What type of equity awards were granted to the executives?

The named executive officers received Performance Share Units (PSUs) and Stock Options.

How is the payout for the Performance Share Units determined?

The payout for the PSUs is determined by two equally weighted performance measures: 50% based on adjusted free cash flow and 50% based on total shareholder return relative to the S&P 500. The payout can range from 0% to 200% of the targeted amount, plus accrued dividend equivalents, based on performance achieved by December 31, 2021.

What is the vesting schedule for the stock options?

The stock options vest over a three-year period: 25% on the first anniversary of the grant date, 25% on the second anniversary, and the remaining 50% on the third anniversary.

What happens to these equity awards if an executive leaves the company before the performance period ends?

The treatment varies depending on the circumstances of departure. For instance, in case of death or disability, awards are paid out based on actual performance. Involuntary termination other than for cause results in prorated payout based on the portion of the performance period completed. Voluntary resignation or termination for cause typically leads to forfeiture. Specific conditions also apply for retirement and change-in-control events, which are detailed in the award agreements.

WM 8-K: Leadership Changes

Summary

Waste Management, Inc. (WM) filed an 8-K on February 25, 2019, detailing the grant of equity awards to its named executive officers on February 19, 2019. These awards, granted under the 2014 Stock Incentive Plan, include performance share units (PSUs) and stock options. The PSUs are tied to specific performance metrics including adjusted free cash flow and total shareholder return relative to the S&P 500, with payout opportunities ranging from 0% to 200% of the target amount. The performance period for these awards concludes on December 31, 2021. In addition to PSUs, stock options were granted with a vesting schedule of 25% annually over three years and a 10-year term. The exercise price for these options was set at the fair market value on the grant date, which was $98.898. The filing also outlines the treatment of these equity awards upon various termination scenarios, including death, disability, retirement, and involuntary terminations, as well as in the event of a change in control. Investors should note that the specific terms and conditions of these awards are detailed in the Form of 2019 Senior Leadership Team Award Agreement filed as an exhibit.

Key Highlights

1Waste Management granted equity awards (Performance Share Units and Stock Options) to its named executive officers on February 19, 2019.
2The Performance Share Units (PSUs) have a performance period ending December 31, 2021.
3PSU payouts are contingent on achieving adjusted free cash flow (50% weighting) and relative total shareholder return (50% weighting).
4PSU award payouts can range from 0% to 200% of the target amount, plus accrued dividend equivalents.
5Stock options granted have a 10-year term and vest over three years (25% at year 1, 25% at year 2, 50% at year 3).
6The exercise price for stock options was set at the fair market value on the grant date, $98.898.
7The filing details provisions for equity award treatment under various termination events and change-in-control scenarios.

WASTE MANAGEMENT INC 8-K Report, Executive Changes (Feb 25, 2019)

Summary

Key Highlights

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