Waste Management 2014 Annual Report Download - page 40

PSUs Granted in 2014. Performance share units are granted to our named executive officers annually
to align compensation with the achievement of our long-term financial goals and to build stock ownership.
Performance share units provide an immediate retention value to the Company because there is unvested
potential value at the date of grant. The number of PSUs granted to our named executive officers corresponds to
an equal number of shares of Common Stock. At the end of the three-year performance period for each grant, the
Company will deliver a number of shares ranging from 0% to 200% of the initial number of PSUs granted,
depending on the Company’s three-year performance against pre-established targets.
The MD&C Committee determined the number of PSUs that were granted to each of the named executives
in 2014 by taking the targeted dollar amounts established for total long-term equity incentives (set forth in the
table above) and multiplying by 80%. Those values were then divided by the average of the high and low price of
our Common Stock over the 30 trading days preceding the MD&C Committee meeting at which the grants were
approved to determine the target number of PSUs granted. The number of PSUs granted in 2014 are shown in the
table below.
Named Executive Officer
Number of
Performance
Share Units
Mr. Steiner ............................................................. 116,280
Mr. Trevathan ........................................................... 27,908
Mr. Fish ................................................................ 27,908
Mr. Harris .............................................................. 22,326
Mr. Morris .............................................................. 22,326
Mr. Aardsma ............................................................ 11,164
Mr. Weidman ........................................................... 7,834
Half of each named executive’s PSUs included in the table set forth above are subject to a cash flow
performance measure; whereas, the Company has previously used a return on invested capital (“ROIC”)
performance measure for PSUs. Like ROIC, the cash flow measure requires focus on capital discipline, but also
strengthens alignment with stockholders’ free cash flow expectations. For purposes of these PSUs, we generally
define cash flow as cash provided by operating activities, with the following exclusions: capital expenditures for
purposes of internal growth; costs associated with labor disruptions; and strategic acquisition, restructuring, and
transformation and reorganization costs. The MD&C Committee retains the right to make additional adjustments
to the calculation of cash flow, as discussed previously with regard to its policy on calculation adjustments.
The table below shows the required achievement of the cash flow performance measure and the
corresponding potential payouts under our PSUs granted in 2014.
Threshold Target Maximum
Performance Payout Performance Payout Performance Payout
Cash Flow ....... $3.300 billion 60% $3.611 billion 100% $3.922 billion 200%
The remaining half of each named executive’s PSUs are subject to total shareholder return relative to the
S&P 500. This measure directly correlates executive compensation with creation of shareholder value. Total
shareholder return is calculated as follows: (Common Stock price at end of performance period – Common Stock
price at beginning of performance period + dividends during performance period) / Common Stock price at
beginning of performance period. The table below shows the required achievement of the total shareholder return
performance measure and the corresponding potential payouts under our PSUs granted in 2014.
Total Shareholder Return Relative to the S&P 500
Performance Payout
75th percentile (Maximum) ............................. 200%
50th percentile (Target) ............................. 100%
25th percentile (Threshold) ............................. 50%
If actual performance falls between performance levels for either of the PSU performance measures, then the
number of PSUs earned will be interpolated between the two performance levels, rounded to the nearest 0.1%.
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