Waste Management 2013 Annual Report Download - page 42

Target annual cash incentives are a specified percentage of the executives’ base salary. The following table
shows each named executive’s target percentage of base salary for 2013 and annual cash incentive for 2013 paid
in March 2014.
Named Executive Officer
Target Percentage
of Base Salary
Annual Cash
Incentive
For 2013*
Mr. Steiner** ............................................ 135 $2,387,194
Mr. Trevathan** .......................................... 85 $ 769,756
Mr. Fish ................................................ 85 $ 666,540
Mr. Harris ............................................... 75 $ 630,795
Mr. Morris .............................................. 75 $ 519,843
* Base salary increases for 2013 were not implemented until Spring of 2013; accordingly, the calculation of
annual cash incentive payouts, as a percentage of base salary, was prorated to take account of the named
executive’s actual base salary received during 2013.
** For 2013, the target percentage of base salary was increased from 115% to 135% and from 75% to 85% for
Messrs. Steiner and Trevathan, respectively. These changes were made to better position the executives
around the competitive median, to reflect their contributions and, in the case of Mr. Trevathan, to account
for internal pay equity.
The MD&C Committee develops financial performance measures intended to drive behaviors to create
performance and results, in particular focusing on generating strong cash flow and profitable revenue, cost
cutting and cost control, and making the best use of our assets. The MD&C Committee found that the Income
from Operations Margin and Cash Flow Measure used previously successfully supported these goals and resulted
in disciplined capital spending. The MD&C Committee refined the Cost Measure for 2013 to increase our focus
on controlling costs, specifically SG&A spending and operating expense. When setting threshold, target and
maximum performance measure levels each year, the MD&C Committee looks to the Company’s historical
results of operations and analyses and forecasts for the coming year. Specifically, the MD&C Committee
considers expected revenue based on analyses of pricing and volume trends, as affected by operational and
general economic factors; expected wage, maintenance, fuel and other operational costs; and expected SG&A
costs. The MD&C Committee believes these financial performance measures support and align with the strategy
of the Company and are appropriate indicators of our progress toward the Company’s goals.
Long-Term Equity Incentives — Our equity awards are designed to hold individuals accountable for long-
term decisions by rewarding the success of those decisions. The MD&C Committee continuously evaluates the
components of its programs. In determining which forms of equity compensation are appropriate, the MD&C
Committee considers whether the awards granted are achieving their purpose; the competitive market; and
accounting, tax or other regulatory issues, among others. In determining the appropriate awards for the named
executives’ 2013 annual long-term incentive grant, the MD&C Committee decided to grant both PSUs
comprising 80% of each named executive’s award and stock options comprising 20% of each named executive’s
award. Payout on 50% of each named executives’ PSUs granted in 2013 are dependant on ROIC, to increase
focus on improved asset utilization, and payout on the remaining 50% of PSUs granted in 2013 are dependant on
total shareholder return relative to the S&P 500. Meanwhile, stock options encourage focus on increasing the
market value of our stock. Before determining the actual number of PSUs and stock options that were granted to
each of the named executives in 2013, the MD&C Committee established a target dollar amount for each named
executive’s annual total long-term equity incentive award. The values chosen were based primarily on the
comparison information for the competitive market and an analysis of the named executives’ responsibility for
meeting the Company’s strategic objectives. Target dollar amounts for equity incentive awards may vary from
grant date fair values calculated for accounting purposes.
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