Waste Management 2014 Annual Report Download - page 202

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Deferred Units — Recipients can elect to defer some or all of the vested RSU or PSU awards until a
specified date or dates they choose. Deferred amounts are not invested, nor do they earn interest, but deferred
amounts do earn dividend equivalents during deferral. Deferred amounts are paid out in shares of common stock
at the end of the deferral period. At December 31, 2014, we had approximately 295,000 vested deferred units
outstanding.
Stock Options — Stock options granted primarily vest in 25% increments on the first two anniversaries of
the date of grant with the remaining 50% vesting on the third anniversary. The exercise price of the options is the
average of the high and low market value of our common stock on the date of grant, and the options have a term
of 10 years. A summary of our stock options is presented in the table below (options in thousands):
Options Weighted Average Exercise Price
Outstanding at January 1, 2014 .................. 9,674 $35.98
Granted .................................... 2,099 $41.23
Exercised ................................... (2,798) $35.85
Forfeited or expired ........................... (597) $37.60
Outstanding at December 31, 2014(a) ............ 8,378 $37.22
Exercisable at December 31, 2014(b) ............. 4,451 $36.05
(a) Stock options outstanding as of December 31, 2014 have a weighted average remaining contractual term of
7.2 years and an aggregate intrinsic value of $118 million based on the market value of our common stock
on December 31, 2014.
(b) Stock options exercisable as of December 31, 2014 have a weighted average remaining contractual term of
6.2 years and an aggregate intrinsic value of $68 million based on the market value of our common stock on
December 31, 2014. Stock options exercisable at December 31, 2014 have an exercise price ranging from
$32.18 to $40.62.
We received cash proceeds of $93 million, $132 million and $43 million during the years ended
December 31, 2014, 2013 and 2012, respectively, from employee stock option exercises. We also realized tax
benefits from these stock option exercises during the years ended December 31, 2014, 2013 and 2012 of $5
million, $10 million and $5 million, respectively. These amounts have been presented as cash inflows in the
“Cash flows from financing activities” section of our Consolidated Statements of Cash Flows. The aggregate
intrinsic value of stock options exercised during the years ended December 31, 2014, 2013 and 2012 was $27
million, $41 million and $15 million, respectively.
All unvested stock options shall become exercisable upon the award recipient’s death or disability. In the
event of a recipient’s retirement, stock options shall continue to vest pursuant to the original schedule set forth in
the award agreement. If the recipient is terminated by the Company without cause or voluntarily resigns, the
recipient shall be entitled to exercise all stock options outstanding and exercisable within a specified time frame
after such termination. All outstanding stock options, whether exercisable or not, are forfeited upon termination
for cause.
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