Waste Management 2014 Annual Report Download - page 51

to receiving post-termination benefits and (b) a clawback feature that allows for the suspension and refund of
termination benefits for subsequently discovered cause. The clawback feature in the agreements generally allows
the Company to cancel any remaining payments due and obligates the named executive to refund to the Company
severance payments already made if, within one year of termination of employment of the named executive by
the Company for any reason other than for cause, the Company determines that the named executive could have
been terminated for cause.
Our current form of award agreements for equity awards also contain provisions regarding termination and
change-in-control. Our stock option awards are also subject to double trigger vesting in the event of a change-in-
control situation. The award agreements for restricted stock units granted to Messrs. Fish, Harris and Morris
provide that restricted stock units vest upon a change-in-control, unless the successor entity converts the awards
to equivalent grants in the successor. Provided, however, such converted restricted stock unit awards will vest in
full if the executive is involuntarily terminated without cause following the change-in-control. Award agreements
applicable to performance share units provide that awards 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 be compensated for the lost opportunity from the date of the change-in-control to the end of the original
performance period by receiving a replacement award of restricted stock units in the successor entity, provided
that the successor entity is publicly traded. If the successor is not publicly traded, the executive will be entitled to
a replacement award of cash. However, if the employee is thereafter involuntarily terminated other than for cause
within the change-in-control window referenced, he would vest in full in the replacement award.
Our current equity award agreements also include a requirement that, in order to be eligible to vest in any
portion of the award, the employee must enter into an agreement containing restrictive covenants applicable to
the employee’s behavior following termination. Additionally, our performance share unit and stock option award
agreements include compensation clawback provisions that provide, if the MD&C Committee determines that an
employee either engaged in or benefited from misconduct, then the employee will refund any amounts received
under the equity award agreements. Misconduct generally includes any act or failure to act that caused or was
intended to cause a violation of the Company’s policies, generally accepted accounting principles or applicable
laws and that materially increased the value of the equity award. Further, our MD&C Committee has adopted a
clawback policy applicable to our annual cash incentive awards that is designed to recoup annual cash incentive
payments when the recipient’s personal misconduct results in a restatement or otherwise affects the payout
calculations for the awards. Clawback terms applicable to our incentive awards allow recovery within the earlier
to occur of one year after discovery of misconduct and the second anniversary of the employee’s termination of
employment.
The terms “Cause,” “Good Reason,” and “Change-in-Control” as used in the table below are defined in the
executives’ employment agreements and/or the applicable equity award agreement and have the meanings
generally described below. You should refer to the individual agreements for the actual definitions.
“Cause” generally means the named executive has:
• deliberately refused to perform his duties;
• breached his duty of loyalty to the Company;
• been convicted of a felony;
• intentionally and materially harmed the Company; or
• breached the covenants contained in his agreement.
“Good Reason” generally means that, without the named executive’s consent:
• his duties or responsibilities have been substantially changed;
• he has been removed from his position;
• the Company has breached his employment agreement;
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