Waste Management 2013 Annual Report Download - page 216

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The total fair market value of RSUs that vested during the years ended December 31, 2013, 2012 and 2011
was $1 million, $11 million and $9 million, respectively. Net of units deferred and units used for payment of
associated taxes, we issued approximately 15,000, 196,000 and 162,000 shares of common stock for RSUs that
vested during the years ended December 31, 2013, 2012 and 2011, respectively.
RSUs provide award recipients with dividend equivalents during the vesting period, but the units may not be
voted or sold until time-based vesting restrictions have lapsed. RSUs primarily provide for three-year cliff
vesting. Unvested units are subject to forfeiture in the event of voluntary or for-cause termination. RSUs are
subject to pro-rata vesting upon an employee’s retirement or involuntary termination other than for cause and
become immediately vested in the event of an employee’s death or disability.
Compensation expense associated with RSUs is measured based on the grant-date fair value of our common
stock and is recognized on a straight-line basis over the required employment period, which is generally the
vesting period. Compensation expense is only recognized for those awards that we expect to vest, which we
estimate based upon an assessment of expected forfeitures.
Performance Share Units — Two types of PSUs are currently outstanding: PSUs for which payout is
dependent on the Company’s performance against pre-established return on invested capital metrics (“ROIC
PSUs”) and PSUs for which payout is dependent on total shareholder return relative to the S&P 500 (“TSR
PSUs”). Both types of PSUs are payable in shares of common stock after the end of a three-year performance
period, when the Company’s financial performance for the entire performance period is 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 performance against the pre-
established targets. A summary of our PSUs is presented in the table below (units in thousands):
Units
Weighted Average
Fair Value
Unvested at January 1, 2013 ..................................... 1,718 $36.20
Granted ..................................................... 752 $43.38
Vested ...................................................... (599) $36.47
Forfeited .................................................... (45) $43.43
Unvested at December 31, 2013 .................................. 1,826 $43.41
The determination of achievement of performance results and corresponding vesting of PSUs for the three-
year performance period ended December 31, 2013 was performed by the Management Development and
Compensation Committee in February 2014. Accordingly, vesting information for such awards is not included in
the table above as of December 31, 2013. The “vested” PSUs are for the three-year performance period ended
December 31, 2012, as achievement of performance results and corresponding vesting was determined in
February 2013. The Company’s financial results, 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 these PSU
awards were entitled to receive a payout of approximately 63% of the vested PSUs. In early 2013, we issued
approximately 238,000 shares of common stock for these vested PSUs, net of units deferred and units used for
payment of associated taxes.
The shares of common stock that were earned during the years ended December 31, 2013 and 2012 on
account of PSU awards had a fair market value of $14 million and $32 million, respectively. No shares of
common stock were earned in 2011, as the Company’s performance for purposes of the PSUs for the
performance period ended December 31, 2010 did not meet threshold criteria. 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. PSUs are payable to an employee (or his beneficiary) upon death or disability as if that
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