Waste Management 2011 Annual Report Download - page 36

consultant to provide it advice relating to market and general compensation trends. The MD&C Committee also
uses the services of its independent consultant for data gathering and analyses. The MD&C Committee has
retained Frederic W. Cook & Co., Inc. as its independent consultant since 2002. The Company makes regular
payments to Frederic W. Cook for its services around executive compensation, including meeting preparation
and attendance, advice, best practice information, as well as competitive data. Information about such payments
is submitted to the chair of the MD&C Committee.
In addition to services related to executive compensation, the consultant also provides the Board of
Director’s Nominating and Governance Committee information and advice considered when recommending
compensation of the independent directors. Frederic W. Cook has no other business relationships with the
Company and receives no other payments from the Company. The MD&C Committee adopted a written policy
to ensure the independence of any compensation consultants it uses for executive compensation matters. Pursuant
to the policy, no compensation consultant engaged by the MD&C Committee to assist in determining or
recommending the compensation of executive officers or independent directors of the Board of Directors may be
engaged by management of the Company unless first approved by the MD&C Committee. Since the adoption of
the policy, no engagements have been proposed to the MD&C Committee for approval.
Role of CEO. Mr. Steiner contributes to compensation determinations by assessing the performance of the
named executive officers reporting to him and providing these assessments with recommendations to the MD&C
Committee. Personnel within the Company’s People Department assist the MD&C Committee by working with
the independent consultant to provide information requested by the MD&C Committee and assisting it in
designing and administering the Company’s incentive programs.
Peer Company Comparisons. The MD&C Committee uses compensation information of comparison
groups of companies to gauge the competitive market, which is relevant for attracting and retaining key talent
and for ensuring that the Company’s compensation practices are aligned with prevalent practices. For purposes of
establishing the 2011 executive compensation program, the MD&C Committee considered a competitive analysis
of total direct compensation levels and compensation mixes for our executive officers, using information from:
• two general industry surveys as provided by management; the Hewitt Associates 2010 TCM Executive
Total Compensation Survey and the Towers Watson 2010 U.S. General Industry Executive Database. The
competitive consensus for top five named executive officers consists of an equally-weighted average of
comparison company median data and size-adjusted median data from both general industry surveys; and
• a comparison group of 20 companies, described below.
The comparison group of companies is initially recommended by the independent consultant prior to the
actual data gathering process, with input from management. The composition of the group is evaluated and a
final comparison group of companies is approved by the MD&C Committee each year. The selection process for
the comparison group begins with all companies in the Standard & Poor’s North American database that are
publicly traded U.S. companies in 17 different Global Industry Classifications. These industry classifications are
meant to provide a collection of companies in industries that share similar characteristics with Waste
Management. The companies are then limited to those with at least $5 billion in annual revenue to ensure
appropriate comparisons, and further narrowed by choosing those with asset intensive domestic operations, as
well as those focusing on transportation and logistics. Companies with these characteristics are chosen because
the MD&C Committee believes that it is appropriate to compare our executives’ compensation with executives
that have similar responsibilities and challenges at other companies. The MD&C Committee received a statistical
analysis of the growth profile, profitability profile, size and shareholder return of all companies in the
comparison group to verify that the Company is appropriately positioned versus the comparison group. This
analysis revealed the Company’s composite percentile rankings among the companies in the comparison group
based on numerous statistical measures were as follows: growth profile – 43%; profitability profile – 54%; size
27