xx

 

Exhibit 10.1

 

2019 Long Term Incentive Compensation

 

Award Agreement

 

for the Senior Leadership Team under the

 

Waste Management, Inc. 2014 Stock Incentive Plan

 

This Award Agreement (this “Agreement”) is entered into effective as of
February 19, 2019 (the “Grant Date”), by and between Waste Management, Inc., a
Delaware corporation (the “Company”) (together with its Subsidiaries and
Affiliates, “WM”), and you (“Employee”).  At all times, the Awards under this
Agreement are subject to the terms and conditions of the Waste Management, Inc.
2014 Stock Incentive Plan (the “Plan”), this Agreement, and all applicable
administrative interpretations and practices.  A copy of the Plan is available
online at http://visor.wm.com under the Legal tab.  Once there, scroll to the
bottom of the Legal page, then choose Documents, Stock Incentive Plan and choose
“2014 Stock Incentive Plan.”  A description of the Plan appears on the same
page under “2014 Stock Incentive Plan Prospectus” (the “Prospectus”).  Please
also see the Company’s Form 10-K included in its most recent Annual Report,
available on the Investor Relations page of www.wm.com under Financial Reporting
– Annual Reports, for information about the Company.   By executing this
Agreement, you consent to receipt of the Plan, the Prospectus, and the Annual
Reports by electronic access as set forth in this paragraph.

 

You must execute this Agreement in full, online in accordance with the
instructions below, prior to March 31, 2019, in order for this Agreement to
become effective.   If you do not execute this Agreement by correctly following
the instructions below, your Awards may be cancelled.

 

Important Instructions for Executing this Agreement

 

If you have previously received a stock-based incentive award, simply log on to
www.mywmtotalrewards.com using your My WM Total Rewards user ID and password. 
If you have forgotten your user ID or password, there are instructions on the
site to help you.  Under the “My Compensation” section, click on the link to
view your grants at the website maintained by the third party stock
administrator appointed by the Company.  Follow the online instructions and
complete all of the steps required to accept the award.

 

If you are a new Plan participant, you must open a Limited Individual Investor
Account (LIIA) before you can accept your awards. This account is separate from
any other brokerage account you may have at the third party stock administrator.
To open your LIIA, log on to www.mywmtotalrewards.com using your My WM Total
Rewards user ID and password. If you have forgotten your user ID or password,
there are instructions on the site to help you.  Under the “My Compensation”
section, click on the link to the secure website maintained by the third party
stock administrator appointed by the Company. You may also log in directly at
www.benefits.ml.com. Once logged in, follow the prompts to “Open a Brokerage
Account”.   When you have successfully created your account, follow the online
instructions and complete all of the steps required to accept the award.

 

Performance Share Units

 

1.            PSU Grant.  The Company grants to Employee a Performance Share
Unit Award (a “PSU Award”), as provided in the Notice of Long-Term Incentive
Award dated February 25, 2019 (the “Notice”).   Each Performance Share Unit
(“PSU”) is a notational unit of measurement denominated in shares of common
stock of the Company, $.01 par value (“Common Stock”).

 

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2.            PSU Metrics.

 

a.          The “Performance Period” for this PSU Award is the 36-month period
beginning January 1, 2019, and ending on December 31, 2021.  Vesting and payout
of your PSU Award is based upon the level of achievement of the Performance
Goals that have been set by the Management Development and Compensation
Committee of the Board of Directors of the Company (the “Committee”).  The
Performance Goals set by the Committee for your PSU Awards are described in
paragraph 3 below.

 

b.          The performance measure selected by the Committee to serve as the
Performance Goal for half (50%) of your Target PSU Award is Adjusted Free Cash
Flow (defined in paragraph 2.c. below).   The performance measure selected by
the Committee to serve as the Performance Goal for the other half (50%) of your
Target PSU Award is Total Shareholder Return Relative to the S&P 500, or “TSR”
(as defined in paragraph 2.d. below).  To determine the payout (if any) under
your PSU Award, the Committee will determine the level of the Performance Goal
reached (“Achievement”) and the corresponding payout percentage applicable to
each half of your Target PSU Award under paragraph 3 below.   The Committee’s
determinations, and the related calculations, including the calculation of
Adjusted Free Cash Flow and TSR, are made by, and in the sole discretion of, the
Committee, and are final and not subject to appeal.

 

c.            Adjusted Free Cash Flow is the cash flow provided by operating
activities of WM for the Performance Period with the following adjustments:

i.    Capital expenditures are excluded;

ii.   Payments related to costs (including legal costs) associated with labor
disruptions (e.g., strikes) and actual or potential multiemployer plan
withdrawal liability(ies) are excluded as expenditures required as a result of
past labor commitments combined with changing economic conditions of the present
business climate;

iii.  Strategic acquisition, restructuring, transformation and reorganization
costs are excluded in recognition of WM’s goals to increase customer and
business base while minimizing operating costs; and

iv.  Cash proceeds from the divestiture of businesses and other assets are
included.

 

The Committee, solely in its discretion, is permitted to make other adjustments
to reflect management’s performance consistent with maximizing shareholder
value; provided that such other adjustments shall not reduce the Adjusted Free
Cash Flow amount.

 

d.            Total Shareholder Return Relative to the S&P 500 or “TSR” is the
percentile performance of the Company as compared to the other S&P 500 Companies
for the Performance Period.   For these purposes:

i.    S&P 500 Companies means all of the entities listed on the Standard &
Poor’s 500 Composite Index, including the Company, on the date which is 30
trading days prior to the commencement of the Performance Period, with the
following modifications:

A.       except as provided in paragraph 2.d.i.B. below, only those entities
that continue to trade throughout the Performance Period without interruption on
a National Exchange shall be included; and

B.       any such entity that files for bankruptcy (“Bankrupt Peer”) during the
Performance Period shall continue to be included.

For these purposes “National Exchange” shall mean a securities exchange that has
registered with the SEC under Section 6 of the Securities Exchange Act of 1934.

ii.    Total Shareholder Return is the result of dividing (1) the sum of the
cumulative value of an entity’s dividends for the Performance Period, plus the
entity’s Ending Price, minus the Beginning Price, by (2) the Beginning Price. 
For purposes of determining the cumulative value of an entity’s dividends during
the Performance Period, it will be assumed that all dividends declared and paid
with respect to a particular entity during the Performance Period were
reinvested in such entity at the ex-dividend date, using the closing price on
such date.  The aggregate shares, or fractional shares thereof, that will be
assumed to be purchased as part of the reinvestment calculation will be
multiplied by the Ending Price to determine the cumulative value of an entity’s
dividends for the Performance Period.  For these purposes:

 

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A.                    Price is the per share closing price, as reported by the
Bloomberg L.P. (or any other publicly available reporting service that the
Committee may designate from time to time) of a share or share equivalent on the
applicable stock exchange.

B.                    Beginning Price is the average Price for the period of 20
trading days immediately preceding the first day of the Performance Period.

C.                   Ending Price is the average Price for the period of 20
trading days immediately preceding and including the final day of the
Performance Period.

D.                   Bankrupt Peer:  Notwithstanding anything in the foregoing
to the contrary, any Bankrupt Peer shall have a Total Shareholder return of
negative one hundred percent (-100%).

iii.    Relative TSR Percentile Rank is the percentile performance of the
Company as compared to the S&P 500 Companies.  Relative TSR Percentile Rank is
determined by ranking the Company and all other S&P 500 Companies according to
their respective Total Shareholder Return for the Performance Period.  The
ranking is in order from minimum-to-maximum, with the lowest performing entity
assigned a rank of one.  The Company’s ranking is then divided by the total
number of entities within the S&P 500 Companies to get the Relative TSR
Percentile Rank.

 

3.            PSU Payout Percentage.

 

a.           The Performance Goals are the levels of performance set by the
Committee on the Grant Date with respect to each measure of performance.

 

b.           The “Target PSU Award” for this Agreement is based on the target
number of PSUs granted by the Committee and announced in the Notice.  If
Achievement falls between two levels of Achievement, the resulting payout
percentage will be straight–line interpolated (rounding to the nearest 0.1
percent) between the payout percentages for those two levels of Achievement.

 

Achievement Levels and Corresponding Payouts for PSUs Dependent on Adjusted Cash
Flow Performance Measure

 

 

 

 

 

 

 

Level of Achievement

Adjusted Free
Cash Flow Over the
Performance Period

Payout Percentage for the
applicable half of your
Target PSU Award

 

 

Threshold Performance (the minimum level of Achievement to qualify for any
payout of the Adjusted Free Cash Flow half of your Target PSU Award.)

$5.875 Billion

50%

 

 

Target Performance (the level of Achievement to qualify for 100% payout of the
Adjusted Free Cash Flow half of your Target PSU Award.)

$6.375 Billion

100%

 

 

Maximum Performance (the maximum level of Achievement that results in an
increased number of PSUs paid out under the Adjusted Free Cash Flow half of your
Target PSU Award.)

$6.875 billion

200%

 

 

 

 

 

 

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Achievement Levels and Corresponding Payouts for PSUs Dependent on TSR

 

 

 

 

 

Total Shareholder Return Relative to the S&P 500 over the Performance Period

 

 

Level of Achievement

Relative TSR
Percentile Rank

Payout Percentage for the
applicable half of your Target
PSU Award

 

 

Threshold Performance (the minimum level of Achievement to qualify for any
payout of the TSR half of your Target PSU Award.)

25th

50%

 

 

Target Performance (the level of Achievement to qualify for 100% payout of the
TSR half of your Target PSU Award.)

50th

100%

 

 

Maximum Performance (the maximum level of Achievement that results in an
increased number of PSUs paid out under the TSR half of your Target PSU Award.)

75th

200%

 

 

 

4.            Timing and Form of Payment of PSU Award.  After the close of the
Performance Period, the Committee will certify (with respect to each portion of
your Target PSU Award relating to the separate Performance Goals) Achievement
and determine the corresponding payout percentage of the PSU Award by
multiplying the applicable half of the PSU Award by the applicable payout
percentage.  The results will sum to the total number of shares of Common Stock
that you are entitled to receive (the “PSU Awarded Shares”).  Unless you have a
valid Deferral Election in place for your PSU Award (see paragraph 8 under
“Important Award Details” for further information on permitted deferrals), the
Company will deliver the PSU Awarded Shares and payment of the corresponding
Dividend Equivalents (as defined in paragraph 7 under “Important Award Details”)
as soon as administratively feasible (and no later than 74 days after the end of
the Performance Period) after the Committee’s certification and determination.

 

Stock Options

 

1.            Stock Option Grant.  The Company grants to Employee a stock option
award (the “Stock Option Award”) for the number of shares (“Stock Options”) of
Common Stock provided in the Notice.  This Stock Option Award grants Employee
the right to purchase shares of Common Stock at the Grant Price.  The “Grant
Price” is the Fair Market Value (as defined in the Plan) of a share of Common
Stock on the Grant Date.

 

2.            Term.  Notwithstanding any other provisions of this Agreement, the
maximum term of the Stock Option Award is the 10th anniversary of the Grant
Date.

 

3.            Right to Exercise.  Provided Employee remains employed by WM
continuously through the applicable exercise dates, the Stock Option Award is
exercisable as follows:

 

 

 

 

 

 

Exercise Date

Cumulative Percentage of Stock
Option Award Exercisable

 

 

Prior to the first anniversary of the Grant Date

0%

 

 

On or after the first anniversary of the Grant Date

25%

 

 

On or after the second anniversary of the Grant Date

50%

 

 

On or after the third anniversary of the Grant Date

100%

 

 

4.            Manner of Exercise.  In order to exercise all or a portion of the
Stock Option Award, Employee must contact (either by phone or online) the
third-party stock plan administrator designated by the Company and follow the
procedures established by the Company for exercising a Stock Option Award.

 

5.            Payment of Grant Price.  The Grant Price is payable in full to the
Company either (a) in cash or its equivalent; (b) by tendering previously
acquired shares of Common Stock held for at least six months and with an
aggregate fair

 

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market value at the time of exercise equal to the aggregate Grant Price; (c) to
the extent Employee is an executive officer at the time of exercise, by
withholding shares of Common Stock that otherwise would be acquired  pursuant to
the Stock Option Award; or (d) any combination of the foregoing.  The Grant
Price may also be paid by cashless exercise through delivery of irrevocable
instructions to a broker to promptly deliver to the Company the amount of
proceeds from a sale of shares having fair market value equal to the Grant
Price, provided that such instructions are delivered by no later than the close
of the New York Stock Exchange on the last Trading Day prior to the 10th
anniversary of the Grant Date.  Payment by cashless exercise shall not be
considered to have occurred until the broker has issued confirmation of the
transaction.  For these purposes, Trading Day means a day on which the New York
Stock Exchange is open for trading for its regular trading sessions.

 

 

Important Award Details

 

Your Awards under this Agreement are subject to important terms and conditions
set forth below.  Please read them carefully and seek advice from your own legal
and tax advisors before executing this Agreement.

 

1.            Death or Disability.  Upon Employee’s death or disability (as
determined by the Committee and within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended, and the Treasury Regulations issued
thereunder (“Section 409A”) and specifically Section 409A(a)(2)(C)
(“Disability”)), Employee (or in the case of Employee’s death, Employee’s
beneficiary) shall, subject to paragraph 2.e below, be entitled to:

 

a.               receive the PSU Awarded Shares and related Dividend Equivalents
that Employee would have been entitled to under this Agreement if Employee had
remained employed until the last day of the Performance Period and determined
based upon actual Achievement through the end of the Performance Period, which
shall be paid to no later than 74 days following the end of the Performance
Period; and

 

b.               exercise all Stock Options outstanding under the Stock Option
Award (whether or not previously exercisable) for one year following such
event.  Provided however, if Employee was eligible for Retirement (as defined in
paragraph 2.d.i. below) at the time of his death or Disability, the Stock Option
Award will remain exercisable for three years following the date of such event.

 

2.            Treatment of PSU Award Upon Retirement or Involuntary Termination
of Employment Without Cause by WM.

 

a.               Upon an involuntary Termination of Employment by WM without
Cause (as defined in paragraph 6.d.iii. below), Employee shall, subject to
paragraph 2.e below, be entitled to receive the PSU Awarded Shares and related
Dividend Equivalents that Employee would have been entitled to under this
Agreement if Employee had remained employed until the last day of the
Performance Period and determined based upon actual Achievement through the end
of the Performance Period multiplied by the fraction which has as its numerator
the total number of days that Employee was employed by WM during the Performance
Period and has as its denominator 1096 (which amount shall be issued and paid as
soon as practicable and no later than 74 days following the end of the
Performance Period).

 

b.               Upon Employee’s Retirement (as defined in paragraph 2.d.i
below), Employee shall, subject to paragraph 2.e below,  be entitled to receive
the PSU Awarded Shares and related Dividend Equivalents that Employee would have
been entitled to under this Agreement if Employee had remained employed until
the last day of the Performance Period and determined based upon actual
Achievement through the end of the Performance Period multiplied by the fraction
which has as its numerator the total number of days that Employee was employed
by WM during the first 12 months of the Performance Period and has as its
denominator 365 (which amount shall be issued and paid as soon as practicable
and no later than 74 days following the end of the Performance Period).  To
illustrate the application of the preceding sentence, if Employee’s Retirement
is on or after December 31, 2019, subject to paragraph 2.e below, he or she
shall be eligible to receive a full payout at the end of the Performance Period
(based upon actual Achievement).

 

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c.               In the event Employee is employed by a subsidiary of the
Company that is sold by the Company in a transaction (i) that would not
constitute a Change in Control of the Company within the meaning of paragraph
6.c.i. below, but (ii) that would constitute a Change in Control of the
subsidiary within the meaning of paragraph 6.c.i. with the subsidiary
substituted for Company thereunder, such transaction shall be deemed to
constitute an involuntary Termination of Employment by WM without Cause for
purposes of this paragraph 2 as of the effective date of such Transaction.

 

d.     The following terms shall have the meanings set forth below for purposes
of this Agreement:

 

i.               Retirement means Termination of Employment due to the voluntary
resignation of employment by Employee, after Employee (1) has reached age 55 or
greater; (2) has a sum of age plus years of Service (as defined in paragraph ii.
below) with WM equal to 65 or greater; and (3) has completed at least 5
consecutive full years of Service with WM during the 5 year period immediately
preceding the resignation; provided, that Employee is not receiving severance
benefits pursuant to the severance pay plans of WM in connection with such
Termination of Employment.

 

ii.            Service is measured from Employee’s original date of hire by WM,
except as provided below.  In the case of a break of employment by Employee from
WM of one year or more in length, Employee’s service before the break of
employment is not considered Service.  Service with an entity acquired by WM is
considered Service so long as Employee remained continuously employed with such
predecessor company(ies) and WM.  In the case of a break of employment between a
predecessor company and WM of any length, Employee’s Service shall be measured
from the original date of hire by WM and shall not include any service with any
predecessor company.

 

e.               In order to receive any of the vesting or exercisability
benefits upon termination described in paragraphs 1, 2.a, 2.b or 3.b, Employee
(or, if applicable, Employee’s estate) must (x) to the extent requested by WM,
execute and not revoke a general release of claims in favor of WM and its
affiliates in a form that is acceptable to WM and which has become effective and
irrevocable prior to the payment date set forth above (or such earlier deadline
set by WM) and (y) continue to abide by all ongoing obligations to WM under any
restrictive covenant agreement.

 

3.            Treatment of Stock Option Award upon Involuntary Termination;
Resignation; Retirement.

 

a.          Involuntary Termination of Employment Without Cause or Resignation
by Employee.  Upon an involuntary Termination of Employment without Cause by WM
or a Termination of Employment due to a voluntary resignation by Employee that
is accepted by WM that is not a Retirement (as defined above), for a period of
90 days following such Termination of Employment, Employee shall be entitled to
exercise all of the Stock Options then outstanding and exercisable under the
Stock Option Award.  Any Stock Options that are not outstanding and exercisable
shall be forfeited.

 

b.          Retirement.  Upon Employee’s Retirement, the Stock Option Award
shall, subject to paragraph 2.e above, continue to become exercisable under the
applicable exercise schedule for three years following Employee’s Retirement and
once exercisable shall remain exercisable for the three-year period following
Employee’s Retirement.

 

4.            Termination of Employment for Other Reasons.

 

a.          PSU Award in the Event of Involuntary Termination with Cause or
Resignation by Employee.  Except as provided in paragraphs 1 through 2 above and
6 below, Employee must be an employee of WM continuously from the Grant Date
through the close of business on last day of the Performance Period to be
entitled to receive payment of any PSU Award.  Upon Termination of Employment on
or before December 31, 2021, for any reason other than any termination that
would qualify Employee for payout under paragraphs 1 through 2 above and 6

 

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below, Employee shall immediately forfeit the PSU Award and any related Dividend
Equivalents without payment of any consideration by WM.

 

b.          Stock Option Award in the Event of Involuntary Termination with
Cause.  Upon Termination of Employment by WM with Cause, Employee shall forfeit
all Stock Options under the Stock Option Award, whether or not exercisable,
without the payment of any consideration by WM.

 

5.            Repayment of Award in the Event of Misconduct.

 

a.          Overriding any other inconsistent terms of this Agreement, if the
Committee, in its sole discretion, determines that Employee either engaged in or
benefited from Misconduct (as defined below), then, to the fullest extent
permitted by law, Employee shall refund and pay to WM any Common Stock and/or
amounts (including Dividend Equivalents), plus interest, received by Employee
under this Agreement.  Misconduct means any act or failure to act by any
employee of WM that (i) caused or was intended to cause a violation of WM’s
policies or the WM code of conduct, generally accepted accounting principles or
any applicable laws in effect at the time of the act or failure to act in
question and that (ii) materially increased the value of the payment or Award
received by Employee under this Agreement.  The Committee may, in its sole
discretion, delegate the determination of Misconduct to an independent third
party (either a law firm or an accounting firm, hereinafter referred to as
Independent Third Party) appointed by the Committee.

 

b.          Following a determination of Misconduct by Employee, Employee may
dispute such determination pursuant to binding arbitration as set forth in
paragraph 18 under “General Terms” provided, however, that if Employee is
determined to have benefited from, but not engaged in, Misconduct, Employee will
have no right to dispute such determination and such determination shall be
conclusive and binding.

 

c.            WM must initiate recovery pursuant to this paragraph 5 by the
earliest of (i) one year after discovery of alleged Misconduct, or (ii) the
second anniversary of Employee’s Termination of Employment.

 

d.            The provisions of this paragraph 5, without any implication as to
any other provision of this Agreement, shall survive the expiration or
termination of this Agreement and Employee’s employment.

 

6.            Acceleration upon Change in Control.  Overriding any other
inconsistent terms of this Agreement:

 

a.            PSU Award.  If there is a Change in Control (as defined in
paragraph 6.c.i. below) before the close of the Performance Period, Employee is
entitled to receive both i. and ii., as follows:

 

i.                 For each half of the PSU Award, the result of an equation
with a numerator of

 

(x)        the respective number of PSUs Employee would have otherwise received
based upon achievement of the applicable Performance Goal after reducing the
Performance Period so that it ends on the last day of the quarter preceding the
Change in Control (the “Early Measurement Date”) and, for the Adjusted Free Cash
Flow half of the PSU Award, after adjusting the Threshold, Target and Maximum
Achievement Levels to reflect budgeted performance in the shorter Performance
Period, multiplied by

 

(y)        a fraction equal to (1) the number of days occurring between the
beginning of the Performance Period and the Early Measurement Date (including
the Early Measurement Date) divided by (2) 1096.

 

Payout of the PSUs shall be an immediate cash payment (in all events paid within
74 days following the Change in Control) equal to the number of PSUs earned
under this paragraph 6.a. multiplied by the closing stock price of the Common
Stock on the Early Measurement Date and will be accompanied by a cash payment of
the associated Dividend Equivalents through the Early Measurement Date; and

 

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ii.              As a substitute award for the lost opportunity to continue to
earn PSUs for the entire length of the original Performance Period:

 

1.            If the successor entity is a publicly traded company as of the
Early Measurement Date, an award of restricted stock units in the successor
entity equal to the number of shares of common stock of the successor entity
that could have been purchased on the Early Measurement Date with an amount of
cash equal to the quotient obtained from the following equation:

 

 

TAP X (1096 – EMD) x CP

1096

 

where

TAP is the number of PSUs represented by the Target PSU Award;

 

EMD is the number of days during the Performance Period which occur prior to and
including the Early Measurement Date; and

 

CP is the closing price of a share of Common Stock of the Company on the Early
Measurement Date.

 

Any restricted stock units in the successor entity awarded under this paragraph
6.a.ii.1. will vest completely on December 31, 2021 (and be paid within 74 days
thereof), provided that Employee remains continuously employed with the
successor entity until then.  Provided however, in the event of Employee’s
involuntary Termination of Employment without Cause during the Window Period (as
defined in paragraph c.iv. below) or upon Employee’s Retirement, death or
Disability, Employee shall become immediately vested in full in the restricted
stock units in the successor entity awarded pursuant to this paragraph 6.a.ii.1
and paid (i) in the case of death or Disability, within 74 days of such time or
(ii) in the case of Retirement or involuntary Termination of Employment without
Cause, within 74 days following December 31, 2021.

 

2.            If the successor entity is not a publicly traded company as of the
Early Measurement Date, an amount of cash equal to the quotient obtained from
the equation in paragraph 6.a.ii.1. above.

 

Any cash payment awarded under this paragraph 6.a.ii.2. will be paid to Employee
as soon as administratively feasible (and no later than 74 days) following
December 31, 2021, provided that Employee remains continuously employed with the
successor entity until such date.  Provided however, in the event of Employee’s
involuntary Termination of Employment without Cause during the Window Period or
upon Employee’s Retirement, death or Disability, Employee shall become vested
and be paid such cash payment by the successor entity (i) in the case of death
or Disability, within 74 days of such time or (ii) in the case of Retirement or
involuntary Termination of Employment without Cause, within 74 days following
December 31, 2021.

 

b.            Stock Option Award.  In the event of Employee’s involuntary
Termination of Employment without Cause or Termination of Employment due to a
resignation by Employee for Good Reason that, in either case, occurs on or
before the second anniversary of a Change in Control, the Stock Option Award
shall become exercisable immediately (whether or not previously exercisable) and
shall remain exercisable for the three year period following such Termination of
Employment.  For this purpose, “Good Reason” has the same meaning determined by
Employee’s written employment agreement in effect on the Grant Date.  In the
event there is no such agreement or definition, then Good Reason means the
initial existence of one or more of the following conditions, arising without
the consent of the Employee:  (1) a material diminution in Employee’s base
compensation; (2) a material diminution in Employee’s authority, duties, or
responsibilities, so as to effectively cause Employee to no longer be performing
the duties of his position; (3) a material diminution in the authority, duties,
or responsibilities of the supervisor to whom Employee is required to report.

 

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c.            The following terms shall have the meanings set forth below for
purposes of this Agreement:

 

i.                 Change in Control means the first to occur of any of the
following:

 

1.          any Person, or Persons acting as a group (within the meaning of
Section 409A), acquires, directly or indirectly, including by purchase, merger,
consolidation or otherwise, ownership of securities of the Company that,
together with securities held by such Person or Persons, represents fifty
percent (50%) or more of the total voting power or total fair market value of
the Company’s then outstanding securities;

 

2.          any Person, or Persons acting as a group (within the meaning of
Section 409A), acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such Person or Persons), directly or
indirectly, including by purchase, merger, consolidation or otherwise, ownership
of securities of the Company that represents thirty percent (30%) or more of the
total voting power of the Company’s then outstanding voting securities;

 

3.          the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, at the Grant
Date, constitute the Board of Directors of the Company (the “Board”) and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s stockholders was approved or recommended by a vote of at least
a majority of the directors before the date of such appointment or election or
whose appointment, election or nomination for election was previously so
approved or recommended; or

 

4.          the stockholders of the Company approve a plan of complete
liquidation of the Company and such liquidation is actually commenced or there
is consummated an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets (or any transaction having a similar
effect), other than a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity, at least fifty percent (50%) of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale. For purposes hereof, a
“sale or other disposition by the Company of all or substantially all of the
Company’s assets” will not be deemed to have occurred if the sale involves
assets having a total gross fair market value of less than forty percent (40%)
of the total gross fair market value of all assets of the Company immediately
prior to such sale;

 

provided, in each of cases 1 through 4, that in the event the award or portion
of the award is determined to constitute a non-exempt “deferral of compensation”
pursuant to Section 409A, to the extent necessary to avoid the imposition of any
penalties or additional tax under Section 409A, with respect to such award or
portion of award the Change of Control event must also constitute a “change in
the ownership of a corporation,” a “change in the effective control of a
corporation,” or a “change in the ownership of a substantial portion of a
corporation’s assets,” in each case, within the meaning of Section 409A.

 

 

For purposes of this definition, the following terms shall have the following
meanings:

 

(A)                                 “Exchange Act” means the Securities and
Exchange Act of 1934, as amended from time to time; and

 

 

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(B)                                 “Person” shall have the meaning set forth in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (1) the Company, (2) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, (3) an employee benefit plan of the Company, (4) an underwriter
temporarily holding securities pursuant to an offering of such securities or
(5) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of shares of
Common Stock.

 

ii.             Termination of Employment means the termination of Employee’s
employment or other service relationship with WM as determined by the
Committee.  Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and its Subsidiaries and
Affiliates will not be considered a Termination of Employment.  Any question as
to whether and when there has been a Termination of Employment, and the cause of
such termination, shall be determined by and in the sole discretion of the
Committee and such determination shall be final.

 

iii.          Cause means any of the following:  (1)  willful or deliberate and
continual refusal to materially perform Employee’s duties reasonably requested
by WM after receipt of written notice to Employee of such failure to perform,
specifying such failure (other than as a result of Employee’s sickness, illness,
injury, death or disability) and Employee fails to cure such nonperformance
within ten (10) days of receipt of said written notice; (2) breach of any
statutory or common law duty of loyalty to WM; (3) Employee has been convicted
of, or pleaded nolo contendre to, any felony; (4) Employee willfully or
intentionally caused material injury to WM, its property, or its assets;
(5) Employee disclosed to unauthorized person(s) proprietary or confidential
information of WM that causes a material injury to WM; or (6) any material
violation or a repeated and willful violation of WM’s policies or procedures,
including but not limited to, WM’s Code of Business Conduct and Ethics (or any
successor policy) then in effect.

 

iv.        Window Period means the period beginning on the date occurring six
(6) months immediately prior to the date on which a Change in Control first
occurs and ending on the second anniversary of the date on which a Change in
Control occurs.

 

7.            Dividend Equivalents on PSUs.  Dividend Equivalents mean an amount
of cash equal to all dividends and distributions (or their economic equivalent)
that are payable by the Company on one share of Common Stock to the stockholders
of record.   The Company will pay Dividend Equivalents with respect to the PSUs
when (i) the Performance Period has ended; (ii) Employee has vested in the
Award; and (iii) the PSU Awarded Shares have been certified by the Committee
based on actual Achievement during the Performance Period (or otherwise
determined pursuant to paragraph 6.a.i. above).  As soon as administratively
feasible after these events (and no later than 74 days following the end of the
Performance Period), the Company will pay Employee a lump-sum cash amount for
PSU Award Dividend Equivalents based on the number of PSU Awarded Shares
multiplied by the per share quarterly dividend payments made to stockholders of
the Company’s Common Stock during the Performance Period (without any interest
or compounding).  Any accumulated and unpaid Dividend Equivalents attributable
to PSUs that are cancelled or forfeited will not be paid and are immediately
forfeited upon cancellation of the PSUs.

 

8.            Deferral Elections.

 

a.          The Committee may establish procedures for Employee to elect to
defer, until a time or times later than the vesting of PSU Awards, receipt of
all or a portion of the shares of Common Stock deliverable under the Awards. 
Any such deferral election (“Deferral Election”) must be under the terms and
conditions determined in the sole discretion of the Committee (or its designee)
and the Waste Management, Inc. 409A Deferral Savings Plan, As Amended and
Restated Effective January 1, 2014 and as further amended, restated or
supplemented from time to time (the “WM 409A Plan”).  The Committee further
retains the authority and discretion to modify and/or terminate existing
Deferral Elections, procedures and distribution options.  Common Stock subject
to a Deferral

 

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Election does not confer any shareholder rights to Employee unless and until the
date the deferral expires and certificates representing such shares are
delivered to Employee.

 

b.            No deferrals of Dividend Equivalents are permitted.  In the event
shares of Common Stock received upon vesting of PSU Awards are deferred pursuant
to a valid Deferral Election, then the Company will pay Dividend Equivalents to
Employee in cash on such deferred shares of Common Stock, as soon as
administratively feasible following the payment of such dividends to
stockholders of record.

 

c.            If the Committee permits deferral of the PSU Awards under this
Agreement, then each provision of this Agreement shall be interpreted to permit
deferral only (i) in accordance with the terms of the WM 409A Plan and (ii) as
allowed in compliance with Section 409A.  Any provision that would conflict with
such requirements is not valid or enforceable.  Employee acknowledges, without
limitation, and consents that the application of Section 409A to this Agreement
may require additional delay of payments otherwise payable under this Agreement
or the WM 409A Plan.  Employee and the Company agree to execute any instruments
and take any action as reasonably may be necessary to comply with Section 409A.

 

 

General Terms

 

1.            Restrictions on Transfer.

 

a.            Absent prior written consent of the Committee, Awards may not be
sold, assigned, transferred, pledged or otherwise encumbered, whether
voluntarily or involuntarily, by operation of law or otherwise, other than
pursuant to a domestic relations order; provided, however, that the transfer of
any shares of Common Stock issued under the Awards shall not be restricted by
virtue of this Agreement once such shares have been paid out.

 

b.            Consistent with paragraph 1.a. above and except as provided in
paragraph 3. below, no right or benefit under this Agreement shall be subject to
transfer, anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, whether voluntary, involuntary, by operation of law or otherwise, and
any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or
charge the same shall be void.  No right or benefit hereunder shall in any
manner be liable for or subject to any debts, contracts, liabilities or torts of
the person entitled to such benefits.  If Employee or his Beneficiary shall
attempt to transfer, anticipate, alienate, assign, sell, pledge, encumber or
charge any right or benefit hereunder (other than pursuant to a domestic
relations order), or if any creditor shall attempt to subject the same to a writ
of garnishment, attachment, execution sequestration, or any other form of
process or involuntary lien or seizure, then such attempt shall have no effect
and shall be void.

 

2.            Fractional Shares.  No fractional shares of Common Stock will be
issued under the Plan or this Agreement.

 

3.            Withholding Tax.  Employee agrees that Employee is responsible for
federal, state and local tax consequences associated with the Awards (and any
associated Dividend Equivalents) under this Agreement.  Upon the occurrence of a
taxable event with respect to any Award under this Agreement, Employee shall
deliver to WM at such time, (i) such amount of money or shares of Common Stock
earned or owned by Employee or (ii) if employee is an executive officer at the
time of such tax event and so elects (or, otherwise, with WM’s approval), shares
deliverable to Employee at such time pursuant to the applicable Award, in each
case, as WM may require to meet its obligation under applicable tax laws or
regulations, and, if Employee fails to do so, WM is authorized to withhold from
any shares of Common Stock deliverable to Employee, cash, or other form of
remuneration then or thereafter payable to Employee, any tax required to be
withheld.

 

4.            Compliance with Securities Laws.  WM is not required to deliver
any shares of Common Stock under this Agreement, if, in the opinion of counsel
for the Company, such issuance would violate the Securities Act of 1933 or any
other

 

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applicable federal or state securities laws or regulations.  Prior to the
issuance of any shares, WM may require Employee (or Employee’s legal
representative upon Employee’s death or disability) to enter into such written
representations, warranties and agreements as WM may reasonably request in order
to comply with applicable laws, including an agreement (in such form as the
Committee may specify) under which Employee represents that the shares of Common
Stock acquired under an Award are being acquired for investment and not with a
view to sale or distribution.

 

Further, WM may postpone issuing and/or delivering any Common Stock for so long
as WM, in its complete and sole discretion, reasonably determines is necessary
to satisfy any of the following conditions:  (a) the Company completing or
amending any securities registration or qualification of the Common Stock,
(b) receipt of proof satisfactory to WM that a person seeking to exercise the
Award after the Employee’s death is entitled to do so; (c) establishment of
Employee’s compliance with any necessary representations or terms and conditions
of the Plan or this Agreement, or (d) compliance with any federal, state, or
local tax withholding obligations.

 

5.            Employee to Have no Rights as a Stockholder.  Employee shall have
no rights as a stockholder with respect to any shares of Common Stock subject to
this Award prior to the date on which Employee is recorded as the holder of such
shares of Common Stock on the records of the Company, including no right to
dividends declared on the Common Stock underlying the Award.   Notwithstanding
the foregoing, Dividend Equivalents shall be paid to Employee in accordance with
and subject to the terms of paragraph 7 under “Important Award Details.”

 

6.            Successors and Assigns.  This Agreement shall bind and inure to
the benefit of and be enforceable by Employee, WM and their respective permitted
successors or assigns (including personal representatives, heirs and legatees),
except that Employee may not assign any rights or obligations under this
Agreement except to the extent, and in the manner, expressly permitted herein.
The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that WM would be
required to perform it if no such succession had taken place, except as
otherwise expressly provided in paragraph 6.b. under “Important Award Details.”

 

7.            Limitation of Rights.  Nothing in this Agreement or the Plan may
be construed to:

 

a.               give Employee any right to be awarded any further Awards other
than in the sole discretion of the Committee;

 

b.               give Employee or any other person any interest in any fund or
in any specified asset or assets of WM (other than the Awards made by this
Agreement, the related Dividend Equivalents awarded under this Agreement, and
any Common Stock issuable under the terms and conditions of such Awards); or

 

c.               confer upon Employee the right to continue in the employment or
service of WM.

 

8.            Governing Law.  This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Texas, without reference to
principles of conflict of laws.

 

9.            Severability/Entire Agreement.  The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.

 

a.    Employee understands and agrees that the Awards granted under this
Agreement are granted under the authority of the Plan and these Awards and this
Agreement are in all ways governed by the terms and conditions of the Plan and
its administrative practices and interpretations.  Any inconsistency between the
Agreement and the Plan shall be resolved in favor of the Plan.  Employee also
agrees the terms and conditions of the Plan, this Agreement and related
administrative practices and interpretations control, even if there is a
conflict with any other terms and conditions in any employment agreement or in
any prior awards.  Without limiting the generality of the foregoing, as a
condition to receipt of this Award, Employee agrees that the provisions relating
to vesting and/or forfeiture of this Award upon a Termination of Employment set
forth in this Agreement

 

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supersede and replace any provisions relating to vesting of the Award upon
termination or other event set forth in any employment agreement, offer letter
or similar document.

 

b.    Employee understands and agrees that he or she is to consult with and rely
upon only Employee’s own tax, legal, and financial advisors regarding the
consequences and risks of this Agreement and the awards made under this
Agreement.

 

c.    Except as provided in paragraph 13 below, this Agreement may not be
amended except in writing (including by electronic writing) signed by all the
parties to this Agreement (or their respective successors and legal
representatives).  The captions are not a part of the Agreement and for that
reason shall have no force or effect.

 

10.    No Waiver.  In the event the Employee or WM fails to insist on strict
compliance with any term or condition of this Agreement or fails to assert any
right under this Agreement, such failure is not a waiver of that term, condition
or right.

 

11.    Covenant Requirement Essential Part of Award.  An overriding condition
(even if any other provision of the Plan and this Agreement are conflicting) for
Employee to receive any benefit from or payment of any Award under this
Agreement, is that Employee must also have entered into an agreement containing
restrictive covenants concerning limitations on Employee’s behavior following
termination of employment that is satisfactory to WM.

 

12.    Definitions.  If not defined in this Agreement, capitalized terms have
the meanings set forth in the Plan.

 

13.    Compliance with Section 409A.  Both WM and Employee intend that this
Agreement not result in unfavorable tax consequences to Employee under
Section 409A.  Accordingly, Employee consents to any amendment of this Agreement
WM may reasonably make consistent to achieve that intention and WM may,
disregarding any other provision in this Agreement to the contrary, unilaterally
execute such amendment to this Agreement.  WM shall promptly provide, or make
available to, Employee a copy of any such amendment.  WM agrees to make any such
amendments to preserve the intended benefits to the Employee to the maximum
extent possible. This paragraph does not create an obligation on the part of WM
to modify this Agreement and does not guarantee that the amounts or benefits
owed under the Agreement will not be subject to interest and penalties under
Section 409A.  Each cash and/or stock payment and/or benefit provided under the
Plan and this Agreement and/or pursuant to the terms of WM’s benefit plans,
programs and policies shall be considered a separate payment for purposes of
Section 409A.  Notwithstanding the foregoing, it is intended that Stock Option
Awards not be subject to Section 409A.  For purposes of Section 409A, to the
extent that Employee is a “specified employee” within the meaning of the
Treasury Regulations issued pursuant to Section 409A as of Employee’s separation
from service and to the limited extent necessary to avoid the imputation of any
tax, penalty or interest pursuant to Section 409A, notwithstanding anything to
the contrary in this Agreement, no amount which is subject to Section 409A of
the Code and is payable on account of Employee’s separation from service shall
be paid to Employee before the date (the “Delayed Payment Date”) which is the
first day of the seventh month after the Employee’s separation from service or,
if earlier, the date of the Employee’s death following such separation from
service. All such amounts that would, but for the immediately preceding
sentence, become payable prior to the Delayed Payment Date will be accumulated
and paid without interest on the Delayed Payment Date.

 

14.    Use of Personal Data.  Employee agrees to the collection, use, processing
and transfer of certain personal data, including name, salary, nationality, job
title, position, social security number (or other tax identification number) and
details of all past Awards and current Awards outstanding under the Plan
(“Data”), for the purpose of managing and administering the Plan.  Employee is
not obliged to consent to such collection, use, processing and transfer of
personal data, but a refusal to provide such consent may affect the ability to
participate in the Plan.  WM may transfer Data among themselves or to third
parties as necessary for the purpose of implementation, administration and
management of the Plan.  These various recipients of Data may be located
throughout the world.  Employee authorizes these various recipients of Data to
receive, possess, use, retain and transfer the Data, in electronic or other
form, for the purposes of implementing, administering and managing the Plan. 
Employee may, at any time,

 

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review Data with respect to Employee and require any necessary amendments to
such Data.  Employee may withdraw his or her consent to use Data herein by
notifying WM in writing (according to the provisions of paragraph 15 below);
however, Employee understands that by withdrawing his or her consent to use
Data, Employee may affect his or her ability to participate in the Plan.

 

15.    Notices.  Any notice given by one party under this Agreement to the other
shall be in writing and may be delivered personally or by mail, postage prepaid,
addressed to the Secretary of the Company, at its then corporate headquarters,
and Employee at Employee’s address as shown on WM’s records, or to such other
address as Employee, by notice to the Company, may designate in writing from
time to time.

 

16.    Electronic Delivery.   WM may, in its sole discretion, deliver any
documents related to the Awards under this Agreement, the Plan, and/or the WM
409A Plan, by electronic means or request Employee’s consent to participate in
the administration of this Agreement, the Plan, and/or the WM 409A Plan by
electronic means.   Employee hereby consents to receive such documents by
electronic delivery and agrees to participate in the Plan through an on-line or
electronic system established and maintained by WM or another third party
designated by WM.

 

17.    Clawback.  Notwithstanding any provisions in the Plan or this Agreement
to the contrary, any portion of the payments and benefits provided under this
Agreement or the sale of any shares of Common Stock issued hereunder shall be
subject to any clawback or other recovery policy adopted by the Committee from
time to time, including, without limitation, any such policy adopted in
accordance with the requirements of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 or any SEC rule.

 

18.    Binding Arbitration.  Except as otherwise specifically provided herein,
the Committee’s findings, calculations and determinations under this Agreement
are made in the sole discretion of the Committee, and Employee expressly agrees
that such determinations shall be final and not subject to dispute.  In the
event, however, that Employee has a right to dispute a matter hereunder
(including, but not limited to the right to dispute set forth in paragraph 5
under “Important Award Details”), the Company and Employee agree that such
dispute shall be settled exclusively by final and binding arbitration, as
governed by the Federal Arbitration Act (9 U.S.C. 1 et seq.).    The arbitration
proceeding, including the rendering of an award, if any, shall be administered
by JAMS pursuant to its Employment Arbitration Rules and Procedures, which may
be found on the JAMS Website www.jamsadr.com.  All expenses associated with the
arbitration shall be borne by WM; provided however, that such arbitration
expenses will not include attorney fees incurred by the respective parties. 
Judgment on any arbitration award may be entered in any court having
jurisdiction.

 

19.    Counterparts.  This Agreement may be executed in counterparts, which
together shall constitute one and the same original.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Execution

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
one of its officers thereunto duly authorized and Employee has executed this
Agreement, effective as of February 19, 2019.

 

 

 

 

 

WASTE MANAGEMENT, INC.

 

Employee

 

 

 

 

 

 

 

 

 

 

 

Accepted by Electronic Communication 

 

 

 

 

 

 

 

 

John J. Morris, Jr.

 

 

 

 

 

Date:  February 19, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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