Waste Management 2015 Annual Report Download - page 182

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(a) Share repurchases in 2015 and 2014 were completed through accelerated share repurchase (“ASR”)
agreements. The terms of these agreements required that we deliver cash at the beginning of each ASR
repurchase period. In exchange, we received 70% of the shares expected to be repurchased based on the
then-current market price of our common stock. The remaining shares repurchased over the course of each
repurchase period were delivered to us once the repurchase period was complete. Additional information
related to our ASRs is included below.
(b) In July 2014, we executed ASR agreements to repurchase $600 million of our common stock. At the
beginning of the ASR repurchase periods, we delivered $600 million in cash and received 9.6 million shares
based on a stock price of $43.89. The share repurchase periods of the agreements concluded in February
2015, at which time we received 2.8 million additional shares based on a final weighted average per share
purchase price during the repurchase period of $48.58. The amounts reported here as “Shares repurchased”
are based on when shares were delivered to WM.
(c) Share repurchases in 2013 were completed through open market purchases.
Each ASR agreement was accounted for as two separate transactions: (i) as shares of reacquired common
stock for the shares delivered to us upon effectiveness of the ASR agreements and (ii) as a forward contract
indexed to our own common stock for the undelivered shares. The initial delivery of shares was included in
treasury stock at cost and resulted in an immediate reduction of the outstanding shares used to calculate the
weighted average common shares outstanding for basic and diluted earnings per share. The forward contracts
indexed to our own stock met the criteria for equity classification, and these amounts were initially recorded in
additional paid-in capital and reclassified to treasury stock upon completion of the ASR agreements.
The Company entered into an additional ASR agreement in December 2015 to repurchase $150 million of
our common stock in early 2016. Subsequent to this ASR agreement, we announced that the Board of Directors
refreshed its prior authorization of up to $1 billion in future share repurchases. Any future share repurchases will
be made at the discretion of management, and will depend on factors similar to those considered by the Board in
making dividend declarations.
16. Stock-Based Compensation
Employee Stock Purchase Plan
We have an Employee Stock Purchase Plan (“ESPP”) under which employees that have been employed for
at least 30 days may purchase shares of our common stock at a discount. The plan provides for two offering
periods for purchases: January through June and July through December. At the end of each offering period,
enrolled employees purchase shares of our common stock at a price equal to 85% of the lesser of the market
value of the stock on the first and last day of such offering period. The purchases are made at the end of an
offering period with funds accumulated through payroll deductions over the course of the offering period, and the
number of shares that may be purchased is limited by IRS regulations. The total number of shares issued under
the plan for the offering periods in each of 2015, 2014 and 2013 was approximately 786,000, 774,000 and
928,000, respectively. Including the impact of the January 2016 issuance of shares associated with the July to
December 2015 offering period, approximately 3.2 million shares remain available for issuance under the plan,
which includes 3.0 million additional shares that stockholders approved in May 2015 for future issuance.
Accounting for our ESPP increased annual compensation expense by approximately by $6 million, or $4
million net of tax, for 2015, 2014 and 2013.
119