Waste Management 2014 Annual Report Download - page 36

may not exceed the predetermined amount of 0.5% of the Company’s pre-tax income from operations per
participant. Our performance share unit awards are also intended to meet the qualified performance-based
compensation exception under Code Section 162(m). The annual cash incentive plan has historically been used to
grant executives’ annual cash incentive award; however, our President and Chief Executive Officer’s annual cash
incentive award granted in 2014 was made pursuant to the 2009 Stock Incentive Plan.
Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”), generally
provides that any deferred compensation arrangement which does not meet specific requirements will result in
immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. In general,
to avoid a Code Section 409A violation, amounts deferred may only be paid out on separation from service,
disability, death, a specified time or fixed schedule, a change-in-control or an unforeseen emergency.
Furthermore, the election to defer generally must be made in the calendar year prior to performance of services.
We intend to structure all of our compensation arrangements, including our Deferral Plan, in a manner that
complies with or is exempt from Code Section 409A.
We account for stock-based payments, including stock options and PSUs, in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation. The MD&C
Committee takes into consideration the accounting treatment under ASC Topic 718 when determining the form
and amount of annual long-term equity incentive awards. However, because our long-term equity incentive
awards are based on a target dollar value established prior to grant (described in further detail under “Named
Executives’ 2014 Compensation Program and Results — Long-Term Equity Incentives”), this “value” will differ
from the grant date fair value of awards calculated pursuant to ASC Topic 718.
Risk Assessment. The MD&C Committee uses the structural elements set forth in the Executive Summary
earlier to establish compensation that will provide sufficient incentives for named executive officers to drive
results while avoiding unnecessary or excessive risk taking that could harm the long-term value of the Company.
During 2014, the MD&C Committee reviewed the Company’s compensation policies and practices and the
assessment and analysis of related risk conducted by the independent compensation consultant. Based on this
review and analysis, the MD&C Committee and the independent compensation consultant concluded that our
compensation policies and practices do not create risks that are reasonably likely to have a material adverse
effect on the Company.
Consideration of Stockholder Advisory Vote on Executive Compensation. The MD&C Committee reviews
the results of the stockholder advisory vote on executive compensation and considers any implications of such
voting results on the Company’s compensation programs. In light of the very high percentage of shares present
and entitled to vote at the annual meeting voting in favor of the Company’s executive compensation the past four
years, the results of the stockholder advisory votes have not caused the MD&C Committee to recommend any
changes to our compensation practices.
Departure of Mr. Weidman. At the end of 2013, the Company recognized certain strategic divestiture
opportunities with respect to its waste-to-energy assets and investments, and the Company concluded that
retention of Mr. Weidman, President of Wheelabrator since 2006, would be integral to the successful execution
of such divestitures. Accordingly, the Company entered into amendments to Mr. Weidman’s employment
agreement to motivate Mr. Weidman to facilitate attractive divestitures and for retention purposes.
In connection with such amendments, Mr. Weidman received a cash payment of $1 million in 2014 for his
performance in connection with a successful sale of our investment in Shanghai Environment Group, a joint
venture that operated and managed waste-to-energy and other waste services in the Chinese market.
Also in connection with such amendments and the Company’s desire to divest substantially all of the stock
or assets of Wheelabrator and its subsidiaries, Mr. Weidman received a retention bonus of $500,000 in 2014 for
continuing his employment for a required period. On December 19, 2014, the Company announced that it had
completed the previously announced sale of Wheelabrator for approximately $1.95 billion. Mr. Weidman’s
employment with the Company terminated on December 19, 2014 when Wheelabrator Technologies Inc. ceased
to be a subsidiary of the Company. Upon Mr. Weidman’s departure from the Company, he received a payout of
his annual cash incentive award, based on estimated actual full year performance achieved, and pro-rated to
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