Waste Management 2011 Annual Report Download - page 37

profile – 48%; and shareholder return profile – 73%. The comparison group used for consideration of 2011
compensation was composed of the companies listed below:
American Electric Power
Baker Hughes
Burlington Northern Santa Fe
CH Robinson
CSX
Entergy
FedEx
Grainger
Halliburton
Hertz
NextEra Energy
Norfolk Southern
Republic Services
Ryder
Schlumberger
Southern Company
Sysco
Union Pacific
United Parcel Service
YRC Worldwide
The general industry data and the comparison group data are blended when composing the competitive
analysis, when possible, such that the combined general industry data and the comparison group are each
weighted 50%. The competitive analysis showed that the Company’s named executives’ 2011 total direct
compensation opportunities are positioned in a range around the median of the compensation of the executives
comprising the competitive analysis, and none of our named executive officers’ total direct compensation is
above the range around the median for their peers in the competitive analysis. For competitive comparisons, the
MD&C Committee has determined that total direct compensation packages for our named executive officers
within a range of plus or minus twenty percent of the median total compensation of the competitive analysis is
appropriate. In making these determinations, total direct compensation consists of base salary, target annual
bonus, and the annualized grant date fair value of long-term equity incentive awards.
Allocation of Compensation Elements and Tally Sheets. The MD&C Committee considers the forms in
which total compensation will be paid to executive officers and seeks to achieve an appropriate balance between
base salary, annual cash incentive compensation and long-term incentive compensation. The MD&C Committee
determines the size of each element based primarily on comparison group data and individual and Company
performance. The percentage of compensation that is contingent on achievement of performance criteria typically
increases in correlation to an executive officer’s responsibilities within the Company, with at-risk performance-
based incentive compensation making up a greater percentage of total compensation for our most senior
executive officers. Additionally, as an executive becomes more senior, a greater percentage of the executive’s
compensation shifts away from short-term to long-term incentive awards.
The MD&C Committee uses tally sheets to review the compensation of our named executive officers, which
show the cumulative impact of all elements of compensation. These tally sheets include detailed information and
dollar amounts for each component of compensation, the value of all equity held by each named executive, and
the value of welfare and retirement benefits and severance payments. Tally sheets provide the MD&C Committee
with the relevant information necessary to determine whether the balance between long-term and short-term
compensation, as well as fixed and variable compensation, is consistent with the overall compensation
philosophy of the Company. This information is also useful in the MD&C Committee’s analysis of whether total
direct compensation provides a compensation package that is appropriate and competitive. Tally sheets are
provided to the full Board of Directors.
The following charts display the allocation of total 2011 compensation among base salary, annual cash
incentive at target and long-term incentives at target for our Chief Executive Officer and President and for
Messrs. Trevathan (prior to his promotion), Harris and Woods, on average. In the process of establishing the
2011 executive compensation program, the MD&C Committee determined that the compensation of our Senior
Group Vice President position was weighted too heavily in favor of short-term incentives in comparison to our
peers. As a result, the MD&C Committee revised the allocation of 2011 targeted compensation of Senior Group
Vice Presidents that are named executives as shown below to shift emphasis toward long-term incentives.
Accordingly, these charts reflect the MD&C Committee’s 2011 desired total mix of compensation for Senior
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