Waste Management 2011 Annual Report Download - page 44

including himself, receive a one-time “transformational award” of long-term equity to reward senior leadership
for undertaking the Company’s new strategic initiatives, to encourage key employees to lead a change in
Company-wide culture, and to retain key employees as the Company undergoes its transformation. Accordingly,
the MD&C Committee approved a one-time additional award to the named executives, other than Mr. Steiner,
equal to 10% of the dollar value of the named executive’s annual long-term equity incentive award. This
transformational award was made up of stock options and performance share units using the same terms as the
annual long-term equity incentive grant.
Named Executive Officer
Dollar Values of Annual Long-Term
Equity Incentives
Set by the Committee (at Target)
Dollar Values of Additional
Transformational Award
Set by the Committee (at Target)
Mr. Steiner .................... $5,100,000 N/A
Mr. Preston* ................... N/A N/A
Mr. Simpson ................... $1,157,360 $115,736
Mr. Trevathan .................. $ 867,000 $ 86,700
Mr. Harris ..................... $ 867,000 $ 86,700
Mr. Woods .................... $ 867,000 $ 86,700
* Mr. Preston was not yet employed by the Company at the time of the annual long-term equity incentive grants.
Performance Share Units
• Named executives were granted new performance share units with a three-year performance period
ending December 31, 2013, which may be earned based on the achievement of a ROIC goal.
• Named executive officers earned 86.99% of the performance share units that were granted in 2009 with
the three-year performance period ended December 31, 2011; based on actual performance against goals
described further below.
Performance share units are granted to our named executive officers annually to align compensation with
the achievement of our long-term financial goals and to build stock ownership. Performance share units provide
an immediate retention value to the Company because there is unvested potential value at the date of grant. The
number of performance share units granted to our named executive officers corresponds to an equal number of
shares of Common Stock. At the end of the three-year performance period for each grant, the Company will
deliver a number of shares ranging from 0% to 200% of the initial number of units granted, depending on the
Company’s three-year performance against a pre-established ROIC target and subject to the general payout and
forfeiture provisions. ROIC in our plan is defined generally as net operating profit after taxes divided by capital.
Capital is comprised of long-term debt, noncontrolling interests and stockholders’ equity, less cash. ROIC is an
indicator of our ability to generate returns for our stockholders. We believe that earnings growth is important and
an appropriate measure for our annual bonuses. However, creating value over time is also important, and we
therefore chose the three-year performance period for our long-term incentive compensation. We believe that
using a three-year average of ROIC incentivizes our named executive officers to ensure the strategic direction of
the Company is being followed and forces them to balance the short-term incentives awarded for growth with the
long-term incentives awarded for value generated.
The MD&C Committee determined the number of units that were granted to each of the named executives
in 2011 by taking the targeted dollar amounts established for total long-term equity incentives (set forth in the
table above) and multiplying by 30%. Those values were then divided by the average of the high and low price of
our Common Stock over the 30 trading days preceding the MD&C Committee meeting at which the grants were
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