Waste Management 2013 Annual Report Download - page 64

P ROPOSAL TO A PPROVE THE C OMPANY ’ S
2014 S TOCK I NCENTIVE P LAN
(I TEM 4 ON THE P ROXY C ARD )
Stockholders are asked to consider and vote upon a proposal to approve the Company’s 2014 Stock
Incentive Plan, which we refer to as the 2014 Plan. Upon the recommendation of the MD&C Committee, the
Board of Directors approved the 2014 Plan, subject to receipt of stockholder approval at our 2014 Annual
Meeting. The Board believes that approval of the 2014 Plan is in the best interests of the Company and its
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF
THE 2014 STOCK INCENTIVE PLAN.
As discussed in our Compensation Discussion and Analysis beginning on page 22, performance-based pay
elements, including equity-based awards, are key components of our overall compensation program. As of
December 31, 2013, approximately 4.2 million shares remained available for issuance with respect to future
awards under our existing equity-based compensation plans. The 2014 Plan is designed to allow the Company to
continue to attract and retain highly-qualified persons to serve as officers, non-employee directors, key
employees and consultants of the Company and to align their interests more closely with the interests of the
Company’s stockholders, as well as provide incentives and reward opportunities designed to enhance the
profitable growth of the Company by providing for additional shares of Common Stock to be available for such
awards.
In addition, as described below, under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”), we generally are prohibited from deducting compensation paid to our principal executive officer
and our three other most highly compensated executive officers (other than our principal financial officer) in
excess of $1 million per person in any year. However, the Section 162(m) deduction limit does not apply to
qualified “performance-based compensation” that is established by an independent compensation committee and
adequately disclosed to, and approved by, a majority vote of our stockholders, generally at least once every five
years. By approving the 2014 Plan, stockholders also will be approving the material terms of the performance
goals under the 2014 Plan for purposes of ensuring the Company’s ability to grant “performance based
compensation” awards under Code Section 162(m). The material terms of the performance goals for the 2014
Plan are disclosed below.
Certain Features of the 2014 Plan
The following features of the 2014 Plan are designed to reinforce the alignment between equity
compensation arrangements and stockholders’ interests:
No Discounting of Stock Options. The 2014 Plan prohibits the granting of stock options and stock
appreciation rights with an exercise price less than the fair market value of our Common Stock on the date of
grant.
No Repricing or Replacement of Underwater Stock Options.The 2014 Plan prohibits, without stockholder
approval, actions to amend any outstanding option award to lower the exercise price, cancel and replace any
outstanding option award with an option award having a lower exercise price or repurchase any option at any
time when the fair market value of the Common Stock is less than the option exercise price.
Limitation on Terms of Stock Options.The maximum term of each stock option is ten years.
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