December 31,2005.  We incurred fees to CreamerInvestments of $100,000 for management advisory services for each of the yearsended December 31, 2007 and 2006 and $92,000 for the eleven months ended December 31,2005.  These advisory service agreementswere terminated on November 20, 2007 in conjunction with the completion ofour public offering.

 

In addition, wepaid fees to Goldberg Lindsay, Peterson Capital and Creamer Investments foradvisory services related to our acquisitions of Envirocare and Duratek.  We paid Goldberg Lindsay fees of $5.0 millionand $5.9 million for the year ended December 31, 2006 and the elevenmonths ended December 31, 2005, respectively, for these services.  We paid Peterson Capital fees of $382,000 and$460,000 for the year ended December 31, 2006 and the eleven months ended December 31,2005, respectively, for advisory services related to our acquisition ofDuratek. We paid Creamer Investments fees of $38,000 for the eleven monthsended December 31, 2005 for these services.  No fees were paid to Creamer Investments forthe year ended December 31, 2006 for advisory services related to ouracquisitions.

 

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*Registration Rights Agreement.*

 

We have entered into a registration rightsagreement with ENV Holdings LLC pursuant to which we agree to register theshares of our common stock held by ENV Holdings LLC under the Securities Act of1933 for resale at any time and from time to time by ENV Holdings LLC. Theregistration rights agreement provides ENV Holdings LLC (1) demandregistration rights, (2) piggy-back registration rights and (3) shelfdemand registration rights at any time when we become eligible to use aregistration statement on Form S-3.

 

In the registrationrights agreement, we agree to pay expenses in connection with such registrationand resale (excluding underwriters’ discounts and commissions) and indemnifyENV Holdings LLC for material misstatements or omissions in the registrationstatement.

 

*Transactions with Others.*

 

RSteve Creamer’s son, Ryan Creamer, is employed by us as Vice President ofCapital Projects, Logistics and Transportation. Ryan Creamer received aggregatecompensation, including Equity Awards and performance-based compensation bonus,of $186,125.89 in the year ended December 31, 2007.

 

Wehave an agreement with Pat Creamer, R Steve Creamer’s brother, for insurancebrokerage services and 401(k) administrative services. Pat Creamerindirectly received $384,629.07 in commissions from Energy*Solutions* in the year ended December 31,2007.

 

*Procedures for Approval of Related Party Transactions.*

 

Our Audit Committeereviews and approves or ratifies all relationships and related partytransactions in which we and our directors and executive officers or theirimmediate family members are participants to determine whether such personshave a direct or indirect material interest. Our legal staff is primarilyresponsible for the development and implementation of processes and controls toobtain information from our directors and executive officers with respect torelated party transactions and for determining, based on the facts andcircumstances, whether we or a related person have a direct or indirectmaterial interest in the transaction.

 

In the course of itsreview and approval or ratification of a related party transaction, the AuditCommittee will consider the nature of the related person’s interest in thetransaction; the material terms of the transaction, including, withoutlimitation, the amount and type of transaction; the importance of thetransaction to the related person; the importance of the transaction to us;whether the transaction would impair the judgment of a director or executiveofficer to act in the best interest of the Company; and any other matters theAudit Committee deems appropriate.

 

Any member of the AuditCommittee who is a related person with respect to a transaction under review isnot permitted to participate in the deliberations or vote respecting approvalor ratification of the transaction. However, such director may be counted indetermining the presence of a quorum at a meeting of the committee thatconsiders the transaction.

 

*Director Independence*

 

ENV Holdings LLC,controls more than 50% of our voting power. See “Information on StockOwnership.”  As a result, we qualify as a“controlled company” as defined in Rule 303A.00 of the NYSE Listing Rules.Therefore, we are exempt from the requirements of the NYSE Listing Rules withrespect to our Board of Directors consisting of a majority of “independentdirectors” and the related rules covering the independence of directorsserving on the Compensation Committee and Nominating and Corporate GovernanceCommittee. The controlled company exemption does not modify the independencerequirements for the Audit Committee. The Board of Directors has determined that the following two directorssatisfy the NYSE’s definition of independent director: E. Gail de Planque andDavid B. Winder.  The Board will electanother independent director prior to November 14, 2008, who will serve onthe Audit Committee in place of Mr. Everest to comply with the NYSE’s rules regardingAudit Committee member independence within one year of our initial publicoffering.

 

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**Item 14.  Principal Accountant Fees and Services.**

 

The followingtable presents fees billed for professional audit services and other servicesrendered to Energy*Solutions* by Ernst &Young LLP for the years ended December 31, 2007 and 2006 (in thousands ofdollars).

 
| ** **             | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------------------|------------|----------|------------|----------|------------|
| Audit fees (1)         |       | $        | 4,256      |     | $          | 2,288 |   |
| Audit-related fees (2) |       | 923      |       | 181      |       |
| Tax fees (3)           |       | 3,069    |       | 573      |       |
| All other fees (4)     |       | 7        |       | 238      |       |
| Total                  |       | $        | 8,255      |     | $          | 3,280 |   |

 

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| (1) |   | Audit fees include audits of consolidated financial statements,  statutory audits, quarterly reviews, reviews of registration statement  filings, comfort letters and consents related to SEC filings                                                                                                                                                                            |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Audit-related fees include  services for assurance and related services that are reasonably related to  the performance of the audit or review of our financial statements that are  not reported under “audit fees.” These services include due diligence related  to mergers and acquisitions, audits in connection with acquisitions and  accounting consultations. |
| (3) |   | Tax fees include professional services related to preparation of U.S.  and international tax filings and tax planning and advice.                                                                                                                                                                                                                                                |
| (4) |   | All other fees include other services that do not meet the above  category descriptions. These services include certain permitted advisory  services related to our government contracts.                                                                                                                                                                                        |

 

**Pre-****Approval****of Audit and Non-Audit Services**

 

Our AuditCommittee was formed on November 20, 2007, the date of completion of ourinitial public offering.  Since that timethe Audit Committee has pre-approved all audit and non-audit services providedby Ernst & Young LLP.  Inaccordance with the Audit Committee’s pre-approval policy, the Audit Committeepre-approves all permissible non-audit services and all audit, review or attestengagements.

 

**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized, this 29th day of April, 2008.

 
|   | ENERGY*SOLUTIONS*, INC. |
|--------|------------------------------|
|   |                         |   |
|   |                         |   |
|   | By:                          | /s/ PHILIP O. STRAWBRIDGE |   |
|   |                         | Philip O. Strawbridge |   |
|   |                         | *Executive  Vice President and* |   |
|   |                         | *Chief  Financial Officer* |   |

 

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**EXHIBIT INDEX**

 
| **Exhibit  Number** | ** ** | **Exhibit Description**                                                                                                                                                                                                             |
|---------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.10.1             |       | First Amendment to Amended  and Restated Employment Agreement and Non-Competition Agreement dated on or  about April 15, 2008, between Energy*Solutions*, LLC,  ENV Holdings LLC and R Steve Creamer                           |
| 10.11.1             |       | First Amendment to Amended  and Restated Employment Agreement and Non-Competition Agreement dated on or  about April 15, 2008, between Energy*Solutions*, LLC,  ENV Holdings LLC and Jean I. “Chip” Everest, II |
| 10.12.2             |       | Second Amendment to  Executive Employment and Non-Competition Agreement, dated on or about  April 15, 2008, between Energy*Solutions*, LLC,  ENV Holdings LLC and Raul Deju                                          |
| 10.14.2             |       | Third Amendment to  Executive Employment and Non-Competition Agreement, dated on or about April 15,  2008, between Energy*Solutions*, LLC,  ENV Holdings LLC and Val John Christensen                                |
| 10.15.2             |       | Second Amendment to  Executive Employment and Non-Competition Agreement, dated on or about  April 15, 2008, between Energy*Solutions*, LLC,  ENV Holdings LLC and Alan Parker                                        |
| 10.16.3             |       | Third Amendment to  Executive Employment and Non-Competition Agreement, dated on or about  April 15, 2008, between Energy*Solutions*, LLC,  ENV Holdings LLC and Philip O. Strawbridge                               |
| 31.1                |       | Rule 13a-14(a) /  15d-14(a) Certification of Chief Executive Officer                                                                                                                                                      |
| 31.2                |       | Rule 13a-14(a) /  15d-14(a) Certification of Chief Financial Officer                                                                                                                                                      |

 

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