Waste Management 2011 Annual Report Download - page 198

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Performance Share Units — PSUs are payable in shares of common stock after the end of a three-year
performance period and after the Company’s financial results for the entire performance period are reported,
typically in mid to late February of the succeeding year. At the end of the performance period, the number of shares
awarded can range from 0% to 200% of the targeted amount, depending on the Company’s performance against
pre-established financial targets. A summary of our PSUs is presented in the table below (units in thousands):
Years Ended December 31,
2011 2010 2009
Units(a)
Weighted
Average
Fair
Value Units(b)
Weighted
Average
Fair
Value Units(c)
Weighted
Average
Fair
Value
Unvested, beginning of year ............... 1,740 $26.72 2,254 $27.68 2,009 $34.78
Granted ............................... 380 $37.19 690 $33.49 1,159 $22.66
Vested(d) .............................. (1,070) $22.66 — $ — (827) $37.28
Expired without vesting .................. — $ — (1,064) $32.92 — $ —
Forfeited .............................. (69) $31.31 (140) $28.41 (87) $33.59
Unvested, end of year .................... 981 $34.85 1,740 $26.72 2,254 $27.68
(a) The Company’s financial results for the three-year performance period ended December 31, 2011, as
measured for purposes of these awards, are anticipated to be lower than the target levels established but in
excess of the threshold performance criteria. Accordingly, recipients of PSU awards with the performance
period ended December 31, 2011 will be entitled to receive an estimated payout of greater than 60% but less
than 100% of the vested PSUs. The payout will occur in late February 2012.
(b) The Company’s financial results for the three-year performance period ended December 31, 2010, as
measured for purposes of these awards, did not meet the threshold performance criteria for such PSUs, and
as a result, the PSUs with the performance period ended December 31, 2010 expired without vesting.
(c) The Company’s financial results for the three-year performance period ended December 31, 2009, as
measured for purposes of these awards, were lower than the target levels established but in excess of the
threshold performance criteria. Accordingly, recipients of PSU awards with the performance period ended
December 31, 2009 were entitled to receive a payout of approximately 84% of the vested PSUs. In early
2010, we issued approximately 443,000 shares of common stock for these vested PSUs, net of units deferred
and units used for payment of associated taxes.
(d) The PSUs that vested in 2009 had a fair market value of $23 million.
PSUs have no voting rights. PSUs receive dividend equivalents that are paid out in cash based on actual
performance at the end of the awards’ performance period. In the case of the PSUs with the performance period
ended December 31, 2010 that expired without vesting, no dividend equivalents were paid. PSUs are payable to
an employee (or his beneficiary) upon death or disability as if that employee had remained employed until the
end of the performance period, are subject to pro-rata vesting upon an employee’s retirement or involuntary
termination other than for cause and are subject to forfeiture in the event of voluntary or for-cause termination.
Compensation expense associated with PSUs that continue to vest based on future performance is measured
based on the grant-date fair value of our common stock. Compensation expense is recognized ratably over the
performance period based on our estimated achievement of the established performance criteria. Compensation
expense is only recognized for those awards that we expect to vest, which we estimate based upon an assessment
of both the probability that the performance criteria will be achieved and current period and historical forfeitures.
Deferred Units — Recipients can elect to defer some or all of the vested RSU or PSU awards until a
specified date or dates they choose. Deferred amounts are not invested, nor do they earn interest, but deferred
amounts do earn dividend equivalents during deferral. Deferred amounts are paid out in shares of common stock
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