Waste Management 2014 Annual Report Download - page 31

forfeits unvested awards if he or she voluntarily terminates employment. We enter into employment agreements
with our named executive officers to provide a form of protection for the Company through restrictive covenant
provisions. Employment agreements also aid in retention of senior leadership by providing the individual with
comfort that he will be treated fairly in the event of a termination not for cause or under a change-in-control
situation. The change-in-control provision included in each named executive officer’s agreement requires a
double trigger in order to receive any payment in the event of a change-in-control situation. First, a change-in-
control must occur, and second, the individual must terminate employment for good reason or the Company must
terminate employment without cause within six months prior to or two years following the change-in-control
event. Our stock option awards are also subject to double trigger vesting in the event of a change-in-control
situation. Performance share units will be paid out in cash on a prorated basis based on actual results achieved
through the end of the fiscal quarter prior to a change-in-control. Thereafter, the executive would typically
receive a replacement award of restricted stock units in the successor entity. Restricted Stock Units (“RSUs”),
which are not routinely a component of our compensation program for named executive officers, vest upon a
change-in-control, unless the successor entity converts the awards to equivalent grants in the successor. However,
such converted RSU awards will vest in full if the executive is terminated without cause following the change-in-
control. We believe providing change-in-control protection encourages our named executives to pursue and
facilitate change-in-control transactions that are in the best interests of stockholders while not granting executives
an undeserved windfall.
Deferral Plan. Each of our named executive officers is eligible to participate in our 409A Deferral
Savings Plan. The plan was amended and restated effective January 1, 2014 to restrict deferral of base salary and
cash incentives to annual amounts in excess of $255,000 (as such amount may be revised under
Section 402(a)(17) of the Internal Revenue Code of 1985, as amended, the “Limit”). The plan currently provides
that eligible employees may defer for payment at a future date (i) up to 25% of base salary and up to 100% of
annual cash incentives payable after the aggregate of such compensation components reaches the Limit;
(ii) receipt of any RSUs; and (iii) receipt of any PSUs. The Company match provided under the Deferral Plan is
dollar for dollar on the employee’s deferrals, up to 3% of the employee’s aggregate base salary and cash
incentives in excess of the Limit, and fifty cents on the dollar on the employee’s deferrals, up to 6% of the
employee’s aggregate base salary and cash incentives in excess of the Limit. Additional deferral contributions
will not be matched but will be tax-deferred. Amounts deferred under this plan are allocated into accounts that
mirror selected investment funds in our 401(k) plan, although the amounts deferred are not actually invested in
the funds. In prior years, participants could elect to receive distribution of deferred compensation (i) in a lump
sum on a future date on or after termination of employment or retirement or (ii) in annual installments over up to
ten years, to begin after any future date or age specified by the employee. Under the amended and restated plan,
participating employees generally can elect to receive distributions commencing six months after the employee
leaves the Company in the form of annual installments or a lump sum payment. We believe that providing a
program that allows and encourages planning for retirement is a key factor in our ability to attract and retain
talent. Additional details on the plan can be found in the Nonqualified Deferred Compensation table and the
footnotes to the table on page 46.
Perquisites. The Company permits the President and Chief Executive Officer to use the Company’s
aircraft for business and personal travel whenever reasonably possible; provided, however, that personal use of
the Company aircraft attributed to him that results in incremental cost to the Company shall not exceed 90 hours
during any calendar year without approval from the Chairman of the MD&C Committee. Use of the Company’s
aircraft is permitted for other employees’ personal use only with Chief Executive Officer approval in special
circumstances, which seldom occurs. The value of our named executives’ personal use of the Company’s
airplanes is treated as taxable income to the respective executive in accordance with IRS regulations using the
Standard Industry Fare Level formula. This is a different amount than we disclose in the Summary Compensation
Table, which is based on the SEC requirement to report the incremental cost to us of their use.
We also reimburse the cost of physical examinations for our senior executives, as we believe it is beneficial
to the Company to facilitate its executives receiving preventive healthcare. Other than as described in this
section, we have eliminated all perquisites for our named executive officers.
27