Waste Management 2014 Annual Report Download - page 27

• performance-based awards include threshold, target and maximum payouts correlating to a range of
performance goals and are based on a variety of indicators of performance, which limits risk-taking
behavior;
• performance stock units with a three-year performance period, as well as stock options that vest over a
three-year period, link executives’ interests with long-term performance and reduce incentives to
maximize performance in any one year;
• all of our named executive officers are subject to stock ownership requirements, which we believe
demonstrates a commitment to, and confidence in, the Company’s long-term prospects;
• the Company has clawback provisions in its equity award agreements and recent employment
agreements, and has adopted a clawback policy applicable to annual incentive compensation, designed to
recoup compensation when cause and/or misconduct are found;
• our executive officer severance policy implemented a limitation on the amount of benefits the Company
may provide to its executive officers under severance agreements entered into after the date of such
policy; and
• the Company has adopted a policy that prohibits it from entering into new agreements with executive
officers that provide for certain death benefits or tax gross-up payments.
2014 Company Performance and Compensation Results
We recognize that the waste industry is changing, and we believe we are uniquely equipped to meet the
challenges of our industry and our customers’ waste management needs, both today and as we work together to
envision and create a more sustainable future. As the waste industry leader, we have the expertise necessary to
collect and handle our customers’ waste efficiently and responsibly by delivering environmental performance —
maximizing resource value, while minimizing environmental impact — so that both our economy and our
environment can thrive. Drawing on our resources and experience, we also pursue projects and initiatives that
benefit the waste industry, the customers and communities we serve and the environment.
We remain dedicated to providing long-term value to our stockholders by successfully executing our
strategy: to know and service our customers better than anyone in our industry, to extract more value from the
materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals
through competitive advantages derived from a “best cost” structure achieved through operational improvements
and differentiation in our industry, driven by capitalizing on our extensive, well-placed network of assets. While
we will continue to monitor emerging diversion technologies that may generate additional value, our current
attention will be on improving existing diversion technologies such as recycling operations. We believe that
execution of our strategy will drive continued financial performance and leadership in a dynamic industry.
We began 2014 with a focus on growing earnings and free cash flow, increasing yield and exercising discipline
around capital spending and costs, and our officers’ and employees’ execution on these goals translated into strong
overall operating results for our Company in 2014. Additionally, we increased the amount we returned to
stockholders in 2014 compared to 2013 by increasing our dividend and share repurchases. Our fourth quarter results
capitalized on the momentum we built throughout the year, delivering growth in income from operations and
income from operations margin in our solid waste business that we expect to continue into 2015. During the fourth
quarter, we also completed our previously announced divestiture of our Wheelabrator business for cash proceeds of
$1.95 billion, net of cash divested, subject to certain post-closing adjustments, and we intend to use these proceeds
in further support of our strategic growth plans to drive long-term stockholder value.
In line with the Company’s financial results, the following is a summary of the 2014 compensation program
results:
• the Company granted a two and a half percent merit increase to base salaries of executive officers in
2014, with additional increases as necessary in limited cases where prompted by competitive market data,
internal pay equity considerations and individual performance;
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