Waste Management 2014 Annual Report Download - page 38

cash incentive award design to encourage balanced focus on growth and profitability, replacing the 2013 cash
flow measure, which became a long-term incentive performance measure in 2014, discussed further below.
Finally, the MD&C Committee refined the Cost Measure for 2014 to focus on operating cost control, after
successfully driving reductions in SG&A spending that were the target of the 2013 cost measure. When setting
threshold, target and maximum performance measure levels each year, the MD&C Committee looks to the
Company’s historical results of operations and analyses and forecasts for the coming year. Specifically, the
MD&C Committee considers expected revenue based on analyses of pricing and volume trends, as affected by
operational and general economic factors and expected costs. The MD&C Committee believes these financial
performance measures support and align with the strategy of the Company and are appropriate indicators of our
progress toward the Company’s goals.
The table below details the Company-wide performance measures set by the MD&C Committee for the
named executive officers in 2014.
Threshold
Performance
(60% Payment)
Target
Performance
(100% Payment)
Maximum
Performance
(200% Payment)
Income from Operations Margin ........... 15.1% 15.7% 16.3%
Income from Operations excluding
Depreciation & Amortization ............ $3.41 billion $3.639 billion $3.821 billion
Cost Measure ........................... 63.5% 62.1% - 62.5% 61.5%
The following table sets forth the Company’s performance achieved on each of the annual cash incentive
performance measures and the payout earned on account of such performance.
Income from Operations
Margin (weighted 25%)
Income from Operations, excluding
Depreciation & Amortization
(weighted 25%) Cost Measure (weighted 50%) Total
Payout Earned
(as a percentage
of Target)Actual Payout Earned Actual Payout Earned Actual Payout Earned
16.1% 170.9% $3.549 billion 84.2% 61.0% 200.0% 163.8%
As discussed above, the MD&C Committee has discretion to make adjustments to the performance
calculations for unusual or otherwise non-operational matters in line with its policy on calculation adjustments;
however, no adjustments were made to the calculation of 2014 annual cash incentive performance measures.
Target annual cash incentives are a specified percentage of the executives’ base salary. The following table
shows each named executive’s target percentage of base salary for 2014 and annual cash incentive for 2014 paid
in March 2015.
Named Executive Officer Target Percentage of Base Salary
Annual Cash
Incentive
For 20141
Mr. Steiner .............................................. 135 $2,626,505
Mr. Trevathan2........................................... 90 $ 918,083
Mr. Fish2................................................ 90 $ 816,830
Mr. Harris ............................................... 75 $ 691,457
Mr. Morris .............................................. 75 $ 627,822
Mr. Aardsma3............................................ 75 $ 233,979
Mr. Weidman4........................................... 60 $ 375,045
1) Base salary increases for 2014 were not implemented until Spring of 2014; accordingly, the calculation of
annual cash incentive payouts, as a percentage of base salary, was prorated to take account of the named
executive’s actual base salary received during 2014.
2) For 2014, the target percentage of base salary was increased from 85% to 90% for Messrs. Trevathan and
Fish. These changes were made to better position the executives around the competitive median and to
reflect their contributions.
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