Waste Management 2006 Annual Report Download - page 152

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Effectiveness of Controls and Procedures
We maintain a set of disclosure controls and procedures designed to ensure that information we are required to
disclose in reports that we file or submit with the SEC is recorded, processed, summarized and reported within the
time periods specified by the SEC. An evaluation was carried out under the supervision and with the participation of
the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),
of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.
Based on that evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures
are effective to ensure that we are able to collect, process and disclose the information we are required to disclose in
the reports we file with the SEC within required time periods.
Internal Controls Over Financial Reporting
Management’s report on our internal control over financial reporting can be found in Item 8 of this report. The
Independent Registered Public Accounting Firm’s attestation report on management’s assessment of the effec-
tiveness of our internal control over financial reporting can also be found in Item 8, Financial Statements and
Supplementary Data, of this report.
Item 9B. Other Information.
At the meeting of the Management Development and Compensation Committee of the Board of Directors on
December 14, 2006, the Compensation Committee set the fiscal 2007 performance criteria for our executive officers
for annual bonuses paid under our annual incentive plan. Pursuant to the criteria approved by the Committee, the
executives’ target bonuses are based entirely on financial measures, although the Committee may exercise its
discretion to increase or decrease an executives’ potential bonus by up to 25% based on personal performance.
Additionally, the annual incentive plan provides that in no event will any award made under the plan exceed 0.5% of
the Company’s pre-tax income from operations. Each of the executives is party to an employment agreement with
the Company that sets forth such executive’s target incentive bonus, which ranges from 50% to 115% of the
executives’ annual base salary. Further, the agreements provide that the executives’ actual bonuses may range from
zero to two times the target bonus, depending on the achievement of the goals set forth under the annual incentive
plan.
The 2007 criteria set by the Committee consists of financial measures divided equally between an earnings per
share measure, calculated for the Company applicable to all executives, and a cash flow target. For purposes of the
performance criteria, “cash flow” is calculated as earnings before interest, taxes, depreciation and amortization less
capital expenditures. The cash flow targets are Company based for corporate executives and calculated for each
individual Group for the Group executives. The Committee may, in its discretion, adjust actual results by
eliminating charges for restructuring, extraordinary, unusual or non-recurring items, discontinued operations
and cumulative effect of changes in accounting principles or changes in tax laws in determining whether the criteria
have been met.
Also on December 14, 2006, the Committee determined to make changes to the awards issued as part of its
long-term incentive program. Beginning in 2007, rather than granting an equal number of restricted stock unit
awards and performance share unit awards to executives, the total value of the awards will be allocated 25% for
restricted stock units and 75% performance share units. Additionally, rather than ratable vesting over a four-year
period, 100% of the restricted stock units will vest at the end of a three-year service period.
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