2020 WASTE MANAGEMENT
ANNUAL
REPORT
Proxy Statement
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Due to on-going public health concerns related to the
COVID-19 pandemic, we will be holding a virtual Annual
Meeting. You may access and participate in the virtual
Annual Meeting using your control number,
including
asking questions, examining the list of
registered
stockholders and voting shares, if you were a stockholder
of record as of the close of business on the record date or
held shares through a bank, broker, or nominee on that
date.
Virtual Meeting Date:
Tuesday, May 11, 2021
Virtual Meeting Time:
11:00 a.m. Central Time
Virtual Meeting Location:
www.virtualshareholdermeeting.com/WM2021
Record Date:
March 17, 2021
Agenda for the Annual Meeting (or any adjournment
or postponement thereof):
• To elect the nine nominees named in the attached proxy
statement to our Board of Directors;
• To vote on a proposal to ratify the appointment of Ernst &
Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2021;
• To vote on a non-binding, advisory proposal to approve
our executive compensation; and
• To conduct other business that is properly raised at the
meeting.
IMPORTANT NOTICE OF INTERNET AVAILABILITY
OF PROXY MATERIALS:
This Notice of Annual Meeting and Proxy Statement
and the Company’s Annual Report on Form 10-K for
the year ended December 31, 2020 are available on
the “Investors” webpage at www.wm.com.
in
accordance with
You may submit your proxy via the Internet
by following the instructions provided in the
Notice or, if you received printed copies of
the proxy materials, on your proxy card.
the
If you received printed copies of
materials
the
instructions in the Notice, you also have the
option to submit your proxy by telephone by
calling the toll-free number listed on your
proxy card. Telephone voting is available 24
hours per day until 11:59 p.m., Eastern
Time, on May 10, 2021.
If you received printed copies of the proxy
materials
the
instructions in the Notice and would like to
submit your proxy by mail, please mark,
sign and date your proxy card and return it
promptly in the postage-paid envelope
provided.
accordance with
in
If your shares of Common Stock are held in street name,
you will receive instructions from your broker, bank or
nominee that you must follow in order to have your
shares of Common Stock voted at the Annual Meeting.
The Board of Directors recommends that stockholders vote FOR each of the proposals on the meeting agenda.
Your vote is important. We urge all stockholders — whether attending the virtual Annual Meeting or not — to vote
and submit their proxies as soon as possible using one of the methods described above.
Enroll in Electronic Delivery Today. Help us save paper, time and money! If you are a
beneficial owner, visit http://www.proxyvote.com or follow the instructions on the
Notice, proxy card or voting instructions. All stockholders may also enroll at https://
enroll.icsdelivery.com/wmi.
Courtney A. Tippy
Corporate Secretary
March 31, 2021
TABLE OF CONTENTS
GENERAL INFORMATION . . . . . . . . . . . . . . . . .
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . .
Nominees for Director
. . . . . . . . . . . . . . . . .
Leadership Structure . . . . . . . . . . . . . . . . . .
Independence of Board Members . . . . . . . . . .
Meetings and Board Committees . . . . . . . . . .
Role in Risk Oversight . . . . . . . . . . . . . . . . . .
Oversight of ESG Risk and Performance . . . . .
Audit Committee . . . . . . . . . . . . . . . . . . . . .
Audit Committee Report
. . . . . . . . . . . . . . . .
Management Development and Compensation
Committee . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Report . . . . . . . . . .
Compensation Committee Interlocks and
Insider Participation . . . . . . . . . . . . . . . . .
Nominating and Governance Committee . . . . .
Related Party Transactions . . . . . . . . . . . . . .
Board of Directors Governing Documents . . . .
Non-Employee Director Compensation . . . . . .
ELECTION OF DIRECTORS (Item 1 on the Proxy
Card)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIRECTOR AND OFFICER STOCK OWNERSHIP . .
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS . . . . . . . . . . . . . . . . .
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . .
Executive Summary . . . . . . . . . . . . . . . . .
2020 Pay-For Performance . . . . . . . . . . . .
Consideration of Stockholder Advisory Vote .
2021 Compensation Program Preview . . . . .
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Our Compensation Philosophy for Named
Executive Officers . . . . . . . . . . . . . . . . .
Overview of Elements of Our 2020
Compensation Program . . . . . . . . . . . . .
How Named Executive Officer Compensation
Decisions are Made . . . . . . . . . . . . . . . .
Named Executives’ 2020 Compensation
Program and Results . . . . . . . . . . . . . . .
Post-Employment and Change in Control
Compensation; Clawback Policies . . . . . .
Other Compensation Policies and Practices. .
Executive Compensation Tables . . . . . . . . . .
Summary Compensation Table . . . . . . . . . .
Grant of Plan-Based Awards in 2020 . . . . . .
Outstanding Equity Awards as of
December 31, 2020 . . . . . . . . . . . . . . . .
Option Exercises and Stock Vested . . . . . . .
Nonqualified Deferred Compensation in
2020 . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments Upon Termination or
Change in Control
. . . . . . . . . . . . . . . . .
Potential Consideration Upon Termination of
Employment . . . . . . . . . . . . . . . . . . . . .
Chief Executive Officer Pay Ratio . . . . . . . . .
Equity Compensation Plan Table . . . . . . . . .
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (Item 2 on the
Proxy Card)
. . . . . . . . . . . . . . . . . . . . . . . .
ADVISORY VOTE ON EXECUTIVE
COMPENSATION (Item 3 on the Proxy Card) . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . .
Page
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PROXY STATEMENT
Waste Management, Inc. is a holding company, and all operations are conducted by its subsidiaries. Our subsidiaries are
operated and managed locally and focus on providing services in distinct geographic areas. Through our subsidiaries, we
are North America’s leading provider of comprehensive waste management environmental services, providing services
throughout the United States (“U.S.”) and Canada, and we are also a leading developer, operator and owner of landfill
gas-to-energy facilities in the U.S.
Our Board of Directors is soliciting your proxy for the 2021 Annual Meeting of Stockholders and at any postponement or
adjournment of the meeting. We are furnishing proxy materials to our stockholders primarily via the Internet. On
March 31, 2021, we sent an electronic notice of how to access our proxy materials and our Annual Report to stockholders
that have previously signed up to receive their proxy materials via the Internet. On March 31, 2021, we began mailing a
Notice of Internet Availability of Proxy Materials to those stockholders that previously have not signed up for electronic
delivery. The Notice contains instructions on how stockholders can access our proxy materials on the website referred to
in the Notice or request that a printed set of the proxy materials be sent to them.
Enroll in Electronic Delivery Today! We encourage stockholders to elect to receive all future proxy materials
electronically, which is free, fast, convenient, environmentally friendly and helps lowers our printing and postage costs.
If you are a beneficial owner, visit http://www.proxyvote.com or follow the instructions on your Notice, proxy card or
voting instructions. All stockholders may also enroll at https://enroll.icsdelivery.com/wmi. Thank you for supporting
our sustainability mission.
Record Date March 17, 2021.
Quorum The holders of a majority of the shares of Common Stock outstanding on the record date must be present in
person or by proxy.
Shares Outstanding There were 422,040,583 shares of our Common Stock outstanding and entitled to vote as of
March 17, 2021.
Attending the Meeting Due to on-going public health concerns related to the COVID-19 pandemic, we will be holding a
virtual Annual Meeting. If you were a stockholder of record as of the close of business on the record date or held shares
through a bank, broker, or nominee on that date, you are entitled to access and participate in the virtual Annual Meeting,
including asking questions, examining the list of registered stockholders and voting shares. To attend the virtual Annual
Meeting, you must use the link provided and enter the 16-digit control number found on your Notice, proxy card, or voting
instructions. If you do not have your 16-digit control number, you will be admitted to the virtual Annual Meeting as a
guest, but you will not have the ability to vote your shares or ask questions at the virtual Annual Meeting. If you are a
beneficial owner, you may contact the bank, broker or other institution where you hold your account if you have questions
about obtaining your control number. We encourage you to access the virtual Annual Meeting before it begins. Online
check-in will start approximately fifteen minutes before the meeting on May 11, 2021. If you have difficulty accessing the
meeting, a phone number for technical support will be available at the virtual Annual Meeting web address on the day of
the meeting.
Virtual Annual Meeting Web Address www.virtualshareholdermeeting.com/WM2021
Submitting Your Proxy Internet, phone, or mail.
Voting and Asking Questions at the Meeting Stockholders can vote and ask questions during the virtual Annual Meeting
by following the instructions available on the meeting website during the meeting. Questions relevant to the business of
the Company or the Annual Meeting may be submitted in a field provided by the virtual meeting platform. An audio
recording of the virtual Annual Meeting, including the question and answer segment, will be available on the “Investors”
webpage at www.wm.com after the meeting. Whether or not you plan to attend the virtual Annual Meeting, it is important
that your shares be represented and voted at the Annual Meeting. Please read the Notice of Annual Meeting of
Stockholders and this Proxy Statement with care and follow the voting instructions to ensure that your shares are
represented at the Annual Meeting.
Changing Your Vote Stockholders of record may revoke their proxy at any time before we vote it at the meeting by
submitting a later-dated proxy via the Internet, by telephone, by mail, by delivering instructions to our Corporate Secretary
2021 Proxy Statement | 1
PROXY STATEMENT
before the Annual Meeting revoking the proxy or by voting during the virtual Annual Meeting. Attendance at the Annual
Meeting, by itself, will not revoke a proxy. If you hold shares through a bank or brokerage firm, you may revoke any prior
voting instructions by contacting that firm.
Votes Required to Adopt Proposals Each share of our Common Stock outstanding on the record date is entitled to one
vote on each of the nine director nominees and one vote on each other matter. To be elected, a director must receive a
majority of the votes cast with respect to that director’s election at the meeting. This means that the number of shares
voted “for” a director must exceed 50% of the votes cast with respect to that director. Each of the other proposals
requires the favorable vote of the holders of a majority of the outstanding shares of Common Stock present, either by
proxy or in person, and entitled to vote on the matter.
Effect of Abstentions and Broker Non-Votes Abstentions will have no effect on the election of directors. For each of
the other proposals, abstentions will have the same effect as a vote against these matters because they are considered
present and entitled to vote on the matters.
If your shares are held by a broker, you may submit your voting instructions to the broker as to how you want your shares
to be voted. If you give the broker instructions, your shares must be voted as you direct. If you do not give voting
instructions for the proposal to ratify selection of the Company’s independent registered public accounting firm, the
broker may vote your shares at its discretion. However, with respect to the election of directors and the advisory vote on
executive compensation, the broker cannot vote your shares without instructions from you; when this happens, it is
called a “broker non-vote.” Broker non-votes are counted in determining the presence of a quorum at the meeting, but
they have no effect on the outcome of the vote on the election of directors or the advisory vote on executive compensation.
Voting Instructions You may receive more than one proxy card depending on how you hold your shares. If you hold
shares through a broker, your ability to submit your voting instructions by phone or over the Internet depends on your
broker’s voting process. You should complete and return each proxy or other voting instruction request provided to you.
If you complete and submit your proxy voting instructions, the persons named as proxies will follow your instructions. If
you submit your proxy but do not give voting instructions, we will vote your shares in accordance with the
recommendation of the Board on each of the proposals as set forth below. If you give us your proxy, your shares will be
voted at the discretion of the proxy holders on any other matters that may properly come before the meeting.
Item
Matter
1 Election of Director Nominees set forth in this Proxy Statement
2 Ratification of Ernst & Young LLP as the Company’s Independent
3 Approve the Company’s Executive Compensation
Registered Public Accounting Firm for fiscal year 2021
Board Vote
Recommendation
FOR each director
nominee
FOR
FOR
Stockholder Proposals and Nominees for the 2022 Annual Meeting The Company will not consider any proposal or
nomination that is not timely or otherwise does not meet the Company’s By-law and Securities and Exchange Commission
(“SEC”) requirements for submitting a proposal or nomination. We also ask that you email a courtesy copy of any notice
to GCLegal@wm.com. A copy of our By-laws may be obtained free of charge by writing to our Corporate Secretary and is
available in the “ESG — Corporate Governance” section of the “Investors” page on our website at www.wm.com.
Stockholder Proposals: Eligible stockholders who wish to submit a proposal for inclusion in the proxy statement pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for our 2022 Annual Meeting
must submit their proposal to our Corporate Secretary at Waste Management, Inc., 800 Capitol Street, Suite 3000,
Houston, Texas 77002 for receipt on or before November 29, 2021. The proponent and the proposal must comply with the
requirements set forth in the federal securities laws, including Rule 14a-8 of the Exchange Act, in order to be included in
the Company’s proxy statement and proxy card for the 2021 Annual Meeting.
2 |
2021 Proxy Statement
PROXY STATEMENT
Advance Notice Proposals and Nominations: In addition, the Company’s By-laws establish advance notice procedures that
must be complied with for stockholders to bring proposals that are not included in the Company’s proxy materials and
nominations of persons for election as directors (other than pursuant to our proxy access By-law discussed below)
before an annual meeting of stockholders. In accordance with our By-laws, for a proposal or nominee not included in our
proxy materials to be properly brought before the 2022 Annual Meeting, a stockholder’s notice must be delivered to our
Corporate Secretary at Waste Management, Inc., 800 Capitol Street, Suite 3000, Houston, Texas 77002 no earlier than
December 12, 2021 and no later than January 11, 2022 and must contain the information specified in the Company’s
By-laws.
Proxy Access Nominations: The Company’s By-laws permit a stockholder or group of up to 20 stockholders owning 3% or
more of the Company’s outstanding Common Stock continuously for at least three years to nominate and include in the
Company’s proxy materials director nominees constituting up to the greater of 20% of the Board of Directors or two
individuals, provided the stockholder(s) and the nominee(s) satisfy the requirements specified in the Company’s By-laws.
Notice of proxy access director nominees must be delivered to our Corporate Secretary at Waste Management, Inc., 800
Capitol Street, Suite 3000, Houston, Texas 77002 no earlier than October 30, 2021, and no later than November 29, 2021,
together with other information required by the Company’s By-laws.
Expenses of Solicitation We pay the cost of preparing, assembling and mailing this proxy-soliciting material. In addition
to the use of the mail, proxies may be solicited personally, by Internet or telephone, or by Waste Management officers and
employees of the Company’s subsidiaries without additional compensation. We pay all costs of solicitation, including
certain expenses of brokers and nominees who mail proxy materials to their customers or principals. Also, Innisfree
M&A Incorporated has been hired to help in the solicitation of proxies for the 2021 Annual Meeting for a fee of $15,000
plus associated costs and expenses.
Annual Report A copy of our Annual Report on Form 10-K for the year ended December 31, 2020, which includes our
financial statements for fiscal year 2020, is included with this Proxy Statement. The Annual Report on Form 10-K is not
incorporated by reference into this Proxy Statement or deemed to be a part of the materials for the solicitation of proxies.
Householding Information We have adopted a procedure approved by the SEC called “householding.” Under this
procedure, stockholders of record who have the same address and last name and do not participate in electronic delivery
of proxy materials will receive only one copy of the Proxy Statement and Annual Report unless we are notified that one or
more of these individuals wishes to receive separate copies. This procedure helps reduce our printing costs and postage
fees.
If you wish to receive a separate copy of this Proxy Statement and the Annual Report, please contact: Waste Management,
Inc., Corporate Secretary, 800 Capitol Street, Suite 3000, Houston, Texas 77002, telephone 713-512-6200.
If you do not wish to participate in householding in the future and prefer to receive separate copies of the proxy materials,
please contact: Broadridge Financial Solutions, Attention Householding Department, 51 Mercedes Way, Edgewood,
NY 11717, telephone 1-866-540-7095. If you are currently receiving multiple copies of proxy materials and wish to
receive only one copy for your household, please contact Broadridge.
2021 Proxy Statement | 3
BOARD OF DIRECTORS
Our Board of Directors currently has ten members. Each member of our Board is elected annually. Mr. Frank M. Clark, Jr.
has reached the retirement age set forth in the Company’s Corporate Governance Guidelines; therefore, he is not standing
for re-election and his term as a director of the Company will expire at the 2021 Annual Meeting. The Board of Directors
intends to reduce the size of the Board to nine members effective as of the expiration of Mr. Clark’s term at the 2021
Annual Meeting.
Nominees for Director
Committee
Management
Development &
Compensation
Nominating &
Governance
C
C
Name
Age
Tenure
Independent
Audit
James C. Fish, Jr.
Andrés R. Gluski
Victoria M. Holt
Kathleen M. Mazzarella
Sean E. Menke
William B. Plummer
John C. Pope
Maryrose T. Sylvester
Thomas H. Weidemeyer
58
63
63
61
52
62
71
55
73
2016 – Present
2015 – Present
2013 – Present
2015 – Present
2021 – Present
2019 – Present
1997 – Present
2021 – Present
2005 – Present
Chair, as of 2021 Annual Meeting C
Member
Leadership Structure
C
Mr. Thomas H. Weidemeyer has served as our Non-Executive Chairman of the Board since May 2018 and presides over
all meetings of the Board, including executive sessions that only non-employee directors attend. Stockholders and
interested parties wishing to communicate with the Board or the non-employee directors should address their
communications to Mr. Thomas H. Weidemeyer, Non-Executive Chairman of the Board, c/o Waste Management, Inc., P.O.
Box 53569, Houston, Texas 77052-3569.
We separated the roles of Chairman of the Board and Chief Executive Officer at our Company in 2004. We believe that
having a Non-Executive Chairman of the Board is in the best interests of the Company and stockholders, due in part to the
ever-increasing demands made on boards of directors under federal securities laws, national stock exchange rules and
other federal and state regulations. The separation of the positions allows our Chairman of the Board to focus on
management of Board matters and allows our Chief Executive Officer to focus his attention on managing our business.
Additionally, we believe the separation of those roles contributes to the independence of the Board in its oversight role
and in assessing the Chief Executive Officer and management generally. The Non-Executive Chairman’s responsibilities
include leading full Board meetings and executive sessions and managing the Board function. The Board elected
Mr. Weidemeyer to serve as Chairman of the Board due to his many years as a valuable member of our Board, his
experience serving on boards of other large public companies and his extensive operational and leadership experience.
Mr. Weidemeyer also serves on all three Board committees.
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2021 Proxy Statement
BOARD OF DIRECTORS
Independence of Board Members
The Board of Directors has determined that each of the following eight non-employee director nominees are independent
in accordance with the New York Stock Exchange listing standards: Andrés R. Gluski, Victoria M. Holt, Kathleen M.
Mazzarella, Sean E. Menke, William B. Plummer, John C. Pope, Maryrose T. Sylvester and Thomas H. Weidemeyer.
James C. Fish, Jr., our President and Chief Executive Officer, is also a director of the Company. As an employee of the
Company, Mr. Fish is not an “independent” director.
To assist the Board in determining independence, the Board of Directors adopted categorical standards of director
independence, which meet or exceed the requirements of the New York Stock Exchange. These standards specify certain
relationships that are prohibited in order for the non-employee director to be deemed independent. The categorical
standards our Board uses in determining independence are included in our Corporate Governance Guidelines, which can
be found on our website. In addition to these categorical standards, our Board makes a subjective determination of
independence considering relevant facts and circumstances.
The Board reviewed all commercial and non-profit affiliations of each non-employee director and the dollar amount of all
transactions between the Company and each entity with which a non-employee director is affiliated to determine
independence. These transactions consisted of the Company, through its subsidiaries, providing waste management
services in the ordinary course of business and the Company’s subsidiaries purchasing goods and services in the ordinary
course of business and included commercial dealings with Graybar Electric Company, Inc., Sabre Corporation and The
AES Corporation. Ms. Mazzarella, Mr. Menke and Mr. Gluski, respectively, serve as chief executive officer of these entities.
The Board concluded there are no transactions between the Company and any entity with which a non-employee director
is affiliated that (a) are prohibited by our categorical standards of independence, (b) are material individually or in the
aggregate or (c) give rise to a material direct or indirect interest for that non-employee director. Accordingly, the Board
has determined that each non-employee director candidate meets the categorical standards of independence and that
there are no relationships that would affect independence.
Meetings and Board Committees
Last year the Board held seven regular meetings and four special meetings, and each committee of the Board met
independently as set forth below. Each director attended at least 75% of the meetings of the Board and the committees
on which he or she served. In addition, all directors attended the 2020 virtual Annual Meeting of Stockholders. We do not
have a formal policy, but it has been longstanding practice that all directors attend the annual meeting of stockholders
unless there are unavoidable schedule conflicts or unforeseen circumstances.
The Board appoints committees to help carry out its duties. Committee members take on greater responsibility for key
issues. All members of the Board are invited to attend, and do generally attend, all committee meetings. The committees
review meeting results and recommendations with the full Board. The Board has three separate standing committees:
the Audit Committee; the Management Development and Compensation Committee (the “MD&C Committee”); and the
Nominating and Governance Committee. Additionally, the Board has the power to appoint additional committees, as it
deems necessary.
Role in Risk Oversight
Our executive officers have primary responsibility for risk management within our Company. Our Board of Directors
oversees risk management to ensure that the processes designed, implemented and maintained by our executives are
functioning as intended and adapted when necessary to respond to changes in our Company’s strategy as well as
emerging risks. The primary means by which our Board oversees our risk management processes is through its regular
communications with management and by regularly reviewing our enterprise risk management, or ERM, framework. We
believe that our leadership team’s engagement and communication methods are supportive of comprehensive risk
management practices and that our Board’s involvement is appropriate to ensure effective oversight.
Our ERM process is supported by regular inquiries of our Company’s Senior Leadership Team, and additional members
of management and operations leadership across the enterprise, as to the risks, including emerging risks, that may
affect the execution of our strategic priorities or achievement of our long-term outlook. For the most significant risks, the
ERM process is designed to generate actionable insights that are actively discussed and reviewed with the Senior
Leadership Team and our Board. Risks and opportunities are assessed and then prioritized using internal evaluations of
2021 Proxy Statement | 5
BOARD OF DIRECTORS
financial impact, likelihood of occurrence, outlook for changes in the nature or extent of risk exposure and a self-
assessment of the Company’s confidence in existing risk mitigation efforts. The Senior Leadership Team reviews the
outcomes of the risk assessments, focusing largely on the estimated scope of impacts, as well as the adequacy of
current support by internal staff, the sufficiency of financial support for mitigation measures needed to manage and
reduce risk, and the sufficiency of any third-party expertise that may be necessary to supplement internal resources. All
significant risks have a standardized scorecard that includes forward-looking action plans with measurable indicators
and progress updates on action plans from previous assessments.
At quarterly Audit Committee meetings, management provides an ERM report and a deep-dive on specific risk topics.
Additionally, risks related to our strategy, operations and financial results are also addressed in our Board meetings. Our
President and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Legal Officer report to our
Board and Audit Committee at these meetings, and other members of management periodically attend and present
information, including those responsible for our Internal Audit, Environmental Audit, Business Ethics and Compliance,
People, Government Affairs, Digital, Insurance, Safety, Finance and Accounting functions. These presentations allow our
directors to have direct communication with management and assess management’s evaluation and administration of
the Company’s risk profile through our ERM process. Examples of key areas of assessment addressed by our ERM
process and overseen by our Audit Committee and Board include the following:
industry disruption; revenue
management; legal and regulatory; capital allocation; supply chain management; service to customers; cost discipline;
process improvement; physical infrastructure; brand management; health & safety; human capital; information security;
technology and currency, interest rate and commodity risk management. Additionally, in accordance with New York
Stock Exchange requirements, the Audit Committee is responsible for discussing our major financial risk exposures,
steps management has taken to monitor and control such exposures and the Company’s process for risk assessment
and management, and quarterly reports are made to the Audit Committee on financial and compliance risks.
Management is encouraged to communicate with our directors with respect to any issues or developments that may
require consideration between regularly scheduled Board meetings, and members of management are regularly in
direct contact with our Non-Executive Chairman of the Board and our committee chairs. Our Non-Executive Chairman of
the Board also facilitates communications with our Board of Directors as a whole and is integral in initiating the
discussions among the independent directors necessary to ensure management is adequately evaluating and overseeing
risks to our Company.
Oversight of ESG Risk and Performance
As North America’s leading provider of comprehensive waste management environmental services, sustainability and
environmental stewardship is embedded in all that we do. We have enabled a people-first, technology-led focus to drive
our mission, that we are Always Working for a Sustainable Tomorrow. As a result, it would not be effective, or possible,
to assign responsibility for oversight of our environmental, social and governance (“ESG”) risk and performance to any
one committee of our Board of Directors. Rather, various aspects of ESG, which are already organically a part of our
Board and committees’ oversight of our performance, risk management and strategic vision, are addressed in different
committees and with our full Board of Directors, as appropriate depending on the subject matter.
Our Board has a dedicated annual strategic planning session with our Senior Leadership Team and receives focused
strategic updates quarterly. Given the nature of our business, those sessions will address topics such as sustainable
operations, waste diversion, recycling business improvements, potentially disruptive technologies and environmental
impacts, risks and opportunities. In 2020, the Board received a dedicated strategy update regarding ESG and climate
impacts, responses and goal setting. Additionally, reflective of our people-first strategy and the importance of inclusion
and diversity and safety to our organization, the full Board of Directors receives annual in-depth reports on leadership,
workforce and supplier diversity, as well as quarterly safety performance updates. Through these reports, our Board
directly oversees our progress toward inclusion and diversity and safety goals.
Our Audit Committee also plays a significant role in oversight of ESG risk and performance. As discussed above, our
Audit Committee receives a quarterly ERM update with deep-dives into specific risk topics. At least annually, one of the
quarterly deep-dives will look at an aspect of ESG risk. Additionally, the Audit Committee receives quarterly reports on
our compliance programs, including ethics and environmental and safety audit, with an annual in depth review of our
compliance programs. Our Audit Committee also has responsibility for oversight of information and cyber security and
assessment of cyber threats and defenses. Our Audit Committee receives reports from our Digital organization at least
6 |
2021 Proxy Statement
BOARD OF DIRECTORS
twice a year. Topics historically covered in such reports include third party evaluation of our technology infrastructure
and information security management system against the industry-standard NIST (National Institute of Standards and
Technology) cybersecurity framework; risk mitigation through the Company’s enterprise-wide cyber security training,
including our Board of Directors, conducted at least annually, regular simulated phishing tests and third party penetration
testing; review of the Company’s cyber incident insurance coverage and external cyber incident resources and
consideration of applicable laws and regulations, including those related to privacy.
Additional areas of ESG oversight managed by our MD&C Committee include review of employee health, welfare and
benefit programs and compensation plan risk assessment. The Committee also engages in quarterly sessions with our
President and Chief Executive Officer and our Senior Vice President and Chief People Officer regarding talent development
and succession planning at several levels of our organization. A critical component of these talent development and
succession planning efforts is the recognition that inclusion and diversity are part of the Company’s core values.
Recognizing the importance of social justice, our People programs overseen by our MD&C Committee embrace and
cultivate respect, trust, open communication and diversity of thought and people.
Strong and effective corporate governance is established and overseen by our Nominating & Governance Committee.
The Committee leads the process for annual Board, committee and director evaluations and is responsible for review
and recommendation of Board and committee composition and leadership. In connection with performing this vital
function, the Nominating & Governance Committee reviews the skills, expertise and qualifications of our existing directors,
as well as potential external candidates, and considers matters such as inclusion and diversity, tenure and Board
refreshment. These efforts deliver on the Nominating & Governance Committee’s purpose to identify and nominate the
best possible candidates to guide and support the Company’s strategy and its commitment to serve and care for our
customers, the environment, the communities in which we work and our stockholders.
For additional information about the topics discussed above, including ESG goals, metrics and progress, we encourage
stockholders to review our 2020 Sustainability Report at https://sustainability.wm.com. Our 2020 Sustainability Report
does not constitute a part of, and is not incorporated by reference into, this Proxy Statement or any report filed with the
SEC.
2021 Proxy Statement | 7
THE AUDIT COMMITTEE
BOARD OF DIRECTORS
Number of Meetings Held in 2020: 8
Victoria M. Holt
Sean E. Menke
Thomas H. Weidemeyer
Members:
William B. Plummer, Chairman
Frank M. Clark, Jr.
Andrés R. Gluski
Mr. Plummer has been the Chairman of our Audit Committee since May 2020. Mr. Menke was appointed to our Audit
Committee on March 15, 2021, which was after the Audit Committee’s review of our Annual Report on Form 10-K. Each
member of our Audit Committee satisfies the additional New York Stock Exchange independence standards for audit
committees set forth in Section 10A of the Exchange Act. Our Board of Directors has determined that Audit Committee
Chairman Mr. Plummer, Mr. Clark, Mr. Gluski, and Ms. Holt are audit committee financial experts as defined by the SEC
based on a thorough review of their education and financial and public company experience. Additional information
regarding our directors’ expertise and qualifications is available under “Election of Directors” below.
Key Functions
The Audit Committee’s duties are set forth in a written charter that was approved by the Board of Directors. A copy of the
charter can be found on our website. The Audit Committee generally is responsible for overseeing all matters relating to
our financial statements and reporting, independent auditors and internal audit function. As part of its function, the
Audit Committee reports the results of all of its reviews to the full Board. In fulfilling its duties, the Audit Committee, has
the following responsibilities:
Administrative Responsibilities
• Report to the Board, at least annually, all public company audit committee memberships by members of the Audit
Committee;
• Perform an annual review of its performance relative to its charter and report the results of its evaluation to the full
Board; and
• Adopt an orientation program for new Audit Committee members.
Financial Statements
• Review financial statements and Forms 10-K and 10-Q with management and the independent auditor;
• Review all earnings press releases and discuss with management the type of earnings guidance that we provide to
analysts and rating agencies;
• Discuss with the independent auditor any material changes to our accounting principles and matters required to be
communicated by Public Company Accounting Oversight Board (United States) Auditing Standard No. 1301
Communications with Audit Committees;
• Review our financial reporting, accounting and auditing practices with management, the independent auditor and our
internal auditors;
• Review management’s and the independent auditor’s assessment of the adequacy and effectiveness of internal
controls over financial reporting; and
• Review executive officer certifications related to our reports and filings.
Independent Auditor
• Engage an independent auditor, determine the auditor’s compensation and replace the auditor if necessary;
• Review the independence of the independent auditor and establish our policies for hiring current or former employees
of the independent auditor;
• Evaluate the lead partner of our independent audit team and review a report, at least annually, describing the
independent auditor’s internal control procedures; and
• Pre-approve all services, including non-audit engagements, provided by the independent auditor.
Internal Audit
• Review the plans, staffing, reports and activities of the internal auditors; and
• Review and establish procedures for receiving, retaining and handling complaints, including anonymous complaints
by our employees, regarding accounting, internal controls and auditing matters.
8 |
2021 Proxy Statement
BOARD OF DIRECTORS
AUDIT COMMITTEE REPORT
The role of the Audit Committee is, among other things, to oversee the Company’s financial reporting process on behalf
of the Board of Directors, to recommend to the Board whether the Company’s financial statements should be included
in the Company’s Annual Report on Form 10-K and to select the independent auditor for ratification by stockholders.
Company management is responsible for the Company’s financial statements as well as for its financial reporting
process, accounting principles and internal controls. The Company’s independent auditors are responsible for
performing an audit of the Company’s financial statements and expressing an opinion as to the conformity of such
financial statements with accounting principles generally accepted in the United States.
The Audit Committee has reviewed and discussed the Company’s audited financial statements as of and for the year
ended December 31, 2020 with management and the independent registered public accounting firm, and has taken the
following steps in making its recommendation that the Company’s financial statements be included in its annual report:
• First, the Audit Committee discussed with Ernst & Young LLP, the Company’s independent registered public accounting
firm for fiscal year 2020, those matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (United States) and the SEC, including information regarding the scope and
results of the audit. These communications and discussions are intended to assist the Audit Committee in overseeing
the financial reporting and disclosure process.
• Second, the Audit Committee discussed with Ernst & Young LLP its independence and received from Ernst & Young
LLP a letter concerning independence as required under applicable independence standards for auditors of public
companies. This discussion and disclosure helped the Audit Committee in evaluating such independence. The Audit
Committee also considered whether the provision of other non-audit services to the Company is compatible with the
auditor’s independence.
• Third, the Audit Committee met periodically with members of management, the internal auditors and Ernst & Young
LLP to review and discuss internal controls over financial reporting. Further, the Audit Committee reviewed and
discussed management’s report on internal control over financial reporting as of December 31, 2020, as well as Ernst
& Young LLP’s report regarding the effectiveness of internal control over financial reporting.
• Finally, the Audit Committee reviewed and discussed, with the Company’s management and Ernst & Young LLP, the
Company’s audited consolidated balance sheet as of December 31, 2020, and consolidated statements of operations,
comprehensive income, cash flows and changes in equity for the fiscal year ended December 31, 2020, including the
quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the
clarity of the disclosure.
The Committee has also discussed with the Company’s internal auditors and independent registered public accounting
firm the overall scope and plans of their respective audits. The Committee meets periodically with both the internal
auditors and independent registered public accounting firm, with and without management present, to discuss the
results of their examinations and their evaluations of the Company’s internal controls over financial reporting.
The members of the Audit Committee are not engaged in the accounting or auditing profession and, consequently, are
not experts in matters involving auditing or accounting. In the performance of their oversight function, the members of
the Audit Committee necessarily relied upon the information, opinions, reports and statements presented to them by
Company management and by the independent registered public accounting firm.
Based on the reviews and discussions explained above (and without other independent verification), the Audit Committee
recommended to the Board (and the Board approved) that the Company’s financial statements be included in its annual
report for its fiscal year ended December 31, 2020. The Committee has also approved the selection of Ernst & Young LLP
as the Company’s independent registered public accounting firm for fiscal year 2021.
The Audit Committee of the Board of Directors
William B. Plummer, Chairman
Frank M. Clark, Jr.
Andrés R. Gluski
Victoria M. Holt
Thomas H. Weidemeyer
2021 Proxy Statement | 9
THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
BOARD OF DIRECTORS
Number of Meetings Held in 2020: 5
John C. Pope
Maryrose T. Sylvester
Thomas H. Weidemeyer
Members:
Frank M. Clark, Jr., Chairman
Andrés R. Gluski
Kathleen M. Mazzarella
William B. Plummer
Mr. Clark has served as the Chairman of our MD&C Committee since May 2011. Ms. Sylvester was appointed to our
MD&C Committee on March 15, 2021, which was after the MD&C Committee’s approval of the Compensation Committee
Report below. Each member of our MD&C Committee is independent in accordance with the rules and regulations of the
New York Stock Exchange. Chairman Clark has reached the retirement age set forth in the Company’s Corporate
Governance Guidelines and is not standing for re-election. In February 2021, the Nominating and Governance Committee
recommended, and the Board approved, appointment of Mr. Gluski to become Chairman of our MD&C Committee,
effective upon the expiration of Chairman Clark’s term as a director of the Company at the 2021 Annual Meeting.
Key Functions
Our MD&C Committee is responsible for overseeing our executive officer compensation, as well as developing the
Company’s compensation philosophy generally. The MD&C Committee’s written charter, which was approved by the
Board of Directors, can be found on our website. In fulfilling its duties, the MD&C Committee has the following
responsibilities:
• Review and establish policies governing the compensation and benefits of our executive officers;
• Approve the compensation of our executive officers and set the bonus plan goals for those individuals;
• Conduct an annual evaluation of our Chief Executive Officer by all independent directors and set his compensation;
• Oversee the administration of our equity-based incentive plans;
• Review the results of the stockholder advisory vote on executive compensation and consider any implications of such
voting results on the Company’s compensation programs;
• Recommend to the full Board new Company compensation and benefit plans or changes to our existing plans;
• Evaluate and recommend to the Board the compensation paid to our non-employee directors;
• Review the independence of the MD&C Committee’s compensation consultant annually; and
• Perform an annual review of its performance relative to its charter and report the results of its evaluation to the full
Board.
In overseeing compensation matters, the MD&C Committee may delegate authority for day-to-day administration and
interpretation of the Company’s plans, including selection of participants, determination of award levels within plan
parameters, and approval of award documents, to Company employees. However, the MD&C Committee may not
delegate any authority to Company employees under those plans for matters affecting the compensation and benefits of
the executive officers.
COMPENSATION COMMITTEE REPORT
The MD&C Committee has reviewed and discussed the Compensation Discussion and Analysis, beginning on page 23,
with management. Based on their review and discussions, the MD&C Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement.
The Management Development and Compensation Committee of the Board of Directors
Frank M. Clark, Jr., Chairman
Andrés R. Gluski
Kathleen M. Mazzarella
William B. Plummer
John C. Pope
Thomas H. Weidemeyer
10 |
2021 Proxy Statement
BOARD OF DIRECTORS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2020, Ms. Holt, Ms. Mazzarella and Messrs. Clark, Gluski, Plummer, Pope and Weidemeyer served on the MD&C
Committee. No member of the MD&C Committee was an officer or employee of the Company during 2020; no member of
the MD&C Committee is a former officer of the Company; and during 2020, none of our executive officers served as a
member of a board of directors or compensation committee of any entity that has one or more executive officers who
serve on our Board of Directors or MD&C Committee.
THE NOMINATING AND GOVERNANCE COMMITTEE
Members:
Kathleen M. Mazzarella, Chairman
Victoria M. Holt
Ms. Mazzarella was named Chairman of our Nominating and Governance Committee in May 2018. Each member of our
Nominating and Governance Committee is independent in accordance with the rules and regulations of the New York
Stock Exchange.
John C. Pope
Thomas H. Weidemeyer
Number of Meetings Held in 2020: 5
Key Functions
The Nominating and Governance Committee has a written charter that has been approved by the Board of Directors and
can be found on our website. It is the duty of the Nominating and Governance Committee to oversee matters regarding
corporate governance.
In fulfilling its duties, the Nominating and Governance Committee has the following
responsibilities:
• Review and recommend the composition of our Board, including the nature and duties of each of our committees, in
accordance with our Corporate Governance Guidelines;
• Evaluate the charters of each of the committees and recommend directors to serve as committee chairs;
• Review individual director’s performance in consultation with the Chairman of the Board and review the overall
effectiveness of the Board;
• Recommend retirement policies for the Board, the terms for directors and the proper ratio of employee directors to
outside directors;
• Perform an annual review of its performance relative to its charter and report the results of its evaluation to the full
Board;
• Review stockholder proposals received for inclusion in the Company’s proxy statement and recommend action to be
taken with regard to the proposals to the Board; and
• Identify and recommend to the Board candidates to fill director vacancies.
The Nominating and Governance Committee is continually engaged in reviewing the skills, expertise and qualifications
of our existing directors, as well as potential external candidates, to identify and nominate the best possible candidates
to guide and support the Company’s strategy and its commitment to serve and care for our customers, the environment,
the communities in which we work and our stockholders. This is a process that the Nominating and Governance
Committee believes should continue to involve significant subjective judgments.
With the assistance of an external consultant, the Nominating and Governance Committee identified Mr. Sean E. Menke
and Ms. Maryrose T. Sylvester as potential director candidates. Following a robust consideration process summarized
below and recommendation by the Nominating and Governance Committee, the Board increased its size to ten members
and elected Mr. Menke and Ms. Sylvester to serve as members of our Board, effective March 15, 2021. The Nominating
and Governance Committee also recommended, and the Board approved, appointment of Mr. Menke to the Audit
Committee and appointment of Ms. Sylvester to the MD&C Committee. Mr. Menke and Ms. Sylvester are nominees for
re-election at the Annual Meeting.
2021 Proxy Statement | 11
BOARD OF DIRECTORS
The Nominating and Governance Committee considers current and future needs of the Board as a whole and uses a
matrix of experience, skills and expertise to develop nominee criteria. The Committee evaluates nominees based on all
factors it deems relevant, including personal and professional integrity and sound judgment, business and professional
skills and experience, independence, possible conflicts of interest, diversity, and the potential for effectiveness, in
conjunction with the other directors, to serve the long-term interests of the stockholders. The Committee seeks diversity
in business experience, professional expertise, gender and racial / ethnic background. The Nominating and Governance
Committee has considered the gender and racial / ethnic composition of our Board, including the presence of three
women, Mr. Clark’s and Mr. Plummer’s self-identification as African American / Black and Mr. Gluski’s self-identification
as Hispanic, and believes these factors, among numerous others, contribute to a valuable diversity of background,
thoughts and opinions on our Board.
When nominating and re-nominating director candidates, the Committee also considers the need for Board refreshment
and the tenure and age of individual directors and the Board as a whole. The Committee’s primary formal mechanism to
support Board refreshment is the retirement age policy set forth in the Corporate Governance Guidelines, which includes
the guideline that directors will not stand for reelection to the Board after reaching age 75 unless the Nominating and
Governance Committee determines otherwise. The Committee believes that existing practices have been effective at
bringing in new expertise and perspectives, while also maintaining the valuable industry knowledge, experience and
stability that our longer-tenured directors provide.
The Nominating and Governance Committee will consider all potential nominees on their merits and welcomes
suggestions from directors, members of management, and stockholders. Before being recommended for nomination
by the Committee, director candidates are interviewed by the Chief Executive Officer, the Chairman of the Nominating
and Governance Committee, and the Non-Executive Chairman of the Board, as well as additional members of the Board
and an outside consultant. To suggest a nominee for consideration by the Nominating and Governance Committee, you
should submit your candidate’s name, together with biographical information and his or her written consent to
nomination to the Chairman of the Nominating and Governance Committee, Waste Management, Inc., 800 Capitol Street,
Suite 3000, Houston, Texas 77002, between October 30, 2021 and November 29, 2021. Also, see “Stockholder Proposals
and Nominees for the 2022 Annual Meeting — Proxy Access Nominations” for additional information about timing,
notification and informational requirements under the Company’s proxy access By-law provisions.
Related Party Transactions
The Board of Directors has adopted a written Related Party Transactions Policy for the review and approval or ratification
of related party transactions. Our policy generally defines related party transactions as current or proposed transactions
in excess of $120,000 in which (a) the Company is a participant and (b) any director, executive officer or immediate family
member of any director or executive officer has a direct or indirect material interest. In addition, the policy sets forth
certain transactions that will not be considered related party transactions, including (a) executive officer compensation
and benefit arrangements; (b) director compensation arrangements; (c) business travel and expenses, advances and
reimbursements in the ordinary course of business; (d) indemnification payments and advancement of expenses, and
payments under directors’ and officers’ indemnification insurance policies; (e) any transaction between the Company
and any entity in which a related party has a relationship solely as a director, a less than 5% equity holder, or an employee
(other than an executive officer) and (f) purchases of Company debt securities, provided that the related party has a
passive ownership of no more than 2% of the principal amount of any outstanding series. The Nominating and Governance
Committee is responsible for overseeing the policy.
All executive officers and directors are required to notify the Chief Legal Officer or the Corporate Secretary as soon as
practicable of any proposed transaction that they or their family members are considering entering into that involves the
Company. The Chief Legal Officer will determine whether potential transactions or relationships constitute related party
transactions that must be referred to the Nominating and Governance Committee. Any member of the Committee who
has an interest in a transaction presented for consideration will abstain from voting on the related party transaction.
The Nominating and Governance Committee will review a detailed description of the transaction, including the terms of
the transaction; the business purpose of the transaction; the benefits to the Company and to the relevant related party;
and whether the transaction would require a waiver of the Company’s Code of Conduct.
12 |
2021 Proxy Statement
BOARD OF DIRECTORS
In determining whether to approve a related party transaction, the Nominating and Governance Committee will consider,
among other things, whether:
• the terms of the related party transaction are fair to the Company and such terms would be reasonable in an
arms-length transaction;
• there are business reasons for the Company to enter into the related party transaction;
• the related party transaction would impair the independence of any non-employee director;
• the related party transaction would present an improper conflict of interest for any director or executive officer of
the Company; and
• the related party transaction is material to the Company or the individual.
The Nominating and Governance Committee’s consideration of related party transactions and its determination of
whether to approve such a transaction are reflected in the minutes of the Nominating and Governance Committee’s
meetings. As discussed above under “Independence of Board Members,” the Company reviewed all transactions between
the Company and each entity with which a non-employee director is affiliated, as well as all transactions between the
Company and each entity with which an executive officer is affiliated, and the Company is not aware of any transactions
in 2020 that are required to be disclosed.
Board of Directors Governing Documents
Stockholders may obtain copies of our Corporate Governance Guidelines, the charters of the Audit Committee, the MD&C
Committee, and the Nominating and Governance Committee, and our Code of Conduct free of charge by contacting the
Corporate Secretary, c/o Waste Management, Inc., 800 Capitol Street, Suite 3000, Houston, Texas 77002 or by accessing
the “ESG — Corporate Governance” section of the “Investors” page on our website at www.wm.com.
Non-Employee Director Compensation
Our non-employee director compensation program consists of equity awards and cash consideration. Director
compensation is recommended annually by the MD&C Committee, with the assistance of an independent third-party
consultant, and set by action of the Board of Directors. The Board’s goal in designing directors’ compensation is to
provide a competitive package that will enable the Company to attract and retain highly skilled individuals with relevant
experience. The compensation is also designed to reward the time and talent required to serve on the board of a company
of our size and complexity. The Board seeks to provide sufficient flexibility in the form of compensation delivered to meet
the needs of different individuals while ensuring that a substantial portion of directors’ compensation is linked to the
long-term success of the Company.
2020 Non-Employee Director Compensation
In February 2020, the MD&C Committee conducted its annual review of non-employee director compensation with the
assistance of the independent third-party consultant. The MD&C Committee recommended, and the Board of Directors
approved, the following increases in non-employee director compensation, and such increases took effect with the next
installments that were paid or granted in July 2020: (a) annual grant of Common Stock increased from $155,000 to
$165,000; (b) annual cash retainer increased from $110,000 to $115,000 and (c) annual cash retainer for the Nominating
and Governance Committee Chair increased from $15,000 to $20,000. Prior to this change, non-employee director
compensation had been held flat since 2017.
Equity Compensation
Non-employee directors receive an annual grant of shares of Common Stock under the Company’s 2014 Stock Incentive
Plan. The shares are fully vested at the time of grant; however, non-employee directors are required to hold all net
shares until one year after retirement and are subject to ownership guidelines, as discussed below. The grant of shares
is generally made in two equal installments, and the number of shares issued is based on the market value of our
Common Stock on the dates of grant, which are typically January 15 and July 15 of each year. Each non-employee
director serving at the time received a grant of Common Stock valued at approximately $77,500 in January 2020.
Pursuant to the compensation increases discussed above, each non-employee director serving at the time received a
grant of Common Stock valued at approximately $82,500 in July 2020. Mr. Weidemeyer received an additional grant of
Common Stock valued at approximately $50,000 in each of January 2020 and July 2020 for his service as Non-Executive
Chairman of the Board in 2020.
2021 Proxy Statement | 13
Cash Compensation
All non-employee directors receive an annual cash retainer for Board service and additional cash retainers for serving
as a committee chair. Directors do not receive meeting fees in addition to the retainers. The annual cash retainer is
generally paid in advance in two equal installments in January and July of each year. The table below sets forth the cash
retainers for 2020, after giving effect to the compensation increases discussed above:
BOARD OF DIRECTORS
Annual Retainer
Annual Chair Retainers
$115,000
$100,000 for Non-Executive Chairman
$25,000 for Audit Committee Chair
$20,000 for MD&C Committee Chair
$20,000 for Nominating and Governance Committee Chair
Stock Ownership Guidelines for Non-Employee Directors
Our non-employee directors are subject to ownership guidelines that establish a minimum ownership level and require
that all net shares received in connection with a stock award, after selling shares to pay all applicable taxes, be held
during their tenure as a director and for one year following termination of Board service. The MD&C Committee amended
the ownership guidelines for employees and directors in November 2020 to increase the assumed stock price from $80
per share to $100 per share, to better reflect more recent sustained market prices for our Common Stock since the prior
revision in November 2018. As a result, non-employee directors are now required to hold 5,750 shares, valued at
approximately five times the 2020 annual cash retainer for non-employee directors. There is no deadline for non-
employee directors to reach their ownership guideline; however, the MD&C Committee performs regular reviews to
confirm that all non-employee directors are in compliance or are showing sustained progress toward achievement of
their ownership guideline. All of our non-employee directors have reached the ownership guideline, except our newest
directors, Mr. Menke, Mr. Plummer and Ms. Sylvester, are making appropriate progress toward the ownership guideline.
Additionally, our Insider Trading Policy provides that directors are not permitted to hedge their ownership of Company
securities, including trading in options, warrants, puts and calls or similar derivative instruments on any security of the
Company or selling any security of the Company “short.”
Director Compensation Table
The table below shows the aggregate cash paid, and stock awards issued, to the non-employee directors in 2020 in
accordance with the descriptions set forth above:
Name
Frank M. Clark, Jr.
Andrés R. Gluski
Patrick W. Gross(2)
Victoria M. Holt
Kathleen M. Mazzarella
William B. Plummer(3)
John C. Pope
Thomas H. Weidemeyer
Fees Earned
or Paid in
Cash ($)
132,500
112,500
67,500
112,500
130,000
129,327
112,500
212,500
Stock
Awards
($)(1)
159,973
159,973
77,501
159,973
159,973
159,973
159,973
259,978
Total ($)
292,473
272,473
145,001
272,473
289,973
289,300
272,473
472,478
(1) Amounts in this column represent the grant date fair value of stock awards granted in 2020, in accordance
with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The grant date
fair value of the awards is equal to the number of shares issued multiplied by the average of the high and
low market price of our Common Stock on each date of grant; there are no assumptions used in the
valuation of shares.
(2) As of the 2020 Annual Meeting, Mr. Gross had reached the retirement age set forth in the Company’s
Corporate Governance Guidelines; therefore, he did not stand for re-election and his term as a director of
the Company expired on May 12, 2020.
(3) Mr. Plummer received a prorated cash payment for service as Audit Committee Chairman from May 12,
2020 until the next regular installment of retainer payments in July 2020.
14 |
2021 Proxy Statement
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The first item on the proxy card is the election of nine directors to serve until the 2022 Annual Meeting of Stockholders or
until their respective successors have been duly elected and qualified. The Board has nominated the nine director
candidates named below and recommends that you vote FOR their election. If any nominee is unable or unwilling to
serve as a director, which we do not anticipate, the Board, by resolution, may reduce the number of directors that
constitute the Board or may choose a substitute. To be elected, a director must receive a majority of the votes cast with
respect to that director at the meeting. Our Company’s By-laws provide that if the number of shares voted “for” any
director nominee does not exceed 50% of the votes cast with respect to that director, he or she will tender his or her
resignation to the Board of Directors contingent on the acceptance of such resignation by the Board. The Nominating and
Governance Committee will then make a recommendation to the Board on whether to accept or reject the resignation, or
whether other action should be taken. The Board will act on the resignation, taking into account the Nominating and
Governance Committee’s recommendation, and publicly disclose its decision and the rationale behind it within 90 days of
the date of the certification of the election results.
The table below shows all of our director nominees; their ages, terms of office on our Board; experience within at least
the past five years; and qualifications our Board considered when inviting them to serve as a director as well as
nominating them for re-election. We believe that, as a general matter, our directors’ past five years of experience gives
an indication of the wealth of knowledge and experience these individuals have and that our Board considered; however,
we have also included specific skills and areas of expertise that makes each of these individuals a valuable member of
our Board. Each of the director nominees currently serves on our Board of Directors.
Director Nominees
JAMES C. FISH, JR.
Age: 58
Director since:
November 2016
POSITION AND BUSINESS EXPERIENCE
President and Chief Executive Officer — Waste Management, Inc. since November 2016; also
served as President and Chief Financial Officer — from July 2016 to November 2016;
Executive Vice President and Chief Financial Officer from 2012 to July 2016; Senior Vice
President — Eastern Group from 2011 to 2012; Area Vice President — Pennsylvania and
West Virginia Area from 2009 to 2011 and Market Area General Manager — Western
Pennsylvania/West Virginia from 2008 to 2009 and Rhode Island/Southern Massachusetts
from 2006 to 2008.
QUALIFICATIONS
Mr. Fish has been our President and Chief Executive Officer and a member of the Board of
Directors since November 2016. Mr. Fish joined the Company in 2001 and held several key
positions with the Company prior to his promotion, including Executive Vice President and
Chief Financial Officer, Senior Vice President for the Company’s Eastern Group, Area Vice
President for the Pennsylvania and West Virginia Area and Vice President of Price
Management. As a result, Mr. Fish has a broad and deep understanding of the Company and
the strategic actions necessary to deliver stockholder value.
2021 Proxy Statement | 15
ANDRÉS R. GLUSKI
POSITION AND BUSINESS EXPERIENCE
ELECTION OF DIRECTORS
President, Chief Executive Officer and Director — The AES Corporation (global energy
company) since 2011; also served as Executive Vice President and Chief Operating Officer
from 2007 to 2011.
Director of AES Gener (Chile) from 2005 to January 2020.
Director of Fluence Energy, LLC, a private company, since March 2019.
QUALIFICATIONS
As CEO of The AES Corporation, a Fortune 500 company in the electricity sector, Mr. Gluski
has led the transformation of the company to become a leader in renewable energy, energy
storage and cloud-based energy efficiency services. Under his leadership, AES has been
designated as one of the World’s Most Ethical Companies by the Ethisphere® Institute every
year since 2014. Mr. Gluski has extensive experience in finance, operations and turnarounds.
He serves as Chairman of the Council of the Americas and has been voted one of the “Most
Influential Leaders” by Latino Leaders magazine.
Age: 63
Director since:
2015
Board Committees:
Audit and Management
Development &
Compensation
(Chair, effective
May 2021)
VICTORIA M. HOLT
POSITION AND BUSINESS EXPERIENCE
President and Chief Executive Officer — Proto Labs, Inc. (online and technology-enabled
quick-turn manufacturer) from 2014 to March 2021; also served as Director since 2014
(retiring May 2021).
Director of Piper Sandler Companies (formerly Piper Jaffray Companies) since
September 2019.
Nominated for election to serve as a Director of A. O. Smith Corp. for a term commencing in
April 2021.
Director of Watlow Electric Manufacturing Company, a private company, since 2012.
QUALIFICATIONS
Age: 63
Director since:
2013
Board Committees:
Audit and Nominating &
Governance
Ms. Holt has served in executive positions at public companies for many years, providing her
with extensive knowledge about operations, management, logistical requirements and
measuring financial performance of large public companies. Her background and education
provide her with expertise in applying environmental solutions critical to our Company’s
strategy. She also has many years of experience serving on the board of directors for public
companies.
16 |
2021 Proxy Statement
ELECTION OF DIRECTORS
KATHLEEN M. MAZZARELLA
Age: 61
Director since:
2015
Board Committees:
Management
Development &
Compensation and
Nominating &
Governance (Chair)
SEAN E. MENKE
Age: 52
Director since:
March 2021
Board Committee:
Audit
POSITION AND BUSINESS EXPERIENCE
Chairman, President and Chief Executive Officer — Graybar Electric Company,
Inc.
(distributor of electrical, communications and data networking products and provider of
related supply chain management and logistics services) since 2013; also served as
President and Chief Executive Officer from 2012 to 2013 and Executive Vice President and
Chief Operating Officer from 2010 to 2012.
Director of Cigna Corporation since December 2018.
Director of Express Scripts Holding Company from June 2017 until acquisition by Cigna
Corporation in December 2018.
Director of Core & Main, a private company, since January 2019.
Director of Federal Reserve Bank of St. Louis from 2015 to December 2019; Chair of the
Board from April 2016 to December 2019.
QUALIFICATIONS
Ms. Mazzarella has experience serving as the chief executive of a large corporation,
developing expertise in the areas of logistics and supply chain management. During her
more than 40-year tenure at Graybar, Ms. Mazzarella has held executive-level positions in
sales, human resources, strategic planning and marketing. This diverse background
combined with her deep and valuable experience leading various aspects of a customer-
focused business will help the Company achieve its strategy to provide an exceptional
customer experience. She also has experience serving on large public company, private
company and non-profit boards.
POSITION AND BUSINESS EXPERIENCE
President, Chief Executive Officer and Director — Sabre Corporation (software and
technology solutions provider to the travel industry) since December 2016; also served as
President of Sabre Travel Network from 2015 to December 2016.
QUALIFICATIONS
Mr. Menke is a proven transformation leader, using his extensive experience in technology
and transportation operations to bring together strategy and data to address complex
issues. Mr. Menke has substantial executive leadership experience, having served as
President and Chief Executive Officer of Sabre Corporation since 2016, preceded by more
than 20 years in the airline industry. His expertise in logistics and commitment to delivering
efficient, customer-focused innovation through imaginative technology solutions will help
further the Company’s strategy to differentiate our services. Mr. Menke also has
several years of experience serving on a public company board of directors.
2021 Proxy Statement | 17
WILLIAM B. PLUMMER
POSITION AND BUSINESS EXPERIENCE
ELECTION OF DIRECTORS
Executive Vice President and Chief Financial Officer — United Rentals, Inc. (world’s largest
equipment rental company) from 2008 to October 2018; also served as Senior Adviser from
October 2018 to January 2019.
Director of Global Payments Inc. since May 2017.
Chairman of the Board — Nesco Holdings, Inc. since July 2019.
Director of Venture Metals, LLC, a private company, since July 2019.
Director of Cisco Equipment, Inc. a private company, since February 2020.
Director of John Wiley & Sons, Inc. from 2003 to September 2019.
Director of United Rentals North America,
January 2019.
Inc., a private company, from 2008 to
QUALIFICATIONS
Mr. Plummer has more than two decades of financial leadership experience. During his
tenure at United Rentals, Mr. Plummer was responsible for the development of the
company’s finance activities, investor relations, and co-led its merger, acquisition and
divestiture strategies. Mr. Plummer also served as Chief Financial Officer of Dow Jones &
Company, where he set policy for global finance and corporate strategy. Mr. Plummer has
experience as a member of the board of directors of a number of other large public
companies, with particular focus on audit committee service and leadership.
POSITION AND BUSINESS EXPERIENCE
Chairman of the Board — PFI Group (private investment firm) since 1994.
Chairman of the Board — R.R. Donnelley & Sons Company since 2014; Director of
R.R. Donnelley & Sons Company, or predecessor companies, since 1996.
Lead Director — The Kraft Heinz Company since January 2021; Director of The Kraft Heinz
Company, or predecessor companies including Kraft Foods Group, Inc., since 2001.
Director of Talgo S.A. since 2015.
Former Directorships: Con-way, Inc., or predecessor companies, from 2003 to 2015; Dollar
Thrifty Automotive Group, Inc. from 1997 to 2012; and Navistar International Corporation
from 2012 to 2013.
QUALIFICATIONS
Prior to his service on the boards of multiple major corporations, Mr. Pope served in
executive operational and financial positions at large airline companies for almost 20 years,
providing him with extensive experience and knowledge of management of large public
companies with large-scale logistical challenges, high fixed-cost structure and significant
capital requirements. His background, education and board service also provide him with
expertise in finance and accounting. Mr. Pope has served on the board of directors for many
public companies for over 30 years.
Age: 62
Director since:
August 2019
Board Committees:
Audit (Chair) and
Management
Development &
Compensation
JOHN C. POPE
Age:
71
Director since:
1997
Board Committees:
Management
Development &
Compensation and
Nominating &
Governance
18 |
2021 Proxy Statement
POSITION AND BUSINESS EXPERIENCE
U.S. Managing Director and U.S. Head of Electrification — ABB Ltd. (global technology
company focused on electrification, robotics, power and automation) from August 2019 to
August 2020.
President and Chief Executive Officer — Current, powered by GE (energy services and
information technology subsidiary of General Electric subsequently acquired by private
equity investors) from 2015 to June 2019; also served as President and Chief Executive
Officer — GE Lighting from 2011 to 2015 and President and Chief Executive Officer — GE
Intelligent Platforms (GE Fanuc) from 2006 to 2011.
Director of Harley-Davidson, Inc. since August 2016.
QUALIFICATIONS
Ms. Sylvester is a strategic, growth-oriented leader who is passionate about technology,
innovation and automation. Through her recent experience leading the U.S. electrification
business for ABB Group, combined with her 19 years of executive leadership for divisions of
GE, Ms. Sylvester has developed expertise in delivering technology-enabled and energy-
efficient sustainable solutions. Ms. Sylvester brings extensive knowledge regarding
consumer marketing, supply chain strategy, and operational improvement. She also has
governance experience from her service on a public company board of directors.
POSITION AND BUSINESS EXPERIENCE
Chief Operating Officer — United Parcel Service, Inc. (package delivery and supply chain
services company) from 2001 to 2003; Senior Vice President — United Parcel Service, Inc.
from 1994 to 2003.
President, UPS Airlines (UPS owned airline) from 1994 to 2003.
Director of NRG Energy, Inc. since 2003.
Director of Amsted Industries Incorporated, a private company, since 2007.
Director of The Goodyear Tire & Rubber Company from 2004 to April 2020.
QUALIFICATIONS
Mr. Weidemeyer served in executive positions at a large public company for several years
and has served as our Non-Executive Chairman of the Board since May 2018. His roles
encompassed significant operational management responsibility, providing him knowledge
and experience in an array of functional areas critical to large public companies, including
supply chain and logistics management. Mr. Weidemeyer also has over 15 years of
experience serving on the board of directors for public companies.
ELECTION OF DIRECTORS
MARYROSE T. SYLVESTER
Age:
55
Director since:
March 2021
Board Committee:
Management
Development &
Compensation
THOMAS H. WEIDEMEYER
Age:
73
Director since:
2005
Chairman of the
Board since:
May 2018
Board Committees:
Audit, Management
Development &
Compensation and
Nominating & Governance
FOR THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION
OF EACH OF THE NINE DIRECTOR NOMINEES.
2021 Proxy Statement | 19
DIRECTOR AND OFFICER STOCK OWNERSHIP
Our Board of Directors has adopted stock ownership guidelines for our non-employee directors based on the
recommendation of the MD&C Committee, as described in the Non-Employee Director Compensation discussion. Our
executive officers, including Mr. Fish, are also subject to stock ownership guidelines, as described in the Compensation
Discussion and Analysis.
The Security Ownership of Management table below shows the number of shares of Common Stock each director and
each executive officer named in the Summary Compensation Table beneficially owned as of March 17, 2021, our record
date for the Annual Meeting, as well as the number owned by all directors and executive officers as a group. These
individuals, both individually and in the aggregate, own less than 1% of our outstanding shares as of the record date.
SECURITY OWNERSHIP OF MANAGEMENT
Shares of Common
Stock Covered by
Exercisable Options(2)
—
—
—
—
—
—
—
—
—
131,909
50,648
15,955
35,164
27,844
390,333
Shares of Common
Stock Owned(1)
33,004
12,660
18,043
10,572
—
2,677
54,372
—
33,559
249,447
25,473
86,898
28,499
23,431
658,102
Name
Frank M. Clark, Jr.
Andrés R. Gluski
Victoria M. Holt
Kathleen M. Mazzarella(3)
Sean E. Menke(4)
William B. Plummer
John C. Pope
Maryrose T. Sylvester(4)
Thomas H. Weidemeyer(5)
James C. Fish, Jr.(6)
Devina A. Rankin
John J. Morris, Jr.
Tara J. Hemmer
Steven R. Batchelor
All directors and executive officers as a group (19 persons)(7)
(1) The table reports beneficial ownership in accordance with Rule 13d-3 under the Exchange Act. The amounts reported
above include 4,025 stock equivalents attributed to Mr. Fish, 2,263 stock equivalents attributed to Mr. Morris and
985 stock equivalents attributed to Mr. Batchelor, based on their holdings in the Company’s 401(k) Retirement
Savings Plan stock fund. The amounts reported above also include 94,844 shares of Common Stock deferred by
Mr. Fish. Deferred shares were earned on account of vested equity awards and pay out in shares of Common Stock
after the executive’s departure from the Company pursuant to the Company’s 409A Deferral Savings Plan (“409A
Deferral Plan”).
Executive officers may choose a Waste Management stock fund as an investment option for deferred cash
compensation under the Company’s 409A Deferral Plan. Interests in the fund are considered phantom stock because
they are equal in value to shares of our Common Stock, but these amounts are not invested in stock or funds.
Phantom stock is not included in the table above, but it represents an investment risk based on the performance of
our Common Stock. Mr. Morris and Mr. Batchelor have 2,457 and 5,134 phantom stock equivalents, respectively,
under the 409A Deferral Plan.
Includes the number of options currently exercisable and options that will become exercisable within 60 days of our
record date.
(2)
(3) Shares are held by the Mazzarella Living Trust, for which Ms. Mazzarella and her husband serve as trustees.
(4) Mr. Menke and Ms. Sylvester were elected to our Board on March 15, 2021. Each received an award of Common
Stock under our 2014 Stock Incentive Plan with a fair market value of $55,000 on the March 19, 2021 grant date, as
pro-rated equity compensation for the current director service period. See “Non-Employee Director Compensation”
above for additional information about director compensation.
(5) Shares are held by the Thomas H. Weidemeyer and Mary R. Weidemeyer Trust, for which Mr. Weidemeyer and his
(6)
(7)
wife serve as trustees.
Includes 18,692 shares held in trusts for the benefit of Mr. Fish’s minor children.
Included in the “All directors and executive officers as a group” are 10,713 stock equivalents attributable to the
executive officers’ collective holdings in the Company’s 401(k) Retirement Savings Plan stock fund. This group also
holds an aggregate of 8,608 phantom stock equivalents under the 409A Deferral Plan that are not included in the
table.
20 |
2021 Proxy Statement
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below shows information for persons known to us to beneficially own more than 5% of our Common Stock
based on their filings with the SEC through March 17, 2021.
Name and Address
William H. Gates III
500 Fifth Avenue North
Seattle, WA 98109
The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
Shares Beneficially
Owned
Number
35,234,344(2)
Percent(1)
8.3%
34,896,452(3)
8.3%
30,563,244(4)
7.2%
(1) Percentage is calculated using the number of shares of Common Stock outstanding and entitled to vote as of
March 17, 2021.
(2) This information is based on a Schedule 13G/A filed with the SEC on February 12, 2021. Mr. Gates reports that he
has sole voting and dispositive power over 16,600,672 shares of Common Stock held by Cascade Investment, L.L.C.,
as the sole member of such entity. Additionally, the Schedule 13G/A reports that Mr. Gates and Melinda French
Gates share voting and dispositive power over 18,633,672 shares of Common Stock beneficially owned by Bill &
Melinda Gates Foundation Trust.
(3) This information is based on a Schedule 13G/A filed with the SEC on February 10, 2021. The Vanguard Group reports
that it has shared voting power over 701,749 shares of Common Stock and sole or shared dispositive power over
34,896,452 shares of Common Stock beneficially owned.
(4) This information is based on a Schedule 13G/A filed with the SEC on February 1, 2021. BlackRock, Inc. reports that
it has sole voting power over 26,850,422 shares of Common Stock and sole dispositive power over 30,563,244
shares of Common Stock beneficially owned.
2021 Proxy Statement | 21
EXECUTIVE OFFICERS
The following is a listing of our current executive officers, their ages and their business experience for at least the past
five years (other than Mr. Fish, whose age, experience and qualifications are included in the director nominees section of
this Proxy Statement). Unless otherwise specified, all prior positions listed below were with our Company.
Name
Steven R. Batchelor
Age
63
Positions Held and Business Experience for Past Five Years
• Senior Vice President — Operations since January 2019.
• Vice President, Collections and Fleet Operations from 2013 to December 2018.
Charles C. Boettcher
47
• Executive Vice President, Corporate Development and Chief Legal Officer since
February 2020.
• Senior Vice President, Corporate Development and Chief Legal Officer from
May 2019 to February 2020.
• Senior Vice President and Chief Legal Officer from January 2017 to May 2019.
• Also served as Chief Compliance Officer from May 2017 to February 2018.
• Vice President and General Counsel from September 2016 to December 2016.
• Executive Vice President, Chief Financial Officer and General Counsel of Oilfield
Water Logistics, an oilfield services company, from 2015 to August 2016.
Tara J. Hemmer
48
• Senior Vice President — Operations since January 2019.
• Senior Vice President — Operations, Safety and Environmental Compliance
John J. Morris, Jr.
Leslie K. Nagy
Tamla D. Oates-Forney
Devina A. Rankin
Nikolaj H. Sjoqvist
Michael J. Watson
from January 2018 to December 2018.
• Vice President — Disposal Operations, Closed Sites and Environmental
Compliance from September 2017 to January 2018.
• Area Vice President — Greater Mid-Atlantic Area from 2012 to May 2017.
• Executive Vice President and Chief Operating Officer since January 2019.
• Senior Vice President — Operations from 2012 to December 2018.
• Chief Strategy Officer from March 2012 to July 2012.
• Area Vice President — Greater Mid-Atlantic Area from 2011 to 2012.
• Vice President and Chief Accounting Officer since November 2017.
• Principal Accounting Officer and Controller, Parker Drilling Company, an oilfield
services company, from 2014 to November 2017.
• Senior Vice President and Chief People Officer since December 2018.
• Vice President, Human Resources, GE Energy Connections, an electrification
and automation business included in the General Electric Company
multinational conglomerate, from 2014 to April 2018.
• Executive Vice President and Chief Financial Officer since February 2020.
• Senior Vice President and Chief Financial Officer from February 2017 to
February 2020.
• Also continued to serve as Treasurer from February 2017 to August 2017.
• Vice President, Treasurer and Acting Chief Financial Officer from January 2017
to February 2017.
• Vice President and Treasurer from 2012 to January 2017.
• Senior Vice President and Chief Digital Officer since October 2017.
• Vice President — Revenue Management from 2012 to October 2017.
• Senior Vice President and Chief Customer Officer since October 2018.
• Area Vice President — Illinois / Missouri Valley Area from 2013 to
September 2018.
51
46
49
45
48
51
22 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The Company’s Compensation Discussion and Analysis provides information about the Company’s executive
compensation philosophy and the components of its compensation programs. This includes information about how
compensation of the Company’s named executive officers for the fiscal year ended December 31, 2020 aligned with the
Company’s 2020 financial goals and performance. The Compensation Discussion and Analysis helps readers better
understand the information found in the Summary Compensation Table and other accompanying tables included in this
Proxy Statement.
This Compensation Discussion and Analysis focuses on our executive pay program as it relates to the following executive
officers during 2020, whom we refer to as the “named executive officers” or “named executives”:
• Mr. James C. Fish, Jr. — President and Chief Executive Officer since November 2016.
• Ms. Devina A. Rankin — Executive Vice President and Chief Financial Officer since February 2020; Senior Vice
President and Chief Financial Officer since February 2017.
• Mr. John J. Morris, Jr. — Executive Vice President and Chief Operating Officer since January 2019; Senior Vice
President, Operations from July 2012 to December 2018.
• Ms. Tara J. Hemmer — Senior Vice President, Operations since January 2019.
• Mr. Steven R. Batchelor — Senior Vice President, Operations since January 2019.
For additional information about the named executives’ background and prior experience with the Company, see
“Executive Officers” above.
Executive Summary
The objective of our executive compensation program is to attract, retain, reward and incentivize talented employees
who will lead the Company in the successful execution of our strategy. The Company seeks to accomplish this goal by
designing a compensation program that is supportive of and aligns with the strategy of the Company and the creation of
stockholder value, while discouraging excessive risk-taking.
We have enabled a people-first, technology-led focus, that leverages and sustains the strongest asset network in the
industry to drive best in class customer experience and growth. As North America’s leading provider of comprehensive
waste management environmental services, sustainability and environmental stewardship is embedded in all that we
do. As a result, we believe that positive financial results, including the results for the performance measures on which
our executives are compensated, are naturally aligned with the successful execution of our goals to put our people first
and position them to serve and care for our customers, the environment, the communities in which we work and our
stockholders. On the other hand, we believe our Company would not be successful, on financial performance measures
or otherwise, without our industry-leading focus on sustainability.
The following key structural elements and policies further the objective of our executive compensation program:
• a substantial portion of executive compensation is linked to Company performance, through annual cash incentive
performance criteria and long-term equity-based incentive awards. As a result, our executive compensation
program provides for notably higher total compensation in periods of above-target Company performance, as we
saw with respect to compensation elements with a three-year performance period ended 2020. Performance-
based annual cash incentive and long-term equity-based incentive awards comprised 88.6% of total 2020 target
compensation for our President and Chief Executive Officer, while approximately 80% of the 2020 target
compensation opportunities for our other named executives was performance-based;
• at target, 71.5% of total compensation of our President and Chief Executive Officer was tied to long-term equity
awards, and 60% of total compensation of our other named executives was tied to long-term equity awards,
which aligns executives’ interests with those of stockholders;
2021 Proxy Statement | 23
EXECUTIVE COMPENSATION
• our total direct compensation opportunities for named executive officers are targeted to fall in a range around the
competitive median;
• performance-based awards include threshold, target and maximum payouts correlating to a range of
performance outcomes and are based on a variety of indicators of performance, which limits risk-taking behavior;
• performance stock units with a three-year performance period, as well as stock options that vest over a three-
interests with long-term performance and reduce incentives to maximize
year period,
link executives’
performance in any one year;
• all of our executive officers are subject to stock ownership guidelines, which we believe demonstrates a
commitment to, and confidence in, the Company’s long-term prospects;
• the Company has clawback provisions in its equity award agreements and executive officer employment
agreements, and has adopted a clawback policy applicable to annual incentive compensation, designed to recoup
compensation when cause and/or misconduct are found;
• our executive officer severance policy implemented a limitation on the amount of benefits the Company may
provide to its executive officers under severance agreements entered into after the date of such policy (the
“Severance Limitation Policy”); and
• the Company has adopted a policy that prohibits it from entering into new agreements with executive officers that
provide for certain death benefits or tax gross-up payments.
2020 Pay-For-Performance
During 2020, we delivered solid operating income and cash flows despite revenue declines in our collection and disposal
lines of business due to the COVID-19 pandemic. The Company continued its commitment to supporting both organic and
inorganic growth during 2020, with the highlight being the completion of our acquisition of Advanced Disposal Services,
Inc. (“Advanced Disposal”). Following is a summary of the 2020 compensation program results:
Total Shareholder Return
With respect to the half of the performance share units (“PSUs”) granted in 2018 with a three-year performance period
ended December 31, 2020 that was subject to total shareholder return relative to the S&P 500 (“TSR PSUs”), the
performance of the Company’s Common Stock on this measure translated into a percentile rank relative to the S&P 500
of 68.21%, resulting in a 172.84% payout on these PSUs in shares of Common Stock. This performance directly benefited
our stockholders, delivering total shareholder return of 45.67% over the three-year performance period.
Cash Flow Generation
The Company generated net cash flow from operating activities, less capital expenditures, for purposes of the
performance goal associated with the other half of our PSUs (“Cash Flow PSUs”) granted in 2018, of $7.009 billion,
exceeding the maximum performance level of $6.316 billion for the three-year performance period ended December 31,
2020. This performance resulted in a maximum 200% payout on these PSUs in shares of Common Stock.
Annual Incentive Performance Measures
Company performance on annual cash incentive performance measures for named executive officers is set forth below.
Due to these results, each of the named executives received an annual cash incentive payment for 2020 equal to 68.1%
of target.
Income from Operations, excluding Depreciation and Amortization — $4.371 billion, yielding a payout of 60.9%
Income from Operations Margin — 17.70%, yielding a payout of 150.5%
Internal Revenue Growth — defined as internal revenue growth from yield, plus internal revenue growth from volume,
at the consolidated level for the traditional solid waste business — (3.00)%, yielding a payout of 0%.
In 2020, the COVID-19 global pandemic and related measures had a significant adverse impact on many sectors of the
economy, including environmental services. Despite the unpredictable and unprecedented challenges faced during the
24 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
year, the 2020 executive compensation program continued to demonstrate effective alignment between executive pay
and Company performance. The payouts on the PSUs granted in 2018 correlate with outstanding cash flow generation
and total shareholder return over the three-year performance period, and both stockholders and executives were
rewarded by these above-target results.
Further, the blended results of the annual incentive performance measures are reflective of our executives taking the
right actions to deliver operating and financial performance, despite the difficult broader economic conditions. Our
executives’ successful implementation of intentional steps to decrease our operating costs and eliminate discretionary
selling, general and administrative expenses to mitigate the impact from the declines in our volumes resulted in enhanced
Company performance on the Income from Operations, excluding Depreciation and Amortization performance measure.
The Income from Operations Margin performance measure was similarly benefited by such actions, as well as proactive
steps our executives took to manage our capital spending. The Internal Revenue Growth performance measure fell
below threshold performance criteria, as we experienced revenue declines at our landfills, as well as decreased demand
from our industrial and commercial collection customers, due to the COVID-19 pandemic. Overall, while the blended
results on these annual incentive performance measures were below target, this aspect of executive compensation
rewarded our executives’ focus on operational execution and efficiency that allowed the Company to continue to provide
reliable, high quality service to our customers and generate strong financial performance in the face of exceptional
external challenges.
2020 Actual Performance and Compensation Payouts
Maximum
Annual Incentive Plan
17.70% Actual
17.15% Target
(25% weight)
$4.371B Actual
$4.863 Target
(50% weight)
Target
150.5%
60.9%
-3.0% Actual
4.0% Target
(25% weight)
0.0%
Threshold
Income from
Operations,
excluding
Depreciation &
Amortization
Income from
Operations
Margin
Internal
Revenue
Growth
Consideration of Stockholder Advisory Vote
Combined
Results
68.1%
Annual
Incentive
Award
Payout
Long-Term Performance Share Units
$7.009B Actual
$5,906B Target
(50% weight)
68th Percentile Actual
50th Percentile Target
(50% weight)
200%
172.84%
Combined
Results
186.4%
Relative TSR
(S&P 500)
Cash Flow
Generation
PSU Award
Payout
When establishing 2020 compensation for the named executives, the MD&C Committee noted the results of the advisory
stockholder votes on executive compensation, with more than 95% of shares present and entitled to vote at the annual
meeting voting in favor of the Company’s executive compensation every year since the advisory vote on compensation
was implemented. Accordingly, the results of the stockholder advisory vote have not caused the MD&C Committee to
recommend any changes to our compensation practices.
2021 Compensation Program Preview
The MD&C Committee continually reviews our compensation program to ensure it is clearly aligned with the business
strategy and best supports the accomplishment of our goals. The Committee also believes that consistency in program
design reinforces its efforts to maintain a compensation program that is straightforward, easy to communicate and
2021 Proxy Statement | 25
EXECUTIVE COMPENSATION
readily translates into actionable goals. The Committee’s choice of long-term performance measures and respective
weighting has been consistent since 2016, and the MD&C Committee is pleased with the financial results and stockholder
value that has been generated. Accordingly, the Committee has approved keeping the 2021 long-term incentive program
design consistent with the 2020 design.
With respect to the annual incentive program, the 2021 design is largely consistent with prior years, but two of the
specific performance measures have been modified, primarily in response to current impacts from our acquisition of
Advanced Disposal. The Income from Operations Margin performance measure has been replaced with an income from
operations, excluding depreciation and amortization margin performance measure, maintaining its 25% weighting. This
measure is intended to encourage responsible, high margin revenue growth and cost management and reduction, while
removing variability caused by Advanced Disposal purchase price accounting. The Internal Revenue Growth performance
measure, which would otherwise exclude the incentive to grow Advanced Disposal acquired revenue, has been replaced
with a total revenue performance measure, also maintaining its 25% weighting. This measure will encourage top line
growth, through growth of the Company’s legacy revenue, as well as the acquired Advanced Disposal revenue.
Our Compensation Philosophy for Named Executive Officers
The Company’s compensation philosophy is designed to:
• Attract and retain exceptional employees through competitive compensation opportunities;
• Encourage and reward performance through substantial at-risk performance-based compensation, while
discouraging excessive risk-taking behavior; and
• Align our decision makers’ long-term interests with those of our stockholders through emphasis on equity
ownership.
Additionally, our compensation philosophy is intended to encourage executives to embrace the Company’s strategy and
to lead the Company in setting aspirations that will continue to drive exemplary performance.
With respect to our named executive officers, the MD&C Committee believes that total direct compensation at target
should be in a range around the competitive median according to the following:
• Base salaries should be paid within a range of plus or minus 10% around the competitive median, with attention
given to individual circumstances, including strategic importance of the named executive’s role, the executive’s
experience and individual performance;
• Target short-term and long-term incentive opportunities should generally be set at the competitive median; and
• Total direct compensation opportunities should generally be within a range of plus or minus 20% around the
competitive median.
26 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
Overview of Elements of Our 2020 Executive Compensation Program
Timing
Current
Short-Term
Performance
Incentive
Component
Base Salary
Annual Cash
Incentive
Purpose
Key Features
To attract and retain
executives with a competitive
level of regular income
Adjustments to base salary primarily consider competitive
market data and the executive’s individual performance and
responsibilities.
To encourage and reward
contributions to our annual
financial objectives through
performance-based
compensation subject to
challenging, yet attainable,
objective and transparent
metrics
Cash incentives are targeted at a percentage of base salary
and range from zero to 200% of target based on the following
performance measures:
• Income from Operations, excluding Depreciation and
Amortization — designed to encourage balanced growth
and profitability (weighted 50%);
• Income from Operations Margin — defined as Income from
Operations as a percentage of Revenue — motivates
executives to control costs and operate efficiently while
focusing on yield (weighted 25%); and
• Internal Revenue Growth — defined as internal revenue
growth from yield, plus internal revenue growth from
volume, at the consolidated level for the traditional solid
waste business — designed to support strategic growth
goals (weighted 25%).
The MD&C Committee has discretion to increase or decrease
an individual’s payment by up to 25% based on individual
performance, but such modifier has never been used to
increase a payment to a named executive.
Number of shares delivered range from zero to 200% of the
initial target grant based on performance over a three-year
performance period.
Payout on half of each executive’s PSUs granted in 2020 is
dependent on cash flow generation, defined as net cash flow
provided by operating activities, less capital expenditures,
with certain exclusions, which continues our focus on capital
discipline, while also aligning the Company with stockholders’
free cash flow expectations. We refer to these as Cash Flow
PSUs.
Payout on the remaining half of the PSUs granted in 2020 is
dependent on total shareholder return relative to other
companies in the S&P 500 over the three-year performance
period. We refer to these as TSR PSUs.
PSUs earn dividend equivalents that are paid at the end of the
performance period based on the number of shares earned.
Recipients can defer the receipt of shares, in which case such
shares of Common Stock will be paid out, without interest, at
the end of the deferral period.
Stock options vest in 25% increments on the first two
anniversaries of the date of grant and the remaining 50% vest
on the third anniversary.
Exercise price is the average of the high and low market price
of our Common Stock on the date of grant.
Stock options have a term of ten years.
No restricted stock units (“RSUs”) were granted to named
executives in 2020.
RSUs typically vest in full three years after the date of grant.
Time-based vesting aids retention. Dividend equivalents on
RSUs accrue and are paid in cash upon vesting.
2021 Proxy Statement | 27
Long-Term
Performance
Incentives
Performance Share
Units
To encourage and reward
building long-term stockholder
value through successful
strategy execution;
To retain executives; and
To increase stockholder
alignment through executives’
stock ownership
Stock Options
Restricted Stock
Units
To support the growth element
of the Company’s strategy and
encourage and reward stock
price appreciation over the
long-term;
To retain executives; and
To increase stockholder
alignment through executives’
stock ownership
Used on a limited basis (e.g.
promotion and new hire) to
make awards that encourage
and reward long-term
performance and increase
alignment with stockholders
EXECUTIVE COMPENSATION
Deferral Plan. Each of our named executive officers is eligible to participate in our 409A Deferral Plan and may elect to
defer receipt of portions of their base salary and cash incentives in excess of the annual compensation threshold
established under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “IRC”). We believe that
providing a program that allows and encourages planning for retirement is a key factor in our ability to attract and retain
talent. Additional details on the 409A Deferral Plan can be found in the Nonqualified Deferred Compensation in 2020
table and accompanying disclosure.
Perquisites. The Company provides very limited perquisites or personal benefits to executive officers, consisting of
reimbursement of the cost of physical exams, cost to the Company for spousal or guest participation in corporate events
(which did not occur in 2020 due to the COVID-19 pandemic), and use of Company aircraft for personal travel. The MD&C
Committee permits our President and Chief Executive Officer to use the Company’s aircraft for business and personal
travel; provided, however, that personal use of the Company aircraft attributed to him that results in incremental cost to
the Company shall not exceed 90 hours during any calendar year without approval from the Chairman of the MD&C
Committee. In 2020, our President and Chief Executive Officer had less than nine hours of personal use of Company
aircraft under this standard. Personal use of the Company’s aircraft by other employees resulting in incremental cost to
the Company is permitted with Chief Executive Officer approval. This generally occurs infrequently, although additional
personal use of the Company aircraft was permitted in 2020 due to the COVID-19 pandemic. The value of our named
executives’ personal use of the Company’s aircraft is treated as taxable income to the respective executive in accordance
with IRS regulations using the Standard Industry Fare Level formula. This is a different amount than we calculate
pursuant to the SEC requirement to report the incremental cost to us of their use. See note (4) to the Summary
Compensation Table below for additional information about this calculation.
Post-Employment and Change in Control Compensation. The Company provides severance protections that aid in retention
of senior leadership by providing the individual with comfort that he or she will be treated fairly in the event of an
involuntary termination not for cause. The change in control provisions included in our Executive Severance Protection
Plan, our stock option award documentation and, if applicable, employment agreements require a double trigger in order
to receive any payment in the event of a change in control situation. Additional details can be found under “— Post
Employment and Change in Control Compensation; Clawback Policies” and “Potential Payments Upon Termination or
Change in Control.”
How Named Executive Officer Compensation Decisions are Made
The MD&C Committee meets several times each year to perform its responsibilities as delegated by the Board of Directors
and as set forth in the MD&C Committee’s charter. These responsibilities include evaluating and approving the Company’s
compensation philosophy, policies, plans and programs for our named executive officers.
In the performance of its duties, the MD&C Committee regularly reviews the total compensation, including the base
salary, target annual cash incentive award opportunities, long-term incentive award opportunities and other benefits,
including potential severance payments for each of our named executive officers. At a regularly scheduled meeting each
year, the MD&C Committee reviews our named executives’ total compensation and compares that compensation to the
competitive market, as discussed below. In the first quarter of each year, the MD&C Committee meets to determine
salary increases, if any, for the named executive officers; verifies the results of the Company’s performance for annual
cash incentive and performance share unit calculations; reviews the individual annual cash incentive targets for the
current year as a percent of base salary for each of the named executive officers; and makes decisions on granting
long-term equity awards.
Compensation Consultant. The MD&C Committee uses several resources in its analysis of the appropriate compensation
for the named executive officers. The MD&C Committee selects and employs an independent consultant to provide advice
relating to market and general compensation trends. The MD&C Committee also uses the services of its independent
consultant for data gathering and analyses. The MD&C Committee has retained Frederic W. Cook & Co., Inc. (“FW Cook”)
as its independent consultant since 2002. The Company makes regular payments to FW Cook for its services around
executive compensation, including meeting preparation and attendance, advice, and best practice information, as well as
competitive data. Information about such payments is submitted to the chair of the MD&C Committee.
In addition to services related to executive compensation, FW Cook also provides the MD&C Committee information and
advice with respect to compensation of the independent directors. FW Cook has no other business relationships with the
Company and receives no other payments from the Company. The MD&C Committee adopted a charter provision requiring
28 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
that it consider the independence of any compensation consultants it uses for executive compensation matters. The
MD&C Committee has considered the independence of FW Cook in light of SEC rules and New York Stock Exchange listing
standards. In connection with this process, the MD&C Committee has reviewed, among other items, a letter from FW
Cook addressing the independence of FW Cook and the members of the consulting team serving the MD&C Committee,
including the following factors: (a) other services provided to us by FW Cook; (b) fees paid by us as a percentage of FW
Cook’s total revenue; (c) policies or procedures of FW Cook that are designed to prevent conflicts of interest; (d) any
business or personal relationships between the senior advisor of the consulting team with a member of the MD&C
Committee; (e) any Company stock owned by the senior advisor or any member of his immediate family and (f) any
business or personal relationships between our executive officers and the senior advisor. The MD&C Committee reviewed
these considerations and concluded that the work performed by FW Cook and its senior advisor involved in the
engagement did not raise any conflict of interest.
Role of CEO and our People Organization. Our President and Chief Executive Officer contributes to compensation
determinations by assessing the performance of the other named executive officers and providing these assessments
with recommendations to the MD&C Committee. Personnel within the Company’s People Organization assist the MD&C
Committee by working with the independent consultant to provide information requested by the MD&C Committee and
assisting it in designing and administering the Company’s compensation programs.
Peer Company Comparisons. The MD&C Committee uses compensation information of comparison groups of companies
to gauge the competitive market, which is relevant for attracting and retaining key talent and for ensuring that the
Company’s compensation practices are aligned with prevalent practices. For purposes of establishing the 2020 executive
compensation program, the MD&C Committee considered a competitive analysis of total direct compensation levels and
compensation mix for our executive officers during the second half of 2019, using information from:
• Size-adjusted median compensation data from two general industry surveys in which management annually
participates; the Aon Hewitt 2019 Total Compensation Measurement Survey and the Willis Towers Watson 2019
Executive Compensation Database Survey. The 2019 Aon Hewitt Total Compensation Measurement Survey
includes 450 organizations ranging in size from $60 million to $265 billion in annual revenue, and the 2019 Willis
Towers Watson Executive Compensation Database Survey includes 811 organizations ranging in size from
approximately $25 million to $200 billion in annual revenue. Data selected from these surveys is scoped based on
Company revenue; and
• Median compensation data from a comparison group of 18 publicly traded U.S. companies, described below.
The comparison group of companies is initially recommended by the independent consultant prior to the data gathering
process, with input from management and the MD&C Committee. The composition of the group is evaluated, and a final
comparison group of companies is approved by the MD&C Committee each year. The selection process for the comparison
group begins with all companies in the Standard & Poor’s North American database that are publicly traded U.S.
companies in 15 different Global Industry Classifications. These industry classifications are meant to provide a collection
of companies in industries that share similar characteristics with us. The companies are then limited to those with at
least $5 billion in annual revenue to ensure appropriate comparisons, and further narrowed by choosing those with
asset intensive domestic operations, as well as those focusing on transportation and logistics. Companies with these
characteristics are chosen because the MD&C Committee believes that it is appropriate to compare our executives’
compensation with executives that have similar responsibilities and challenges at other companies.
2021 Proxy Statement | 29
The following chart sets forth various size comparisons to companies in the comparison group; this table is provided to
evidence that the Company was appropriately positioned within its peer group for purposes of establishing 2020
compensation during 2019. All financial and market data are taken from Standard & Poor’s Capital IQ, with financial data
as of each company’s 2018 fiscal year end and market capitalization as of December 31, 2018.
Peer Company Comparison Group
EXECUTIVE COMPENSATION
Net Revenue
Operating Income
Total Assets
Total Equity
Total Employees
Market Capitalization
Waste Management Composite
Percentile Rank
45%
47%
37%
39%
71%
60%
50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
18 Company Comparison Group
American Electric Power
Grainger WW
Ryder System
Avis Budget
Halliburton
Southern
C.H. Robison WW
Hertz Global Holdings
Southwest Airlines
CSX
Entergy
FedEx
NextEra Energy
Sysco
Norfolk Southern
Union Pacific
Republic Services
UPS
For purposes of each of the named executives, the general industry data and the comparison group data are blended
when composing the competitive analysis, when possible, such that the combined general industry data and the
comparison group are each weighted 50%. For competitive comparisons, the MD&C Committee has determined that total
direct compensation packages for our named executive officers within a range of plus or minus 20% of the median total
compensation of the competitive analysis is appropriate. In making these determinations, total direct compensation
consists of base salary, target annual cash incentive, and the annualized grant date fair value of long-term equity
incentive awards.
Allocation of Compensation Elements and Tally Sheets. The MD&C Committee considers the forms in which total
compensation will be paid to executive officers and seeks to achieve an appropriate balance between base salary, annual
cash incentive compensation and long-term incentive compensation. The MD&C Committee determines the size of each
element based primarily on comparison group data and individual and Company performance. The percentage of
compensation that is contingent on achievement of performance criteria typically increases in correlation to an executive
officer’s responsibilities within the Company, with performance-based incentive compensation making up a
greater percentage of total compensation for our most senior executive officers. Additionally, as an executive becomes
more senior, a greater percentage of the executive’s compensation shifts away from short-term to long-term incentive
awards.
The MD&C Committee uses tally sheets to review the compensation of our named executive officers, which show the
cumulative impact of all elements of compensation. These tally sheets include detailed information and dollar amounts
for each component of compensation, the value of all equity held by each named executive, and the value of welfare and
retirement benefits and severance payments. Tally sheets provide the MD&C Committee with the relevant information
necessary to determine whether the balance between short-term and long-term compensation, as well as fixed and
variable compensation, is consistent with the overall compensation philosophy of the Company. This information is also
useful in the MD&C Committee’s analysis of whether total direct compensation provides a compensation package that is
appropriate and competitive. Tally sheets are provided annually to the full Board of Directors.
The following charts display the allocation of total 2020 target compensation among base salary, annual cash incentive
and long-term incentives for (a) our President and Chief Executive Officer and (b) our other named executives, on average.
30 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
These charts reflect the MD&C Committee’s 2020 desired total mix of target compensation for named executives, which
includes 60% of total compensation derived from long-term equity awards, while long-term equity awards comprised
71.5% of our President and Chief Executive Officer’s total target compensation. These charts also reflect that 88.6% of
our President and Chief Executive Officer’s total target compensation opportunities awarded in 2020 were performance-
based, while approximately 80% of the total target compensation established in February 2020 for the other named
executives was performance-based. We consider stock options granted under our long-term incentive plan to be
performance-based because their value will increase as the market value of our Common Stock increases.
President and CEO
Other Named Executives, on Average
11.4%
Base Salary
17.1%
Annual Cash
Incentive
71.5%
Long-Term Equity
Incentive Awards
60.0%
Long-Term Equity
Incentive Awards
20.5%
Base Salary
19.5%
Annual Cash
Incentive
88.6% Total Performance Based
79.5% Total Performance Based
Internal Pay Equity. The MD&C Committee considers the differentials between compensation of the named executive
officers. The MD&C Committee also reviews compensation comparisons between the President and Chief Executive
Officer and the other executive officers, while recognizing the additional responsibilities of the President and Chief
Executive Officer and that such differentials will increase in periods of above-target performance and decrease in times
of below-target performance. Based on these considerations, the MD&C Committee concluded that the compensation
paid to the President and Chief Executive Officer is reasonable compared to that of the other executive officers.
Policy on Calculation Adjustments.
In 2014, the MD&C Committee adopted a policy on calculation adjustments that affect
payouts under annual and long-term incentive awards in order to address the potentially distorting effect of certain
items. Such adjustments are intended to align award payments with the underlying performance of the business; avoid
volatile, artificial inflation or deflation of awards due to unusual items in either the award year or the previous comparator
year; and eliminate counterproductive incentives to pursue short-term gains and protect current incentive opportunities.
To ensure the integrity of the adjustments, the policy provides that the MD&C Committee’s approach to adjustments shall
generally be consistent with the Company’s approach to reporting adjusted non-GAAP earnings to the investment
community, except that the MD&C Committee has determined that potential adjustments arising from a single transaction
or event generally should be disregarded unless, taken together, they change the calculated award payout by at least
five percent. For this reason, actual results reported in this Proxy Statement on financial performance measures may
differ from earnings results reported to the investment community. The MD&C Committee retains discretion to evaluate
all adjustments, both income and expense, as circumstances warrant; however, beginning with long-term equity incentive
awards granted in 2017, the MD&C Committee agreed that it shall not have the ability to use negative discretion with
respect to the calculation of cash flow for purposes of the Cash Flow PSUs, in order to avoid variable accounting treatment
for those awards.
Tax and Accounting Matters. Following the revision of Section 162(m) of the IRC in 2017, the Company generally may no
longer take a deduction for any compensation paid to any of its named executive officers in excess of $1 million.
Section 409A of the IRC (“Code Section 409A”) generally provides that any deferred compensation arrangement that does
not meet specific requirements will result in immediate taxation of any amounts deferred to the extent not subject to a
substantial risk of forfeiture. In general, to avoid a Code Section 409A violation, amounts deferred may only be paid out on
separation from service, disability, death, a specified time or fixed schedule, a change in control or an unforeseen
emergency. Furthermore, the election to defer generally must be made in the calendar year prior to performance of
services. We intend to structure all of our compensation arrangements, including our 409A Deferral Plan, in a manner
that complies with or is exempt from Code Section 409A.
We account for equity-based payments, including stock options, PSUs and RSUs, in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“ASC Topic 718”). The MD&C
2021 Proxy Statement | 31
EXECUTIVE COMPENSATION
Committee takes into consideration the accounting treatment under ASC Topic 718 when determining the form and
amount of annual long-term equity incentive awards. However, because our long-term equity incentive awards are based
on a target dollar value established prior to grant (described in further detail under “Named Executives’ 2020
Compensation Program and Results — Long-Term Equity Incentives”), this “value” will differ from the grant date fair
value of awards calculated pursuant to ASC Topic 718.
Risk Assessment. The MD&C Committee uses the structural elements set forth in the Executive Summary earlier to
establish compensation that will provide sufficient incentives for named executive officers to drive results while avoiding
unnecessary or excessive risk taking that could harm the long-term value of the Company. During 2020, the MD&C
Committee reviewed the Company’s compensation policies and practices and the assessment and analysis of related
risk conducted by the independent compensation consultant. Based on this review and analysis, the MD&C Committee
and the independent compensation consultant concluded that our compensation policies and practices do not create
risks that are reasonably likely to have a material adverse effect on the Company.
Consideration of Stockholder Advisory Vote on Executive Compensation. The MD&C Committee reviews the results of the
stockholder advisory vote on executive compensation and considers such voting results when establishing the Company’s
compensation programs. In light of the fact that more than 95% of shares present and entitled to vote at the annual
meeting have voted in favor of the Company’s executive compensation every year since the advisory vote on
compensation was implemented, the results of the stockholder advisory votes have not caused the MD&C Committee to
recommend any changes to our compensation practices.
Named Executives’ 2020 Compensation Program and Results
Base Salary
The MD&C Committee approved increases to the 2020 base salaries of named executive officers, consistent with our
compensation philosophy and driven by competitive market data, internal pay equity considerations and individual
performance relative to the executive’s responsibilities and contributions. The table below shows the 2020 annual base
salary established by the MD&C Committee for each of our named executive officers.
Named Executive Officer
Mr. Fish
Ms. Rankin(1)
Mr. Morris
Ms. Hemmer
Mr. Batchelor
2020 Base Salary
$1,275,000
$ 688,750
$ 715,750
$ 575,900
$ 575,900
(1) Ms. Rankin’s 2020 base salary was approved in February 2020 and subsequently increased in May 2020 to
the amount set forth above, following her promotion to Executive Vice President.
Annual Cash Incentive
• Annual cash incentives were dependent on the following performance measures: Income from Operations, excluding
Depreciation and Amortization; Income from Operations Margin and Internal Revenue Growth.
• Blended results on the performance measures resulted in each of the named executives receiving an annual cash
incentive payment for 2020 equal to 68.1% of target.
The MD&C Committee develops financial performance measures for annual cash incentive awards to drive improvements
in business operations, as well as support and fund the long-term strategy of the Company. The MD&C Committee has
found that the Income from Operations, excluding Depreciation and Amortization, performance measure encourages
balanced focus on growth and profitability, while the Income from Operations Margin performance measure continues to
keep the Company focused on cost control, operational improvements and yield. The Internal Revenue Growth measure
supports the Company’s strategic growth and creation of shareholder value. The MD&C Committee believes these
financial performance measures, collectively, support and align with the strategy of the Company and are appropriate
indicators of our progress toward the Company’s goals. See “2020 Pay-for-Performance” in the Executive Summary
above for a discussion of alignment between the annual cash incentive measures and Company performance in 2020.
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2021 Proxy Statement
EXECUTIVE COMPENSATION
When setting threshold, target and maximum performance measure levels each year, the MD&C Committee looks to the
Company’s historical results of operations and analyses and forecasts for the coming year. Specifically, the MD&C
Committee considers expected revenue based on analyses of pricing and volume trends, as affected by operational and
general economic factors and expected costs. The table below details the performance measures set by the MD&C
Committee for purposes of the named executive officers’ annual cash incentive for 2020.
Income from Operations, excluding Depreciation and
Amortization
Income from Operations Margin
Internal Revenue Growth
Threshold
Performance
(60% Payment)
Target
Performance
(100% Payment)
Maximum
Performance
(200% Payment)
$4.360 billion
$4.863 billion
$5.366 billion
16.0%
2.0%
17.15%
4.0%
18.3%
6.0%
The following table sets forth the Company’s performance achieved on each of the annual cash incentive performance
measures and the payout earned on account of such performance.
Income from Operations,
excluding Depreciation
and Amortization
(weighted 50%)
Income from
Operations
Margin
(weighted 25%)
Internal Revenue
Growth
(weighted 25%)
Actual
Payout
Earned
Actual
Payout
Earned
Actual
$4.371 billion
60.9%
17.70%
150.5%
(3.00)%
Payout
Earned
0%
Total
Payout Earned
(as a percentage
of Target)
68.1%
As discussed above, the MD&C Committee has discretion to adjust the performance calculations in line with its policy on
calculation adjustments. The calculation of 2020 annual cash incentive performance measures was generally made on a
basis consistent with the Company’s reporting of its 2020 financial results and excluded $155 million in costs related to
the acquisition and integration of Advanced Disposal. Additionally, the performance calculations exclude $46 million in
costs incurred in connection with the COVID-19 pandemic, primarily to transition employees to remote work
environments while maintaining continuity of operations, and $27 million in costs related to our strategic customer
service digitalization initiative. This initiative was accelerated in light of the COVID-19 pandemic and the increased
emphasis on the quality and ease of electronic interactions with our customers. In both cases, these expenditures were
not contemplated at the time that the annual cash incentive performance targets were developed, but were appropriate
and beneficial responses to external conditions.
Target annual cash incentives are a specified percentage of the executives’ base salary. The following table shows each
named executive’s target percentage of base salary for 2020 and annual cash incentive for 2020 paid in March 2021.
Named Executive Officer
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
Target Percentage
of Base Salary
Annual Cash Incentive
For 2020(1)
150
100
100
90
90
$1,277,922
$ 456,597
$ 479,777
$ 347,774
$ 347,774
(1) Calculations of annual cash incentive payouts, as a percentage of base salary, were made using the named
executive’s actual base salary received in 2020. Such amounts are lower than if calculated using the 2020
base salaries in the table above due to the timing of when base salary increases take effect.
Long-Term Equity Incentives
Our equity awards are designed to hold individuals accountable for long-term decisions by rewarding the success of
those decisions. The MD&C Committee continuously evaluates the components of its programs. In determining which
forms of equity compensation are appropriate, the MD&C Committee considers whether the awards granted are achieving
their purpose; the competitive market; and accounting, tax or other regulatory issues, among others. In determining the
appropriate awards for the named executives’ 2020 annual long-term incentive award, the MD&C Committee decided to
2021 Proxy Statement | 33
EXECUTIVE COMPENSATION
grant both PSUs comprising 80% of each named executive’s award and stock options comprising 20% of each named
executive’s award, consistent with prior years. Half of each named executives’ PSUs granted in 2020 are Cash Flow PSUs
and the remaining half are TSR PSUs. Meanwhile, stock options encourage focus on increasing the market value of our
stock. Before determining the actual number of PSUs and stock options that were granted to each of the named
executives in 2020, the MD&C Committee established a target dollar amount for each named executive’s annual total
long-term equity incentive award. The values chosen were based primarily on the comparison information for the
competitive market and consideration of the named executives’ responsibility for meeting the Company’s strategic
objectives. Target dollar amounts for equity incentive awards will vary from grant date fair values calculated for
accounting purposes.
Named Executive Officer
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
Overview of Performance Share Units.
Dollar Values of 2020
Long-Term Equity Incentives
Set by the Committee
(at Target)
$8,000,000
$2,000,000
$2,200,000
$1,650,000
$1,650,000
• Named executives were granted new PSUs with a three-year performance period ending December 31, 2022. Half of
each named executive’s PSUs granted in 2020 are Cash Flow PSUs and the remaining half are TSR PSUs.
• Named executives received a payout of 186.4% of the PSUs granted in 2018 with a three-year performance period
ended December 31, 2020. The Company exceeded the maximum level of performance for the Cash Flow PSUs, and
the Company exceeded the threshold and neared the maximum level of performance for the TSR PSUs.
PSUs Granted in 2020. 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 increase stockholder alignment through
stock ownership. PSUs provide an immediate retention benefit 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 2020 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 market price of our Common
Stock over the 30 trading days preceding the date of the MD&C Committee meeting at which the grants were approved to
determine the number of PSUs granted. The number of PSUs granted in 2020 are shown in the table below.
Named Executive Officer
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
Number
of PSUs
52,892
13,224
14,546
10,910
10,910
Half of each named executive’s PSUs included in the table above are Cash Flow PSUs; the cash flow generation
performance measure requires focus on capital discipline and strengthens alignment with stockholders’ free cash flow
expectations. For purposes of these PSUs, we define cash flow as net cash provided by operating activities, less capital
expenditures, with the following adjustments: (a) costs associated with labor disruptions and multiemployer plan
withdrawal liabilities are excluded due to being required as a result of past labor commitments combined with changing
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2021 Proxy Statement
EXECUTIVE COMPENSATION
economic conditions and business climate; (b) strategic acquisition, restructuring, and transformation and reorganization
costs are excluded; (c) cash proceeds from the government-required divestiture of businesses and other assets in
connection with our acquisition of Advanced Disposal are excluded; and (d) cash proceeds from divestiture of any other
businesses and assets are included (the “2020 Cash Flow PSU Definition”). The table below shows the required
achievement of the cash flow generation performance measure and the corresponding potential payouts under our Cash
Flow PSUs granted in 2020.
Threshold
Target
Maximum
Performance
Payout
Performance
Payout
Performance
Payout
Cash Flow
$6.306 billion
50% $6.927 billion
100% $7.550 billion
200%
The remaining half of each named executive’s PSUs are TSR PSUs. This measure directly correlates executive
compensation with creation of stockholder 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 TSR PSUs granted
in 2020.
Total Shareholder Return Relative to the S&P 500
Performance
75th percentile (Maximum)
50th percentile (Target)
25th percentile (Threshold)
Payout
200%
100%
50%
The different performance measure levels are determined based on an analysis of historical performance and current
projections and trends. The MD&C Committee uses this analysis and consideration of different scenarios related to items
that affect the Company’s performance such as yield, volumes and capital to set the performance measures. As with the
consideration of targets for the annual cash incentives, when the MD&C Committee established the cash flow targets, the
MD&C Committee carefully considered several material factors anticipated to affect the Company in 2020 and beyond,
including general economic and market conditions and economic indicators for future periods, to align the cash flow
targets with the Company’s long-range strategic plan.
Payout on PSUs for the Performance Period Ended December 31, 2020. Half of the PSUs granted in 2018 with the
performance period ended December 31, 2020 were TSR PSUs, and the remaining half of the PSUs granted in 2018 were
Cash Flow PSUs. In line with the MD&C Committee’s policy on calculation adjustments discussed above, no adjustments
were made to the performance calculations for these PSUs. With respect to the TSR PSUs with a three-year performance
period ended December 31, 2020, the performance of the Company’s Common Stock on this measure translated into
a percentile rank relative to the S&P 500 of 68.21%, resulting in a 172.84% payout in shares of Common Stock that were
issued in February 2021.
For purposes of the Cash Flow PSUs with a three-year performance period ended December 31, 2020, the Company
generated net cash flow from operating activities, less capital expenditures, of $7.009 billion, exceeding the maximum
criteria of $6.316 billion; this performance level yielded a 200% payout in shares of Common Stock that were issued in
February 2021. With respect to these Cash Flow PSUs, the underlying award agreements provide for performance to be
measured using the same methodology as the 2020 Cash Flow PSU Definition set forth above, except that these 2018
awards did not exclude cash proceeds from government-required divestitures in connection with our acquisition of
Advanced Disposal, as such divestiture proceeds were not anticipated at the time the awards were granted. However, the
Company was able to confirm to the MD&C Committee that its results on this performance measure would have exceeded
maximum criteria even without the benefit of such divestiture proceeds; and as a result, the proceeds did not impact the
award payout for the Cash Flow PSUs.
Stock Options. The MD&C Committee believes use of stock options is appropriate to support the growth element of the
Company’s strategy. The grant of options made to the named executive officers in the first quarter of 2020 in connection
with the annual grant of long-term equity awards was based on the targeted dollar amounts established for total
long-term equity incentives (set forth in the table above) and multiplied by 20%. The actual number of stock options
2021 Proxy Statement | 35
granted was determined by assigning a value to the options using an option pricing model and dividing the dollar value of
target compensation by the value of an option. The resulting number of stock options are shown in the table below.
EXECUTIVE COMPENSATION
Named Executive Officer
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
Number
of Options
101,138
25,284
27,813
20,860
20,860
The stock options will vest in 25% increments on the first two anniversaries of the date of grant and the remaining 50%
will vest on the third anniversary. The exercise price of the options granted in 2020 is $126.005, which is the average of
the high and low market price of our Common Stock on the date of grant, and the options have a term of ten years. We
account for our employee stock options under the fair value method of accounting using a Black-Scholes methodology to
measure stock option expense at the date of grant. The fair value of the stock options at the date of grant is amortized to
expense over the vesting period less expected forfeitures, except for stock options granted to retirement-eligible
employees, for which expense is fully recognized at the time of grant.
Restricted Stock Units. The MD&C Committee anticipates that grants of RSUs to named executives will continue to be
made on a limited basis in cases such as a significant promotion and increased responsibilities and to attract new hires,
and that RSUs will not be a routine component of named executive compensation. No RSUs were granted to named
executives in 2020. Mr. Bachelor’s last remaining award of RSUs, granted prior to his promotion to the Senior Leadership
Team, vested in February 2021. No other named executives had unvested RSUs as of December 31, 2020.
Post-Employment and Change in Control Compensation; Clawback Policies
In December 2017, we adopted an Executive Severance Protection Plan (the “Severance
Severance Protection Plan.
Protection Plan”) and each of Messrs. Fish and Morris and Ms. Rankin entered into new or amended and restated
employment agreements (the “2017 Employment Agreements”). The Severance Protection Plan covers each of our
executive officers. The 2017 Employment Agreements do not contain separate severance entitlements, but instead
provide for additional terms and protections relating to the respective executive’s participation in the Severance
Protection Plan. The 2017 Employment Agreements are intended to transition the Company’s severance protections
away from contract-based protections and onto a standardized and flexible plan-based approach. Going forward, the
Company does not anticipate entering into new employment agreements with our executive officers, and neither
Ms. Hemmer nor Mr. Batchelor are party to an employment agreement with the Company.
Post-Employment Covenants and Clawback Policies. The 2017 Employment Agreements contain noncompetition and
nonsolicitation restrictions that apply during employment and for a two-year period following termination. Additionally,
the Severance Protection Plan contains (a) a requirement that the individual execute a general release prior 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 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 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 equity 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 affects the payout calculations for the awards.
36 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
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.
Other Compensation Policies and Practices
Compensation Limitation Policies. The Company has adopted a Severance Limitation Policy that generally provides that
the Company may not enter into new severance arrangements with its executive officers, as defined in the federal
securities laws, that provide for benefits, less the value of vested equity awards and benefits provided to employees
generally, in an amount that exceeds 2.99 times the executive officer’s then current base salary and target annual cash
incentive, unless such future severance arrangement receives stockholder approval. The Company has also adopted its
Policy Limiting Certain Compensation Practices, which generally provides that the Company will not enter into new
compensation arrangements that would obligate the Company to pay a death benefit or gross-up payment to an executive
officer unless such arrangement receives stockholder approval. Both of these compensation limitation policies are
subject to certain exceptions, including benefits generally available to management-level employees and any payment in
reasonable settlement of a legal claim. Additionally, “Death Benefits” under the policy does not include deferred
compensation, retirement benefits or accelerated vesting or continuation of equity-based awards pursuant to generally-
applicable equity award plan provisions. None of our executive officers are party to any employment agreement or
arrangement with the Company that provides for severance, gross-up or death benefits that exceed amounts permitted
by these compensation limitation policies.
Stock Ownership Guidelines and Holding Requirements. All of our named executive officers are subject to stock ownership
guidelines. We instituted stock ownership guidelines because we believe that ownership of Company stock demonstrates
a commitment to, and confidence in, the Company’s long-term prospects and further aligns employees’ interests with
those of our stockholders. We believe that the requirement that these individuals maintain a portion of their individual
wealth in the form of Company stock deters actions that would not benefit stockholders generally. Although there is no
deadline set for executives to reach their ownership guidelines, the MD&C Committee monitors ownership levels to
confirm that executives are making sustained progress toward achievement of their ownership guidelines.
Additionally, our stock ownership guidelines contain holding requirements. Executives with a title of Senior Vice President
or higher, which includes all of our named executives, must hold 100% of all net shares acquired through the Company’s
long-term incentive plans for at least one year, and those individuals must continue to hold 100% of all such net shares
until the individual’s ownership guideline is achieved. Once achieved, the requisite stock ownership level must continue
to be retained throughout the executive’s employment with the Company. Our MD&C Committee believes these holding
periods discourage executives from taking actions in an effort to gain from short-term increases in the market value of
our stock.
The MD&C Committee regularly reviews the ownership guidelines to ensure that the appropriate share ownership levels
are in place. Guidelines are expressed as a fixed number of shares and were revised in November 2020 to account for the
Company’s more recent sustained Common Stock market value since the prior revision in November 2018. The ownership
requirement of Mr. Fish, our President and Chief Executive Officer, was over six times base salary, using his base salary
as of December 31, 2020 and an assumed $100 per share stock price. Using the closing price of our Common Stock on
March 17, 2021, the ownership requirement of our President and Chief Executive Officer is approximately 7.7 times his
base salary as of December 31, 2020. Shares owned outright, vested RSUs and PSUs that have been deferred, Common
Stock equivalents based on holdings in the Company’s 401(k) Retirement Savings Plan and phantom stock held in the
Company’s 409A Deferral Plan count toward meeting the ownership guidelines. Stock options, PSUs, RSUs and restricted
stock, if any, do not count toward meeting the ownership guidelines until they are vested or earned. The following table
outlines the stock ownership guidelines and attainment for our named executive officers.
Named Executive Officer
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
Ownership
Guideline (number
of shares)
Attainment as of
March 17, 2021
82,000
20,500
21,500
11,000
11,000
304%
124%
416%
259%
260%
2021 Proxy Statement | 37
EXECUTIVE COMPENSATION
As discussed under “Director and Officer Stock Ownership,” the MD&C Committee also establishes ownership guidelines
for the independent directors and performs regular reviews to ensure all independent directors are in compliance or are
showing sustained progress toward achievement of their ownership guideline.
Insider Trading; Prohibition of Hedging and Pledging Company Securities. The Company’s Insider Trading Policy prohibits
directors, executive officers and other “designated insiders” from engaging in most transactions involving the Company’s
Common Stock during periods, determined by the Company, that those individuals are most likely to be aware of material,
non-public information. Directors, executive officers and other designated insiders subject to stock ownership guidelines
must clear all their transactions in our Common Stock with the Company’s office of the Chief Legal Officer in advance.
Additionally, it is our policy that directors, executive officers and designated insiders are not permitted to hedge their
ownership of Company securities, including (a) trading in options, warrants, puts and calls or similar derivative
instruments on any security of the Company, (b) selling any security of the Company “short” and (c) purchasing any
financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or
otherwise engaging in transactions that are designed to or have the effect of offsetting any decrease in the market value
of any security of the Company granted as compensation or held, directly or indirectly, by the director, executive officer
or designated insider. The Company’s Insider Trading Policy also provides that directors and executive officers may not
pledge Company securities or hold Company securities in a margin account.
38 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
We are required to present compensation information in the tabular format prescribed by the SEC. This format, including
the tables’ column headings, may be different from the way we describe or consider elements and components of
compensation internally. The Compensation Discussion and Analysis contains a discussion that should be read in
conjunction with these tables to gain a complete understanding of our executive compensation philosophy, programs
and decisions.
SUMMARY COMPENSATION TABLE
Year
James C. Fish, Jr.
President and Chief Executive Officer
2020
2019
2018
Devina A. Rankin
Executive Vice President and Chief Financial Officer
Salary
($)
Stock
Awards
($)(1)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)
All Other
Compensation
($)(4)
Total
($)
1,269,231(6) 8,110,592 1,600,003
1,232,788(6) 6,853,530 1,399,997
1,157,692(6) 5,431,408 1,199,997
1,277,922
1,704,132
1,169,293
116,177
12,373,925
107,654
11,298,101
166,891
9,125,281
2020
2019
2018
677,061
2,027,801
399,993
618,208
1,958,118
399,997
539,923
1,538,892
340,006
456,597
578,516
379,541
60,493
68,575
53,956
3,621,945
3,623,414
2,852,318
John J. Morris, Jr.
Executive Vice President and Chief Operating Officer
2020
2019
2018
Tara J. Hemmer(5)
Senior Vice President — Operations
2020
2019
Steven R. Batchelor(5)
Senior Vice President — Operations
2020
2019
712,115
2,230,520
440,002
699,807
2,153,907
440,006
646,192
1,629,462
359,997
479,777
661,476
435,053
99,517
86,046
3,961,930
4,041,242
116,032
3,186,736
567,062
1,672,967
330,005
535,670
1,615,372
330,001
347,774
479,828
57,125
38,502
2,974,933
2,999,373
567,062
1,672,967
330,005
535,397
1,615,372
330,001
347,774
479,828
13,841
29,157
2,931,649
2,989,755
(1) Amounts in this column represent the grant date fair value of PSUs granted to all named executives annually. The
grant date fair values were calculated in accordance with ASC Topic 718, as further described in Note 15 in the
Notes to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K. The grant date fair value
of a TSR PSU granted in 2020, based on a Monte Carlo valuation, is $180.68, and because total shareholder return is
a market condition, projected achievement is embedded in the grant date fair value. The grant date fair value of a
Cash Flow PSU granted in 2020 is $126.005, which is the average of the high and low market price of our Common
Stock on the date of the grant, in accordance with our 2014 Stock Incentive Plan. The table below shows (a) the
aggregate grant date fair value of Cash Flow PSUs assuming target level of performance is achieved (this is the
amount included in the Stock Awards column in the Summary Compensation Table) and (b) the aggregate grant
date fair value of the same PSUs assuming the Company will reach the highest level of achievement for this
performance measure and maximum payouts will be earned.
2021 Proxy Statement | 39
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
EXECUTIVE COMPENSATION
Aggregate Grant Date
Fair Value of Cash
Flow PSUs
Assuming Target
Level of Performance
Achieved ($)
Aggregate Grant Date
Fair Value of Cash
Flow PSUs
Assuming Highest
Level of Performance
Achieved ($)
3,332,328
2,914,920
2,354,189
833,145
832,820
667,017
916,434
916,092
706,274
687,357
687,044
687,357
687,044
6,664,656
5,829,840
4,708,378
1,666,290
1,665,640
1,334,034
1,832,869
1,832,184
1,412,548
1,374,715
1,374,088
1,374,715
1,374,088
Year
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2020
2019
(2) Amounts in this column represent the grant date fair value of stock options granted annually, in accordance with
ASC Topic 718. The grant date fair value of the options granted in 2020, estimated using the Black-Scholes option
pricing model, is $15.82 per option. The assumptions made in determining the grant date fair values of options are
disclosed in Note 15 in the Notes to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K.
(3) Amounts in this column represent cash incentive awards earned and paid based on the achievement of performance
criteria. See “Compensation Discussion and Analysis — Named Executive’s 2020 Compensation Program and
Results — Annual Cash Incentive” for additional information.
(4) The amounts included in “All Other Compensation” for 2020 are shown below (in dollars):
Mr. Fish
Ms. Rankin
Mr. Morris
Ms. Hemmer
Mr. Batchelor
401(k)
Plan Matching
Contributions
409A
Deferral
Plan
Matching
Contributions
Life Insurance
Premiums
12,825
12,825
12,825
12,825
12,825
78,676
46,479
25,659
43,284
—
2,201
1,189
1,318
1,017
1,017
Perquisites
and Other
Personal
Benefits(a)
22,475
—
59,715
—
—
(a) This column includes incremental cost to us for personal use of Company aircraft. Annually, we calculate
an hourly direct operating cost for Company aircraft using industry standard measurements of costs for
fuel, catering, telecommunications, maintenance, landing and hangar fees, flight plans and permits, and
crew. We then allocate incremental cost to the named executive based on the amount of aircraft time
required for the personal use, multiplied by the direct operating cost. For example, the majority of
Mr. Morris’ personal aircraft use reported above resulted from deviations from business travel flight plans
to pick up or drop off the executive in another location where he was working remotely during the COVID-19
pandemic; in such case, we calculate the time difference resulting from the flight plan deviation and
multiply it by the direct operating cost. We also allocate incremental cost to the named executive for any
deadhead flights required to position the aircraft to serve personal needs. We own and operate our aircraft
primarily for business use; therefore, we do not include purchase costs or other fixed costs associated
with the ownership or operation of our aircraft in the direct operating cost.
(5) Each of Ms. Hemmer and Mr. Batchelor were promoted to their current positions on January 1, 2019.
(6)
Includes $100,000 in 2020, $75,000 in 2019 and $50,000 in 2018 of base salary to which Mr. Fish was entitled but
voluntarily relinquished to fund a scholarship program for children of Company employees.
40 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
GRANT OF PLAN-BASED AWARDS IN 2020
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
Threshold
($)
Target
($)
Maximum
($)
1,125,922 1,876,537 3,753,074
Grant Date
James C. Fish, Jr.
Cash Incentive
2/19/20
2/19/20
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
Target
(#)
Threshold
(#)
Maximum
(#)
All other
Option
Awards:
Number of
Securities
Underlying
Options(#)(3)
Exercise
or Base
Price of
Option
Awards
($/sh)(4)
Closing
Market
Price on
Date of
Grant
($/sh)
Grant
Date Fair
Value of
Stock and
Option
Awards
($)(5)
26,446 52,892 105,784
8,110,592
101,138 126.005 125.23 1,600,003
Devina A. Rankin
Cash Incentive
2/19/20
2/19/20
402,288
670,480 1,340,959
6,612 13,224
26,448
25,284 126.005 125.23
John J. Morris, Jr.
Cash Incentive
2/19/20
2/19/20
422,711
704,518 1,409,037
7,273 14,546
29,092
27,813 126.005 125.23
Tara J. Hemmer
Cash Incentive
2/19/20
2/19/20
306,409
510,681 1,021,363
5,455 10,910
21,820
20,860 126.005 125.23
Steven R. Batchelor
Cash Incentive
2/19/20
2/19/20
306,409
510,681 1,021,363
5,455 10,910
21,820
20,860 126.005 125.23
2,027,801
399,993
2,230,520
440,002
1,672,967
330,005
1,672,967
330,005
(1) Actual payouts of cash incentive awards for 2020 performance are shown in the Summary Compensation Table
under “Non-Equity Incentive Plan Compensation.” The named executives’ possible annual cash incentive payouts
are calculated using a percentage of base salary approved by the MD&C Committee. The threshold levels represent
the amounts that would have been payable if the minimum performance criteria were met for each performance
measure. See “Compensation Discussion and Analysis — Named Executive’s 2020 Compensation Program and
Results — Annual Cash Incentive” for additional information about these awards.
(2) Represents the number of shares of Common Stock potentially issuable based on the achievement of performance
criteria under PSU awards granted under our 2014 Stock Incentive Plan. See “Compensation Discussion and
Analysis — Named
Results — Long-Term Equity
Incentives — Performance Share Units” for additional information about these awards. The performance period for
these awards ends December 31, 2022. PSUs earn dividend equivalents, which are paid out based on the number of
shares earned at the end of the performance period.
Program and
Compensation
Executive’s
2020
(3) Represents the number of shares of Common Stock potentially issuable upon the exercise of options granted under
our 2014 Stock Incentive Plan. See “Compensation Discussion and Analysis — Named Executive’s 2020
Compensation Program and Results — Long-Term Equity Incentives — Stock Options” for additional information
about these awards. The stock options will vest in 25% increments on the first two anniversaries of the date of grant
and the remaining 50% will vest on the third anniversary. Although we consider stock options to be a form of
incentive compensation, only awards with performance criteria are included as “Equity Incentive Plan Awards” in
our compensation tables.
(4) The exercise price represents the average of the high and low market price of our Common Stock on the date of the
grant, in accordance with our 2014 Stock Incentive Plan.
(5) These amounts are grant date fair values of the awards as calculated under ASC Topic 718 and as further described
in notes (1) and (2) to the Summary Compensation Table.
2021 Proxy Statement | 41
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2020
Option Awards
Stock Awards(1)
EXECUTIVE COMPENSATION
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)(2)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)(6)
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(6)
Name
James C. Fish, Jr.
Devina A. Rankin
John J. Morris, Jr.
Tara J. Hemmer
Steven R. Batchelor
—
28,641
—
—
8,183
13,980
—
—
—
—
6,751
8,223
—
6,751
1,842
5,443
101,138(3)
85,925(4)
49,342(5)
126.005
98.898
85.34
2/19/2030
2/19/2029
2/20/2028
25,284(3)
24,550(4)
13,981(5)
126.005
98.898
85.34
2/19/2030
2/19/2029
2/20/2028
27,813(3)
27,006(4)
14,803(5)
126.005
98.898
85.34
2/19/2030
2/19/2029
2/20/2028
20,860(3)
20,254(4)
8,224(5)
126.005
98.898
85.34
2/19/2030
2/19/2029
2/20/2028
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
20,860(3)
20,254(4)
1,842(5)
—
126.005
98.898
85.34
73.335
2/19/2030
2/19/2029
2/20/2028
2/28/2027
515
—
—
—
60,734
—
—
—
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)(7)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)(7)
111,840
—
—
26,378,582
—
—
30,066
—
—
33,072
—
—
24,804
—
—
24,804
—
—
—
7,091,367
—
—
7,800,362
—
—
5,850,271
—
—
5,850,271
—
—
—
(1) Values are based on the closing price of our Common Stock on December 31, 2020 of $117.93.
(2)
(3)
(4)
(5)
(6)
Includes vested stock options granted on February 28, 2017, February 20, 2018 and February 19, 2019 pursuant to
our 2014 Stock Incentive Plan.
Includes stock options granted on February 19, 2020 that vest 25% on the first and second anniversary of the date of
grant and 50% on the third anniversary of the date of grant.
Includes stock options granted on February 19, 2019 that vested 25% on the first anniversary of the date of grant. An
additional 25% will vest on the second anniversary of the date of grant and 50% will vest on the third anniversary of
the date of grant.
Includes stock options granted on February 20, 2018 that vested 25% on the first and second anniversary of the date
of grant. The remaining 50% will vest on the third anniversary of the date of grant.
Includes RSUs granted to Mr. Batchelor on February 20, 2018 under our 2014 Stock Incentive Plan. The RSUs vest
on the third anniversary of the date of grant.
42 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
(7)
Includes PSUs with three-year performance periods ending December 31, 2021 and December 31, 2022. Payouts on
PSUs are made after the Company’s financial results for the performance period are reported and the MD&C
Committee determines achievement of performance results and corresponding vesting, typically in mid to late
February of the succeeding year. The PSUs for the performance period ended December 31, 2020 are not included
in the table as they are considered earned as of December 31, 2020 for proxy statement disclosure purposes;
instead, such PSUs are included in the Option Exercises and Stock Vested table below. Pursuant to SEC disclosure
instructions, because the Company’s performance on the metrics governing our PSUs with the performance period
ended December 31, 2020 exceeded target, the payout value of unearned awards is calculated assuming maximum
performance criteria is achieved. The following number of PSUs have a performance period ending December 31,
and
2021: Mr. Fish — 58,948; Ms. Rankin — 16,842; Mr. Morris — 18,526; Ms. Hemmer — 13,894;
Mr. Batchelor — 13,894. The following number of PSUs have a performance period ending December 31, 2022:
Mr. Fish — 52,892; Ms. Rankin — 13,224; Mr. Morris — 14,546; Ms. Hemmer — 10,910; and Mr. Batchelor — 10,910.
OPTION EXERCISES AND STOCK VESTED
Name
James C. Fish, Jr.
Devina A. Rankin
John J. Morris, Jr.
Tara J. Hemmer
Steven R. Batchelor
Option Awards
Stock Awards
Number of Shares
Acquired on Exercise(#)(1)
Value Realized on
Exercise ($)
Number of Shares
Acquired on Vesting (#)(2)
Value Realized on
Vesting ($)(2)
89,438
32,293
43,233
12,468
41,463
3,849,927
1,608,080
1,381,985
741,459
3,317,942
102,852
29,141
30,856
18,474
3,470
11,556,965
3,274,428
3,467,134
2,063,918
388,089
(1) The following number of net shares were received, after withholdings and the sale of shares to cover option costs
and taxes: Mr. Fish — 19,540; Ms. Rankin — 8,144; Mr. Morris — 7,334; Ms. Hemmer — 3,631 and
Mr. Batchelor — 16,267.
(2)
Includes shares of the Company’s Common Stock issued on account of PSUs granted in 2018 with a performance
period ended December 31, 2020. The determination of achievement of performance results and corresponding
vesting of such PSUs was performed by the MD&C Committee in February 2021. Following such determination,
shares of the Company’s Common Stock earned under this award were issued on February 18, 2021, based on the
average of the high and low market price of our Common Stock on that date. Also includes the following number of
RSUs that vested in 2020: Ms. Hemmer — 1,331 and Mr. Batchelor — 592. The value of RSUs realized on vesting was
calculated using the average of the high and low market price of our Common Stock on the date of vesting.
2021 Proxy Statement | 43
EXECUTIVE COMPENSATION
Nonqualified Deferred Compensation in 2020
Each of our named executive officers is eligible to participate in our 409A Deferral Plan and may elect to defer receipt of
portions of their base salary and cash incentives in excess of the annual compensation threshold established under
Section 401(a)(17) of the IRC, referred to as the “Threshold.” As of 2020, the Threshold was $285,000. The plan provides
that eligible employees may defer for payment at a future date (a) up to 25% of base salary and up to 100% of annual cash
incentives payable after the aggregate of such compensation components reaches the Threshold; (b) receipt of any RSUs
and (c) receipt of any PSUs. The Company match provided under the 409A Deferral Plan is dollar for dollar on the
employee’s deferrals, up to 3% of the employee’s aggregate base salary and cash incentives in excess of the Threshold,
and fifty cents on the dollar on the employee’s deferrals, in excess of 3% and up to 6% of the employee’s aggregate base
salary and cash incentives in excess of the Threshold. Additional deferral contributions will not be matched but will be
tax-deferred. Amounts deferred under this plan are allocated into accounts that mirror selected investment funds in our
401(k) Retirement Savings Plan, including a Company stock fund, although the amounts deferred are not actually invested
in stock or funds. There is no Company match on deferred RSUs or PSUs, but the Company makes a cash payment of
dividend equivalents on the shares deferred at the same time and at the same rate as dividends on the Company’s
Common Stock.
Participating employees generally can elect to receive distributions commencing six months after the employee leaves
the Company in the form of annual installments or a lump sum payment. Special circumstances may allow for a modified
or accelerated distribution, such as the employee’s death, an unforeseen emergency, or upon termination of the plan. In
the event of death, distribution will be made to the designated beneficiary in a single lump sum in the following calendar
year. In the event of an unforeseen emergency, the plan administrator may allow an early payment in the amount
necessary to satisfy the emergency. All participants are immediately 100% vested in all of their contributions, Company
matching contributions, and gains and/or losses related to their investment choices
Name
James C. Fish, Jr.
Devina A. Rankin
John J. Morris, Jr.
Tara J. Hemmer
Steven R. Batchelor
Executive
Contributions
in Last
Fiscal
Year ($)(1)
Registrant
Contributions
in Last
Fiscal
Year ($)(2)
164,029
58,235
30,665
57,642
—
78,676
46,479
25,659
43,284
—
Aggregate
Earnings
in Last
Fiscal
Year ($)(3)
842,985
43,522
319,414
72,136
219,114
Aggregate
Withdrawals/
Distributions ($)(4)
Aggregate Balance
at Last Fiscal
Year End ($)(5)
206,760
—
—
—
—
13,373,751
456,244
2,106,832
446,739
2,122,393
(1) Contributions are made pursuant to the Company’s 409A Deferral Plan. Executive contributions of base salary and
annual cash incentive compensation is included in the Salary column and the Non-Equity Incentive
Plan Compensation column, respectively, of the Summary Compensation Table.
(2) Company contributions to the executives’ 409A Deferral Plan accounts are included in the All Other Compensation
column in the Summary Compensation Table.
(3) Earnings on these accounts are not included in any other amounts in the tables included in this Proxy Statement, as
the amounts of the named executives’ earnings on deferred cash compensation represent the general market gains
(or losses) on investments, rather than amounts or rates set by the Company for the benefit of the named executives.
In case of Mr. Fish, who has deferred receipt of 94,844 shares of Common Stock, earnings also include the change
in the closing price per share of the Company’s Common Stock from December 31, 2019 to December 31, 2020, plus
$2.18 of dividends paid per share of Common Stock in 2020, multiplied by the number of shares deferred. The value
of such deferred shares was included in the Option Exercises and Stock Vested table for the year of vesting.
(4) The amount shown in this column consists of dividend equivalents paid on Mr. Fish’s deferred shares.
(5) Amounts shown in this column include the following amounts that were reported as compensation to the named
executive in the Summary Compensation Table for 2018-2020: Mr. Fish — $903,081; Ms. Rankin — $268,182;
Mr. Morris — $268,236; Ms. Hemmer — $172,411 and Mr. Batchelor — $66,676. Because Ms. Hemmer and
Mr. Batchelor became named executives in 2019, their amounts only include 2019 and 2020 compensation.
44 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
Potential Payments Upon Termination or Change in Control
Change in Control. The post-employment compensation our named executives receive is based on provisions included
in retirement and severance plan documents, employment agreements and equity incentive award documentation.
Severance protections aid in retention of senior leadership by providing the individual with comfort that he or she will be
treated fairly in the event of an involuntary termination not for cause. The change in control provisions included in the
Severance Protection Plan, our stock option award agreements and, if applicable, employment agreements require a
double trigger in order to receive any payment in the event of a change in control situation. First, a change in control must
occur, and second, the individual must terminate employment for good reason or the Company must terminate
employment without cause within six months prior to or two years following the change in control event. PSUs are 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 typically receive a replacement award from 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. RSUs, which are not routinely a component of our named executive officer compensation,
vest upon a change in control, unless the successor entity converts the awards to equivalent grants in the successor. In
the case of both converted RSU and PSU awards, they will vest in full if the executive is terminated without cause
following the change in control. We believe providing change in control protection encourages our named executives to
pursue and facilitate transactions that are in the best interests of stockholders while not granting executives an
undeserved windfall.
Involuntary Termination or Resignation for Good Reason. Under the Severance Protection Plan, in the event a participant
is terminated without cause or resigns for good reason, subject to execution of a release of claims and continued
compliance with all restrictive covenants, he or she will be entitled to receive: (a) cash severance in an aggregate amount
equal to two times the sum of the participant’s base salary and target annual bonus (with one half payable in a lump sum
at termination, and the remaining half payable in installments over a two-year period); (b) continuation of group health
benefits over a two-year period following termination and (c) a pro rata annual cash incentive payment for the year of
termination. In the event a named executive is terminated for cause, he or she is entitled to any accrued but unpaid salary
only, and all unvested awards and outstanding stock options, whether exercisable or not, are forfeited.
The terms “cause,” “good reason,” and “change in control” are defined in the executives’ employment agreements, the
Severance Protection Plan and equity award plans and agreements, as applicable, but such terms have the meanings
generally described below. You should refer to the applicable documentation, accessible through the Company’s Form
10-K Exhibit List, for the actual definitions.
“Cause” generally means the named executive has: deliberately refused to perform his or her duties; breached his
or her duty of loyalty to the Company; been convicted of a felony; intentionally and materially harmed the Company;
materially violated the Company’s policies and procedures or breached the covenants contained in his or her
agreement.
“Good Reason” generally means that, without the named executive’s consent: his or her duties or responsibilities
have been substantially changed; he or she has been removed from his or her position; the Company has breached
his or her employment agreement; any successor to the Company has not assumed the obligations under his or her
employment agreement; or he or she has been reassigned to a location more than 50 miles away.
“Change in Control” generally means that: at least 25% of the Company’s Common Stock has been acquired by one
person or persons acting as a group; certain significant turnover in our Board of Directors has occurred; there has
been a merger of the Company in which at least 50% of the combined post-merger voting power of the surviving
entity does not consist of the Company’s pre-merger voting power, or a merger to effect a recapitalization that
resulted in a person or persons acting as a group acquired 25% or more of the Company’s voting securities; or the
Company is liquidating or selling all or substantially all of its assets.
Benefits to a participant under the Severance Protection Plan are subject to reduction to the extent required by the
Company’s Severance Limitation Policy or if the excise tax described in Sections 280G or 4999 of the IRC is applicable
and such reduction would place the participant in a better net after tax position.
Voluntary Termination; Retirement. Our equity award agreements generally provide that an executive forfeits unvested
awards if he or she voluntarily terminates employment. RSUs and PSUs generally vest on a pro rata basis upon
involuntary termination other than for cause. RSUs generally vest on a pro rata basis upon an employee’s qualifying
2021 Proxy Statement | 45
EXECUTIVE COMPENSATION
retirement; however, PSUs and stock options generally continue to vest following a qualifying retirement as if the
employee had remained employed until the end of the performance period. If the recipient is terminated by the Company
without cause or voluntarily resigns, the recipient is entitled to exercise all stock options outstanding and exercisable
within a specified time frame after such termination.
Explanation of Tabular Disclosure. The following table presents potential payouts to our named executives at year-end
upon termination of employment in the circumstances indicated pursuant to the terms of applicable plans and
agreements. The payouts set forth below assume the triggering event indicated occurred on December 31, 2020, when
the closing price of our Common Stock was $117.93 per share. These payouts are calculated for SEC disclosure purposes
and are not necessarily indicative of the actual amounts the named executive would receive. Please note the following
when reviewing the payouts set forth below:
• The compensation component set forth below for accelerated vesting of stock options is comprised of the
unvested stock options granted in 2018 and 2019, which vest 25% on the first and second anniversary of the date
of grant and 50% on the third anniversary of the date of grant, based on the difference between the closing price
of our Common Stock on December 31, 2020 and the exercise price of those options. The exercise price of stock
options granted in 2020 was below the closing price of our Common Stock on December 31, 2020, and no value is
attributed to those stock options in the chart below.
• For purposes of calculating the payout of performance share unit awards outstanding as of December 31, 2020,
we have assumed that target performance was achieved; any actual performance share unit payouts will be
based on actual performance of the Company during the performance period.
• For purposes of calculating the payout upon the “double trigger” of change in control and subsequent involuntary
termination not for cause, the value of the performance share unit replacement award is equal to the number of
PSUs that would be forfeited based on the prorated acceleration of the PSUs, multiplied by the closing price of our
Common Stock on December 31, 2020.
• The payout for continuation of benefits is an estimate of the cost the Company would incur to continue those
benefits.
• The Company’s practice is to provide all benefits eligible employees with life insurance that pays one times annual
base salary upon death. The insurance benefit is a payment by an insurance company, not the Company, and is
payable under the terms of the insurance policy.
• Refer to the Nonqualified Deferred Compensation in 2020 table above for aggregate balances payable to the
named executives under our 409A Deferral Plan pursuant to the named executive’s distribution elections.
46 |
2021 Proxy Statement
EXECUTIVE COMPENSATION
Potential Consideration Upon Termination of Employment
Payout or Value of Compensation Components, in dollars
In Event of Death or Disability
• Accelerated vesting of stock options
• Payment of PSUs (contingent on actual
3,243,381
922,877
996,408
653,494
445,505
Mr. Fish
Ms. Rankin
Mr. Morris Ms. Hemmer Mr. Batchelor
performance at end of performance period)
• Accelerated vesting of restricted stock units
• Life insurance benefit paid by insurance
company (in the case of death)
Total
In Event of Termination Without Cause by the
Company or For Good Reason by the Employee
• Two times base salary plus target annual cash
bonus (one-half payable in lump sum; one-half
payable in bi-weekly installments over a
two-year period)
• Continued coverage under health and welfare
13,189,291
—
3,545,683
—
3,900,181
—
2,925,136
—
2,925,136
60,734
1,175,000
538,000
17,607,672 5,107,560 5,596,589 4,116,630
639,000
700,000
538,000
3,969,375
6,375,000
2,755,000
2,863,000
2,188,420
2,188,420
benefit plans for two years
27,600
27,600
27,600
27,600
27,600
6,713,676
—
1,521,218
—
13,116,276 4,626,553 4,918,917 3,737,238
1,843,953
—
2,028,317
—
1,521,218
57,697
3,794,936
• Prorated payment of PSUs (contingent on actual
performance at end of performance period)
• Prorated vesting of restricted stock units
Total
In Event of Termination Without Cause by the
Company or For Good Reasons by the Employee Six
Months Following a Change in Control (Double Trigger)
• Two times base salary plus target annual cash
bonus (one-half payable in lump sum; one-half
payable in bi-weekly installments over a
two-year period)
6,375,000
2,755,000
2,863,000
2,188,420
2,188,420
• Continued coverage under health and welfare
benefit plans for two years
• Accelerated vesting of stock options
• Prorated accelerated payment of PSUs
• Accelerated payment of PSUs replacement grant
• Accelerated vesting of restricted stock units
• Prorated annual cash bonus(1)
Total
27,600
3,243,381
6,713,676
6,475,615
—
3,825,000
27,600
653,494
1,521,218
1,403,917
—
518,310
26,660,272 8,628,660 9,218,689 6,312,960
27,600
922,877
1,843,953
1,701,730
—
1,377,500
27,600
996,408
2,028,317
1,871,864
—
1,431,500
27,600
445,505
1,521,218
1,403,917
60,734
518,310
6,165,705
(1) Pursuant to the Severance Protection Plan, Ms. Hemmer and Mr. Batchelor receive a prorated target annual cash
bonus under this scenario. Mr. Fish, Ms. Rankin and Mr. Morris receive a prorated maximum annual cash bonus
under this scenario pursuant to their 2017 Employment Agreements. The 2017 Employment Agreements provided
for this enhanced treatment partially on account of similar terms in pre-existing employment agreements that
executives were agreeing to terminate in order to support the Company’s transition toward a more standardized
and flexible approach to severance protections.
2021 Proxy Statement | 47
EXECUTIVE COMPENSATION
Chief Executive Officer Pay Ratio
In 2018, we identified the Company’s median employee, based on total annual compensation for all employees other than
our Chief Executive Officer, in accordance with SEC Regulation S-K, Item 402(u) (the “Median Employee”). To select the
Median Employee, we determined the actual taxable compensation paid to each listed employee in 2017, converted to
U.S. dollars at appropriate exchange rates for non-U.S. employees, and annualized for salaried employees hired during
the year. We did not apply any cost-of-living adjustments nor did we use any form of statistical sampling. During 2019, a
change in such employee’s circumstances made it no longer appropriate to use that individual as the Median Employee.
A new Median Employee was selected at the end of 2019, whose compensation is substantially similar to the original
median employee based on the compensation measure used to select the original median employee. The Median
Employee, a Driver in the U.S., was identified from a list of Company employees as of December 31, 2017. Out of a total
worldwide employee population of 42,075 on that date, the list included 41,585 employees and excluded the Chief
Executive Officer and our 489 employees based in India. Approximately 90% of these total employees work in the U.S.
and approximately 10% work in Canada. Over 99% of these individuals are full-time employees. Any temporary or
seasonal employees are included; any subcontracted workers are not employees and are excluded.
Since December 31, 2017, there have been no changes to the Company’s employee population, compensation
arrangements, or the circumstances of the Median Employee (except as noted above) that the Company believes would
significantly impact this pay ratio disclosure. Accordingly, as permitted by SEC Regulation S-K, Item 402(u), the Company
is providing the following information based on the Median Employee as identified.
For 2020, total annual compensation for the Median Employee was $80,091. The annual compensation of our Chief
Executive Officer was $12,373,925, for a ratio of 1:154. These values were calculated in accordance with SEC
Regulation S-K, Item 402(c)(2)(x) requirements for reporting total compensation in the Summary Compensation Table.
Equity Compensation Plan Table
The following table provides information as of December 31, 2020 about the number of shares to be issued upon vesting
or exercise of equity awards and shares remaining available for issuance under our equity compensation plans.
Plan Category
Equity compensation plans approved by security holders(1)
Number of
Securities to be
Issued Upon
Exercise
of Outstanding
Options and Rights
5,070,134(2)
Weighted-Average
Exercise Price of
Outstanding
Options and Rights
$82.86(3)
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation Plans
21,254,870(4)
(1)
(2)
Includes our 2009 Stock Incentive Plan, 2014 Stock Incentive Plan and Employee Stock Purchase Plan (“ESPP”). No
additional awards may be granted under our 2009 Stock Incentive Plan.
Includes: options outstanding for 3,542,750 shares of Common Stock; 197,105 shares of Common Stock to be issued in
connection with deferred compensation obligations; 331,465 shares underlying unvested RSUs and 998,814 shares of Common
Stock that would be issued on account of outstanding PSUs if the target performance level is achieved. Assuming, instead, that
the maximum performance level was achieved on such PSUs, the amount of Common Stock that would be issued on account
of outstanding awards would increase by 998,814 shares.
The total number of shares subject to outstanding awards in the table above includes 353,534 shares on account of PSUs, at
target, with the performance period ended December 31, 2020. The determination of achievement of performance results on
such PSUs was performed by the MD&C Committee in February 2021, and the Company achieved (a) maximum performance
criteria on the Cash Flow PSUs, yielding a 200% payout and (b) above threshold performance criteria on the TSR PSUs, yielding
a 172.84% payout. A total of 436,269 shares of Common Stock were issued on account of such PSUs in February 2021, net
of units deferred, of which 234,526 shares of Common Stock were included in the first column of the table above.
Excludes purchase rights that accrue under the ESPP. Purchase rights under the ESPP are considered equity compensation for
accounting purposes; however, the number of shares to be purchased is indeterminable until the time shares are actually
issued, as automatic employee contributions may be terminated before the end of an offering period and, due to the look-back
pricing feature, the purchase price and corresponding number of shares to be purchased is unknown.
(3) Excludes PSUs and RSUs because those awards do not have exercise prices associated with them. Also excludes
purchase rights under the ESPP for the reasons described in (2) above.
(4) The shares remaining available include 3,237,157 shares under our ESPP and 18,017,713 shares under our 2014
Stock Incentive Plan, assuming payout of PSUs at maximum. Assuming payout of PSUs at target, the number of
shares remaining available for issuance under our 2014 Stock Incentive Plan would be 19,016,527.
48 |
2021 Proxy Statement
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
(ITEM 2 ON THE PROXY CARD)
Our Board of Directors, upon the recommendation of the Audit Committee, has ratified the selection of Ernst & Young LLP
to serve as our independent registered public accounting firm for fiscal year 2021, subject to ratification by our
stockholders. Representatives of Ernst & Young LLP will attend the virtual Annual Meeting. They will be able to make a
statement if they want, and will be available to answer appropriate questions submitted by stockholders during the
virtual Annual Meeting.
Although ratification of the selection of Ernst & Young LLP is not required by our By-laws or otherwise, we are submitting
the selection to stockholders for ratification because we value our stockholders’ views on our independent registered
public accounting firm and as a matter of good governance. If our stockholders do not ratify our selection, it will be
considered a direction to our Board and Audit Committee to consider selecting another firm. Even if the selection is
ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm,
subject to ratification by the Board, at any time during the year if it determines that such a change is in the best interests
of the Company and our stockholders.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEE INFORMATION
Fees for professional services provided by our independent registered public accounting firm in each of the last two
fiscal years, in each of the following categories, were as follows:
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
Total
2020
$6.2
2019
(In millions)
$4.5
— 0.1
—
—
—
—
$4.6
$6.2
Audit fees includes fees for the annual audit, reviews of the Company’s Quarterly Reports on Form 10-Q, work performed
to support the Company’s debt issuances, accounting consultations, and separate subsidiary audits required by statute
or regulation. Audit-related fees principally include financial due diligence services relating to acquisitions.
The Audit Committee has adopted procedures for the approval of Ernst & Young LLP’s services and related fees. At the
beginning of each year, all audit and audit-related services, tax fees and other fees for the upcoming audit are provided
to the Audit Committee for approval. The services are grouped into significant categories and provided to the Audit
Committee in the format shown above. All projects that have the potential to exceed $100,000 are separately identified
and reported to the Committee for approval. The Audit Committee Chairman has the authority to approve additional
services, not previously approved, between Committee meetings. Any additional services approved by the Audit
Committee Chairman between Committee meetings are reported to the full Audit Committee at the next regularly
scheduled meeting. The Audit Committee is updated on the status of all services and related fees at every regular meeting.
In 2020 and 2019, the Audit Committee or Audit Committee Chairman pre-approved all audit and audit-related services
performed by Ernst & Young LLP. As set forth in the Audit Committee Report, the Audit Committee has considered
whether the provision of these audit-related services is compatible with maintaining auditor independence and has
determined that it is.
VOTE REQUIRED FOR APPROVAL
Approval of this proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Common
Stock present at the meeting, in person or represented by proxy, and entitled to vote.
FOR THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2021.
2021 Proxy Statement | 49
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(ITEM 3 ON THE PROXY CARD)
Pursuant to Section 14A of the Exchange Act, stockholders are entitled to an advisory (non-binding) vote on compensation
programs for our named executive officers (sometimes referred to as “say on pay”). The Board of Directors has
determined that it will include this “say on pay” vote in the Company’s proxy materials annually, pending consideration of
future advisory stockholder votes on the frequency of this advisory vote on executive compensation.
We encourage stockholders to review the Compensation Discussion and Analysis and the Executive Compensation Tables
on pages 23 to 48 of this Proxy Statement. The Company has designed its executive compensation program to be
supportive of, and align with, the strategy of the Company and the creation of stockholder value, while discouraging
excessive risk-taking. The following key structural elements and policies, discussed in more detail in the Compensation
Discussion and Analysis, further the objective of our executive compensation program and evidence our dedication to
competitive and reasonable compensation practices that are in the best interests of stockholders:
• a significant portion of our named executive’s target compensation is linked to Company performance and long-
term equity awards, which aligns executives’ interests with those of stockholders;
• our total direct compensation opportunities for named executive officers are targeted to fall in a range around the
competitive median;
• performance-based awards include threshold, target and maximum payouts correlating to a range of
performance outcomes and are based on a variety of indicators of performance, which limits risk-taking behavior;
• performance stock units with a three-year performance period, as well as stock options that vest over a three-
interests with long-term performance and reduce incentives to maximize
year period,
link executives’
performance in any one year;
• all of our executive officers are subject to stock ownership guidelines, which we believe demonstrates a
commitment to, and confidence in, the Company’s long-term prospects;
• the Company has clawback provisions in its equity award agreements and executive officer employment
agreements, and has adopted a clawback policy applicable to annual incentive compensation, designed to recoup
compensation when cause and/or misconduct are found; and
• the Company has adopted policies that limit executive officer severance benefits and prohibit it from entering into
new agreements with executive officers that provide for certain death benefits or tax gross-up payments.
The Board strongly endorses the Company’s executive compensation program and recommends that the stockholders
vote in favor of the following resolution:
RESOLVED, that the compensation of the Company’s named executive officers as described in this Proxy Statement
under “Executive Compensation,” including the Compensation Discussion and Analysis and the tabular and narrative
disclosure contained in this Proxy Statement, is hereby APPROVED.
VOTE REQUIRED FOR APPROVAL
Approval of this proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Common
Stock present at the meeting, in person or represented by proxy, and entitled to vote. Because the vote is advisory, it will
not be binding, and neither the Board nor the MD&C Committee will be required to take any action as a result of the
outcome of the vote on this proposal. The MD&C Committee will carefully consider the outcome of the vote in connection
with future executive compensation arrangements.
FOR THE BOARD RECOMMENDS THAT YOU VOTE TO APPROVE THE COMPANY’S
EXECUTIVE COMPENSATION.
OTHER MATTERS
The Company does not intend to bring any other matters before the Annual Meeting, nor does the Company have any
present knowledge that any other matters will be presented by others for action at the meeting. If any other matters are
properly presented, your proxy card authorizes the people named as proxy holders to vote using their judgment.
50 |
2021 Proxy Statement
Form 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-12154
Waste Management, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
800 Capitol Street
Houston, Texas
(Address of principal executive offices)
73-1309529
(I.R.S. Employer
Identification No.)
77002
(Zip code)
Registrant’s telephone number, including area code:
(713) 512-6200
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.01 par value
Trading Symbol
WM
Name of Each Exchange on Which Registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2020 was approximately $44.7 billion. The aggregate market
value was computed by using the closing price of the common stock as of that date on the New York Stock Exchange (“NYSE”). (For purposes of calculating this amount
only, all directors and executive officers of the registrant have been treated as affiliates.)
The number of shares of Common Stock, $0.01 par value, of the registrant outstanding as of February 12, 2021 was 423,152,948 (excluding treasury shares of
207,129,513).
DOCUMENTS INCORPORATED BY REFERENCE
Document
Proxy Statement for the
2021 Annual Meeting of Stockholders
Incorporated as to
Part III
TABLE OF CONTENTS
PART I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1.
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Page
3
17
32
32
32
32
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
33
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . .
66
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . 132
Item 9.
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . 134
Item 12.
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . 134
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Item 14.
PART III
Item 15.
Item 16.
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
PART IV
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Item 1. Business.
General
PART I
Waste Management, Inc. is a holding company and all operations are conducted by its subsidiaries. When the terms
“the Company,” “we,” “us” or “our” are used in this document, those terms refer to Waste Management, Inc., its
consolidated subsidiaries and consolidated variable interest entities. When we use the term “WM,” we are referring only
to Waste Management, Inc., the parent holding company.
WM was incorporated in Oklahoma in 1987 under the name “USA Waste Services, Inc.” and was reincorporated as
a Delaware company in 1995. In a 1998 merger, the Illinois-based waste services company formerly known as Waste
Management, Inc. became a wholly-owned subsidiary of WM and changed its name to Waste Management Holdings, Inc.
(“WM Holdings”). At the same time, our parent holding company changed its name from USA Waste Services to Waste
Management, Inc. Like WM, WM Holdings is a holding company and all operations are conducted by subsidiaries.
Our principal executive offices are located at 800 Capitol Street, Houston, Texas 77002. Our telephone number is
(713) 512-6200. Our website address is www.wm.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q
and current reports on Form 8-K are all available, free of charge, on our website as soon as practicable after we file the
reports with the SEC. Our stock is traded on the New York Stock Exchange under the symbol “WM.”
We are North America’s leading provider of comprehensive waste management environmental services, providing
services throughout the United States (“U.S.”) and Canada. We partner with our residential, commercial, industrial and
municipal customers and the communities we serve to manage and reduce waste at each stage from collection to disposal,
while recovering valuable resources and creating clean, renewable energy. Our “Solid Waste” business is operated and
managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and
recycling and resource recovery services. Through our subsidiaries, we are also a leading developer, operator and owner
of landfill gas-to-energy facilities in the U.S. During 2020, our largest customer represented less than 5% of annual
revenues. We employed approximately 48,250 people as of December 31, 2020.
We own or operate 268 landfill sites, which is the largest network of landfills in the U.S. and Canada. In order to make
disposal more practical for larger urban markets, where the distance to landfills is typically farther, we manage 348 transfer
stations that consolidate, compact and transport waste efficiently and economically. We also use waste to create energy,
recovering the gas produced naturally as waste decomposes in landfills and using the gas in generators to make electricity.
We are a leading recycler in the U.S. and Canada, handling materials that include cardboard, paper, glass, plastic and
metal. We provide cost-efficient, environmentally sound recycling programs for municipalities, businesses and households
across the U.S. and Canada as well as other services that supplement our Solid Waste business.
Our Company’s goals are targeted at putting our people first, positioning them to serve and care for our customers,
the environment, the communities in which we work and our stockholders. Increasingly, our industry-leading focus on
environmental sustainability aligns with demand from our customers who want more of their waste materials recovered.
Waste streams are becoming more complex, and our aim is to address current needs, while anticipating the expanding and
evolving needs of our customers.
We believe we are uniquely equipped to meet the challenges of the changing waste industry and our customers’ waste
management needs, both today and as we work together to envision and create a more sustainable future. As the waste
industry leader, we have the expertise necessary to collect and handle our customers’ waste efficiently and responsibly by
delivering environmental performance — maximizing resource value, while minimizing environmental impact — so that
both our economy and our environment can thrive.
Our fundamental strategy has not changed; we remain dedicated to providing long-term value to our stockholders by
successfully executing our core strategy of focused differentiation and continuous improvement. We have enabled a
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people-first, technology-led focus, that leverages and sustains the strongest asset network in the industry to drive
best-in-class customer experience and growth. Our strategic planning processes appropriately consider that the future of
our business and the industry can be influenced by changes in economic conditions, the competitive landscape, the
regulatory environment, asset and resource availability and technology. We believe that focused differentiation, which is
driven by capitalizing on our unique and extensive network of assets, will deliver profitable growth and position us to
leverage competitive advantages. Simultaneously, we believe the combination of cost control, process improvement and
operational efficiency will deliver on the Company’s strategy of continuous improvement and yield an attractive total cost
structure and enhanced service quality. While we will continue to monitor emerging diversion technologies that may
generate additional value and related market dynamics, our current attention will be on improving existing diversion
technologies, such as our recycling operations.
We believe that execution of our strategy will deliver shareholder value and leadership in a dynamic industry and
challenging economic environment. In addition, we intend to continue to return value to our stockholders through dividend
payments and our common stock repurchase program. In December 2020, we announced that our Board of Directors
expects to increase the quarterly dividend from $0.545 to $0.575 per share for dividends declared in 2021, which is a 5.5%
increase from the quarterly dividends we declared in 2020. This is an indication of our ability to generate strong and
consistent cash flows and marks the 18th consecutive year of dividend increases. All quarterly dividends will be declared
at the discretion of our Board of Directors and depend on various factors, including our net earnings, financial condition,
cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem
relevant.
Operations
General
We evaluate, oversee and manage the financial performance of our Solid Waste business subsidiaries through our
17 Areas. See Note 20 to the Consolidated Financial Statements for additional information about our reportable segments.
We also provide expanded service offerings and solutions that are not managed through our Solid Waste business, as
described below. These operations are presented in this report as “Other.” The services we currently provide include
collection, landfill (solid and hazardous waste landfills), transfer, recycling and resource recovery and other services, as
described below.
On October 30, 2020, we completed the acquisition of all outstanding shares of Advanced Disposal Services, Inc.
(“Advanced Disposal”). This acquisition expanded our collection and disposal business in a number of markets in the
Eastern half of the U.S. The acquisition is discussed further in Note 18 to the Consolidated Financial Statements.
Collection. Our commitment to customers begins with a vast waste collection network. Collection involves picking
up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery
facility (“MRF”) or disposal site. We generally provide collection services under one of two types of arrangements:
• For commercial and industrial collection services, typically we have three-year service agreements. The fees
under the agreements are influenced by factors such as collection frequency, type of collection equipment we
furnish, type and volume or weight of the waste collected, distance to the disposal facility, labor costs, cost of
disposal and general market factors. As part of the service, we provide steel containers to most customers to store
their solid waste between pick-up dates. Containers vary in size and type according to the needs of our customers
and the restrictions of their communities. Many are designed to be lifted mechanically and either emptied into a
truck’s compaction hopper or directly into a disposal site. By using these containers, we can service most of our
commercial and industrial customers with trucks operated by only one employee.
• For most residential collection services, we have a contract with, or a franchise granted by, a municipality,
homeowners’ association or some other regional authority that gives us the exclusive right to service all or a
portion of the homes in an area. These contracts or franchises are typically for periods of three to ten years. We
also provide services under individual monthly subscriptions directly to households. The fees for residential
collection are either paid by the municipality or authority from their tax revenues or service charges, or are paid
4
directly by the residents receiving the service. The Company is generally phasing out traditional manual systems
and moving to further automate residential collection services. Benefits of automation include enhanced worker
safety, improved service delivery to the customer and an overall reduction in the cost to provide services.
Landfill. Landfills are the main depositories for solid waste in North America. As of December 31, 2020, we owned
or operated 263 solid waste landfills and five secure hazardous waste landfills, which represents the largest network of
landfills in the U.S. and Canada. Solid waste landfills are constructed and operated on land with engineering safeguards
that limit the possibility of water and air pollution, and are operated under procedures prescribed by regulation. A landfill
must meet federal, state or provincial, and local regulations during its design, construction, operation and closure. The
operation and closure activities of a solid waste landfill include excavation, construction of liners, continuous spreading
and compacting of waste, covering of waste with earth or other acceptable material and constructing final capping of the
landfill. These operations are carefully planned to maintain environmentally safe conditions and to maximize the use of
the airspace.
All solid waste management companies must have access to a disposal facility, such as a solid waste landfill. The
significant capital requirements of developing and operating a landfill serve as a barrier to landfill ownership and, thus,
third-party haulers often dispose of waste at our landfills. It is usually preferable for our collection operations to use
disposal facilities that we own or operate, a practice we refer to as internalization, rather than using third-party disposal
facilities. Internalization generally allows us to realize higher consolidated margins and stronger operating cash flows. The
fees charged at disposal facilities, which are referred to as tipping fees, are based on several factors, including our cost to
construct, maintain and close the landfill, the distance to an alternative disposal facility, the type and weight or volume of
solid waste deposited and competition.
Under environmental laws, the federal government (or states with delegated authority) must issue permits for all
hazardous waste landfills. All of our hazardous waste landfills have obtained the required permits, although some can
accept only certain types of hazardous waste. These landfills must also comply with specialized operating standards. Only
hazardous waste in a stable, solid form, which meets regulatory requirements, can be deposited in our secure disposal cells.
In some cases, hazardous waste can be treated before disposal. Generally, these treatments involve the separation or
removal of solid materials from liquids and chemical treatments that transform waste into inert materials that are no longer
hazardous. Our hazardous waste landfills are sited, constructed and operated in a manner designed to provide long-term
containment of waste. We also operate a hazardous waste facility at which we isolate treated hazardous waste in liquid
form by injection into deep wells that have been drilled in certain acceptable geologic formations far below the base of
fresh water to a point that is safely separated by other substantial geological confining layers.
Transfer. As of December 31, 2020, we owned or operated 348 transfer stations in the U.S. and Canada. We deposit
waste at these stations, as do other waste haulers. The solid waste is then consolidated and compacted to reduce the volume
and increase the density of the waste and transported by transfer trucks or by rail to disposal sites.
Access to transfer stations is critical to haulers who collect waste in areas not in close proximity to disposal facilities.
Fees charged to third parties at transfer stations are usually based on the type and volume or weight of the waste deposited
at the transfer station, the distance to the disposal site, market rates for disposal costs and other general market factors.
The utilization of our transfer stations by our own collection operations improves internalization by allowing us to
retain fees that we would otherwise pay to third parties for the disposal of the waste we collect. It enables us to manage
costs associated with waste disposal because (i) transfer trucks, railcars or rail containers have larger capacities than
collection trucks, allowing us to deliver more waste to the disposal facility in each trip; (ii) waste is accumulated and
compacted at transfer stations that are strategically located to increase the efficiency of our network of operations and
(iii) we can retain the volume by managing the transfer of the waste to one of our own disposal sites.
The transfer stations that we operate but do not own generally are operated through lease agreements under which we
lease property from third parties. There are some instances where transfer stations are operated under contract, generally
for municipalities. In most cases, we own the permits and will be responsible for any regulatory requirements relating to
the operation and closure of the transfer station.
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Recycling. Our recycling operations provide communities and businesses with an alternative to traditional landfill
disposal and support our strategic goals to extract more value from the materials we manage. We were the first major solid
waste company to focus on residential single-stream recycling, which allows customers to mix clean bottles, cans, paper
and cardboard in one bin. Residential single-stream programs have greatly increased the recycling volumes. Single-stream
recycling is possible through the use of various mechanized screens and optical sorting technologies. We have also been
advancing the single-stream recycling programs for commercial applications. Recycling involves the separation of
reusable materials from the waste stream for processing and resale or other disposition. Our recycling operations include
the following:
Materials processing — Through our collection operations and third-party customer base, we collect recyclable
materials from residential, commercial and industrial customers and direct these materials to one of our MRFs for
processing. As of December 31, 2020, we operated 103 MRFs where cardboard, paper, glass, metals, plastics,
construction and demolition materials and other recycling commodities are recovered for resale or redirected for other
purposes.
Recycling commodities — We market and resell recycling commodities globally. We manage the marketing of
recycling commodities that are processed in our facilities by maintaining comprehensive service centers that
continuously analyze market prices, logistics, market demands and product quality.
Recycling brokerage services — We also provide recycling brokerage services, which involve managing the
marketing of recyclable materials for third parties. The experience of our recycling operations in managing recycling
commodities for our own operations gives us the expertise needed to effectively manage volumes for third parties.
Utilizing the resources and knowledge of our recycling operations’ service centers, we can assist customers in
marketing and selling their recycling commodities with minimal capital requirements.
The recyclable materials processed in our MRFs are received from various sources, including third parties and our
own operations. In recent years, we have been focused on reducing dependency on market prices for recycled commodities
by recovering our processing costs first. Over time we have been transitioning our customer base from the traditional
rebate model, where we paid suppliers for the inbound material, to a fee-for-service model that ensures the cost of
processing the recyclable materials is covered along with an acceptable margin. With our current fee-for-service model,
the pricing for these recyclable materials can either be a charge or “tip fee” when commodity pricing does not cover our
cost to process the recyclable materials or a “rebate” when commodity pricing is higher than our processing costs and we
are able to share this benefit with the customers generating recyclable materials. In some cases, our pricing is based on
fixed contractual rates or on defined minimum per-ton rates. Generally, this pricing also considers the price we receive for
sales of processed goods, market conditions and transportation costs. As a result, changes in commodity prices for recycled
materials also significantly affect the pricing to our suppliers. Depending on the key terms of the arrangement, these
“rebates” are recorded as either operating expenses or a reduction in operating revenues within our Consolidated
Statements of Operations. If the key terms result in a charge to the customer, the associated “tip fees” would be recorded
as operating revenues within our Consolidated Statements of Operations.
Other. Other services we provide include the following:
Although many waste management services such as collection and disposal are local services, our Strategic Business
Solutions (“WMSBS”) business works with customers whose locations span the U.S. and Canada. Our strategic accounts
program provides centralized customer service, billing and management of accounts to streamline the administration of
customers’ waste management needs across multiple locations.
Our Energy and Environmental Services (“EES”) business offers our customers a variety of services in collaboration
with our Area and strategic accounts programs, including (i) construction and remediation services; (ii) services associated
with the disposal of fly ash, residue generated from the combustion of coal and other fuel stocks; (iii) in-plant services,
where our employees work full-time inside our customers’ facilities to provide full-service waste management solutions
and consulting services (this service is managed through our EES business but reflected principally in our collection line
of business) and (iv) specialized disposal services for oil and gas exploration and production operations (revenues for this
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service are also reflected principally in our collection line of business). Our vertically integrated waste management
operations enable us to provide customers with full management of their waste. The breadth of our service offerings and
the familiarity we have with waste management practices gives us the unique ability to assist customers in minimizing the
amount of waste they generate, identifying recycling opportunities, determining the most efficient means available for
waste collection and disposal and ensuring that disposal is achieved in a manner that is both reflective of the current
regulatory environment and environmentally friendly.
We develop, operate and promote projects for the beneficial use of landfill gas through our WM Renewable Energy
business. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas
is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel.
The U.S. Environmental Protection Agency (“EPA”) endorses landfill gas as a renewable energy resource, in the same
category as wind, solar and geothermal resources. As of December 31, 2020, we had 146 landfill gas beneficial use projects
producing commercial quantities of methane gas at owned or operated landfills. For 104 of these projects, the processed
gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power
cooperatives. For 16 of these projects, the landfill gas is processed to pipeline-quality natural gas and then sold to natural
gas suppliers. For 26 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a
direct substitute for fossil fuels in industrial processes.
We provide expanded service offerings and solutions that are not managed through our Solid Waste business including
the collection of project waste, including construction debris and household or yard waste, through our Bagster® business.
We continue to invest in businesses and technologies that are designed to offer services and solutions ancillary or
supplementary to our current operations. While most of these investments are in the form of minority equity stakes, they
can also include joint ventures, joint development agreements or majority equity stakes. The solutions and services include
(i) waste collection, processing, and recycling; (ii) the development, operation and marketing of waste processing facilities
and technologies; (iii) operation of renewable natural gas plants and (iv) the development and operation of organic
recycling technologies. Furthermore, we continually scout, evaluate and run proof-of-concepts of innovative technologies
within our core operations to improve safety, operational efficiencies and customer solutions.
Competition
We encounter intense competition from governmental, quasi-governmental and private sources in all aspects of our
operations. We principally compete with large national waste management companies, counties and municipalities that
maintain their own waste collection and disposal operations and regional and local companies of varying sizes and financial
resources. The industry also includes companies that specialize in certain discrete areas of waste management, operators
of alternative disposal facilities, companies that seek to use parts of the waste stream as feedstock for renewable energy
and other by-products, and waste brokers that rely upon haulers in local markets to address customer needs. In recent years,
the industry has seen some additional consolidation, though the industry remains intensely competitive.
Operating costs, disposal costs and collection fees vary widely throughout the Areas in which we operate. The prices
that we charge are determined locally, and typically vary by volume and weight, type of waste collected, treatment
requirements, risk of handling or disposal, frequency of collections, distance to final disposal sites, the availability of
airspace within the geographic region, labor costs and amount and type of equipment furnished to the customer. We face
intense competition in our Solid Waste business based on pricing and quality of service. We have also begun competing
for business based on breadth of service offerings. As companies, individuals and communities look for ways to be more
sustainable, we are promoting our comprehensive services that go beyond our core business of collecting and disposing of
waste in order to meet their needs.
Seasonal Trends
Our operating revenues tend to be somewhat higher in summer months, primarily due to higher construction and
demolition waste volumes. The volumes of industrial and residential waste in certain regions where we operate also tend
7
to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect
these seasonal trends.
Service disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly
affect the operating results of the Areas impacted. On the other hand, certain destructive weather and climate conditions,
such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern
U.S. during the second half of the year, can increase our revenues in the Areas affected as a result of the waste volumes
generated by these events. While weather-related and other event driven special projects can boost revenues through
additional work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings
at comparatively lower margins.
Human Capital Resources
Employees
As of December 31, 2020, we had approximately 48,250 full-time employees across the U.S., Canada and India.
Approximately 45,200 employees were located within the U.S. and 3,050 employees were located outside of the U.S.
Approximately 9,100 employees were employed in administrative and sales positions with the remainder in operations.
Approximately 8,750 of our employees are covered by collective bargaining agreements. Additional information about
our workforce can be found in our 2020 Sustainability Report at https://sustainability.wm.com. Our 2020 Sustainability
Report does not constitute a part of, and is not incorporated by reference into, this report or any other report we file with
(or furnish to) the SEC, whether made before or after the date of this Annual Report on Form 10-K.
People First Commitment
Our Company is committed to People First, knowing that the daily contributions of our team members are what enable
us to play a vital role in the communities we serve. Our success depends upon effective leadership, the contributions of
each employee, and our ability to give them the tools they need to safely execute their roles as well as to develop and excel
in their careers. As our industry and workforce evolve, we are focused on our imperatives of keeping our employees safe,
improving diversity, equity, and inclusion at all levels of our Company, managing employee turnover and increasing
retention and supporting ongoing cultural integration and knowledge transfer. We regularly focus on these objectives when
managing our business. Refer to COVID-19 Update within Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations for discussion regarding our focus on employees during the COVID-19 pandemic.
We strive to be a workplace of choice through competitive pay, comprehensive benefits for long-term financial and
personal health and opportunities for growth across our ranks. Being an employer of choice is critical to our efforts to
attract and retain a high-quality workforce, while motivating us to sharpen our focus on our values that help us empower
and develop good employees. By promoting from within and offering training opportunities, we help employees maximize
their effectiveness and grow in their careers.
Safety as a Core Value
At the Company, safety is a core value, with no compromise. A large number of our employee population work as
drivers, heavy equipment operators and sorters, which are essential jobs that carry inherent risks. For nearly 20 years, we
have engaged employees on safety through our Mission to Zero (“M2Z”) program. The “Zero” in M2Z represents zero
tolerance for unsafe behaviors. Employees learn safety best practices through new-hire and ongoing training. To build
upon lessons learned in training, we conduct structured observations of frontline employees that cover all aspects of our
collection and post-collection operations, including driving, loading, unloading, lifting and lowering and arriving prepared
for work.
8
Learning and Development
We offer expansive learning and development solutions to meet the development needs of our people and supporting
opportunities for growth and improvement. Our talent management strategy is designed to reach employees at all levels.
Given the wide variety of employee roles and skill sets in our Company, our training and development programs are varied
but generally fall into the following categories: (i) compliance, including Code of Conduct and cybersecurity training;
(ii) safety; (iii) environmental excellence; (iv) professional development and leadership and (v) job-specific.
Inclusion and Diversity
Fostering mutual trust and respect for one another is a cornerstone of being an inclusive and welcoming workplace,
one that is well-positioned to serve our customers and communities. Inclusion and diversity (“I&D”) are part of the
Company’s core values; we embrace and cultivate respect, trust, open communication and diversity of thought and people.
We are continually working to further embed I&D as central pillars of our culture. To this end, we established two
aspirational goals to achieve by 2025: (i) achieve ethnic diversity in each segment of our workforce, with an emphasis on
improving representation of minorities in all aspects of our business, including leadership and (ii) lead the industry in
female representation at all levels, with a special emphasis on operations and leadership. To enable us to achieve these
goals, we have established a cross-functional Inclusion and Diversity Leadership Council aimed at ensuring all of the
Company’s policies, practices and procedures support these efforts.
Compensation and Benefits
The objective of our compensation and benefit programs is to attract, engage, reward and incentivize valuable
employees who will support the successful execution of our strategy. We pay the full cost to provide employees with short-
term disability benefits, long-term disability benefits, basic life insurance for the employee and their dependents, and
employee and family assistance benefits. The costs for medical and dental coverage are shared with employees, with the
Company paying for a majority of the premium expense. The Company offers other important benefits such as paid
vacation and holidays, legal services, flexible spending accounts, dependent care assistance, adoption assistance, employee
discounts and student loan refinancing services. We also provide plans to help employees save for their future; refer to
Note 10 to the Consolidated Financial Statements for additional information on our employee benefit plans.
Financial Assurance and Insurance Obligations
Financial Assurance
Municipal and governmental waste service contracts generally require contracting parties to demonstrate financial
responsibility for their obligations under the contract. Financial assurance is also a requirement for (i) obtaining or
retaining disposal site or transfer station operating permits; (ii) supporting certain variable-rate tax-exempt debt and
(iii) estimated final capping, closure, post-closure and environmental remedial obligations at many of our landfills. We
establish financial assurance using surety bonds, letters of credit, insurance policies, trust and escrow agreements and
financial guarantees. The type of assurance used is based on several factors, most importantly: the jurisdiction, contractual
requirements, market factors and availability of credit capacity.
Surety bonds and insurance policies are supported by (i) a diverse group of third-party surety and insurance
companies; (ii) an entity in which we have a noncontrolling financial interest or (iii) a wholly-owned insurance captive,
the sole business of which is to issue surety bonds and/or insurance policies on our behalf. Letters of credit generally are
supported by our long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”) and other
credit lines established for that purpose.
Insurance
We carry a broad range of insurance coverages, including health and welfare, general liability, automobile liability,
workers’ compensation, real and personal property, directors’ and officers’ liability, pollution legal liability, cyber incident
9
liability and other coverages we believe are customary to the industry. Our exposure to loss for insurance claims is
generally limited to the per-incident deductible under the related insurance policy. We use a wholly-owned insurance
captive to insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs.
As of December 31, 2020, both our commercial General Liability Insurance Policy and our workers’ compensation
insurance program carried self-insurance exposures of up to $5 million per incident. As of December 31, 2020, our
automobile liability insurance program included a per-incident deductible of up to $10 million. We do not expect the
impact of any known casualty, property, environmental or other contingency to have a material impact on our financial
condition, results of operations or cash flows. Our estimated insurance liabilities as of December 31, 2020 are summarized
in Note 11 to the Consolidated Financial Statements.
Regulation
Our business is subject to extensive and evolving federal, state or provincial and local environmental, health, safety
and transportation laws and regulations. These laws and regulations are administered by the EPA, Environment Canada,
and various other federal, state, provincial and local environmental, zoning, transportation, land use, health and safety
agencies in the U.S. and Canada. Many of these agencies regularly examine our operations to monitor compliance with
these laws and regulations and have the power to enforce compliance, obtain injunctions or impose civil or criminal
penalties in cases of violations.
Because the primary mission of our business is to collect and manage solid waste in an environmentally sound manner,
a significant amount of our capital expenditures are related, either directly or indirectly, to environmental protection
measures, including compliance with federal, state, provincial and local rules. There are costs associated with siting,
design, permitting, operations, monitoring, site maintenance, corrective actions, financial assurance, and facility closure
and post-closure obligations. With acquisition, development or expansion of a waste management or disposal facility or
transfer station, we must often spend considerable time, effort and money to obtain or maintain required permits and
approvals. There are no assurances that we will be able to obtain or maintain required governmental approvals. Once
obtained, operating permits are subject to renewal, modification, suspension or revocation by the issuing agency.
Compliance with current regulations and future requirements could require us to make significant capital and operating
expenditures. However, most of these expenditures are made in the normal course of business and do not place us at any
competitive disadvantage.
The regulatory environment in which we operate is influenced by changes in leadership at the federal, state, provincial
and local levels. The policies set forth under the previous U.S. administration, for example, generally were in favor of
reducing regulation and corporate taxation. While it is anticipated that the new U.S. administration will reverse course on
regulatory policies impacting our Company, we cannot predict what impact the change in administrations will have on
specific regulations, nor can we predict the timing of any such changes. Reduction of regulation may have a favorable
impact on our operating costs, but the extensive environmental regulation applicable to the waste sector is a barrier to rapid
entry that benefits our Company. Moreover, the risk reduction provided by stringent regulation is valuable to our customers
and the communities we serve.
The primary U.S. federal statutes affecting our business are summarized below:
• The Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, regulates handling, transporting
and disposing of hazardous and non-hazardous waste and delegates authority to states to develop programs to
ensure the safe disposal of solid waste. Landfills are regulated under Subtitle D of RCRA, which sets forth
minimum federal performance and design criteria for solid waste landfills, and Subtitle C of RCRA, which
establishes a federal program to manage hazardous wastes from cradle to grave. These regulations are typically
implemented by the states, although states can impose requirements that are more stringent than the federal
standards. We incur costs in complying with these standards in the ordinary course of our operations.
• The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), as
amended, which is also known as Superfund, provides for federal authority to respond directly to releases or
threatened releases of hazardous substances into the environment that have created actual or potential
environmental hazards. CERCLA’s primary means for addressing such releases is to impose strict liability for
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cleanup of disposal sites upon current and former site owners and operators, generators of the hazardous
substances at the site and transporters who selected the disposal site and transported substances thereto. Liability
under CERCLA is not dependent on the intentional release of hazardous substances; it can be based upon the
release or threatened release of hazardous substances, even resulting from lawful, unintentional and attentive
action, as the term is defined by CERCLA and other applicable statutes and regulations. The EPA may issue
orders requiring responsible parties to perform response actions at sites, or the EPA may seek recovery of funds
expended or to be expended in the future at sites. Liability may include contribution for cleanup costs incurred
by a defendant in a CERCLA civil action or by an entity that has previously resolved its liability to federal or
state regulators in an administrative or judicially-approved settlement. Liability under CERCLA could also
include obligations to a potentially responsible party (“PRP”) that voluntarily expends site clean-up costs. Further,
liability for damage to publicly-owned natural resources may also be imposed. We are subject to potential liability
under CERCLA as an owner or operator of facilities at which hazardous substances have been disposed and as a
generator or transporter of hazardous substances disposed of at other locations.
• The Federal Water Pollution Control Act of 1972, as amended, known as the Clean Water Act, regulates the
discharge of pollutants into streams, rivers, groundwater, or other surface waters from a variety of sources,
including solid and hazardous waste disposal sites. If our operations discharge any pollutants into surface waters,
the Clean Water Act requires us to apply for and obtain discharge permits, conduct sampling and monitoring,
and, under certain circumstances, reduce the quantity of pollutants in those discharges. In 1990, the EPA issued
additional standards for management of storm water run-off that require landfills and other waste-handling
facilities to obtain storm water discharge permits. Also, if a landfill or other facility discharges wastewater
through a sewage system to a publicly-owned treatment works, the facility must comply with discharge limits
imposed by the treatment works. Further, before the development or expansion of a landfill can alter or affect
“wetlands,” a permit may have to be obtained providing for mitigation or replacement wetlands. The Clean Water
Act provides for civil, criminal and administrative penalties for violations of its provisions.
• The Clean Air Act of 1970, as amended, provides for federal, state and local regulation of the emission of air
pollutants. Certain of our operations are subject to the requirements of the Clean Air Act, including municipal
solid waste (“MSW”) landfills and landfill gas-to-energy facilities. In 1996, the EPA issued new source
performance standards (“NSPS”) and emission guidelines (“EG”) controlling landfill gases from new and existing
MSW landfills larger than specified size thresholds. In January 2003, the EPA issued Maximum Achievable
Control Technology (“MACT”) standards for municipal solid waste landfills subject to the NSPS and EG. The
EPA issued two new rules that serve to update the 1996 NSPS and EG regulatory requirements in August 2016
and updated its MACT regulations in 2020. These NSPS, EG and MACT regulations impose performance
standards to minimize air emissions from regulated MSW landfills, subject those landfills to certain operating
permit requirements under Title V of the Clean Air Act and, in many instances, require installation of landfill gas
collection and control systems to control emissions or to treat and utilize landfill gas on- or off-site.
• The Occupational Safety and Health Act of 1970 (“OSHA”), as amended, establishes certain employer
responsibilities, including maintenance of a workplace free of recognized hazards likely to cause death or serious
injury, compliance with standards promulgated by the Occupational Safety and Health Administration, and
various reporting and record keeping obligations as well as disclosure and procedural requirements. Various
standards for notices of hazards, safety in excavation and demolition work and the handling of asbestos, may
apply to our operations. The Department of Transportation and OSHA, along with other federal agencies, have
jurisdiction over certain aspects of hazardous materials and hazardous waste, including safety, movement and
disposal. Various state and local agencies with jurisdiction over disposal of hazardous waste may seek to regulate
movement of hazardous materials in areas not otherwise preempted by federal law.
We are also actively monitoring the following recent federal regulatory developments affecting our business:
• With regard to regulatory developments under RCRA, the EPA published an advance notice of proposed
rulemaking in December 2018 to consider whether to propose revisions to the municipal solid waste landfill
criteria to support advances in liquids management. Although the notice does not reopen any existing regulations,
we have been working closely with the EPA to ensure that the agency is aware of how future regulation could
impact our industry. In July 2019, the EPA announced increases in the user fees accompanying the system that
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the agency uses to track hazardous waste shipments electronically. The U.S. Department of Energy (“DOE”) has
responsibility under the Mercury Export Ban Act to designate a government facility to consolidate the long-term
storage and disposal of elemental mercury and establish a fee structure to cover the facility’s operating costs. Our
Company continues to store mercury, largely on behalf of our customers, in anticipation of the planned DOE
announcements. We cannot predict what cost we will incur in connection with these regulations, but we do not
anticipate a material impact to our hazardous waste business units. We are working closely with the EPA and
DOE to minimize risks more broadly to our industry.
• With regard to regulatory requirements pertaining to greenhouse gas emissions, since 2014, decisions from the
U.S Supreme Court and U.S. Court of Appeals for the D.C Circuit, as well as EPA policy memoranda, have
significantly narrowed the applicability and scope of EPA permitting requirements for GHGs from stationary
sources, including with respect to biogenic carbon dioxide (“CO2”) permitting. In 2016, the EPA proposed
revisions to the Prevention of Significant Deterioration (“PSD”) and Title V Greenhouse Gas (“GHG”) permitting
regulations establishing a significant emissions rate (“SER”) threshold, below which sources would not be
required to implement additional control technologies for their GHG emissions. This SER threshold should
prevent most of our operational changes, such as landfill expansions and beneficial gas recovery projects, from
being subject to PSD or Title V permit requirements due to our GHG emissions – assuming the EPA classifies
biogenic CO2 emissions from municipal solid waste and landfill gas as carbon neutral. The EPA has not yet
finalized this rulemaking, although the EPA’s independent Science Advisory Board has recommended that the
agency treat waste-derived CO2 emissions as carbon neutral. These judicial and regulatory actions have reduced,
and are expected to continue to reduce, the potential impact of the GHG-related PSD and Title V regulations on
our air permits, compliance and operating requirements. Future GHG regulations may require landfill gas
emission quantification and/or emission reduction requirements beyond what is currently required, and such
amendments could have an adverse effect on our operating costs.
Potential climate change, GHG regulatory, and corporate sustainability initiatives have influenced our business
strategy to provide low-carbon services to our customers, and we increasingly view our ability to offer lower
carbon services as a key component of our business growth. We continue to anticipate the needs of our customers,
which include investing in and developing ever-more-advanced recycling and reuse technologies. As the U.S.
and Canada continue to explore various forms of GHG regulation that increase demand for low-carbon service
offerings, the services we are developing are becoming increasingly valuable.
• We continue to monitor periodic regulatory actions to increase the stringency of certain National Ambient Air
Quality Standards (“NAAQS”) which could affect the cost, timeliness and availability of air permits for new and
modified large municipal solid waste landfills and landfill gas-to-energy facilities. While we cannot predict the
ultimate outcome of potential revisions to NAAQS, we do not believe that the such requirements will have a
material adverse impact on our business as a whole.
•
In December 2014, the EPA issued a final rule regulating the disposal and beneficial use of coal combustion
residuals (“CCR”). This codification of the CCR rule provides utilities with a stable regulatory regime and
encourages beneficial use of CCR in encapsulated uses (e.g., used in cement or wallboard), and use according to
established industry standards (e.g., application of sludge for agricultural enrichment). The EPA also deemed
disposal and beneficial use of CCR at permitted municipal solid waste landfills exempt from the new regulations
because the RCRA Subtitle D standards applicable at municipal solid waste landfills provide at least equivalent
protection. These standards are consistent with our approach to handling CCR at our sites currently, and the new
standards have provided a growth opportunity for the Company. In 2018, the U.S. Court of Appeals for the D.C
Circuit vacated significant portions of the 2014 final rule and remanded the rule to the EPA for further revision.
As of December 2020, the EPA had finalized two rules and is in the process of developing three other rules aimed
at providing utilities with some flexibility in closing or retrofitting unlined storage ponds and in regulating onsite
storage of CCR for beneficial reuse. The Company will monitor whether the new administration intends to revisit
these rules as we continue to evaluate opportunities to provide CCR disposal services.
•
In May 2016, the EPA established lifetime health advisories for certain per- and polyfluoroalkyl substances
(“PFAS”), a group of man-made chemicals that have been manufactured and used globally since the 1940s in
products such as textiles, fire suppressants, cookware, packaging and plastics. PFAS are typically very persistent
in the environment and can be found in water, soil and air. Citing concerns about potential adverse human health
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effects from exposure to PFAS, the EPA announced its “PFAS Action Plan” in February 2019 and has taken
various actions to address PFAS contamination. Meanwhile, an increasing number of states have enacted new
drinking water, surface water and/or groundwater limits for various PFAS, which has led to a patchwork of PFAS
standards across the U.S. The EPA is expected to increase its regulatory oversight of PFAS in 2021, with
proposals anticipated that would establish drinking water standards, expand authority for PFAS remediation,
impose chemical release reporting obligations, and provide guidance on PFAS disposal. Compliance with new
and proposed PFAS standards is anticipated to result in additional expense to the Company, but such standards
are also anticipated to present potential business opportunities in the area of PFAS management, treatment and
disposal.
•
In August 2016, the EPA published two rules to update the 1996 standards with new requirements for landfill gas
control and monitoring at both new municipal solid waste landfills (constructed or modified after July 17, 2014)
as well as existing landfills (operating after November 8, 1987, and not modified after July 17, 2014). Working
with our trade associations and other landfill owners and operators, we identified significant legal, technical and
implementation concerns with the rules and together filed a judicial appeal of the rules while also filing
administrative petitions asking that the EPA stay the rules and initiate a rulemaking process. We also alerted the
EPA that its August 2016 rulemakings led to an inconsistent regulatory structure in which six separate
overlapping and inconsistent sets of work practices now govern the disposal industry. In May 2017, the EPA
granted our industry’s administrative petitions for reconsideration and rulemaking, signaling its intent to
reconsider its 2016 rulemakings. In March 2020, the EPA updated its regulations to its 2003 MACT standards,
adding further confusion to this regulatory scheme, while declining to address many of the ongoing issues that
our industry has identified as problematic. Meanwhile, the agency continues to move forward with an additional
rulemaking package (a federal plan to implement the 2016 rule for existing landfills) that could also lead to further
regulatory confusion. We cannot predict the outcome of any of these ongoing rulemaking processes; however,
we do not believe any such regulatory changes will have a material adverse impact on our business as a whole.
State, Provincial and Local Regulations
There are also various state or provincial and local regulations that affect our operations. Each state and province in
which we operate has its own laws and regulations governing solid waste disposal, water and air pollution, and, in most
cases, releases and cleanup of hazardous substances and liabilities for such matters. States and provinces have also adopted
regulations governing the design, operation, maintenance and closure of landfills and transfer stations. Some counties,
municipalities and other local governments have adopted similar laws and regulations. Our facilities and operations are
likely to be subject to these types of requirements.
Our landfill operations are affected by the increasing preference for alternatives to landfill disposal. Many state and
local governments mandate recycling and waste reduction at the source and prohibit the disposal of certain types of waste,
such as yard waste, food waste and electronics at landfills. The number of state and local governments with recycling
requirements and disposal bans continues to grow, while the logistics and economics of recycling the items remain
challenging.
Various states have enacted, or are considering enacting, laws that restrict the disposal within the state of solid waste
generated outside the state. While laws that overtly discriminate against out-of-state waste have been found to be
unconstitutional, some laws that are less overtly discriminatory have been upheld in court. From time to time, the U.S.
Congress has considered legislation authorizing states to adopt regulations, restrictions, or taxes on the importation of out-
of-state or out-of-jurisdiction waste. Additionally, several state and local governments have enacted “flow control”
regulations, which attempt to require that all waste generated within the state or local jurisdiction be deposited at specific
sites. In 1994, the U.S. Supreme Court ruled that a flow control ordinance that gave preference to a local facility that was
privately owned was unconstitutional, but in 2007, the Court ruled that an ordinance directing waste to a facility owned
by the local government was constitutional. The U.S. Congress’ adoption of legislation allowing restrictions on interstate
transportation of out-of-state or out-of-jurisdiction waste or certain types of flow control, or courts’ interpretations of
interstate waste and flow control legislation, could adversely affect our solid and hazardous waste management services.
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Additionally, regulations establishing extended producer responsibility (“EPR”) are being considered or implemented
in many places around the world, including in the U.S. and Canada. EPR regulations are designed to place either partial
or total responsibility on producers to fund the post-use life cycle of the products they create. Along with the funding
responsibility, producers may be required to undertake additional responsibilities, such as taking over management of local
recycling programs by taking back their products from end users or managing the collection operations and recycling
processing infrastructure. There is no federal law establishing EPR in the U.S. or Canada; however, federal, state,
provincial and local governments could take, and in some cases have taken, steps to implement EPR regulations for
packaging, including traditional recyclables such as cardboard, bottles and cans. If wide-ranging EPR regulations were
adopted, they could have a fundamental impact on the waste, recycling and other streams we manage and how we operate
our business, including contract terms and pricing.
Many states, provinces and local jurisdictions have enacted “fitness” laws that allow the agencies that have jurisdiction
over waste services contracts or permits to deny or revoke these contracts or permits based on the applicant’s or permit
holder’s compliance history. Some states, provinces and local jurisdictions go further and consider the compliance history
of the parent, subsidiaries or affiliated companies, in addition to the applicant or permit holder. These laws authorize the
agencies to make determinations of an applicant’s or permit holder’s fitness to be awarded a contract to operate, and to
deny or revoke a contract or permit because of unfitness, unless there is a showing that the applicant or permit holder has
been rehabilitated through the adoption of various operating policies and procedures put in place to assure future
compliance with applicable laws and regulations. While fitness laws can present potential increased costs and barriers to
entry into market areas, these laws have not, and are not expected to have a material adverse impact on our business as a
whole.
States and municipalities are also increasingly adopting requirements for environmental justice reviews as part of
certain permitting decisions. These policies generally require permitting agencies to give heightened attention to the
potential for projects to disproportionately impact low-income and minority communities. Our Company supports policies
seeking to advance high standards of environmental performance and the fair treatment of people of all races, cultures,
and incomes. Nevertheless, we are actively monitoring recent regulatory developments in this area as additional conditions
imposed on permitting decisions could increase the time and cost involved to pursue and maintain necessary permits.
Recycling; Foreign Import and Export Regulations and Material Restrictions
Enforcement or implementation of foreign and domestic regulations can affect our ability to export products. In 2017,
the Chinese government announced bans on certain scrap materials and begun to enforce extremely restrictive quality and
other requirements, which significantly reduced China’s import of recyclables. As of January 1, 2021, China ceased
importing virtually all recyclables, including those exported by us. Many other markets, both domestic and foreign, have
also tightened their quality expectations and limited or restricted the import of certain recyclables. As an example, on
January 1, 2021, new restrictions on the trade of most plastics went into effect as part of the Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and Their Disposal. The U.S. is not a party to the Basel
Convention, but most countries to which we export are, which may limit exports of certain plastics. The impact of Basel
Convention restrictions is unknown at this time, but it will be mitigated by the fact that we no longer export residential
recyclables.
Such trade restrictions have disrupted the global trade of recyclables, particularly fiber, creating excess supply and
decreasing recyclable commodity prices. The heightened quality requirements have been difficult for the industry to
achieve and have driven up operating costs. In particular, single-stream MRFs process a wide range of commingled
materials and tend to receive a higher percentage of non-recyclables, which results in increased processing and residual
disposal costs to achieve quality standards. As recyclable commodity prices have fallen and operating costs have increased,
recyclers are passing cost increases through to customers. The resulting price increase for recycling services in
communities and at businesses in the U.S. has resulted in some customers reducing or eliminating their recycling service.
COVID-19 placed additional financial stress on municipalities, resulting in recycling programs being paused or eliminated.
When combined with the impacts of the global markets shifts caused by China’s termination of imports, the most recent
financial stress has led to a number of states considering EPR regulations, which would shift the financial burden of
recycling to the producers of products and goods. Industry trade organizations and government agencies are engaged in
discussions to mitigate long-term impacts to recycling programs and the industry as a whole.
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For the past several years, we have been working with stakeholders to educate the public on the need to recycle
properly. We are investing time and labor and working with customers to help improve quality and have seen improvement
in the quality of material that we receive at our facilities. We have continued our focus on developing a sustainable
recycling business model that meets customers’ environmental needs by passing through the increasing cost of processing
and higher contamination rates, and these efforts had a positive impact on the operating results for our recycling business
in 2020.
With a heightened awareness of the global problems caused by plastic waste in the environment, an increasing number
of cities and states across the country have passed ordinances banning certain types of plastics from sale or use. The most
common materials banned include plastic straws, polystyrene plastic and single use packaging. These bans have increased
pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling programs
to alleviate public pressures to ban the sale of those materials. However, with no viable end markets for recycling these
materials, we and other recyclers are working to educate and remind customers of the need for end market demand and
economic viability to support sustainable recycling programs. With increased focus on responsible management of plastics,
our procurement team has taken a proactive approach to ensure environmental sustainability goals are prioritized in
managing the products we buy.
Regulation of Oil and Gas Exploration, Production and Disposal
Our EES business provides specialized environmental management and disposal services for fluids used and wastes
generated by customers engaged in oil and gas exploration and production, and these disposal services include use of
underground injection wells. There is heightened federal regulatory focus on emissions of methane that occur during
drilling and transportation of natural gas, as well as state attention to protective disposal of drilling residuals. There also
remains heightened attention from the public, some states and the EPA to the alleged potential for hydraulic fracturing that
occurs during drilling to impact drinking water supplies. Increased regulation of oil and gas exploration and production,
including GHG emissions or hydraulic fracturing, could make it more difficult or cost-prohibitive for our EES customers
to continue operations, adversely affecting our business.
Additionally, any new regulations regarding the treatment and disposal of wastes associated with exploration and
production operations, including through use of injection wells, could increase our costs to provide oilfield services and
reduce our margins and revenue from such services. Conversely, any loosening of regulations regarding how such wastes
are handled or disposed of could adversely affect our business, as we believe the size, capital structure, regulatory
sophistication and established reliability of our Company provide us with an advantage in providing services that must
comply with any complex regulatory regime that may govern providing oilfield waste services.
Investment in Natural Gas Vehicles and Infrastructure
We operate a large fleet of natural gas vehicles, and we plan to continue to invest in these assets for our collection
fleet. Natural gas fueling infrastructure is not yet broadly available in the U.S. and Canada; as a result, we have constructed
and operate natural gas fueling stations, some of which also serve the public or pre-approved third parties. Concerns have
been raised about the potential for emissions from the fueling stations and infrastructure that serve natural gas-fueled
vehicles. Additional regulation of, or restrictions on, natural gas fueling infrastructure or reductions in associated tax
incentives could increase our operating costs. We are not yet able to evaluate potential operating changes or costs
associated with such regulations, but we do not anticipate that such regulations would have a material adverse impact on
our business.
There is increasing pressure to reduce the use of fossil fuel in the heavy-duty truck industry, and some cities and states
are beginning to discuss requirements for using more advanced engine technology, such as electric powered vehicles,
rather than natural gas or diesel vehicles. This is resulting in a reduction in tax incentives and grants for natural gas trucks.
Although current options for heavy-duty electric vehicles lack sufficient range and proven experience for our operations,
we proactively engage in pilots of electric powered heavy duty vehicles and anticipate that we could redirect future planned
capital investments in our fleet toward these assets when the vehicles prove economically and operationally viable. Should
regulation mandate an accelerated transition to electric powered vehicles, our cost to acquire vehicles needed to service
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our customers could increase, capital investment required to establish sufficient charging infrastructure could be significant
and investments we have made in an industry-leading natural gas fleet and infrastructure could be impaired.
Renewable Fuel Production
We have invested, and continue to invest, in facilities to capture and treat renewable natural gas (“RNG”) from the
Company’s landfills, and RNG from landfill and dairy biogas is a significant source of fuel for our natural gas collection
vehicles. The Energy Policy Act of 2005 and Energy Independence and Security Act of 2007 authorize the Renewable
Fuels Standards (“RFS”) program that promotes the production and use of renewable transportation fuels. The Company
is an EPA-registered producer of transportation fuel making compressed and liquefied RNG from landfill biogas, which
qualifies as a cellulosic biofuel under the RFS program. Oil refiners and importers are required through the RFS program
to blend specified volumes of various categories of renewable transportation fuels with gasoline or buy credits, referred to
as renewable identification numbers (“RINs”), from renewable fuel producers. Market uncertainty related to the EPA’s
implementation of the RFS program led to volatility and a decline in the price of RINs between 2017 and 2020. RIN prices
rebounded in 2020 in response to a court ruling limiting the number of small refinery exemptions that the EPA could grant
to renewable fuel obligations, and later following the November 2020 federal elections on the belief that the newly elected
presidential administration would result in stronger enforcement of mandates for RNG and other advanced and
conventional biofuels.
Federal, State and Local Climate Change Initiatives; Sustainability
In light of regulatory and business developments related to concerns about climate change, we have identified a
strategic business opportunity to provide our public and private sector customers with sustainable solutions to reduce their
GHG emissions. As part of our on-going marketing evaluations, we assess customer demand for and opportunities to
develop waste services offering verifiable carbon reductions, such as waste reduction, increased recycling, and conversion
of landfill gas and discarded materials into electricity and fuel. We use carbon life cycle tools in evaluating potential new
services and in establishing the value proposition that makes us attractive as an environmental service provider. We are
active in support of public policies that encourage development and use of lower carbon energy and waste services that
lower users’ carbon footprints. We understand the importance of broad stakeholder engagement in these endeavors, and
actively seek opportunities for public policy discussion on more sustainable materials management practices. In addition,
we work with stakeholders at the federal and state level in support of legislation that encourages production and use of
renewable, low-carbon fuels and electricity.
We continue to assess the physical risks to company operations from the effects of severe weather events and use risk
mitigation planning to increase our resiliency in the face of such events. We are investing in infrastructure to withstand
more severe storm events, which may afford us a competitive advantage and reinforce our reputation as a reliable service
provider through continued service in the aftermath of such events.
Consistent with our Company’s long-standing commitment to corporate sustainability and environmental stewardship,
we have published our 2020 Sustainability Report, which details the GHG emissions reductions we have facilitated to date
and our determination to expand these reductions in the future, as well as our commitment to help make the communities
in which we live and work safe, resilient and sustainable. Our 2020 Sustainability Report can be found at
https://sustainability.wm.com, but it does not constitute a part of, and is not incorporated by reference into, this Annual
Report on Form 10-K. The Company actively participates in a number of sustainability reporting programs and
frameworks, including the Dow Jones Sustainability Indices, where we are “Sector Leader” for Commercial Services, the
CDP, where we are among “A List” companies, and the Sustainability Accounting Standards Board, on which we serve
as a member of the Board’s advisory group.
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Item 1A. Risk Factors.
In an effort to keep our stockholders and the public informed about our business, we may make “forward-looking
statements.” Forward-looking statements are often identified by the words, “will,” “may,” “should,” “continue,”
“anticipate,” “believe,” “expect,” “plan,” “forecast,” “project,” “estimate,” “intend” and words of a similar nature and
generally include statements regarding:
•
•
•
•
future results of operations, including revenues, earnings or cash flows;
plans and objectives for the future;
projections, estimates or assumptions relating to our operational or financial performance; or
our opinions, views or beliefs about the effects of current or future events, circumstances or performance.
You should view these statements with caution. These statements are not guarantees of future performance,
circumstances or events. They are based on facts and circumstances known to us as of the date the statements are made.
All aspects of our business are subject to uncertainties, risks and other influences, many of which we do not control. Any
of these factors, either alone or taken together, could have a material adverse effect on us and could change whether any
forward-looking statement ultimately turns out to be true. Additionally, we assume no obligation to update any forward-
looking statement as a result of future events, circumstances or developments. The following discussion should be read
together with the Consolidated Financial Statements and the notes thereto. Outlined below are some of the risks that we
believe could affect our business and financial statements for 2021 and beyond and could cause actual results to be
materially different from those that may be set forth in forward-looking statements made by the Company. In addition to
the following risks, there may be additional risks and uncertainties that adversely affect our business, performance, or
financial condition in the future that are not presently known or are not currently believed to be material.
Strategy and Operational Risks
If we fail to implement our business strategy, our financial performance and our growth could be materially and
adversely affected.
Our future financial performance and success are dependent in large part upon our ability to implement our business
strategy successfully. Implementation of our strategy will require effective management of our operational, financial and
human resources and will place significant demands on those resources. See Item 1. Business for more information on our
business strategy.
There are risks involved in pursuing our strategy, including the following:
• Our employees, customers or investors may not embrace and support our strategy.
• We may not be able to hire or retain the personnel necessary to manage our strategy effectively.
• A key element of our strategy is yield management through focus on price leadership, which has presented
challenges to keep existing business and win new business at reasonable returns. We have also continued our
environmental fee, fuel surcharge and regulatory recovery fee to offset costs. The loss of volumes as a result of
price increases and our unwillingness to pursue lower margin volumes may negatively affect our cash flows or
results of operations. Additionally, we have in the past and may in the future face purported class action lawsuits
related to our customer service agreements, prices and fees.
• We may be unsuccessful in implementing improvements to operational efficiency and such efforts may not yield
the intended result.
• We may not be able to maintain cost savings achieved through optimization efforts.
• Strategic decisions with respect to our asset portfolio may result in impairments to our assets. See Item 1A. Risk
Factors — We may record material charges against our earnings due to impairments to our assets.
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• Our ability to make strategic acquisitions depends on our ability to identify desirable acquisition targets, negotiate
advantageous transactions despite competition for such opportunities, fund such acquisitions on favorable terms,
obtain regulatory approvals and realize the benefits we expect from those transactions.
• Acquisitions, investments and/or new service offerings may not increase our earnings in the timeframe
anticipated, or at all, due to difficulties operating in new markets or providing new service offerings, failure of
emerging technologies to perform as expected, failure to operate within budget, integration issues, or regulatory
issues, among others.
•
Integration of acquisitions and/or new services offerings could increase our exposure to the risk of inadvertent
noncompliance with applicable laws and regulations.
• Liabilities associated with acquisitions, including ones that may exist only because of past operations of an
acquired business, may prove to be more difficult or costly to address than anticipated.
• Execution of our strategy, particularly growth through acquisitions, may cause us to incur substantial additional
indebtedness, which may divert capital away from our traditional business operations and other financial plans.
• We continue to seek to divest underperforming and non-strategic assets if we cannot improve their profitability.
We may not be able to successfully negotiate the divestiture of underperforming and non-strategic operations,
which could result in asset impairments or the continued operation of low-margin businesses.
In addition to the risks set forth above, implementation of our business strategy could also be affected by other factors
beyond our control, such as increased competition, legal developments, government regulation, general economic
conditions, increased operating costs or expenses, subcontractor costs and availability and changes in industry trends. We
may decide to alter or discontinue certain aspects of our business strategy at any time. If we are not able to implement our
business strategy successfully, our long-term growth and profitability may be adversely affected. Even if we are able to
implement some or all of the initiatives of our business strategy successfully, our operating results may not improve to the
extent we anticipate, or at all.
We may not realize the strategic benefits and cost synergies that are anticipated from our acquisition of Advanced
Disposal Services, Inc. (“Advanced Disposal”), and we may encounter difficulties integrating Advanced Disposal’s
operations and systems that could impact the effectiveness of our internal controls over financial reporting.
The benefits that are expected to result from our acquisition of Advanced Disposal will depend, in part, on our ability
to successfully integrate Advanced Disposal’s operations and systems and realize anticipated cost synergies. There is a
significant degree of difficulty and management distraction inherent in the process of integrating an acquisition of this
size. The process of integrating operations could cause business interruption and distraction. Some members of our
management may be required to devote considerable time to this integration process, which will decrease the time they
will have to manage our Company, service existing customers, attract new customers and develop new products or
strategies. If management is not able to effectively manage the integration process, or if any significant business activities
are interrupted as a result of the integration process, our business, financial condition and results of operations could suffer.
The acquisition of Advanced Disposal may not result in realization of the benefits and cost synergies that we currently
expect, and we cannot guarantee that these benefits and cost synergies will be achieved within anticipated time frames or
at all. Additionally, we may incur substantial expenses in connection with the ongoing integration of Advanced Disposal,
which may exceed expectations and offset certain benefits.
As described further in Item 9A. Controls and Procedures, in accordance with SEC staff guidance, we have excluded
Advanced Disposal from the assessment of the effectiveness of our internal control over financial reporting as of
December 31, 2020 contained in this Annual Report on Form 10-K; however, this exclusion may not extend beyond one
year from the October 30, 2020 closing date. We are in the process of integrating Advanced Disposal’s operations and
systems to ensure the effectiveness of the internal control over financial reporting for this acquired business. Establishing,
testing and maintaining an effective system of internal control over financial reporting requires significant resources and
time commitments on the part of our management and our finance staff, and the time and expenditures needed may exceed
our expectations. If we encounter difficulties integrating Advanced Disposal operations and systems into our system of
internal control over financial reporting, and if we are unable to correct any issues encountered in a timely manner, our
ability to record, process, summarize, and report financial data may be adversely affected, which may impact the accuracy,
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quality and completeness of our financial statements. Such failure could materially and adversely impact our business and
subject us to potential investigations, liability, and penalties. Additionally, if we are unable to conclude that our internal
control over financial reporting is effective in any future period (or if our auditors are unable to express an opinion on the
effectiveness of our internal controls or conclude that our internal controls are ineffective), we could lose investor
confidence and suffer an adverse effect on our stock price.
Our operations must comply with extensive existing regulations, and changes in regulations and/or enforcement of
regulations can restrict or alter our operations, increase our operating costs, increase our tax rate, or require us to
make additional capital expenditures.
Stringent government regulations at the federal, state, provincial and local level in the U.S. and Canada have a
substantial impact on our operations, and compliance with such regulations is costly. Many complex laws, rules, orders
and interpretations govern environmental protection, health, safety, land use, zoning, transportation and related matters.
Among other things, governmental regulations and enforcement actions restrict our operations at times and may adversely
affect our financial condition, results of operations and cash flows by imposing conditions such as:
•
•
•
limitations on siting and constructing new waste disposal, transfer, recycling or processing facilities or on
expanding existing facilities;
limitations, regulations or levies on collection and disposal prices, rates and volumes;
limitations or bans on disposal or transportation of out-of-state waste or certain categories of waste;
• mandates regarding the management of solid waste, including requirements to recycle, divert or otherwise process
certain waste, recycling and other streams; or
•
limitations or restrictions on the recycling, processing or transformation of waste, recycling and other streams.
Regulations affecting the siting, design and closure of landfills require us, at times, to undertake investigatory or
remedial activities, curtail operations or close landfills temporarily or permanently. We have significant financial
obligations relating to final capping, closure, post-closure and environmental remediation at our existing landfills and we
establish accruals for these estimated costs. Expenditures could be accelerated or materially exceed our accruals due to the
types of waste collected and manner in which it is transported and disposed of, including actions taken in the past by
companies we have acquired or third-party landfill operators; environmental regulatory changes; new information about
waste types previously collected, such as PFAS or other emerging contaminates, and other reasons.
Various states have enacted, or are considering enacting, laws that restrict the disposal within the state of solid waste
generated outside the state. From time to time, the U.S. Congress has considered legislation authorizing states to adopt
regulations, restrictions, or taxes on the importation of out-of-state or out-of-jurisdiction waste. Additionally, several state
and local governments have enacted “flow control” regulations, which attempt to require that all waste generated within
the state or local jurisdiction be deposited at specific sites. The U.S. Congress’ adoption of legislation allowing restrictions
on interstate transportation of out-of-state or out-of-jurisdiction waste certain types of flow control, or courts’
interpretations of interstate waste and flow control legislation, could adversely affect our solid and hazardous waste
management services.
Additionally, regulations establishing extended producer responsibility (“EPR”) are being considered or implemented
in many places around the world, including in the U.S. and Canada. EPR regulations are designed to place either partial
or total responsibility on producers to fund the post-use life cycle of the products they create. Along with the funding
responsibility, producers may be required to undertake additional responsibilities, such as taking over management of local
recycling programs by taking back their products from end users or managing the collection operations and recycling
processing infrastructure. There is no federal law establishing EPR in the U.S. or Canada; however, federal, state,
provincial and local governments could, and in some cases have, taken steps to implement EPR regulations for packaging,
including traditional recyclables such as cardboard, bottles and cans. If wide-ranging EPR regulations were adopted, they
could have a fundamental impact on the waste streams we manage and how we operate our business, including contract
terms and pricing. A significant reduction in the waste, recycling and other streams we manage could have a material
adverse effect on our financial condition, results of operations and cash flows.
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The regulatory environment in which we operate is influenced by changes in leadership at the federal, state, provincial
and local levels. The policies set forth under the previous U.S. administration, for example, included substantial changes
to foreign trade policy and generally were in favor of reducing regulation and corporate taxation. While it is anticipated
that the new administration will reverse course on various regulatory policies impacting our Company, we cannot predict
what impact the change in administrations will have on specific regulations, nor can we predict the timing of any such
changes. It is likely that some policies adopted by the new administration will benefit us and others will negatively affect
us.
Our business is subject to operational and safety risks, including the risk of personal injury to employees and others.
Providing environmental and waste management services, including constructing and operating landfills, transfer
stations, MRFs and other disposal facilities, involves risks such as truck accidents, equipment defects, malfunctions and
failures. Additionally, we closely monitor and manage landfills to minimize the risk of waste mass instability, releases of
hazardous materials, and odors that are sometimes triggered by weather or natural disasters. There are also risks presented
by the potential for subsurface heat reactions causing elevated landfill temperatures and increased production of leachate,
landfill gas and odors. We also build and operate natural gas fueling stations, some of which also serve the public or third
parties. Operation of fueling stations and landfill gas collection and control systems involves additional risks of fire and
explosion. Any of these risks could potentially result in injury or death of employees and others, a need to shut down or
reduce operation of facilities, increased operating expense and exposure to liability for pollution and other environmental
damage, and property damage or destruction.
While we seek to minimize our exposure to such risks through comprehensive training, compliance and response and
recovery programs, as well as vehicle and equipment maintenance programs, if we were to incur substantial liabilities in
excess of any applicable insurance, our business, results of operations and financial condition could be adversely affected.
Any such incidents could also tarnish our reputation and reduce the value of our brand. Additionally, a major operational
failure, even if suffered by a competitor, may bring enhanced scrutiny and regulation of our industry, with a corresponding
increase in operating expense.
We may be unable to obtain or maintain required permits or expand existing permitted capacity of our landfills, which
could decrease our revenue and increase our costs.
Our ability to meet our financial and operating objectives depends in part on our ability to obtain and maintain the
permits necessary to operate landfill sites. Permits to build, operate and expand solid waste management facilities,
including landfills and transfer stations, have become more difficult and expensive to obtain and maintain. Permits often
take years to obtain as a result of numerous hearings and compliance requirements with regard to zoning, environmental
and other regulations. These permits are also often subject to resistance from citizen or other groups and other political
pressures. Local communities and citizen groups, adjacent landowners or governmental agencies may oppose the issuance
of a permit or approval we may need, allege violations of the permits under which we currently operate or laws or
regulations to which we are subjected, or seek to impose liability on us for environmental damage. States and municipalities
are also increasingly adopting requirements for environmental justice reviews as part of certain permitting decisions. These
policies generally require permitting agencies to give heightened attention to the potential for projects to disproportionately
impact low-income and minority communities. Responding to permit challenges has, at times, increased our costs and
extended the time associated with establishing new facilities and expanding existing facilities. In addition, failure to receive
regulatory and zoning approval may prohibit us from establishing new facilities or expanding existing facilities. Our failure
to obtain the required permits to operate our landfills could have a material adverse impact on our financial condition,
results of operations and cash flows.
If we are unable to attract, hire or retain key team members and a high-quality workforce, or if our succession
planning does not develop an adequate pipeline of future leaders, it could disrupt our business, jeopardize our
strategic priorities and result in increased costs, negatively impacting our results of operations.
Our operations require us to attract, hire, develop and retain a high-quality workforce to provide a superior customer
experience. This includes key individuals in leadership and specialty roles, as well as a very large number of drivers,
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technicians and other front-line and back-office team members necessary to provide our environmental services. We
experience significant competition to hire and retain individuals for certain front-line positions, such as commercial truck
drivers, from within and outside our industry. Additionally, the market for employees that serve on our digital team is
highly competitive. As we have accelerated our investments in our digital platform, it is increasingly important that we
are able to attract and retain employees with the skills and expertise necessary to implement and manage our technology-led
strategy. We also compete to attract skilled business leaders, and our own key team members are sought after by our
competitors and other companies. We make significant investments, and engage in extensive internal succession planning,
to provide us with a robust pipeline of future leaders. If we are not able to attract, hire, develop and retain a high-quality
workforce with the necessary skills and expertise, as well as key leaders, or if we experience significant employee turnover,
it can result in business and strategic disruption, increased costs, and loss of institutional knowledge, which could
negatively impact our results of operations.
Our business depends on our reputation and the value of our brand.
We believe we have developed a reputation for high-quality service, reliability and social and environmental
responsibility, and we believe our brand symbolizes these attributes. The Waste Management brand name, trademarks and
logos and our reputation are powerful sales and marketing tools, and we devote significant resources to promoting and
protecting them. Adverse publicity, whether or not justified, relating to activities by our operations, employees or agents
could tarnish our reputation and reduce the value of our brand. Damage to our reputation and loss of brand equity could
reduce demand for our services. This reduction in demand, together with the dedication of time and expense necessary to
defend our reputation, could have an adverse effect on our financial condition, liquidity and results of operations, as well
as require additional resources to rebuild our reputation and restore the value of our brand.
We have made significant investments in an extensive natural gas truck fleet, which makes us partially dependent on
the availability of natural gas and fueling infrastructure and vulnerable to natural gas prices, and requirements to
transition to other vehicle types could impair these investments.
We operate a large fleet of natural gas vehicles, and we plan to continue to invest in these assets for our collection
fleet. However, natural gas fueling infrastructure is not yet broadly available in the U.S. and Canada; as a result, we have
constructed and operate natural gas fueling stations, some of which also serve the public or pre-approved third parties. It
will remain necessary for us to invest capital in fueling infrastructure in order to power our natural gas fleet. Concerns
have been raised about the potential for emissions from fueling infrastructure that serve natural gas-fueled vehicles. New
regulation of, or restrictions on, natural gas fueling infrastructure or reductions in associated tax incentives could increase
our operating costs. Additionally, fluctuations in the price and supply of natural gas could substantially increase our
operating expenses; a reduction in the existing cost differential between natural gas and diesel fuel could materially reduce
the benefits we anticipate from our investment in natural gas vehicles. Further, our fuel surcharge program is currently
indexed to diesel fuel prices, and price fluctuations for natural gas may not effectively be recovered by this program.
There is increasing pressure to reduce the use of fossil fuel in the heavy-duty truck industry, and some cities and states
are beginning to discuss requirements for using more advanced engine technology, such as electric powered vehicles,
rather than natural gas or diesel vehicles. This is resulting in a reduction in tax incentives and grants for natural gas trucks.
Although current options for heavy-duty electric vehicles lack sufficient range and proven experience for our operations,
we proactively engage in pilots of electric powered heavy duty vehicles and anticipate that we could redirect future planned
capital investments in our fleet toward these assets when the vehicles prove economically and operationally viable. Should
regulation mandate an accelerated transition to electric powered vehicles, our cost to acquire vehicles needed to service
our customers could increase, capital investment required to establish sufficient charging infrastructure could be significant
and investments we have made in an industry-leading natural gas fleet and infrastructure could be impaired.
Increases in our labor costs as a result of labor unions organizing, changes in regulations related to labor unions or
increases in employee minimum wages, could adversely affect our future results.
Labor unions continually attempt to organize our employees, and these efforts will likely continue in the future.
Certain groups of our employees are currently represented by unions, and we have negotiated collective bargaining
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agreements with these unions. Additional groups of employees may seek union representation in the future, and, if
successful, would enhance organized labor’s leverage to obtain higher than expected wage and benefits costs and resist
the introduction of new technology and other initiatives, which can result in increased operating expenses and lower net
income. If we are unable to negotiate acceptable collective bargaining agreements, our operating expenses could increase
significantly as a result of work stoppages, including strikes. Additionally, a large portion of our workforce are hourly
personnel, and many of these individuals, particularly in our recycling business, are paid at rates related to federal and
state minimum wages. Increases in minimum wage rates, or the enactment of new wage-related legislation, may
significantly increase our labor costs. Any of these matters could adversely affect our financial condition, results of
operations and cash flows.
The seasonal nature of our business, severe weather events resulting from climate change and event driven special
projects cause our results to fluctuate, and prior performance is not necessarily indicative of our future results.
Our operating revenues tend to be somewhat higher in summer months, primarily due to the higher construction and
demolition waste volumes. The volumes of industrial and residential waste in certain regions where we operate also tend
to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect
these seasonal trends.
Service disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly
affect the operating results of the Areas affected. On the other hand, certain destructive weather and climate conditions,
such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern
U.S. during the second half of the year, can increase our revenues in the Areas affected as a result of the waste volumes
generated by these events. While weather-related and other event driven special projects can boost revenues through
additional work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings
at comparatively lower margins.
For these and other reasons, operating results in any interim period are not necessarily indicative of operating results
for an entire year, and operating results for any historical period are not necessarily indicative of operating results for a
future period. Our stock price may be negatively impacted by interim variations in our results.
External Economic and Industry Risks
The COVID-19 global pandemic has caused a significant disruption in social and commercial activity throughout
North America, and the continuation of the COVID-19 pandemic, or other similar pandemic conditions, may have a
material adverse impact on our business, financial condition, results of operations and cash flows.
During 2020 and continuing into 2021, federal, state and local governments throughout North America have imposed
varying degrees of restriction on social and commercial activity to promote social distancing in an effort to slow the spread
of COVID-19. The pandemic and related measures have had a significant adverse impact on many sectors of the economy,
including environmental services. The resulting business closures, increases in unemployment and loss of consumer
financial stability and confidence has resulted in volume declines and reductions in customers’ waste service needs, which
has negatively impacted our results of operations and cash flows.
We have incurred costs related to health, safety and financial security of our workforce during the COVID-19
pandemic. This included transitioning back-office employees to work-from-home and providing financial certainty to
employees by guaranteeing all full-time hourly employees compensation for a 40-hour work week regardless of service
decreases and reduced work schedules that resulted from the COVID-19 pandemic. It could be necessary for us to incur
additional such costs in the future related to pandemic conditions. If a large portion of our employee base were to become
ill, it could impact our ability to provide timely and reliable service. Additionally, the transition of most of our back-office
employees to work-from-home increases various operational risks, including potential exposure to cyber incidents, loss of
data, fraud, internal control challenges and other disruptions as a consequence of more employees accessing Company
systems and information remotely in the course of their ordinary work.
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A broad-based economic slowdown resulting from prolonged negative effects of COVID-19 could have significant
adverse consequences for the financial condition of our customers or suppliers. As a result, customers may seek to reduce
service levels or terminate our contracts, or they may be unable to timely pay outstanding receivables owed to us, each of
which would adversely affect our results of operations and cash flows. Additionally, such factors have made it more
challenging to implement our pricing strategy and are likely to negatively impact our ability to negotiate, renew or expand
service contracts with acceptable margins. Volume changes can fluctuate dramatically by line of business and decreases
in volumes in higher margin businesses, such as what we have seen with COVID-19, can impact key financial metrics.
Additionally, as stay-at-home orders and work from home trends continue, the costs to service our residential customers
could continue to negatively impact our margins. To the extent our suppliers experience a deterioration in financial
condition or operational capability as a result of the impacts of COVID-19, we may experience material supply chain
disruptions and delays, which could also increase our operating costs.
We are not able to estimate the full impact of COVID-19 on our business, but we expect that this situation will continue
to have an adverse impact on the economy in general and on the Company’s results of operations until a substantial portion
of the U.S. population is vaccinated and social distancing restrictions are lifted. Should these or similar pandemic-related
conditions persist for a prolonged period, it may have a material adverse impact on our financial condition, results of
operations and cash flows and hinder our ability to grow our business and execute our business strategy.
The waste industry is highly competitive, and if we cannot successfully compete in the marketplace, our business,
financial condition and operating results may be materially adversely affected.
We encounter intense competition from governmental, quasi-governmental and private sources in all aspects of our
operations. We principally compete with large national waste management companies, counties and municipalities that
maintain their own waste collection and disposal operations and regional and local companies of varying sizes and financial
resources. The industry also includes companies that specialize in certain discrete areas of waste management, operators
of alternative disposal facilities, companies that seek to use parts of the waste stream as feedstock for renewable energy
and other by-products, and waste brokers that rely upon haulers in local markets to address customer needs. In recent years,
the industry has seen some additional consolidation, though the industry remains intensely competitive. Counties and
municipalities may have financial competitive advantages because tax revenues are available to them and tax-exempt
financing is more readily available to them. Also, such governmental units may attempt to impose flow control or other
restrictions that would give them a competitive advantage. In addition, some of our competitors may have lower financial
expectations, allowing them to reduce their prices to expand sales volume or to win competitively-bid contracts, including
large national accounts and exclusive franchise arrangements with municipalities. When this happens, we may lose
customers and be unable to execute our pricing strategy, resulting in a negative impact to our revenue growth from yield
on base business.
Our revenues, earnings and cash flows will fluctuate based on changes in commodity prices, and commodity prices
for recyclable materials are particularly susceptible to volatility based on regulations and tariffs that affect our ability
to export products.
Enforcement or implementation of foreign and domestic regulations can affect our ability to export products. In 2017,
the Chinese government announced bans on certain scrap materials and begun to enforce extremely restrictive quality and
other requirements, which significantly reduced China’s import of recyclables. As of January 1, 2021, China ceased
importing virtually all recyclables, including those exported by us. Many other markets, both domestic and foreign, have
also tightened their quality expectations and limited or restricted the import of certain recyclables. As an example, on
January 1, 2021, new restrictions on the trade of most plastics went into effect as part of the Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and Their Disposal. The U.S. is not a party to the Basel
Convention, but most countries to which we export are, which may limit exports of certain plastics.
Such trade restrictions have disrupted the global trade of recyclables, particularly fiber, creating excess supply and
decreasing recyclable commodity prices. We have been actively working to identify alternative markets for recycling
commodities, but there may not be demand for all of the material we produce. The heightened quality requirements have
been difficult for the industry to achieve and have driven up operating costs. In particular, single-stream MRFs process a
wide range of commingled materials and tend to receive a higher percentage of non-recyclables, which results in increased
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processing and residual disposal costs to achieve quality standards. As recyclable commodity prices have fallen and
operating costs have increased, we and other recyclers are passing cost increases through to customers. The resulting price
increase for recycling services in communities and at businesses in the U.S. has resulted in some customers reducing or
eliminating their recycling service. COVID-19 placed additional financial stress on municipalities, resulting in recycling
programs being paused or eliminated. When combined with the impacts of the global markets shifts caused by China’s
termination of imports, the most recent financial stress has led to a number of states considering EPR regulations.
Reductions in market prices for recycling commodities, and reduction in demand for recycling commodities and
recycling services, negatively impacted our operating income and cash flows in 2019. The decline in market prices in 2019
for recycling commodities resulted in a decrease in revenue of $248 million. In 2020, we saw a modest recovery in
commodity prices due in part to an increased demand for recycled materials, resulting in increased revenue of $75 million.
As we have increased the size of our recycling operations, we have also increased our exposure to commodity price
fluctuations. Additionally, future regulation, tariffs, international trade policies or initiatives may result in further reduced
demand or increased operating costs, which would cause the profitability of our recycling operations to decline.
Fluctuation in energy prices also affects our business, including recycling of plastics manufactured from petroleum
products. Significant variations in the price of methane gas, electricity and other energy-related products that are marketed
and sold by our landfill gas recovery operations can result in a corresponding significant impact to our revenue from yield
from such operations. Additionally, we provide specialized disposal services for oil and gas exploration and production
operations through our EES business. Demand for these services decreases when drilling activity slows due to depressed
oil and gas prices, such as the low prices throughout the last few years. Any of the commodity prices to which we are
subject may fluctuate substantially and without notice in the future.
Increasing customer preference for alternatives to landfill disposal and bans on certain types of waste could reduce
our landfill volumes and cause our revenues and operating results to decline.
Our customers are increasingly diverting waste to alternatives to landfill disposal, such as recycling and composting,
while also working to reduce the amount of waste they generate. In addition, many state and local governments mandate
diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of waste, such as yard
waste, food waste and electronics at landfills. Where such organic waste is not banned from the landfill, some large
customers such as grocery stores and restaurants are choosing to divert their organic waste from landfills. Zero-waste goals
(sending no waste to the landfill) have been set by many of the U.S. and Canada’s largest companies. Although such
mandates and initiatives help to protect our environment, these developments reduce the volume of waste going to our
landfills which may affect the prices that we can charge for landfill disposal. Our landfills currently provide our highest
income from operations margins. If we are not successful in expanding our service offerings, growing lines of businesses
to service waste streams that do not go to landfills providing services for customers that wish to reduce waste entirely,
then our revenues and operating results may decline. Additionally, despite the development of new service offerings and
lines of business, it is possible that our revenues and our income from operations margins could be negatively affected due
to disposal alternatives.
With a heightened awareness of the global problems caused by plastic waste in the environment, an increasing number
of cities and states across the country have passed ordinances banning certain types of plastics from sale or use. The most
common materials banned include plastic straws, polystyrene plastic and single use packaging. These bans have increased
pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling programs
to alleviate public pressures to ban the sale of those materials. However, there are currently no viable end markets for
recycling these materials, and inclusion of such materials in our recycling stream increases contamination and operating
costs and can negatively affect the results of our recycling operations.
General economic conditions can directly and adversely affect revenues for environmental services and our income
from operations margins.
Our business is directly affected by changes in national and general economic factors that are outside of our control,
including consumer confidence, interest rates and access to capital markets. A weak economy generally results in
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decreased consumer spending and decreases in volumes of waste generated, which negatively impacts the ability to grow
through new business or service upgrades, and may result in customer turnover and reduction in customers’ waste service
needs. Consumer uncertainty and the loss of consumer confidence may also reduce the number and variety of services
requested by customers. Additionally, a weak market for consumer goods can significantly decrease demand by paper
mills for recycled corrugated cardboard used in packaging; such decrease in demand can negatively impact commodity
prices and our operating income and cash flows.
A decrease in waste volumes generated results in an increase in competitive pricing pressure; such economic
conditions may also interfere with our ability to implement our pricing strategy. Many of our contracts have price
adjustment provisions that are tied to an index such as the Consumer Price Index, and our costs may increase more than
the increase, if any, in the Consumer Price Index. This is partially due to our relatively high fixed-cost structure, which is
difficult to quickly adjust to match shifting volume levels and vendor costs, and may not correlate with the Consumer Price
Index or the waste industry.
Weakness in the economy may expose us to credit risk of governmental entities and municipalities and other major
customers, which could negatively impact our financial results.
We provide service to a number of governmental entities, municipalities, and large national accounts. During periods
of economic weakness, governmental entities and municipalities can suffer significant financial difficulties, due in part to
reduced tax revenue and/or high cost structures. During these periods, such entities, and our non-governmental customers,
could be unable to pay amounts owed to us or renew contracts with us at previous or increased rates.
Purchasers of our recycling commodities can be particularly vulnerable to financial difficulties in times of commodity
price volatility. The inability of our customers to pay us in a timely manner or to pay increased rates, particularly large
national accounts, could negatively affect our operating results.
In addition, the financial difficulties of municipalities could result in a decline in investors’ demand for municipal
bonds and a correlating increase in interest rates. As of December 31, 2020, we had $1.2 billion of tax-exempt bonds with
term interest rate periods that expire within the next 12 months and $54 million of variable-rate tax-exempt bonds with
interest rates reset on either a daily or a weekly basis. If market dynamics resulted in repricing of our tax-exempt bonds at
significantly higher interest rates, we would incur increased interest expenses that may negatively affect our operating
results and cash flows.
The Company’s effective tax rate and tax liability could materially change as a result of the adoption of new tax
legislation and other factors.
Predominantly all of the Company’s revenues are generated in the U.S., and changes in U.S. tax laws could materially
impact our effective tax rate, financial condition and results of operations. The U.S. Tax Cuts and Jobs Act, enacted on
December 22, 2017 (the “Tax Act”), had a significant impact on our effective tax rate, cash tax expenses and net deferred
tax liabilities. The Tax Act reduced the U.S. corporate statutory tax rate and eliminated or limited the deduction of several
expenses that were previously deductible, among other things. The results of the 2020 U.S. federal elections could lead to
further changes in tax laws that would negatively impact the Company’s effective tax rate. The new presidential
administration has provided information on what tax law changes it is likely to support, including increasing the U.S.
corporate statutory tax rate. If ultimately enacted into law, this could materially impact our tax provision, cash tax liability
and effective tax rate.
Significant shortages in diesel fuel supply or increases in diesel fuel prices will increase our operating expenses.
The price and supply of diesel fuel can fluctuate significantly based on international, political and economic
circumstances, as well as other factors outside our control, such as actions by the Organization of the Petroleum Exporting
Countries (“OPEC”) and other oil and gas producers, regional production patterns, weather conditions and environmental
concerns. We need diesel fuel to run a significant portion of our collection and transfer trucks and our equipment used in
our landfill operations. Supply shortages could substantially increase our operating expenses. Additionally, if fuel prices
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increase, our direct operating expenses increase and many of our vendors raise their prices to offset their own rising costs.
We have in place a fuel surcharge program, designed to offset increased fuel expenses; however, we may not be able to
pass through all of our increased costs and some customers’ contracts prohibit any pass-through of the increased costs.
Additionally, lawsuits have challenged our fuel and environmental charges included on our invoices. Regardless of any
offsetting surcharge programs, increased operating costs due to higher diesel fuel prices will decrease our income from
operations margins.
Technology and Information Security Risks
Developments in technology could trigger a fundamental change in the waste management industry, as waste streams
are increasingly viewed as a resource, which may adversely impact volumes at our landfills and our profitability.
Our Company and others have recognized the value of the traditional waste stream as a potential resource. Research
and development activities are on-going to provide disposal alternatives that maximize the value of waste, including using
waste as a source for renewable energy and other valuable by-products. We and many other companies are investing in
these technologies. It is possible that such investments and technological advancements may reduce the cost of waste
disposal or the value of landfill gas recovery to a level below our costs and may reduce the demand for landfill space. As
a result, our revenues and margins could be adversely affected due to advancements in disposal alternatives.
If we are not able to develop new service offerings and protect intellectual property or if a competitor develops or
obtains exclusive rights to a breakthrough technology, our financial results may suffer.
Our existing and proposed service offerings to customers require that we invest in, develop or license, and protect
new technologies. Our Company and others are increasingly focusing on new technologies that innovate our operations,
improve the customer experience and provide alternatives to traditional disposal and maximize the resource value of waste.
In 2020, we are continuing our multi-year commitment to strategic investments in technology, including accelerated
investments in customer service digitalization. Research, development and implementation of enhanced technology often
requires significant spending that may divert capital investment away from our traditional business operations. We may
experience difficulties or delays in the research, development, production and/or marketing of new products and services
or implementation of technologies in which we have invested, which may negatively impact our operating results and
prevent us from recouping or realizing a return on these investments. Further, protecting our intellectual property rights
and combating unlicensed copying and use of intellectual property is difficult, and inability to obtain or protect new
technologies could impact our services to customers and development of new revenue sources. If a competitor develops
or obtains exclusive rights to a “breakthrough technology” that provides a revolutionary change in traditional waste
management, or if we have inferior intellectual property to our competitors, our financial results may suffer.
We are increasingly dependent on technology in our operations and if our technology fails, our business could be
adversely affected.
We may experience problems with the operation of our current information technology systems or the technology
systems of third parties on which we rely, as well as the development and deployment of new information technology
systems, that could adversely affect, or even temporarily disrupt, all or a portion of our operations until resolved. Inabilities
and delays in implementing new systems can also affect our ability to realize projected cost savings or other benefits.
Additionally, any system failures could impede our ability to timely collect and report financial results in accordance with
applicable laws and regulations.
We are implementing a new enterprise resource planning system, and challenges with the implementation of the
system may impact our business and operations.
We are in the process of a complex, multi-year implementation of a new enterprise resource planning (“ERP”) system.
The ERP system implementation requires the integration of the new ERP system with multiple new and existing
information systems and business processes and is designed to accurately maintain our books and records and provide
information to our management team important to the operation of the business. Such an implementation is a major
26
undertaking from a financial, management, and personnel perspective. The implementation of the ERP system may prove
to be more difficult, costly, or time consuming than expected, and it is possible that the system will not yield the benefits
anticipated. Any disruptions, delays or deficiencies in the design and implementation of our new ERP system could
adversely affect our ability to produce timely and accurate financial statements or comply with applicable regulations,
resulting in negative impacts on our business and operations and subject us to potential liability. Additionally, our
implementation of the ERP system involves greater utilization of third-party “cloud” computing services in connection
with our business operations. Problems faced by us or our third-party providers, including technological or business-related
disruptions, as well as cybersecurity threats, could adversely impact our business, results of operations and financial
condition for future periods.
A cybersecurity incident could negatively impact our business and our relationships with customers, vendors and
employees and expose us to increased liability.
Substantially all aspects of our business operations rely on digital technology. We use computers, mobile devices,
social networking and other online platforms to connect with our employees and our customers. These uses give rise to
cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information.
Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and
intellectual property, including customers’ personal information, private information about employees, and financial and
strategic information about the Company and its business partners. We also rely on a Payment Card Industry compliant
third party to protect our customers’ credit card information.
We are regularly the target of attempted cyber intrusions, and we must commit substantial resources to continuously
monitor and further develop our networks and infrastructure to prevent, detect, and address the risk of unauthorized access,
misuse, computer viruses and other events. Our security programs and measures do not prevent all intrusions. Cyber
intrusions require a significant amount of time and effort to assess and remedy, and our incident response efforts may not
be effective in all cases. The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential
information or intellectual property, or interference with our information technology systems or the technology systems
of third parties on which we rely, could result in business disruption, direct financial loss, negative publicity, brand damage,
alleged violation of privacy laws, loss of customers, potential regulatory enforcement or private litigation liability and
competitive disadvantage. While we do maintain insurance for cyber incidents, due to policy terms, limits and exclusions,
it may not apply in all cases, and it may not be adequate to cover all liabilities incurred.
Further, as the Company pursues its strategy to grow through acquisitions, including our recent acquisition of
Advanced Disposal, and to pursue new initiatives that improve our operations and cost structure, the Company is also
expanding and improving its information technologies, resulting in a larger technological presence and corresponding
exposure to cybersecurity risk. Certain new technologies, such as use of autonomous vehicles, remote-controlled
equipment and virtual reality, present new and significant cybersecurity safety risks that must be analyzed and addressed
before implementation. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives,
we may become increasingly vulnerable to such risks.
Increasing regulatory focus on privacy and data protection issues and expanding laws could negatively impact our
business, subject us to criticism and expose us to increased liability.
The legislative and regulatory framework for privacy and data protection issues worldwide is rapidly evolving and is
likely to remain uncertain for the foreseeable future. We collect certain personally identifiable information and other
sensitive information as integral parts of our business and in connection with providing services to our customers. We are
subject to a variety of laws and regulations that govern the collection and use of such information obtained from individuals
and businesses. These laws and regulations are inconsistent across jurisdictions and are subject to evolving interpretations.
Government officials, regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies
collect, process, use, store, share and transmit personal data. We must continually monitor the development and adoption
of new and emerging laws and regulations, such as the California Consumer Privacy Act (“CCPA”) that took effect on
January 1, 2020. The CCPA, among other things, contains disclosure obligations for businesses that collect personal
information about California residents and affords those individuals new rights relating to their personal information that
can expand the scope of our potential liability. We must commit substantial time and resources toward compliance with
27
the CCPA and similar laws and regulations. Any inability, or perceived inability, to adequately address privacy and data
protection concerns, even if unfounded, or comply with applicable laws, regulations, policies, industry standards,
contractual obligations, or other legal obligations, including at newly acquired companies, could subject us to regulatory
enforcement, private litigation, public criticism, disrupt our operations, cause us to lose customers, result in additional
costs and legal liability, damage our reputation, and otherwise harm our business.
Legal, Regulatory and Compliance Risks
Our operations are subject to environmental, health and safety laws and regulations, as well as contractual
obligations that may result in significant liabilities.
There is risk of incurring significant environmental liabilities in the use, treatment, storage, transfer and disposal of
waste materials. Under applicable environmental laws and regulations, we could be liable if it is alleged that our operations
cause environmental damage to our properties or to the property of other landowners, particularly as a result of the
contamination of air, drinking water or soil. Under current law, we could also be held liable for damage caused by
conditions that existed before we acquired the assets or operations involved and for conditions resulting from waste types
or compounds previously considered non-hazardous but later determined to present possible threat to public health or the
environment. The risks of successor liability and emerging contaminants are of particular concern as we execute our
growth strategy, partially though acquisitions, because we may be unsuccessful in identifying and assessing potential
liabilities during our due diligence investigations. Further, the counterparties in such transactions may be unable to perform
their indemnification obligations owed to us. Any substantial liability for environmental damage could have a material
adverse effect on our financial condition, results of operations and cash flows.
In the ordinary course of our business, we have in the past, we are currently, and we may in the future, become
involved in legal and administrative proceedings relating to land use and environmental laws and regulations. These
include proceedings in which governmental entities, private groups or individuals seek to impose liability on us for
environmental damage or violation of statutes or desire to revoke or deny permits required for our operations. We generally
seek to work with the authorities or other persons involved in these proceedings to resolve any issues raised. If we are not
successful, the adverse outcome of one or more of these proceedings could result in, among other things, material increases
in our costs or liabilities as well as material charges for asset impairments.
Further, we often enter into agreements with landowners imposing obligations on us to meet certain regulatory or
contractual conditions upon site closure or upon termination of the agreements. Compliance with these agreements
inherently involves subjective determinations and may result in disputes, including litigation. Costs to remediate or restore
the condition of closed sites may be significant.
Changes in regulations applicable to oil and gas exploration, production and disposal could adversely affect our EES
business.
Our EES business provides specialized environmental management and disposal services for fluids used and wastes
generated by customers engaged in oil and gas exploration and production, and these disposal services include the use of
underground injection wells. Demand for these services is adversely affected if drilling activity slows due to regulation
and industry conditions beyond our control, in addition to changes in oil and gas prices. There is heightened federal
regulatory focus on emissions of methane that occur during drilling and transportation, as well as state attention to
protective disposal of drilling residuals. There also remains heightened attention from the public, some states and the EPA
to the alleged potential for hydraulic fracturing that occurs during drilling to impact drinking water supplies. Increased
regulation of oil and gas exploration and production, including GHG emissions or hydraulic fracturing, could make it more
difficult or cost-prohibitive for our EES customers to continue operations, adversely affecting our business.
Additionally, any new regulations regarding the treatment and disposal of wastes associated with exploration and
production operations, including through the use of injection wells, could increase our costs to provide oilfield services
and reduce our margins and revenue from such services. Conversely, any loosening of regulations regarding how such
wastes are handled or disposed of could adversely impact demand for our EES services.
28
Changes to federal and state renewable fuel policies could affect our financial performance in that sector as a
renewable fuel producer.
The primary drivers of renewable fuel development at our landfills are federal and state incentive programs, such as
the federal RFS program and the California Low Carbon Fuel Standard. At the federal level, oil refiners and importers are
required through the RFS program to blend specified volumes of renewable transportation fuels with gasoline or buy
credits, referred to as RINs, from renewable fuel producers. The Company has invested, and continues to invest, in facilities
that capture and convert landfill gas into renewable natural gas so that we can participate in the program. The value of the
RINs associated with our landfill gas is set through a market established by the program. Each year, the EPA is required
to finalize a rule establishing refiners’ obligations to purchase renewable natural gas and other cellulosic biofuels under
the RFS program. Market uncertainty stemming from these annual rulemakings, as well as the EPA’s administration of
other aspects of the RFS program, led to a rapid decline in RIN values in 2019 and much of 2020 before rebounding in
November 2020. We will continue to advocate for the new administration to implement policies that ensure long-term
stability for renewable transportation fuels, as changes in the RFS market or the structure of the RFS program can and has
reduced the value of renewable natural gas RINs and negatively impacted the financial performance of the facilities
constructed to capture and treat the gas.
The impact of climate change, and the adoption of climate change legislation or regulations restricting emissions of
greenhouse gases, could increase our costs to operate.
We continue to assess the physical risks to our operations from the effects of climate change. Although we have made
investments to mitigate risk associated with severe storm events, damage to our facilities or disruption of service caused
by more frequent or more severe storms associated with climate extremes could negatively impact operating results. We
have also identified risk to our assets and our employees associated with drought or water scarcity, flooding, extreme heat
and rain events, and fire conditions associated with climate change. For example, wildfires influenced by climate change
can damage landfill infrastructure such as gas collection systems, flooding in low-lying areas enhanced by sea level rise
can result in greater maintenance expenses at our facilities and service disruption, and more frequent or extreme rain events
can erode the protective vegetative caps on our landfills and generate increased volumes of leachate to manage. Those
areas of the country most prone to these occurrences have protocols in place, or are developing protocols to address these
conditions, including employee safety, driver training, and equipment and facility protection protocols. We have incurred
and will incur costs to develop and implement these protocols, and these protocols may not be effective in offsetting these
risks. Additionally, the actions of others in response to climate change effects, such as the rolling power blackouts
implemented in California in 2019 due to wildfire risks, can result in service disruptions and increase our costs to operate.
Our landfill operations emit methane, identified as a GHG. There are a number of legislative and regulatory efforts at
the state, provincial, regional and federal levels to cap and/or curtail the emission of GHGs to ameliorate the effect of
climate change. We continue to monitor these efforts and the potential impacts to our operations. Should comprehensive
federal climate change legislation be enacted, we expect it could impose costs on our operations that might not be offset
by the revenue increases associated with our lower-carbon service options, the materiality of which we cannot predict. In
2010, the EPA published a Prevention of Significant Deterioration and Title V GHG Tailoring Rule, which expanded the
EPA’s federal air permitting authority to include the six GHGs. The rule sets new thresholds for GHG emissions that
define when Clean Air Act permits are required. The current requirements of these rules have not significantly affected
our operations or cash flows, due to the tailored thresholds and exclusions of certain emissions from regulation. However,
future GHG regulations may require landfill gas emission quantification and/or emission reduction requirements beyond
what is currently required, and such amendments could have an adverse effect on our operating costs.
We could be subject to significant fines and penalties, and our reputation could be adversely affected, if our
businesses, or third parties with whom we have a relationship, were to fail to comply with U.S. or foreign laws or
regulations.
Some of our projects and new business may be conducted in countries where corruption has historically been
prevalent. It is our policy to comply with all applicable anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act,
and with applicable local laws of the foreign countries in which we operate, and we monitor our local partners’ compliance
with such laws as well. Our reputation may be adversely affected if we were reported to be associated with corrupt practices
29
or if we or our local partners failed to comply with such laws. Such damage to our reputation could adversely affect our
ability to grow our business. Additionally, violations of such laws could subject us to significant fines and penalties.
Currently pending or future litigation or governmental proceedings could result in material adverse consequences,
including judgments or settlements.
From time to time we are involved in governmental proceedings relating to the conduct of our business. We are also
party to civil litigation. As a large company with operations across the U.S. and Canada, we are subject to various
proceedings, lawsuits, disputes and claims arising in the ordinary course of our business. Actions that have been filed
against us, and that may be filed against us in the future, include personal injury, property damage, commercial, customer,
and employment-related claims, including purported state and national class action lawsuits related to:
•
•
•
alleged environmental contamination, including releases of hazardous materials and odors;
sales and marketing practices, customer service agreements, prices and fees; and
federal and state wage and hour and other laws.
The timing of the final resolutions to these types of matters is often uncertain. Additionally, the possible outcomes or
resolutions to these matters could include adverse judgments or settlements, either of which could require substantial
payments, adversely affecting our liquidity.
Financial Risks
Our capital requirements and our business strategy could increase our expenses, cause us to change our growth and
development plans, or result in an inability to maintain our desired credit profile.
If economic conditions or other risks and uncertainties cause a significant reduction in our cash flows from operations,
we may reduce or suspend capital expenditures, growth and acquisition activity, implementation of our business strategy,
dividend declarations or share repurchases. We may choose to incur indebtedness to pay for these activities, although our
access to capital markets is not assured and we may not be able to incur indebtedness at a cost that is consistent with
current borrowing rates. We also may need to incur indebtedness to refinance scheduled debt maturities, and it is possible
that the cost of financing could increase significantly, thereby increasing our expenses and decreasing our net income.
Further, our ability to execute our financial strategy and our ability to incur indebtedness is somewhat dependent upon our
ability to maintain investment grade credit ratings on our senior debt. The credit rating process is contingent upon our
credit profile and several other factors, many of which are beyond our control, including methodologies established and
interpreted by third-party rating agencies. If we were unable to maintain our investment grade credit ratings in the future,
our interest expense would increase and our ability to obtain financing on favorable terms could be adversely affected.
Additionally, we have $3.1 billion of debt as of December 31, 2020 that is exposed to changes in market interest rates
within the next 12 months because of the impact of our commercial paper borrowings and tax-exempt bonds. If interest
rates increase, our interest expense would also increase, lowering our net income and decreasing our cash flow.
We may use our $3.5 billion revolving credit facility to meet our cash needs, to the extent available, until maturity in
November 2024. As of December 31, 2020, we had no outstanding borrowings under this facility. We had $270 million
of letters of credit issued and $1.8 billion of outstanding borrowings (net of related discount on issuance) under our
commercial paper program, both supported by this facility, leaving unused and available credit capacity of $1.4 billion as
of December 31, 2020. In the event of a default under our credit facility, we could be required to immediately repay all
outstanding borrowings and make cash deposits as collateral for all obligations the facility supports, which we may not be
able to do. Additionally, any such default could cause a default under many of our other credit agreements and debt
instruments. Without waivers from lenders party to those agreements, any such default would have a material adverse
effect on our ability to continue to operate.
30
We have substantial financial assurance and insurance requirements, and increases in the costs of obtaining
adequate financial assurance, or the inadequacy of our insurance coverages, could negatively impact our liquidity
and increase our liabilities.
The amount of insurance we are required to maintain for environmental liability is governed by statutory requirements.
We believe that the cost for such insurance is high relative to the coverage it would provide and, therefore, our coverages
are generally maintained at the minimum statutorily-required levels. We face the risk of incurring additional costs for
environmental damage if our insurance coverage is ultimately inadequate to cover those damages. We also carry a broad
range of other insurance coverages that are customary for a company our size. We use these programs to mitigate risk of
loss, thereby enabling us to manage our self-insurance exposure associated with claims. The inability of our insurers to
meet their commitments in a timely manner and the effect of significant claims or litigation against insurance companies
may subject us to additional risks. To the extent our insurers are unable to meet their obligations, or our own obligations
for claims are more than we estimated, there could be a material adverse effect to our financial results.
In addition, to fulfill our financial assurance obligations with respect to variable-rate tax-exempt debt, final capping,
closure, post-closure and environmental remediation obligations, we generally obtain letters of credit or surety bonds, rely
on insurance, including captive insurance, fund trust and escrow accounts or rely upon WM financial guarantees. We
currently have in place all financial assurance instruments necessary for our operations. Our financial position, which can
be negatively affected by asset impairments, our credit profile and general economic factors, may adversely affect the cost
of our current financial assurance instruments, and changes in regulations may impose stricter requirements on the types
of financial assurance that will be accepted. Additionally, in the event we are unable to obtain sufficient surety bonding,
letters of credit or third-party insurance coverage at reasonable cost, or one or more states cease to view captive insurance
as adequate coverage, we would need to rely on other forms of financial assurance. It is possible that we could be forced
to deposit cash to collateralize our obligations. Other forms of financial assurance could be more expensive to obtain, and
any requirements to use cash to support our obligations would negatively impact our liquidity and capital resources and
could affect our ability to meet our obligations as they become due.
We may record material charges against our earnings due to impairments to our assets.
In accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), we capitalize certain expenditures and
advances relating to disposal site development, expansion projects, acquisitions, software development costs and other
projects. Events that have in the past and may in the future lead to an impairment include, but are not limited to, shutting
down a facility or operation or abandoning a development project or the denial of an expansion permit. Additionally,
declining waste volumes and development of, and customer preference for, alternatives to traditional waste disposal could
warrant asset impairments. If we determine an asset or expansion project is impaired, we will charge against earnings any
unamortized capitalized expenditures and advances relating to such asset or project reduced by any portion of the
capitalized costs that we estimate will be recoverable, through sale or otherwise. We also carry a significant amount of
goodwill on our Consolidated Balance Sheets, which is required to be assessed for impairment annually, and more
frequently in the case of certain triggering events. We have in the past and may in the future be required to incur charges
against earnings if such impairment tests indicate that the fair value of a reporting unit is below its carrying amount. Any
such charges could have a material adverse effect on our results of operations.
We could face significant liabilities for withdrawal from Multiemployer Pension Plans.
We are a participating employer in a number of trustee-managed multiemployer defined benefit pension plans
(“Multiemployer Pension Plans”) for employees who are covered by collective bargaining agreements. In the event of our
withdrawal from a Multiemployer Pension Plan, we may incur expenses associated with our obligations for unfunded
vested benefits at the time of the withdrawal. Depending on various factors, including potential legislative changes, future
withdrawals could have a material adverse effect on results of operations or cash flows for a particular reporting period,
and our on-going costs of participation in Multiemployer Pension Plans may increase. See Notes 10 and 11 to the
Consolidated Financial Statements for more information related to our participation in Multiemployer Pension Plans.
31
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
The leases on the Company’s previous principal executive offices in Houston, Texas for approximately 345,000
square feet expired on December 31, 2020. In 2019, the Company commenced a lease for new principal executive offices
in Houston, Texas where we will occupy approximately 297,000 square feet under a lease expiring in 2035. Occupancy of
the new facility began in early 2021.
We also have administrative offices in Arizona, Connecticut, Illinois, Florida and India. We own or lease real property
in most locations where we have operations or administrative functions. We have operations in all 50 states except
Montana, the District of Columbia and throughout Canada.
Our principal property and equipment consist of land (primarily landfills and other disposal facilities, transfer stations
and bases for collection operations), buildings, vehicles and equipment. We believe that our operating properties, vehicles
and equipment are adequately maintained and sufficient for our current operations. However, we expect to continue to
make investments in additional property and equipment for expansion, for the replacement of aging assets and investment
in assets that support our strategy of continuous improvement through efficiency and innovation. For more information,
see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included within this
report.
The following table summarizes our various operations as of December 31:
Landfills owned or operated (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Material recovery facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2019
268
348
103
249
302
103
(a) As of December 31, 2020 and 2019, our landfills owned or operated consisted of total acreage of 172,217 and 159,080;
permitted acreage of 45,642 and 42,992; and expansion acreage of 716 and 795, respectively. Total acreage includes
permitted acreage, expansion acreage, other acreage available for future disposal that has not been permitted, buffer
land and other land. Permitted acreage consists of all acreage at the landfill encompassed by an active permit to dispose
of waste. Expansion acreage consists of unpermitted acreage where the related expansion efforts meet our criteria to
be included as expansion airspace. A discussion of the related criteria is included within Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates and
Assumptions included within this report.
Item 3. Legal Proceedings.
Information regarding our legal proceedings can be found under the Environmental Matters and Litigation sections
of Note 11 to the Consolidated Financial Statements included within this report.
Item 4. Mine Safety Disclosures.
Information concerning mine safety and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this annual report.
32
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “WM.” The number of
holders of record of our common stock on February 12, 2021 was 8,419.
The graph below shows the relative investment performance of Waste Management, Inc. common stock, the
S&P 500 Index and the Dow Jones Waste & Disposal Services Index for the last five years, assuming reinvestment of
dividends at date of payment into the common stock. The graph is presented pursuant to SEC rules and is not meant to be
an indication of our future performance.
Comparison of Cumulative Five Year Total Return
$300
Waste Management, Inc.
$250
S&P 500 Index
Dow Jones Waste & Disposal Services Index
$200
$150
$100
$50
$0
12/31/15
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
Waste Management, Inc. . . . . . . . . . . . . . . . . . . . . $
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Dow Jones Waste & Disposal Services Index . . . . $
12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20
246
170 $
203
136 $
204
142 $
233 $
171 $
192 $
179 $
130 $
142 $
100 $
100 $
100 $
136 $
112 $
121 $
The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board
of Directors. We announced in December 2020 that the Board of Directors has authorized up to $1.35 billion in future
share repurchases, which supersedes and replaces remaining authority under any prior Board of Directors’ authorization
for share repurchases. During 2020, we repurchased an aggregate of $402 million of our common stock under accelerated
share repurchase agreements and open market repurchases, which equated to 3.7 million shares with a weighted average
price per share of $108.92. See Note 14 to the Consolidated Financial Statements for additional information.
Any future share repurchases will be made at the discretion of management and will depend on various factors
including our net earnings, financial condition and cash required for future business plans, growth and acquisitions.
33
Item 6. Selected Financial Data.
The statement of operations data for the years ended December 31, 2020, 2019 and 2018, and the balance sheet data
as of December 31, 2020 and 2019, are presented in the Consolidated Financial Statements included in Part II, Item 8. The
statement of operations data for the years ended December 31, 2017 and 2016, and the balance sheet data as of
December 31, 2018, 2017 and 2016, are not included in this Annual Report on Form 10-K, and are provided in Part II,
Item 8 of our Annual Reports on Form 10-K for the years ended December 31, 2018 and 2017.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This section includes a discussion of our results of operations for the three years ended December 31, 2020. This
discussion may contain forward-looking statements that anticipate results based on management’s plans that are subject
to uncertainty. We discuss in more detail various factors that could cause actual results to differ materially from
expectations in Item 1A. Risk Factors. The following discussion should be read considering those disclosures and together
with the Consolidated Financial Statements and the notes thereto.
Overview
We are North America’s leading provider of comprehensive waste management environmental services, providing
services throughout the United States (“U.S.”) and Canada. We partner with our residential, commercial, industrial and
municipal customers and the communities we serve to manage and reduce waste at each stage from collection to disposal,
while recovering valuable resources and creating clean, renewable energy. We own or operate the largest network of
landfills in the U.S. and Canada. In order to make disposal more practical for larger urban markets, where the distance to
landfills is typically farther, we manage transfer stations that consolidate, compact and transport waste efficiently and
economically. We also use waste to create energy, recovering the gas produced naturally as waste decomposes in landfills
and using the gas in generators to make electricity. Additionally, we are a leading recycler in the U.S. and Canada, handling
materials that include paper, cardboard, glass, plastic and metal. Our “Solid Waste” business is operated and managed
locally by our subsidiaries that focus on distinct geographic areas and provides collection, transfer, disposal, and recycling
and resource recovery services. Through our subsidiaries, we are also a leading developer, operator and owner of landfill
gas-to-energy facilities in the U.S. Consistent with our Company’s long-standing commitment to corporate sustainability
and environmental stewardship, we have published our 2020 Sustainability Report, which details our commitment to help
make the communities in which we live and work safe, resilient and sustainable. The information in this report can be
found at https://sustainability.wm.com but does not constitute a part of, and is not incorporated by reference into, this
Annual Report on Form 10-K. For further discussion see section “Federal, State and Local Climate Change Initiatives;
Sustainability” in Item 1.
Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal,
and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy
operations. Revenues from our collection operations are influenced by factors such as collection frequency, type of
collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or
material recovery facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are
generally based on the type and weight or volume of waste being disposed of at our disposal facilities. Fees charged at
transfer stations are generally based on the weight or volume of waste deposited, taking into account our cost of loading,
transporting and disposing of the solid waste at a disposal site. Recycling revenues generally consist of tipping fees and
the sale of recycling commodities to third parties. The fees we charge for our services generally include our environmental
fee, fuel surcharge and regulatory recovery fee which are intended to pass through to customers direct and indirect costs
incurred. We also provide additional services that are not managed through our Solid Waste business, described under
Results of Operations below.
34
Acquisition of Advanced Disposal Services, Inc. (“Advanced Disposal”)
On October 30, 2020, we completed our acquisition of all outstanding shares of Advanced Disposal for $30.30 per
share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on June 24, 2020. Total
enterprise value of the acquisition was $4.6 billion when including approximately $1.8 billion of Advanced Disposal’s net
debt. This acquisition grows our footprint and allows us to provide differentiated, sustainable waste management and
recycling services to approximately three million new commercial, industrial and residential customers primarily located
in the Eastern half of the U.S. The acquisition was funded using our $3.0 billion, 364-day, U.S. revolving credit facility
(“364-day revolving credit facility”) and our commercial paper program, as discussed further in Note 7 to the Consolidated
Financial Statements. As a result of the acquisition we recorded $4.1 billion of net assets including $2.5 billion of goodwill.
Immediately following the closing of the Advanced Disposal acquisition, the transactions contemplated by the U.S.
Department of Justice in connection with our acquisition of Advanced Disposal (as subsequently amended, the “Divestiture
Agreement”) were consummated. The required divestitures included a combination of assets and businesses belonging to
us and Advanced Disposal. The Company subsequently received cash proceeds from the sale of $856 million, subject to
certain post-closing adjustments. We recognized a net gain of $33 million on our net assets divested in this transaction,
primarily within our Tier 2 segment. The impact on our results of operations from the divestitures was not material for the
year ended December 31, 2020.
For the year ended December 31, 2020, we incurred $156 million of acquisition and integration related costs, which
are primarily classified as “Selling, general and administrative expenses”. The post-closing operating results of Advanced
Disposal have been included in our consolidated financial statements, within our existing reportable segments. Since the
acquisition date, Advanced Disposal has recognized $205 million, $142 million and $60 million of revenue, operating
expenses and selling, general and administrative expenses, respectively, which are included in our Consolidated Statement
of Operations.
COVID-19 Update
In January 2020, a novel strain of coronavirus (“COVID-19”) was declared a Public Health Emergency of
International Concern and was subsequently declared a global pandemic in March 2020. We have contingency plans in
place to ensure continuity of operations at our collection sites, transfer stations, landfills and recycling facilities. These
plans ensure that we are in compliance with federal, state, provincial and local guidelines. Key elements of our business
continuity plan have been executed consistently across the organization. Our safety team has medical experts and industrial
hygienists that are continuously monitoring and incorporating guidance from relevant authorities. To date our existing
personal protective equipment, hygiene and operating procedures comply with guidelines established to protect our
employees from additional risks associated with COVID-19.
COVID-19 began to impact our business in mid-March 2020, the results of which are described in detail under Results
of Operations below. The challenges posed by the COVID-19 pandemic on the global economy increased rapidly at the
end of the first quarter of 2020 and have continued through the date of this report, impacting our business in most
geographies and across a variety of our customer types. Waste Management provides essential services to a diverse
customer base and, as a result, many elements of our business are less exposed to variability. However, steps taken by
national and local governments to slow the spread of the virus, including travel bans, prohibitions on group events and
gatherings, shutdowns of certain businesses, curfews, stay-at-home orders and recommendations to practice social
distancing resulted in revenue declines at our landfills, as well as decreased demand from our industrial and commercial
collection customers. Additionally, within the residential line of business, the cost to service our customers increased as
stay-at-home orders and continuing work-from-home trends increased the waste we collect. While we have seen
improvement in our landfill and industrial and commercial collection volumes from the lowest levels observed in
April 2020, uncertainty continues in the pace of business and economic recovery as national and local governments
respond to guidance from relevant authorities in response to changes in COVID-19 statistics within local jurisdictions.
The Company has proactively taken steps to put our employees’ and customers’ needs first and we continue to work
with the appropriate regulatory agencies to ensure we can provide our essential services safely and efficiently. These
35
efforts are, in some instances, reducing short-term revenues or increasing our costs, though they are sound decisions that
reflect our focus on the long-term strength of our business. Examples of these efforts include:
Employees — We have prioritized the health, safety and financial security of our workforce. As local government
bodies began to implement stay-at-home orders, and as business closures became more prevalent during the first half
of 2020, key steps taken to benefit our workforce included (i) transitioning back-office employees to work-from-
home; (ii) providing financial certainty to employees by temporarily guaranteeing all full-time hourly employees’
compensation for a 40 hour work week regardless of COVID-19 related service decreases; (iii) securing additional
personal protective equipment to bolster the safety and security of our workplaces and (iv) guaranteeing elements of
incentive compensation to certain employees to reflect our appreciation for their dedication and focus on executing
well in the face of the pandemic. We continue to monitor COVID-19 and remain committed to keeping our employees
safe by following federal and local laws and regulations.
Customers — Our top priority with respect to our customers has been ensuring that essential waste service needs
continue to be safely met despite the unprecedented changes encountered in their communities. During the initial
months of the pandemic, we worked with customers impacted by the COVID-19 pandemic to waive and suspend
certain ancillary service charges, defer certain annual price increases, extend payment terms, adjust customer service
levels and provide qualifying small and medium businesses with one month of free service upon re-opening.
Beginning in July, with communities and governments re-opening, social distancing and safety measures being
adopted, and signs of an improving economy, we resumed fees and price increases in accordance with our contractual
terms and our average yield improved as expected.
The above steps, combined with our disciplined execution in our daily operations, have positioned the Company to
prudently manage the challenges presented by the COVID-19 pandemic. The fundamentals of the Company continue to
remain strong, and we have sufficient liquidity on hand to continue business operations during this volatile period.
We attribute the following notable impacts on our results of operations for the year ended December 31, 2020 to the
COVID-19 pandemic:
Revenues — During the year ended December 31, 2020, we experienced a negative impact to revenue that we
attribute to reductions in customers’ waste service needs as a result of COVID-19. While it is very difficult to measure,
we believe that the COVID-19-related revenue loss was approximately $890 million. While the customer-centric steps
discussed above have also contributed to this revenue decline, these impacts have been relatively immaterial to the
overall revenue decline. As mentioned above, our volumes, particularly in our landfill and industrial and commercial
collection lines of businesses, have improved from the lows experienced in April 2020, though the pace of volume
recovery moderated during the fourth quarter of 2020 as local governments responded to recommendations from
applicable authorities and changes in the COVID-19 statistics.
Operating Expenses — Volume-driven revenue declines and our strategic focus on proactive cost management
led to a significant reduction in certain variable operating expenses. These reductions have been most significant in
labor costs, where we have focused on developing an optimal work week that reduces overtime hours, and
maintenance and repairs. The revenue declines due to the COVID-19 pandemic have had a greater impact on our
higher margin business lines and have negatively impacted our operating costs as a percentage of revenues.
Additionally, our operating expenses have been impacted by employee pay guarantees and increases in container
weights in our residential collection line of business, which increased our overall cost to serve these customers. Despite
this, our proactive cost management efforts positioned us to hold our overall operating expenses as a percentage of
revenues flat when compared with the prior year period.
Selling, General and Administrative Expenses — COVID-19 impacts on our customers and related customer
receipts has led to an increase in the provision for bad debts for the year ended December 31, 2020. However, during
the second half of 2020, we began to see an improvement in the provision for bad debts driven by successful collection
efforts. Additionally, during 2020 we incurred costs associated with transitioning back-office employees to a work-
from-home environment and costs related to employee pay guarantees.
36
The ultimate impacts of COVID-19 on our long-term outlook for the business will depend on future developments,
including the duration of the pandemic and pace of economic recovery. These factors and their impacts on our business,
financial condition, results of operations and cash flows are uncertain and cannot be predicted at this time. We remain
focused on the diligent and safe execution of our daily operations. Additionally, we are focused on ensuring that we emerge
from this pandemic a stronger, more differentiated company positioned as the service provider of choice for the long-term.
Business Environment
The waste industry is a comparatively mature and stable industry. However, customers increasingly expect more of
their waste materials to be recovered and those waste streams are becoming more complex. In addition, many state and
local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types
of waste at landfills. We monitor these developments to adapt our services offerings. As companies, individuals and
communities look for ways to be more sustainable, we promote our comprehensive services that go beyond our core
business of collecting and disposing of waste in order to meet their needs.
Despite some industry consolidation in recent years, we encounter intense competition from governmental,
quasi-governmental and private service providers based on pricing, service quality, customer experience and breadth of
service offerings. Our industry is directly affected by changes in general economic factors, including increases and
decreases in consumer spending, business expansions and construction activity. These factors generally correlate to
volumes of waste generated and impact our revenue. Negative economic conditions, including the impact of COVID-19,
can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor
actions, can and have made it more challenging to implement our pricing strategy and negotiate, renew or expand service
contracts with acceptable margins. We also encounter competition for acquisitions and growth opportunities. General
economic factors and the market for consumer goods, in addition to regulatory developments, can also significantly impact
commodity prices for the recyclable materials we sell. Significant components of our operating expenses vary in
correlation to changes in revenue due to volume. Volume changes can fluctuate dramatically by line of business and
decreases in volumes in higher margin businesses, such as what we have seen with COVID-19, can impact key financial
metrics. In this type of environment, we must dynamically manage our cost structure.
Our financial results for the year ended December 31, 2020 reflect declines in our collection and disposal lines of
business as a result of the negative impacts of COVID-19. These impacts began in March 2020 and continued through the
date of this report, although we began to experience improvement in volumes during the second half of 2020 when
compared to the more acute impacts we experienced earlier in the year. Given the ongoing pressures on the business from
COVID-19, we continue to take proactive steps to reduce costs and maximize cash flow. These steps include (i) optimizing
our route structure to respond proactively to lower industrial and commercial collection volumes; (ii) limiting hiring and
optimizing the existing workforce through improved retention and reduced turnover and (iii) reducing or eliminating
certain non-essential costs and expenses like travel and entertainment. Additionally, to enhance our liquidity, we are
maintaining a disciplined focus on capital management by aligning additional investments with the revenue generation of
the business, reducing capital spending on our landfill assets, and managing container capital in conjunction with our
customers’ volumes. We also elected to temporarily suspend additional share repurchases in 2020 after the first quarter.
COVID-19 has also had impacts on the recycling line of business, including the creation of a short-term dislocation
in the supply and demand dynamics for recycled commodities in the U.S. which increased market prices for certain
commodities. Despite this increase in market prices, we continue to invest and seek opportunities for cost improvement as
we remain steadfast in our commitment to improve the profitability and returns of the recycling line of business in any
economic environment. We have maintained our focus on converting to a fee-based pricing model that addresses the cost
of processing materials and the impact on our cost structure to manage contamination in the recycling stream.
We believe that the Company’s industry-leading asset network and strategic focuses on investing in people and our
digital platform will give the Company the necessary tools to address the challenges presented by the COVID-19 pandemic
and the impacts on our industry. In line with our commitment to continuous improvement and a differentiated customer
experience, we continue to accelerate our customer service digitalization initiative to change the way we interact with our
customers. Enhancements made through this initiative are designed to seamlessly and digitally connect all of the
Company’s functions necessary to provide our customers the best experience and service.
37
Current Year Financial Results
During 2020, we delivered solid operating income and cash flows despite revenue declines in our collection and
disposal lines of business due to the COVID-19 pandemic. We continue to take intentional steps to decrease our operating
costs and eliminate discretionary selling, general and administrative expenses to mitigate the impact from the declines in
our volumes. In addition to our focus on reducing certain costs, we took proactive steps to manage our capital spending.
The Company continued its commitment to supporting both organic and inorganic growth during 2020, with the highlight
being the completion of our acquisition of Advanced Disposal. In total, the Company allocated $1,632 million of available
cash to capital expenditures and funded $4,088 million of acquisitions of solid waste businesses. We also allocated
$1,329 million of available cash to our shareholders during 2020 through dividends and common stock repurchases.
Key elements of our 2020 financial results include:
• Revenues of $15,218 million for 2020 compared with $15,455 million in 2019, a decrease of $237 million, or
1.5%. The decline is primarily attributable to lower volumes in our collection and disposal businesses resulting
from a reduction in customers’ waste service needs due to the COVID-19 pandemic, partially offset by (i) higher
yield in our collection and disposal businesses; (ii) higher yield in our recycling business driven by higher
commodity prices and (iii) acquisitions, net of divestitures, primarily due to the acquisition of Advanced Disposal;
• Operating expenses of $9,341 million in 2020, or 61.4% of revenues, compared with $9,496 million, or 61.4% of
revenues, in 2019. The $155 million decrease is directly related to proactive steps taken to manage our variable
costs in the lower volume environment. The revenue declines due to the COVID-19 pandemic have had a greater
impact on our higher margin business lines, which negatively impacted operating costs as a percentage of
revenues. Despite this, our proactive cost management efforts positioned us to hold our overall operating expenses
as a percentage of revenues flat, when compared with the prior year period;
• Selling, general and administrative expenses of $1,728 million in 2020, or 11.4% of revenues, compared with
$1,631 million, or 10.6% of revenues, in 2019. This increase of $97 million is primarily attributable to
(i) increased acquisition-related costs; (ii) higher costs associated with investments in our digital platform; and
(iii) costs incurred as a result of the COVID-19 pandemic, including an increase in provision for bad debts. These
cost increases were offset, in part, by (i) lower legal reserves; (ii) the proactive steps taken to reduce discretionary
expenses and (iii) lower annual incentive compensation costs;
•
Income from operations of $2,434 million, or 16.0% of revenues, in 2020 compared with $2,706 million, or
17.5% of revenues, in 2019. Management has taken steps to control our costs in a period of volume decline,
significantly mitigating the negative impact to our income from operations. However, the year-over-year
comparison has been affected by (i) an increase in integration costs associated with our acquisition of Advanced
Disposal; (ii) non-cash impairment charges of $61 million; (iii) higher depreciation and amortization expense
which was primarily related to investments in capital assets, including trucks and facilities and (iv) investments
we are making in our digital platform. These negative impacts were partially offset by a net divestiture gain of
$33 million associated with the sale of net assets to GFL Environmental in the fourth quarter;
• Net income attributable to Waste Management, Inc. was $1,496 million, or $3.52 per diluted share, compared
with $1,670 million, or $3.91 per diluted share, in the prior year period. In addition to the activity discussed
above, net income in the current period was also impacted by an increase in net interest expense due to debt
incurred to acquire Advanced Disposal. Additionally, net income in the current period was favorably impacted
by (i) a decrease in the cost of early extinguishment of debt; (ii) the unfavorable impact in 2019 of a $52 million
impairment charge related to our minority-owned investment in a waste conversion technology business that was
not deductible for tax purposes and (iii) lower income tax expense primarily attributable to lower income before
income taxes;
• Net cash provided by operating activities was $3,403 million, compared with $3,874 million in the prior year
period with the decline driven by (i) higher income tax payments related to the sale of assets to GFL
Environmental; (ii) increased interest payments and integration related spending due to our acquisition of
Advanced Disposal; (iii) payments associated with investments we are making in our digital platform and
(iv) lower earnings on our traditional Solid Waste business primarily caused by the impact of the COVID-19
38
pandemic. These results were partially offset by cash benefits in the current year associated with the 2019 federal
alternative fuel credits and
• Free cash flow was $2,656 million compared with $2,105 million in the prior year period. The increase in free
cash flow is primarily due to (i) higher proceeds from the sale of net assets to GFL Environmental and (ii) an
intentional reduction in capital expenditures during the current year period to align with the lower volumes in our
business. These positive impacts were partially offset by a decrease in net cash provided by operating activities
noted above. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow within Liquidity and
Capital Resources for our definition of free cash flow, additional information about our use of this measure, and
a reconciliation to net cash provided by operating activities, which is the most comparable GAAP measure.
Results of Operations
Operating Revenues
Our operating revenues set forth below are primarily generated from fees charged for our collection, transfer, disposal,
and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy
operations. We also provide additional services that are not managed through our Solid Waste business, including both
our WMSBS and EES businesses, recycling brokerage services, landfill gas-to-energy services and certain other expanded
service offerings and solutions. The mix of operating revenues from our major lines of business is reflected in the table
below for the year ended December 31 (in millions):
2020
2019
2018
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,102 $ 4,229 $ 3,972
2,529
Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,773
Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
450
Other collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,724
Total collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,560
Landfill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,711
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,293
Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,736
(3,110)
Intercompany (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,218 $ 15,455 $ 14,914
2,613
2,916
482
10,240
3,846
1,820
1,040
1,758
(3,249)
2,716
2,770
465
10,053
3,667
1,855
1,127
1,776
(3,260)
(a) The “Other” line of business includes (i) our WMSBS business; (ii) our landfill gas-to-energy operations; (iii) certain
services within our EES business, including our construction and remediation services and our services associated
with the disposal of fly ash and (iv) certain other expanded service offerings and solutions. In addition, our “Other”
line of business reflects the results of non-operating entities that provide financial assurance and self-insurance support
for our Solid Waste business, net of intercompany activity. We have reclassified collection, landfill, transfer and
recycling activity within our “Other” line of business to the appropriate line of business for purposes of presentation
in this table.
(b) Intercompany revenues between lines of business are eliminated in the Consolidated Financial Statements included
within this report.
39
The following table provides details associated with the period-to-period change in revenues and average yield for the
year ended December 31 (dollars in millions):
2020 vs. 2019
As a % of
Related
As a % of
Total
2019 vs. 2018
As a % of
Related
As a % of
Total
Amount Business(a) Amount Company(b) Amount Business(a) Amount Company(b)
Collection and disposal . . . . . $ 299
Recycling commodities (c) . .
75
Fuel surcharges and
mandated fees . . . . . . . . . . . (151)
Total average yield (d) . . .
Volume . . . . . . . . . . . . . . .
Internal revenue growth . .
Acquisitions . . . . . . . . . . .
Divestitures . . . . . . . . . . . .
Foreign currency
translation and other . . .
Total . . . . . . . . . . . . . . .
2.2 %
7.6
(24.7)
$ 364
(248)
2.8 %
(20.0)
(22)
(3.5)
$ 223
(692)
(469)
248
(8)
(8)
$ (237)
1.5 %
(4.5)
(3.0)
1.7
(0.1)
(0.1)
(1.5)%
$ 94
346
440
222
(104)
(17)
$ 541
0.6 %
2.3
2.9
1.5
(0.7)
(0.1)
3.6 %
(a) Calculated by dividing the increase or decrease for the current year by the prior year’s related business revenue
adjusted to exclude the impacts of divestitures for the current year.
(b) Calculated by dividing the increase or decrease for the current year by the prior year’s total Company revenue adjusted
to exclude the impacts of divestitures for the current year.
(c) Includes combined impact of commodity price variability and changes in fees.
(d) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.
The following provides further details about our period-to-period change in revenues:
Average Yield
Collection and Disposal Average Yield — This measure reflects the effect on our revenue from the pricing activities
of our collection, transfer and landfill operations, exclusive of volume changes. Revenue growth from collection and
disposal average yield includes not only base rate changes and environmental and service fee fluctuations, but also
(i) certain average price changes related to the overall mix of services, which are due to the types of services provided;
(ii) changes in average price from new and lost business and (iii) price decreases to retain customers.
The details of our revenue growth from collection and disposal average yield are as follows (dollars in millions):
2020 vs. 2019
2019 vs. 2018
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landfill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total collection and disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Amount
91
74
73
238
32
29
299
$
As a % of
Related
Business
Amount
109
103
81
293
44
27
364
2.4 % $
2.7
2.9
2.5
1.3
3.0
2.2 % $
As a % of
Related
Business
3.0 %
4.0
3.3
3.3
2.0
2.9
2.8 %
Our overall strategic pricing efforts that are focused on improving our average unit rate have proven to be effective,
despite the COVID-19 pandemic. During the second quarter of 2020, in order to support the continuity of our customers’
40
businesses, we made certain customer-centric pricing decisions, such as temporarily waiving and suspending certain
ancillary service charges as well as delaying price increases in certain markets. These actions negatively impacted our
year-to-date average yield. However, beginning in July 2020, we resumed fees and price increases in accordance with
contractual terms and our average yield rebounded as expected.
Recycling Commodities — Increases in the market prices for recycling commodities resulted in revenue growth of
$75 million for the year ended December 31, 2020 as compared with prior year. Decreases in the market prices for
recycling commodities in 2019 resulted in a revenue decline of $248 million as compared to 2018. Average market prices
for recycling commodities at the Company’s facilities were 19% higher in 2020 compared to 2019 and 35% lower in 2019
compared to 2018. We saw a market price increase in 2020 driven by a short-term dislocation in supply and demand
dynamics for recycled materials, largely due to COVID-19 related decreases in the supply of recycled materials. While
average market prices in 2020 were higher than 2019, we were at or below our overall historical average market price by
the end of 2020. We continue to invest and seek opportunities for cost improvement as we remain steadfast in our
commitment to improve the profitability and returns of the recycling line of business in any economic environment. We
have maintained our focus on converting to a fee-based pricing model that addresses the cost of processing materials and
the impact on our cost structure to manage contamination in the recycling stream.
Fuel Surcharges and Mandated Fees —These fees, which are predominantly generated by our fuel surcharge program,
declined $151 million and $22 million for 2020 and 2019, respectively, as compared with the prior year periods. These
revenues are based on, and fluctuate in response to changes in the national average prices for diesel fuel. Given the
downturn in oil and gas markets, market prices for diesel fuel decreased approximately 16% and 4% for the years ended
December 31, 2020 and 2019, respectively, compared with the prior year periods. Additionally, we transitioned certain
customers’ pricing away from a fuel surcharge, reflecting the cost of fuel in the base rates we charge for our services,
which further contributed to the year-over-year decline.
The mandated fees are primarily related to fees and taxes assessed by various state, county and municipal government
agencies at our landfills and transfer stations. These amounts have not significantly impacted the change in revenue for
the periods presented.
Volume
Our revenues from volume (excluding volumes from acquisitions and divestitures) decreased $692 million, or 4.5%,
and increased $346 million, or 2.3%, for the years ended December 31, 2020 and 2019, respectively, as compared with
the prior year periods.
Beginning in March 2020, and continuing throughout the date of this report, our industrial and commercial collection
and landfill businesses experienced significant volume declines as a result of the COVID-19 pandemic. While we have
seen some improvement in our landfill and industrial and commercial collection volumes from the lowest levels observed
in April 2020, our volumes continue to be meaningfully below prior year, particularly in special waste at the landfill,
project-driven work in the industrial collection business and certain commercial and collection customer segments.
Uncertainty continues with respect to the pace of business and economic recovery as local governments continue to
respond to recommendations from applicable authorities and changes in the COVID-19 statistics. Additionally, while
natural disaster clean-up efforts benefited our 2019 volumes, they were inconsequential to our results for the year ended
December 31, 2020. The preceding decreases in volume-related revenues have been partially offset by volume increases
in our WM Renewable Energy business which grew in 2020 as a result of a new renewable energy facility coming online,
and our continued focus on a differentiated service model for national accounts customers.
We experienced higher volumes throughout 2019 when compared to 2018 due to our focus on customer service and
disciplined growth, combined with favorable market conditions in our collection and disposal business. We experienced
significant volume growth with existing customers, particularly in our commercial collection business as a result of
proactive efforts taken to work with our customers as their needs expanded to identify service upgrade opportunities. Our
event-driven projects in our special waste business and growth in our municipal solid waste business contributed to our
landfill volume growth in 2019. Furthermore, our WMSBS business experienced favorable volume growth in 2019. The
41
clean-up efforts of natural disasters primarily in California during the first half of 2019 contributed to volume growth in
2019, partially offset by volume decline from our recycling brokerage services in 2019.
Operating Expenses
Our operating expenses are comprised of (i) labor and related benefits costs (excluding labor costs associated with
maintenance and repairs discussed below), which include salaries and wages, bonuses, related payroll taxes, insurance and
benefits costs and the costs associated with contract labor; (ii) transfer and disposal costs, which include tipping fees paid
to third-party disposal facilities and transfer stations; (iii) maintenance and repairs costs relating to equipment, vehicles
and facilities and related labor costs; (iv) subcontractor costs, which include the costs of independent haulers who transport
waste collected by us to disposal facilities and are affected by variables such as volumes, distance and fuel prices; (v) costs
of goods sold, which includes the cost to purchase recycling materials for our recycling line of business, including certain
rebates paid to suppliers; (vi) fuel costs, net of tax credits for alternative fuel, which represent the costs of fuel and oil to
operate our truck fleet and landfill operating equipment; (vii) disposal and franchise fees and taxes, which include landfill
taxes, municipal franchise fees, host community fees, contingent landfill lease payments and royalties; (viii) landfill
operating costs, which include interest accretion on landfill liabilities, interest accretion on and discount rate adjustments
to environmental remediation liabilities and recovery assets, leachate and methane collection and treatment, landfill
remediation costs and other landfill site costs; (ix) risk management costs, which include general liability, automobile
liability and workers’ compensation claims programs costs and (x) other operating costs, which include gains and losses
on sale of assets, telecommunications, equipment and facility lease expenses, property taxes, utilities and supplies.
Variations in volumes year-over-year, as discussed above in Operating Revenues, in addition to cost inflation, affect the
comparability of the components of our operating expenses.
The following table summarizes the major components of our operating expenses for the year ended
December 31 (dollars in millions and as a percentage of revenues):
2020
2019
2018
Labor and related benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,746 18.1 % $ 2,791 18.0 % $ 2,703 18.1 %
Transfer and disposal costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maintenance and repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subcontractor costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposal and franchise fees and taxes . . . . . . . . . . . . . . . . . .
Landfill operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.5
8.8
9.9
3.6
2.2
4.1
2.4
1.7
3.2
61.4 % $ 9,496 61.4 % $ 9,249 62.0 %
1,135
1,331
1,523
553
265
606
394
269
519
$ 9,341
1,105
1,255
1,375
783
409
598
331
235
455
1,160
1,355
1,532
553
336
627
379
267
496
7.5
8.7
10.0
3.6
1.7
4.0
2.6
1.8
3.4
7.4
8.4
9.2
5.3
2.7
4.0
2.2
1.6
3.1
As discussed above in Operating Revenues, year-over-year decreases in our landfill and industrial and commercial
collection volumes, primarily due to the impacts of COVID-19, have significantly impacted the year ended
December 31, 2020. The declines in most operating expense categories during the reported periods are directly related to
proactive steps taken to manage our variable costs in the lower volume environment. The revenue declines due to the
COVID-19 pandemic have had a greater impact on our higher margin business lines and have negatively impacted
operating costs as a percentage of revenues. In addition, our operating expenses as a percentage of revenues was impacted
by our acquisition of Advanced Disposal as the acquired business’s operating cost structure is higher than ours, because
we are early in our integration and synergy realization processes and we have incurred certain one-time, upfront costs
42
needed to support integration. Despite this, our proactive cost management efforts positioned us to hold our overall
operating expenses as a percentage of revenues flat when compared with the prior year periods.
Significant items affecting the comparison of operating expenses between reported periods include:
Labor and Related Benefits — The decrease in labor and related benefits costs in 2020 as compared with 2019 was
largely driven by decreases in volume in our industrial and commercial collection businesses. Our proactive steps
positioned us to optimize our route structure to respond to lower industrial and commercial collection volumes.
Additionally, the decrease was attributable to (i) improved efficiency; (ii) lower headcount due to employee attrition
coupled with proactive steps to defer hiring due to COVID-19 driven uncertainty and (iii) lower annual incentive
compensation. These decreases were offset, in part, by annual merit increases and the addition of employees as a result of
our acquisition of Advanced Disposal. The increase in labor and related benefits costs in 2019 as compared with 2018 was
driven by (i) volume growth in our collection and disposal business; (ii) merit increases and (iii) cost inflation. These cost
increases were offset, in part, by lower bonus costs related to a one-time plan established in early 2018 targeted at
improving employee retention.
Transfer and Disposal Costs — The decrease in transfer and disposal costs in 2020 as compared with 2019 was largely
driven by volume declines in our industrial and commercial collection businesses as a result of COVID-19 offset, in part,
by additional disposal costs attributable to our acquisition of Advanced Disposal. The increase in transfer and disposal
costs in 2019 as compared with 2018, was driven by overall volume growth in our collection and disposal business and,
to a lesser extent, cost inflation.
Maintenance and Repairs — The decrease in maintenance and repairs costs in 2020 as compared with 2019 was
largely driven by proactive steps to optimize routes and reduce overtime hours to address the volume declines discussed
above. This decline in costs was partially offset by additional costs incurred to make investments in the fleet acquired as
part of the Advanced Disposal acquisition. Additionally, there has been an increasing trend in our maintenance and repairs
costs during the reported periods due to (i) inflationary cost pressures for both Company and third-party services due to
demand for skilled technician labor as well as for parts and supplies; (ii) higher per unit costs required for an increasingly
automated fleet in the residential line of business and (iii) our focus on making upgrades to our operating facilities. The
comparisons are also impacted by a $16 million non-cash charge to write off certain equipment costs related to our Other
segment recognized in 2019.
Subcontractor Costs — The decrease in subcontractor costs in 2020 as compared to 2019 was largely driven by
COVID-19 related volume declines in our industrial collection business and projects ending or scaling down during 2020
in our EES business. The decrease was offset, in part, by an increase in business activity in our WMSBS business which
relies more extensively on subcontracted hauling than our collection and disposal business. The increase in subcontractor
costs in 2019 as compared to 2018 was primarily driven by (i) volume growth in our collection and disposal business,
largely attributable to a significant contract executed in the second half of 2017 that generated incremental volumes in
2019; (ii) volume growth in our WMSBS and EES businesses and (iii) cost inflation related to capacity constraints of our
subcontractors in certain markets.
Cost of Goods Sold — Costs in 2020 were flat when compared to 2019 in spite of an increase in commodity prices,
largely due to lower recycling volumes as a result of COVID-19. Additionally, a higher percentage of our overall recycled
commodity sales were targeted at domestic markets, resulting in lower freight costs. The decrease in cost of goods sold in
2019 as compared with 2018 was primarily driven by lower market prices for recycling commodities and by lower costs
due to the sale of certain ancillary operations in the second quarter of 2018.
Fuel — The decrease in fuel costs in 2020 as compared with 2019 was primarily due to (i) a decline in market prices
for diesel fuel; (ii) lower costs resulting from the continued conversion of our fleet to natural gas vehicles and (iii) volume
declines. The decreases were offset, in part, by (i) lower federal alternative fuel credits and (ii) additional costs attributable
to our acquisition of Advanced Disposal. The decrease in fuel costs in 2019 as compared with 2018 was due to (i) the
recognition of two years of federal alternative fuel credits in 2019 compared to a single year of credits in 2018 due to the
43
timing of government action providing for the benefits attributable to each period; (ii) lower costs resulting from the
continued conversion of our fleet to natural gas vehicles and (iii) lower market prices for diesel fuel.
Disposal and Franchise Fees and Taxes — The decrease in disposal and franchise fees and taxes in 2020 as compared
to 2019 was primarily related to lower volumes in our landfill line of business, largely driven by the impact of COVID-19.
The decreases were offset, in part, by additional costs attributable to our acquisition of Advanced Disposal. The increase
in disposal and franchise fees and taxes in 2019 as compared with 2018 was primarily related to higher volumes in our
landfill line of business.
Landfill Operating Costs — The increase in landfill operating costs in 2020 as compared with 2019 was primarily due
to higher leachate management costs compared to the prior year and additional costs attributable to our acquisition of
Advanced Disposal. This increase was offset, in part, by decreases attributable to lower volumes at our landfills. The
increase in landfill operating costs in 2019 as compared with 2018 was primarily due to higher leachate management costs
driven largely by inclement weather in certain parts of North America and increased ongoing site maintenance costs.
Additionally, 2020 and 2019 were impacted by decreases in the risk-free discount rate used in the measurement of our
environmental remediation obligations and recovery assets due to decreases in U.S. treasury rates. See Note 4 to the
Consolidated Financial Statements for additional information.
Risk Management — Risk management costs were relatively flat in 2020 as compared with 2019. The increase in risk
management costs in 2019 as compared with 2018 was primarily due to an increase in claims expense as a result of growth
in the business and cost inflation.
Other — Net gains on sales of certain assets during each year impacted the comparability of the reported periods.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of (i) labor and related benefits costs, which include salaries,
bonuses, related insurance and benefits, contract labor, payroll taxes and equity-based compensation; (ii) professional fees,
which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts, which includes allowances
for uncollectible customer accounts and collection fees and (iv) other selling, general and administrative expenses, which
include, among other costs, facility-related expenses, voice and data telecommunication, advertising, bank charges,
computer costs, travel and entertainment, rentals, postage and printing. In addition, the financial impacts of litigation
reserves generally are included in our “Other” selling, general and administrative expenses.
The following table summarizes the major components of our selling, general and administrative expenses for the year
ended December 31 (dollars in millions and as a percentage of revenues):
Labor and related benefits . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,057
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
256
54
361
$ 1,728
2020
2019
6.9 % $ 1,020
183
1.7
38
0.4
2.4
390
11.4 % $ 1,631
2018
957 6.4 %
6.6 % $
113
1.2
53
0.3
2.5
330
10.6 % $ 1,453
0.8
0.3
2.2
9.7 %
Selling, general and administrative expenses for the year ended December 31, 2020 have increased due to
(i) incremental costs of approximately $150 million incurred in connection with the acquisition and integration of
Advanced Disposal; (ii) strategic investments in our digital platform, including planned investments in a new enterprise
resource planning system and accelerated investments in customer service digitalization and (iii) an increase in the
provision for bad debts due to negative impacts on customer receipts experienced as a result of the COVID-19 pandemic.
In addition to the cost increases, selling, general and administrative expenses as a percent of revenue have increased in
2020 due to the decline in volume-related revenues.
44
We consistently manage our costs, particularly those incurred for discretionary initiatives, to ensure that we are
optimizing our customer service, back-office effectiveness and profitability. As a result of the declines in revenue from
the COVID-19 pandemic, we specifically focused on reducing costs for advertising, travel and entertainment and
professional fees other than those specifically tied to strategic initiatives. The decreases in selling, general and
administrative expenses from these proactive steps have been more than offset by the items discussed above.
Significant items affecting the comparison of our selling, general and administrative expenses between reported
periods include:
Labor and Related Benefits — The increase in labor and related benefits costs in 2020 compared with 2019 was
largely due to (i) costs incurred in connection with our acquisition of Advanced Disposal including severance costs and
additional headcount; (ii) annual merit increases and (iii) costs associated with the strategic investments in our digital
platform. These cost increases were offset, in part, by (i) lower annual incentive compensation and (ii) proactive steps
undertaken to defer hiring and reduce labor related costs. The increase in labor and related benefits costs in 2019 compared
with 2018 was primarily due to (i) an increase in headcount, merit increases and higher incentive compensation and
(ii) increased contract labor costs driven by planned investments in our digital platform.
Professional Fees — The increases in professional fees over the reported periods were primarily driven by consulting
fees incurred in connection with the acquisition and integration of Advanced Disposal and strategic investments in our
digital platform.
Provision for Bad Debts — The increase in the provision for bad debts in 2020 compared with 2019 was primarily
due to increased collection risk associated with certain customers as a result of the COVID-19 pandemic. However, we
were encouraged to see an overall improvement in customer account collections during the second half of 2020 when
compared to the first half of the year. The decrease in provision for bad debts in 2019 compared with 2018 was due to the
collection of certain fully reserved receivables and higher prior year bad debt expense associated with the bankruptcy of a
strategic customer.
Other — The decrease in other expenses in 2020 compared with 2019 was primarily due to lower litigation costs and
proactive measures taken to reduce discretionary costs, such as travel and entertainment, company-wide. These cost
decreases were offset, in part, by increased technology infrastructure costs in 2020, which we expect to continue as we
make strategic investments in our digital platform. We also incurred one-time technology costs in the first half of 2020 to
transition employees to work-from-home in response to the COVID-19 pandemic. The increase in other expenses in 2019
compared with 2018 was principally driven by higher litigation reserves and increased infrastructure costs associated with
investments in our digital platform.
Depreciation and Amortization Expenses
The following table summarizes the components of our depreciation and amortization expenses for the year ended
December 31 (dollars in millions and as a percentage of revenues):
2020
2019
2018
Depreciation of tangible property and equipment . . . . . . . . . . . . $ 996 6.6 % $
Amortization of landfill airspace . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . .
3.7
0.7
538
101
$ 1,671 11.0 % $ 1,574 10.2 % $ 1,477
893 5.8 % $ 838 5.6 %
575
106
3.6
0.7
9.9 %
568
107
3.7
0.7
The increase in depreciation of tangible property and equipment in 2020, compared with 2019, was primarily related
to (i) investments in capital assets, including trucks and facilities and (ii) additional depreciation attributable to our
acquisition of Advanced Disposal. The decrease in amortization of landfill airspace in 2020 compared with 2019 was
driven by (i) lower volumes at our landfills, primarily as a result of the COVID-19 pandemic and (ii) a decrease in the
inflation rate used to estimate capping, closure and post-closure asset retirement obligations from 2.5% to 2.25% at
45
December 31, 2020. These decreases were offset, in part, by charges to reflect changes in estimated landfill construction
costs and our acquisition of Advanced Disposal.
Our amortization of intangible assets was flat in 2020, compared with 2019. The increased expense for intangible
assets acquired as part of the acquisition of Advanced Disposal was offset, primarily by decreases for certain customer list
assets reaching the end of their lives.
The increase in depreciation of tangible property and equipment in 2019 compared with 2018 was primarily related
to higher capital expenditures due to an intentional focus on accelerating certain fleet and landfill spending to support the
Company’s strong collection and disposal growth. The increase in amortization of landfill airspace in 2019 compared with
2018 was driven by higher volumes at our landfills and changes in landfill estimates.
Restructuring
During the year ended December 31, 2020, we recognized $9 million of restructuring charges primarily related to
modifying our field sales and customer services structures to better support our investment in customer service
digitalization, which is discussed above.
(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual
items, net for the year ended December 31 (in millions):
Gain from divestitures, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2020
2019
2018
(33) $
68
35 $
— $
42
42 $
(96)
38
(58)
During the year ended December 31, 2020, we recognized $35 million of net charges primarily related to the
following:
Gain from Divestitures, Net — As discussed further in Note 18 to the Consolidated Financial Statements, we and
Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets
from us and Advanced Disposal to address divestitures required by the U.S. Department of Justice. Immediately following
the closing of the Advanced Disposal acquisition on October 30, 2020, the transactions contemplated by the Divestiture
Agreement were consummated and the Company subsequently received cash proceeds from the sale of $856 million. We
recognized a net gain of $33 million on our net assets divested, primarily within our Tier 2 segment.
Energy Services Asset Impairments — During the second quarter of 2020, the Company tested the recoverability of
certain energy services assets in our Tier 1 segment. Indicators of impairment included (i) the sharp downturn in oil demand
that has led to a significant decline in oil prices and production activities, which we project will have long-term impacts
on the utilization of our assets and (ii) significant shifts in our business, including increases in competition and customers
choosing to bury waste on site versus in a landfill, reducing our revenue outlook. The Company determined that the
carrying amount of the asset group was not fully recoverable. As a result, we recognized $41 million of non-cash
impairment charges primarily related to two landfills and an oil field waste injection facility in our Tier 1 segment. We
wrote down the net book value of these assets to their estimated fair value using an income approach based on estimated
future cash flow projections (Level 3). The aggregate fair value of the impaired asset group was $8 million as of
June 30, 2020. The Company tested the recoverability of an additional $239 million in energy services assets and
determined that the carrying amount was recoverable as of June 30, 2020. No new indicators of impairment were identified
during the second half of 2020.
Other Impairments —We recognized a $20 million non-cash impairment charge in our Tier 3 segment due to
management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted
46
airspace, which was considered an impairment indicator. We determined the carrying value was not recoverable, and we
wrote off the entire net book value of the asset using an income approach based on estimated future cash flow projections
(Level 3). The impairment charge was comprised of $12 million related to the carrying value of the asset and $8 million
related to the acceleration of the expected timing of capping, closure and post-closure activities, which is discussed further
in Note 4 to the Consolidated Financial Statements.
Additionally, we recognized $7 million of net charges primarily related to non-cash impairments of certain assets
within our WM Renewable Energy business in our Other segment. We determined the carrying values of the assets were
not recoverable, and we wrote off their entire net carrying value using an income approach based on estimated future cash
flow projections (Level 3).
During the year ended December 31, 2019, we recognized asset impairments of $42 million, related to (i) $27 million
of goodwill impairment charges, of which $17 million related to our EES business, and $10 million related to our
LampTracker® reporting unit and (ii) $15 million of asset impairment charges primarily related to certain solid waste
operations.
During the year ended December 31, 2018, we recognized net gains of $58 million, primarily related to (i) a
$52 million gain associated with the sale of certain collection and disposal operations in Tier 1 and (ii) net gains of
$44 million substantially all from divestitures of certain ancillary operations. These gains were partially offset by (i) a
$30 million charge to impair a landfill in Tier 3 based on an internally developed discounted projected cash flow analysis,
taking into account continued volume decreases and revised capping cost estimates and (ii) $8 million of impairment
charges primarily related to our LampTracker® reporting unit.
See Note 3 to the Consolidated Financial Statements for additional information related to the accounting policy and
analysis involved in identifying and calculating impairments.
Income from Operations
The following table summarizes income from operations for the year ended December 31 and has been updated to
reflect our realigned segments which are discussed further in Note 20 to the Consolidated Financial Statements (dollars in
millions):
Period-to-
Period
Change
2020
2019(c)
Period-to-
Period
Change
2018(c)
Solid Waste:
Tier 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,575 $ (144)
(32)
Tier 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(102)
Tier 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(278)
Solid Waste . . . . . . . . . . . . . . . . . . . . . . . . .
123
Other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(117)
Corporate and Other (b) . . . . . . . . . . . . . . . . . . . .
849
1,071
3,495
(38)
(1,023)
(8.4)% $ 1,719 $
(3.6)
(8.7)
(7.4)
*
12.9
881
1,173
3,773
(161)
(906)
64
69
3.9 % $ 1,655
812
8.5
1,028
145 14.1
3,495
8.0
278
(29)
(132)
*
(677)
(229) 33.8
(3.0)% $ 2,789
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,434 $ (272) (10.1)% $ 2,706 $ (83)
Percentage of revenues . . . . . . . . . . . . . . . . . . . . .
16.0 %
17.5 %
18.7 %
* Percentage change does not provide a meaningful comparison.
(a) “Other” includes (i) our WMSBS business; (ii) those elements of our landfill gas-to-energy operations and third-party
subcontract and administration revenues managed by our EES and WM Renewable Energy businesses that are not
included in the operations of our reportable segments; (iii) our recycling brokerage services and (iv) certain other
expanded service offerings and solutions. In addition, our “Other” segment reflects the results of non-operating entities
that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.
(b) Corporate operating results reflect certain costs incurred for various support services that are not allocated to our
reportable segments. These support services include, among other things, treasury, legal, digital, tax, insurance,
47
centralized service center processes, other administrative functions and the maintenance of our closed landfills.
Income from operations for “Corporate and Other” also includes costs associated with our long-term incentive
program and any administrative expenses or revisions to our estimated obligations associated with divested operations.
(c) In 2020, we revised allocations between our segments including (i) the discontinuation of certain allocations from
Corporate and Other to Solid Waste and (ii) allocating certain insurance costs from Other to Solid Waste.
Reclassifications have been made to our prior period information for comparability purposes.
Solid Waste — The most significant items affecting the results of operations of our Solid Waste business during the
three years ended December 31, 2020 are summarized below:
The following items affected 2020 when compared to 2019:
•
Income from operations for 2020 decreased on a year-over-year basis for all Tiers due to the overall negative
impact of the COVID-19 pandemic resulting in revenue declines from lower volumes and higher depreciation
and amortization expense which was primarily related to investments in capital assets, including trucks and
facilities. The declines were partially offset by (i) higher yield in our collection and disposal businesses; (ii) the
benefit of resumed fees and price increases; (iii) lower operating costs directly related to our proactive steps taken
to manage our variable costs in the lower volume environment and (iv) a net divestiture gain of $33 million
associated with the sale of net assets to GFL Environmental, primarily within our Tier 2 segment.
• Additionally, income from operations for our Tier 1 segment was impacted by $41 million of non-cash asset
impairment charges primarily related to two landfills and an oil field waste injection facility. Income from
operations for our Tier 3 segment was impacted by a $20 million non-cash impairment charge related to
management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining
permitted airspace. Furthermore, in 2019, our Tier 2 segment benefited from the clean-up efforts of natural
disasters primarily in California and similar efforts did not recur in 2020.
The following items affected 2019 when compared to 2018:
•
Income from operations for our collection and disposal business experienced strong operating results, primarily
driven by (i) internal revenue growth; (ii) acquisitions and divestitures and (iii) decreased fuel costs due in part
to a year-over-year increase in federal natural gas fuel credits.
However, the following items negatively impacted our results from operations and resulted in lower income from
operations in 2019 when compared with 2018:
•
(i) higher operating costs, driven by increased volumes, higher depreciation related to new collection fleet and
higher labor, maintenance and repair costs; (ii) lower recycling commodity prices and (iii) asset impairments.
Other — Income from operations for the Other segment for the year ended December 31, 2020 compared with 2019
was favorably impacted primarily by (i) an increase in revenue in our WM Renewable Energy business as a result of a
new renewable energy facility coming online which drove an increase in commodity sales; (ii) an increase in revenue for
our WMSBS business as a result of newly executed national account contracts and (iii) an increase in revenue in our
recycling brokerage business.
In 2019 compared with 2018, lower income from operations is a result of (i) net gains from divestitures of certain
ancillary operations in the prior year period of $44 million; (ii) $27 million of goodwill impairment charges, of which
$17 million related to our EES business and $10 million related to our LampTracker® reporting unit; (iii) lower commodity
48
prices in 2019 associated with our WM Renewable Energy business; (iv) a $16 million non-cash charge to write off certain
equipment costs in 2019 and (v) an increase in claims expense as a result of growth in the business and cost inflation.
Corporate and Other — The most significant items affecting the results of operations for Corporate and Other during
the three years ended December 31, 2020 are summarized below:
The following items affected 2020 when compared with 2019:
• The decrease in income from operations was driven by increased expenses as a result of (i) our acquisition and
integration of Advanced Disposal; (ii) investments we are making in our digital platform; (iii) incremental costs
associated with COVID-19 pandemic and (iv) higher long-term incentive compensation costs. These increased
expenses were offset, in part, by (i) lower annual incentive compensation and (ii) lower litigation reserves.
The following items affected 2019 when compared with 2018:
• The decrease in income from operations was driven by increased expenses as a result of (i) higher consulting
fees, largely due to the investments we are making in our people and digital platform; (ii) higher litigation
reserves; (iii) preparation for our acquisition of Advanced Disposal and (iv) a decrease in the risk-free discount
rate used in the measurement of our environmental remediation obligations and recovery assets in 2019.
Additionally, we recognized higher incentive compensation costs during 2019.
Interest Expense, Net
Our interest expense, net was $425 million, $411 million and $374 million in 2020, 2019 and 2018, respectively. The
increase in interest expense, net for 2020 was primarily attributable to decreases in interest income resulting from lower
cash and cash equivalents balances, due to the redemption of $3.0 billion of senior notes with a special mandatory
redemption feature (the “SMR Notes”) in July 2020 as discussed below in Loss on Early Extinguishment of Debt, Net.
Partially offsetting the decreases in interest income were favorable impacts due to a lower interest rate on our commercial
paper borrowings as a result of the favorable interest rate environment in 2020 compared to 2019. The increase in 2019
compared with 2018 is primarily attributable to our May 2019 issuance of $4.0 billion senior notes, partially offset by
related increases in interest income as a result of higher cash and cash equivalents balances.
Loss on Early Extinguishment of Debt, Net
In May 2019, WM issued $4.0 billion of senior notes, including $3.0 billion of SMR Notes. We used $344 million of
the proceeds from this offering to retire $257 million principal amount of certain high-coupon senior notes. The cash paid
to retire the high-coupon senior notes also included $84 million of related premiums, which are classified as loss on early
extinguishment of debt in our Consolidated Statement of Operations, and $3 million of accrued interest.
In the third quarter of 2019, we elected to refund and reissue $99 million of tax-exempt bonds, which resulted in the
recognition of a $1 million loss on early extinguishment of debt in our Consolidated Statement of Operations.
In July 2020, we recognized a $52 million loss on early extinguishment of debt in our Consolidated Statement of
Operations related to the mandatory redemption of the SMR Notes. The loss includes $30 million of premiums paid and
$22 million of unamortized discounts and debt issuance costs. Pursuant to the terms of the SMR Notes, we were required
to redeem all of such outstanding notes paying debt holders 101% of the aggregate principal amounts of such notes, plus
accrued but unpaid interest, as a result of the Advanced Disposal acquisition not being completed by July 14, 2020.
Accordingly, the redemption was completed on July 20, 2020 using available cash on hand and, to a lesser extent,
49
commercial paper borrowings. The cash paid included the $3.0 billion principal amount of debt redeemed, $30 million of
related premiums and $8 million of accrued interest.
During the fourth quarter of 2020, we repaid the outstanding borrowings under our 364-day revolving credit facility
and contemporaneously terminated the facility, at which time we recognized a $2 million loss on early extinguishment of
debt in our Consolidated Statement of Operations related to unamortized debt issuance costs.
At the time of acquisition, Advanced Disposal had outstanding $425 million of 5.625% senior notes due
November 2024. In November 2020, we redeemed the notes pursuant to an optional redemption feature upon which we
recognized a $1 million gain on early extinguishment of debt in our Consolidated Statement of Operations due to the
difference in carrying value and redemption price.
See Note 7 to the Consolidated Financial Statements for more information related to the debt transactions.
Equity in Net Losses of Unconsolidated Entities
We recognized equity in net losses of unconsolidated entities of $68 million, $55 million and $41 million in 2020,
2019 and 2018, respectively. The losses for each period are primarily related to our noncontrolling interests in entities
established to invest in and manage low-income housing properties. We generate tax benefits, including tax credits, from
the losses incurred from these investments, which are discussed further in Note 9 to the Consolidated Financial Statements.
Additionally, the 2019 periods include losses associated with our investment in a refined coal facility. In 2020, the entity
that holds and manages our ownership interest in the refined coal facility sold a majority of its assets resulting in a
$7 million non-cash impairment charge at that time.
Other, Net
We recognized other, net income of $5 million and $2 million in 2020 and 2018, respectively, compared to other, net
expense of $50 million in 2019. In 2019, we recognized a $52 million non-cash impairment charge related to our minority-
owned investment in a waste conversion technology business. We wrote down our investment to its estimated fair value
as the result of recent third-party investor’s transactions in these securities. The fair value of our investment was not readily
determinable; thus, we determined the fair value utilizing a combination of quoted price inputs for the equity in our
investment (Level 2) and certain management assumptions pertaining to investment value (Level 3).
Income Tax Expense
We recorded income tax expense of $397 million, $434 million and $453 million in 2020, 2019 and 2018 respectively,
resulting in effective income tax rates of 20.9%, 20.6% and 19.0% for the years ended December 31, 2020, 2019 and 2018,
respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the
following:
•
Investments Qualifying for Federal Tax Credits — Our low-income housing properties and refined coal facility
investments reduced our income tax expense by $87 million, $96 million and $57 million, primarily due to tax
credits realized from these investments for the years ended December 31, 2020, 2019 and 2018, respectively. See
Note 19 for additional information related to these unconsolidated variable interest entities;
• Other Federal Tax Credits — During 2020, 2019 and 2018, we recognized federal tax credits in addition to the
tax credits realized from our investments in low-income housing properties and the refined coal facility, resulting
in a reduction in our income tax expense of $7 million, $11 million and $10 million, respectively;
• Non-Deductible Transaction Costs — During 2020 and 2019, we recognized the detrimental tax impact of
$27 million and $10 million, respectively, of non-deductible transaction costs related to our acquisition of
Advanced Disposal. The tax rules require the capitalization of certain facilitative costs on the acquisition of stock
of a company resulting in the applicable costs not being deductible for tax purposes;
50
• Tax Implications of Impairments — Portions of the impairment charges recognized during 2019 and 2018 were
not deductible for tax purposes resulting in an increase in income tax expense of $15 million and $1 million,
respectively. The non-cash impairment charges recognized during 2020 are deductible for tax purposes. See
Note 12 for more information related to our impairment charges;
• Equity-Based Compensation — During 2020, 2019 and 2018, we recognized excess tax benefits related to the
vesting or exercise of equity-based compensation awards resulting in a reduction in our income tax expense of
$27 million, $25 million and $17 million, respectively;
•
State Net Operating Losses and Credits — During 2020, 2019 and 2018, we recognized state net operating losses
and credits resulting in a reduction in our income tax expense of $12 million, $14 million and $22 million,
respectively;
• Tax Audit Settlements — We file income tax returns in the U.S. and Canada, as well as other state and local
jurisdictions. We are currently under audit by various taxing authorities and our audits are in various stages of
completion. During the reported periods, we settled various tax audits, which resulted in a reduction in our income
tax expense of $10 million, $2 million and $40 million for the years ended December 31, 2020, 2019 and 2018,
respectively;
• Adjustments to Accruals and Deferred Taxes — Adjustments to our accruals and deferred taxes due to the filing
of our income tax returns, analysis of our deferred tax balances and changes in state and foreign laws resulted in
a reduction in our income tax expense of $3 million, $22 million and $52 million for the years ended
December 31, 2020, 2019 and 2018, respectively; and
• Enactment of Tax Reform — In accordance with applicable accounting guidance, the Company recognized the
provisional tax impacts and subsequent measurement period adjustments related to the remeasurement of our
deferred income tax assets and liabilities and the one-time, mandatory transition tax on deemed repatriation of
previously tax-deferred and unremitted foreign earnings, resulting in a reduction in our income tax expense of
$12 million for the year ended December 31, 2018.
See Note 9 to the Consolidated Financial Statements for more information related to income taxes.
Landfill and Environmental Remediation Discussion and Analysis
We owned or operated 263 solid waste landfills and five secure hazardous waste landfills as of December 31, 2020
and 244 solid waste landfills and five secure hazardous waste landfills as of December 31, 2019. For these landfills, the
following table reflects changes in capacity, as measured in tons of waste, for the year ended December 31 and remaining
airspace, measured in cubic yards of waste, as of December 31 (in millions):
2020
2019
Balance as of beginning of year (in tons) . . . . . . . . . . . . . . . .
Acquisitions, divestitures, newly permitted landfills and
Remaining
Permitted Expansion Total
Capacity Capacity Capacity Capacity Capacity Capacity
4,982
Remaining
Permitted Expansion Total
4,954
4,754
4,762
200
220
closures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in expansions pursued (a) . . . . . . . . . . . . . . . . . . . . .
Expansion permits granted (b) . . . . . . . . . . . . . . . . . . . . . . . . .
Amortizable tons received . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in engineering estimates and other (c) . . . . . . . . . . .
Balance as of end of year (in tons) . . . . . . . . . . . . . . . . . . . . . .
Balance as of end of year (in cubic yards) . . . . . . . . . . . . . . . .
259
—
44
(112)
(54)
4,891
4,828
14
21
(44)
—
—
273
21
—
(112)
(54)
191 5,082
163 4,991
27
—
57
(121)
29
4,754
4,694
—
36
(57)
—
1
27
36
—
(121)
30
200 4,954
166 4,860
(a) Amounts reflected here relate to the combined impacts of (i) new expansions pursued; (ii) increases or decreases in
the airspace being pursued for ongoing expansion efforts; (iii) adjustments for differences between the airspace being
pursued and airspace granted and (iv) decreases due to decisions to no longer pursue expansion permits, if any.
51
(b) We received expansion permits at four of our landfills during 2020 and seven of our landfills during 2019,
demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal
airspace of our existing landfills.
(c) Changes in engineering estimates can result in changes to the estimated available remaining airspace of a landfill or
changes in the utilization of such landfill airspace, affecting the number of tons that can be placed in the future.
Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based
on a number of factors, including standard engineering techniques and site-specific factors such as current and
projected mix of waste type; initial and projected waste density; estimated number of years of life remaining; depth
of underlying waste; anticipated access to moisture through precipitation or recirculation of landfill leachate and
operating practices. We continually focus on improving the utilization of airspace through efforts that may include
recirculating landfill leachate where allowed by permit; optimizing the placement of daily cover materials and
increasing initial compaction through improved landfill equipment, operations and training.
The tons received at our landfills for the year ended December 31 are shown below (tons in thousands):
Solid waste landfills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hazardous waste landfills . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
Total
# of
Sites Tons(a) Day
263 (b) 112,729
676
113,405
5
268
Tons per # of Total
Sites Tons
413 244 120,556
5
703
415 249 121,259
2
2019
Tons per
Day
443
3
446
Solid waste landfills closed, divested or lease or other
contractual agreement expired during related year . . . . . .
5
318
113,723 (c)
8
692
121,951 (c)
(a) Includes approximately 1.2 million tons attributable to Advanced Disposal.
(b) In 2020, we (i) acquired 24 landfills upon our acquisition of Advanced Disposal; (ii) divested two landfills; (iii) closed
one landfill and (iv) closed two landfills operated under lease agreements. These landfill acquisition and divestiture
totals do not include 16 landfills acquired through our acquisition of Advanced Disposal which were immediately sold
pursuant to the Divestiture Agreement.
(c) These amounts include 1.7 million tons and 1.3 million tons as of December 31, 2020 and 2019, respectively, that
were received at our landfills but were not amortized as they were used for beneficial purposes and generally were
redirected from the permitted airspace to other areas of the landfill. Waste types that are frequently identified for
beneficial use include green waste for composting and clean dirt for on-site construction projects.
When a landfill we own or operate receives certification of closure from the applicable regulatory agency, we
generally transfer the management of the site, including any remediation activities, to our environmental legacy
management group. As of December 31, 2020, our environmental legacy management group managed 221 closed
landfills, including eight closed landfills acquired from Advanced Disposal.
Based on remaining permitted airspace as of December 31, 2020 and projected annual disposal volume, the weighted
average remaining landfill life for all of our owned or operated landfills is approximately 38 years. Many of our landfills
have the potential for expanded airspace beyond what is currently permitted. We monitor the availability of permitted
airspace at each of our landfills and evaluate whether to pursue an expansion at a given landfill based on estimated future
disposal volume, disposal prices, construction and operating costs, remaining airspace and likelihood of obtaining an
expansion permit. We are seeking expansion permits at 15 of our landfills that meet the expansion criteria outlined in the
Critical Accounting Estimates and Assumptions — Landfills section below. Although no assurances can be made that all
future expansions will be permitted or permitted as designed, the weighted average remaining landfill life for all owned or
operated landfills is approximately 40 years when considering remaining permitted airspace, expansion airspace and
projected annual disposal volume.
52
The number of landfills owned or operated as of December 31, 2020, segregated by their estimated operating lives
based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows:
0 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 to 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11 to 20 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21 to 40 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41+ years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
# of Landfills
26
23
45
63
111
268 (a)
(a) Of the 268 landfills, 226 are owned, 30 are operated under lease agreements and 12 are operated under other
contractual agreements. For the landfills not owned, we are usually responsible for final capping, closure and
post-closure obligations.
As of December 31, 2020, we have 17 landfills which are not currently accepting waste. During the year ended
December 31, 2020, we performed tests of recoverability for five of these landfills with an aggregate net recorded
capitalized landfill asset cost of $304 million, for which the undiscounted expected future cash flows resulting from our
probability-weighted estimation approach exceeded the carrying values. We did not perform recoverability tests for the
remaining 12 landfills as the net recorded capitalized landfill asset cost was not material.
Landfill Assets — We capitalize various costs that we incur to prepare a landfill to accept waste. These costs generally
include expenditures for land (including the landfill footprint and required landfill buffer property), permitting, excavation,
liner material and installation, landfill leachate collection systems, landfill gas collection systems, environmental
monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, and on-site road
construction and other capital infrastructure costs. The cost basis of our landfill assets also includes estimates of future
costs associated with landfill final capping, closure and post-closure activities, which are discussed further below.
The changes to the cost basis of our landfill assets and accumulated landfill airspace amortization for the year ended
December 31, 2020 are reflected in the table below (in millions):
Cost Basis of
Accumulated
Landfill Airspace
Net Book
Value of
Landfill Assets Amortization
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirement obligations incurred and capitalized . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of landfill airspace . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset retirements and other adjustments . . . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
15,910 $
546
83
607
—
22
(326)
16,842 $
(9,326) $
—
—
—
(568)
(10)
212
(9,692) $
Landfill Assets
6,584
546
83
607
(568)
12
(114)
7,150
As of December 31, 2020, we estimate that we will spend approximately $664 million in 2021, and approximately
$1.3 billion in 2022 and 2023 combined, for the construction and development of our landfill assets. The specific timing
of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations
in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.
Landfill and Environmental Remediation Liabilities — As we accept waste at our landfills, we incur significant asset
retirement obligations, which include liabilities associated with landfill final capping, closure and post-closure activities.
These liabilities are accounted for in accordance with authoritative guidance on accounting for asset retirement obligations
and are discussed in Note 3 to the Consolidated Financial Statements. We also have liabilities for the remediation of
properties that have incurred environmental damage, which generally was caused by operations or for damage caused by
53
conditions that existed before we acquired operations or a site. We recognize environmental remediation liabilities when
we determine that the liability is probable and the estimated cost for the likely remedy can be reasonably estimated.
The changes to landfill and environmental remediation liabilities for the year ended December 31, 2020 are reflected
in the table below (in millions):
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Obligations incurred and capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions in estimates and interest rate assumptions (a) (b) . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, divestitures and other adjustments (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Landfill
Environmental
Remediation
240
—
(23)
2
11
—
230
1,855 $
83
(103)
103
(27)
245
2,156 $
(a) The amount reported for our landfill liabilities includes a reduction of $104 million related to the change in inflation
rate from 2.5% to 2.25% as of December 31, 2020, of which $26 million was an immediate reduction to amortization
expense. This reduction to landfill liabilities was partially offset by (i) an increase of $69 million primarily from
changes in the timing and amount of costs as well as changes in estimates of remaining airspace and (ii) an increase
of $8 million due to a business decision to close one of our landfills, which resulted in the acceleration of the expected
timing of capping, closure and post-closure activities. This business decision also resulted in an impairment that is
discussed in Note 12 to the Consolidated Financial Statements.
(b) The amount reported for our environmental remediation liabilities includes an increase of $9 million due to a decrease
in the risk-free discount rate used to measure our liabilities from 1.75% at December 31, 2019 to 1.00% at
December 31, 2020.
(c) The amount reported for our landfill liabilities includes (i) $261 million related to our acquisition of Advanced
Disposal offset by (ii) a reduction of $17 million for the sale of certain landfills to GFL Environmental in connection
with the Advanced Disposal acquisition. These items are discussed further in Note 18 to the Consolidated Financial
Statements.
Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended
December 31 (in millions):
Interest accretion on landfill liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest accretion on and discount rate adjustments to environmental
remediation liabilities and recovery assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leachate and methane collection and treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landfill remediation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other landfill site costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2019
2018
103 $
98 $
95
9
189
1
92
13
173
4
91
(2)
150
13
75
331
Total landfill operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
394 $
379 $
Amortization of Landfill Airspace — Amortization of landfill airspace, which is included as a component of
depreciation and amortization expenses, includes the following:
•
•
the amortization of landfill capital costs, including (i) costs that have been incurred and capitalized and
(ii) estimated future costs for landfill development and construction required to develop our landfills to their
remaining permitted and expansion airspace; and
the amortization of asset retirement costs arising from landfill final capping, closure and post-closure obligations,
including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
54
Amortization expense is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate per ton is
calculated by dividing each component of the amortizable basis of a landfill (net of accumulated amortization) by the
number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace. Landfill capital costs
and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its
entire operating life and are, therefore, amortized on a per-ton basis using a landfill’s total permitted and expansion
airspace. Final capping asset retirement costs are related to a specific final capping event and are, therefore, amortized on
a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace. Accordingly, each
landfill has multiple per-ton amortization rates.
The following table presents our landfill airspace amortization expense on a per-ton basis for the year ended
December 31:
Amortization of landfill airspace (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Tons received, net of redirected waste (in millions) . . . . . . . . . . . . . . . . . . . . . . . . .
Average landfill airspace amortization expense per ton . . . . . . . . . . . . . . . . . . . . . . $
568
112
5.07
$
$
575 $
121
4.75 $
538
116
4.64
2020
2019
2018
Different per-ton amortization rates are applied at each of our 268 landfills, and per-ton amortization rates vary
significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial,
state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure
activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire. Accordingly, our
landfill airspace amortization expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we
receive across the Company each year. In addition, amortization expense for 2020 includes approximately $11 million
related to approximately 1.2 million tons received at landfills acquired as part of our Advanced Disposal transaction.
Liquidity and Capital Resources
The Company consistently generates cash flow from operations that meets and exceeds our working capital needs,
payment of our dividends and investment in the business through capital expenditures and tuck-in acquisitions. We
continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us to plan for
our present needs and fund unbudgeted business requirements that may arise during the year. Additionally, the Company
continually takes actions to manage costs and capital spending without compromising long-term strategic priorities. Recent
actions include route optimization initiatives, reducing overtime hours, limiting hiring and optimizing our workforce
through improved retention and reduced turnover, reducing non-essential selling, general and administrative expenses and
lowering capital expenditures to a level that is consistent with volume changes driven by COVID-19. The Company
believes that its investment grade credit ratings, large value of unencumbered assets and modest leverage enable it to obtain
adequate financing to meet its ongoing capital, operating, strategic and other liquidity requirements.
55
Summary of Cash and Cash Equivalents, Restricted Trust and Escrow Accounts and Debt Obligations
The following is a summary of our cash and cash equivalents, restricted trust and escrow accounts and debt balances
as of December 31 (in millions):
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Restricted trust and escrow accounts:
2020
553 $
2019
3,561
Insurance reserves (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Final capping, closure, post-closure and environmental remediation funds . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total restricted trust and escrow accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
306 $
114
2
422 $
270
109
4
383
Debt:
Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
551 $
13,259
13,810 $
218
13,280
13,498
(a) Includes $75 million and $70 million as of December 31, 2020 and 2019, respectively, in other current assets in our
Consolidated Balance Sheets.
Cash and cash equivalents — The decrease in cash and cash equivalents during 2020 is primarily due to funding our
acquisition of Advanced Disposal in October 2020 as discussed above in Acquisition of Advanced Disposal, Inc.
Debt — We use long-term borrowings in addition to the cash we generate from operations as part of our overall
financial strategy to support and grow our business. We primarily use senior notes and tax-exempt bonds to borrow on a
long-term basis, but we also use other instruments and facilities, when appropriate. The components of our borrowings as
of December 31, 2020 are described in Note 7 to the Consolidated Financial Statements.
As of December 31, 2020, we had $3.3 billion of debt maturing within the next 12 months, including (i) $1.8 billion
of short-term borrowings under our commercial paper program; (ii) $1.2 billion of tax-exempt bonds with term interest
rate periods that expire within the next 12 months, which is prior to their scheduled maturities, and (iii) $242 million of
other debt with scheduled maturities within the next 12 months, including $127 million of tax-exempt bonds. As of
December 31, 2020, we have classified $2.7 billion of debt maturing in the next 12 months as long-term because we have
the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity
under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”), as
discussed below. The remaining $551 million of debt maturing in the next 12 months is classified as current obligations.
As of December 31, 2020, we also had $54 million of variable-rate tax-exempt bonds with long-term scheduled
maturities supported by letters of credit under our $3.5 billion revolving credit facility. The interest rates on our variable
rate tax-exempt bonds are generally reset on either a daily or weekly basis through a remarketing process. All recent
tax-exempt bond remarketings have successfully placed Company bonds with investors at market-driven rates and we
currently expect future remarketings to be successful. However, if the remarketing agent is unable to remarket our bonds,
the remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the availability under our
$3.5 billion revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have
classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our
Consolidated Balance Sheet as of December 31, 2020.
In November 2020, WM issued $2.5 billion of senior notes consisting of:
•
•
•
•
$500 million of 0.750% senior notes due November 15, 2025;
$500 million of 1.150% senior notes due March 15, 2028;
$1.0 billion of 1.500% senior notes due March 15, 2031 and
$500 million of 2.500% senior notes due November 15, 2050.
56
The net proceeds from these debt issuances were $2.48 billion and were used to term out our funding of the Advanced
Disposal acquisition, to redeem our $400 million aggregate principal amount of 4.60% senior notes due March 2021,
including $5 million of accrued but unpaid interest, and for general corporate purposes. See Note 7 to the Consolidated
Financial Statements for more information related to the debt transactions.
We have credit lines in place to support our liquidity and financial assurance needs. The following table summarizes
our outstanding letters of credit, categorized by type of facility as of December 31 (in millions):
Revolving credit facility (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other letter of credit lines (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2020
2019
270 $
566
836 $
412
532
944
(a) As of December 31, 2020, we had an unused and available credit capacity of $1.4 billion.
(b) As of December 31, 2020, these other letter of credit lines are uncommitted with terms extending through April 2022.
Guarantor Financial Information
WM Holdings has fully and unconditionally guaranteed all of WM’s senior indebtedness. WM has fully and
unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WM’s other subsidiaries have guaranteed
any of WM’s or WM Holdings’ debt. In lieu of providing separate financial statements for the subsidiary issuer and
guarantor (WM and WM Holdings), we have presented the accompanying supplemental summarized combined balance
sheet and income statement information for WM and WM Holdings on a combined basis after elimination of intercompany
transactions between WM and WM Holdings and amounts related to investments in any subsidiary that is a non-guarantor
(in millions):
December 31,
2020
Balance Sheet Information:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities:
481
14
446
Advances due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,505
11,202
Income Statement Information:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
257
Year Ended
December 31, 2020
57
Summary of Cash Flow Activity
The following is a summary of our cash flows for the years ended December 31 (in millions):
2018
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,570
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,847) $ (2,376) $ (2,169)
1,964 $ (1,508)
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . $ (1,559) $
2019
3,874 $
2020
3,403 $
Net Cash Provided by Operating Activities — Our operating cash flows decreased by $471 million for the year ended
December 31, 2020, as compared with the prior year period, as a result of (i) higher income tax payments related to a
taxable gain on the sale of Advanced Disposal assets to GFL Environmental; (ii) increased interest payments and
integration related spending due to our acquisition of Advanced Disposal; (iii) payments associated with investments we
are making in our digital platform and (iv) to a lesser extent, lower earnings on our traditional Solid Waste business
primarily caused by the impact of the COVID-19 pandemic. These results were partially offset by cash benefits in the
current year associated with the 2019 federal alternative fuel credits.
Our operating cash flows increased by $304 million for the year ended December 31, 2019, as compared with the
prior year period, as a result of (i) higher earnings in the current year period primarily associated with our collection and
disposal business; (ii) lower bonus payments; (iii) lower income tax payments of $57 million and (iv) net favorable
changes in our operating assets and liabilities, net of effects of acquisitions and divestitures, offset slightly by higher
interest payments in the current year period primarily due to our May 2019 issuance of senior notes.
Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing cash
flows for the periods presented are summarized below:
• Acquisitions — Our spending on acquisitions was $4,088 million, $527 million and $466 million in 2020, 2019
and 2018, respectively, of which $4,085 million, $521 million and $460 million, respectively, are considered cash
used in investing activities. The remaining spend is financing or operating activities related to the timing of
contingent consideration paid. Substantially all of these acquisitions are related to our Solid Waste business. Our
acquisition spending in 2020 and 2019 is primarily attributable to Advanced Disposal and Petro Waste
Environmental LP, respectively. See Note 18 to the Consolidated Financial Statements for additional information.
We continue to focus on accretive acquisitions and growth opportunities that will enhance and expand our existing
service offerings.
• Capital Expenditures — We used $1,632 million, $1,818 million and $1,694 million for capital expenditures in
2020, 2019 and 2018, respectively. The Company continues to maintain a disciplined focus on capital
management to prioritize investments in the long-term growth of our business and for the replacement of aging
assets; however, in 2020 we took proactive steps to reduce the amount of capital spending required due to the
decrease in volumes as a result of COVID-19.
• Proceeds from Divestitures — Proceeds from divestitures of businesses and other assets (net of cash divested)
were $885 million, $49 million and $208 million in 2020, 2019 and 2018, respectively. In 2020, our proceeds
included $856 million related to the sale of net assets to GFL Environmental. In 2019 and 2018, $8 million and
$153 million of these divestitures, respectively, were made as a part of our continuous focus on improving or
divesting certain non-strategic or underperforming businesses. The remaining amounts in 2020, 2019 and 2018
generally related to the sale of fixed assets.
• Other, Net — Our spending within other, net was $15 million, $86 million, and $223 million in 2020, 2019 and
2018, respectively. During 2020 and 2019, we used $14 million and $44 million, respectively, of cash from
restricted cash and cash equivalents to invest in available-for-sale securities. We also used $20 million in 2019 to
make an initial cash payment associated with a low-income housing investment. In 2019, these items were
partially offset by cash proceeds from the redemption of our preferred stock received in conjunction with the
2014 sale of our Puerto Rico operations. The activity in 2018 was primarily due to changes in our investments
portfolio associated with our wholly-owned insurance captive from restricted cash and cash equivalents to
available-for-sale securities.
58
Net Cash (Used in) Provided by Financing Activities — The most significant items affecting the comparison of our
financing cash flows for the periods presented are summarized below:
• Debt (Repayments) Borrowings — The following summarizes our cash borrowings and repayments of debt
(excluding our commercial paper program discussed below) for the year ended December 31 (in millions):
2020
2019
2018
Borrowings:
Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
364-day revolving credit facility (a) . . . . . . . . . . . . . . . . . . . . . . . .
Canadian term loan and revolving credit facility . . . . . . . . . . . . . .
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-exempt bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50 $
3,000
—
2,479
—
261
—
— $
—
—
3,971
373
339
—
$ 5,790 $ 4,683 $
119
—
8
—
—
185
47
359
Repayments:
Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
364-day revolving credit facility (a) . . . . . . . . . . . . . . . . . . . . . . . . (3,000)
—
Canadian term loan and revolving credit facility . . . . . . . . . . . . . .
(4,000)
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(437)
Advanced Disposal senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . .
(212)
Tax-exempt bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(108)
Other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11) $ (108)
—
—
(117)
—
—
(257)
—
—
(167)
(204)
(107)
(61)
$ (7,807) $ (533) $ (499)
Net cash (repayments) borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,017) $ 4,150 $ (140)
(50) $
(a) In November 2020, we terminated this facility contemporaneously with repayment of all
outstanding borrowings with proceeds from our November 2020 senior notes issuance.
Refer to Note 7 to the Consolidated Financial Statements for additional information related to our debt borrowings
and repayments.
• Premiums Paid on Early Extinguishment of Debt — During the year ended December 31, 2020, we paid premiums
of $30 million to redeem $3.0 billion of SMR Notes as discussed further in Note 7 to the Consolidated Financial
Statements. During the year ended December 31, 2019, we paid premiums of $84 million to retire certain high-
coupon senior notes. See Loss on Early Extinguishment of Debt for further discussion.
• Commercial Paper Program — During 2020 and 2018, we had net cash borrowings of $1,808 million and
$453 million, respectively, compared to net cash repayments of $1,001 million during 2019, under our
commercial paper program. Borrowings incurred in 2020 were used for the redemption of the SMR Notes and to
partially fund our acquisition of Advanced Disposal. Borrowings incurred in 2019 were primarily to support
acquisitions and for general corporate purposes. We repaid the outstanding balance in the second quarter of 2019
with proceeds from the May 2019 issuance of senior notes discussed above.
• Common Stock Repurchase Program — For the periods presented, all share repurchases have been made in
accordance with financial plans approved by our Board of Directors. We repurchased $402 million, $244 million,
and $1,008 million (including $4 million paid in January 2019) of our common stock during 2020, 2019 and
2018, respectively. See Note 14 to the Consolidated Financial Statements for additional information.
We announced in December 2020 that the Board of Directors has authorized up to $1.35 billion in future share
repurchases, which supersedes and replaces remaining authority under any prior Board of Directors’ authorization
for 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 of Directors in making dividend declarations.
59
• Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. We
paid aggregate cash dividends of $927 million, $876 million and $802 million during 2020, 2019 and 2018,
respectively. The increase in dividend payments is due to our quarterly per share dividend increasing from $0.465
in 2018 to $0.5125 in 2019 and to $0.545 in 2020 which was offset, in part, by a reduction in the number of shares
of our common stock outstanding as a result of our common stock repurchase program.
In December 2020, we announced that our Board of Directors expects to increase the quarterly dividend from
$0.545 to $0.575 per share for dividends declared in 2021. However, all future dividend declarations are at the
discretion of the Board of Directors and depend on various factors, including our net earnings, financial condition,
cash required for future business plans, growth and acquisitions and other factors the Board of Directors may
deem relevant.
• Proceeds from the Exercise of Common Stock Options — The exercise of common stock options generated
financing cash inflows of $63 million, $67 million and $52 million during 2020, 2019 and 2018, respectively.
The year-over-year changes are generally due to the number of stock options exercised and the exercise price of
those options.
Free Cash Flow
We are presenting free cash flow, which is a non-GAAP measure of liquidity, in our disclosures because we use this
measure in the evaluation and management of our business. We define free cash flow as net cash provided by operating
activities, less capital expenditures, plus proceeds from divestitures of businesses and other assets (net of cash divested).
We believe it is indicative of our ability to pay our quarterly dividends, repurchase common stock, fund acquisitions and
other investments and, in the absence of refinancings, to repay our debt obligations. Free cash flow is not intended to
replace net cash provided by operating activities, which is the most comparable GAAP measure. We believe free cash
flow gives investors useful insight into how we view our liquidity, but the use of free cash flow as a liquidity measure has
material limitations because it excludes certain expenditures that are required or that we have committed to, such as
declared dividend payments and debt service requirements.
Our calculation of free cash flow and reconciliation to net cash provided by operating activities is shown in the table
below for the year ended December 31 (in millions), and may not be calculated the same as similarly-titled measures
presented by other companies:
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from divestitures of businesses and other assets (net of cash divested) .
Free cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
3,403 $
(1,632)
885
2,656 $
2019
3,874 $
(1,818)
49
2,105 $
2018
3,570
(1,694)
208
2,084
60
Summary of Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2020 and the anticipated effect of
these obligations on our liquidity in future years (in millions):
2021
2022
2023
2024
2025
Thereafter Total
Recorded Obligations:
Expected environmental liabilities: (a)
Final capping, closure and post-closure . . . . . . . . . . . . . . . $ 138 $
26
Environmental remediation . . . . . . . . . . . . . . . . . . . . . . . . .
59
Non-cancelable operating lease obligations . . . . . . . . . . . .
223
Debt payments (b) (c) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,056
Unrecorded Obligations: (e)
Interest on debt (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated unconditional purchase obligations (g) . . . . . . .
167 $
48
71
286
665
132 $
40
64
236
647
148 $ 2,930 $ 3,681
166 $
220
33
653
55
254
4,554
468 1,451 8,700 13,987
61
362
3,353
12
42
202
292 2,990 4,635
454 1,108
100
Anticipated liquidity impact as of December 31, 2020 . . $ 2,805 $ 1,451 $ 1,341 $ 1,145 $ 2,045 $ 15,497 $ 24,284
366
160
353
147
309
114
325
133
(a) Environmental liabilities include final capping, closure, post-closure and environmental remediation costs recorded
in our Consolidated Balance Sheet as of December 31, 2020, without the impact of discounting and inflation. Our
recorded environmental liabilities for final capping, closure and post-closure will increase as we continue to place
additional tons within the permitted airspace at our landfills.
(b) These amounts represent the scheduled principal payments based on their contractual maturities related to our long-
term debt and financing leases, excluding interest.
(c) Our debt obligations as of December 31, 2020 include $1.2 billion of tax-exempt bonds with term interest rate periods
that expire within the next 12 months, which is prior to their scheduled maturities. If the remarketings of our bonds
are unsuccessful, then the bonds can be put to us, requiring immediate repayment. We have classified the anticipated
cash flows for these contractual obligations based on the scheduled maturity of the borrowings for purposes of this
disclosure. For additional information regarding the classification of these borrowings in our Consolidated Balance
Sheet as of December 31, 2020, refer to Note 7 to the Consolidated Financial Statements.
(d) Our recorded debt obligations include non-cash adjustments associated with debt issuance costs, discounts, premiums
and fair value adjustments attributable to terminated interest rate derivatives. These amounts have been excluded as
they will not impact our liquidity in future periods.
(e) Our unrecorded obligations represent purchase commitments from which we expect to realize an economic benefit in
future periods and interest payable on our debt. We have also made certain guarantees, as discussed in Note 11 to the
Consolidated Financial Statements, that we do not expect to materially affect our current or future financial position,
results of operations or liquidity.
(f) Interest on our fixed-rate debt was calculated based on contractual rates and interest on our variable-rate debt was
calculated based on interest rates as of December 31, 2020. As of December 31, 2020, we had $94 million of accrued
interest related to our debt obligations.
(g) Our unconditional purchase obligations are for various contractual obligations that we generally incur in the ordinary
course of our business. Certain of our obligations are quantity driven. For contracts that require us to purchase
minimum quantities of goods or services, we have estimated our future minimum obligations based on the current
market values of the underlying products or services or contractually stated amounts. Accordingly, the amounts
reported in the table are subject to change and actual cash flow obligations in the near future may be different. See
Note 11 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase
obligations.
61
Critical Accounting Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for
and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and
assumptions because certain information that we use is dependent on future events, cannot be calculated with precision
from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must
exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates
and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental
remediation liabilities, long-lived asset impairments, the fair value of assets and liabilities acquired in business
combinations or as asset acquisitions and reserves associated with our insured and self-insured claims. Each of these items
is discussed in additional detail below and in Note 3 to the Consolidated Financial Statements. Actual results could differ
materially from the estimates and assumptions that we use in the preparation of our financial statements.
Landfills
Accounting for landfills requires that significant estimates and assumptions be made regarding (i) the cost to construct
and develop each landfill asset; (ii) the estimated fair value of final capping, closure and post-closure asset retirement
obligations, which must consider both the expected cost and timing of these activities; (iii) the determination of each
landfill’s remaining permitted and expansion airspace and (iv) the airspace associated with each final capping event.
Landfill Costs — We estimate the total cost to develop each of our landfill sites to its remaining permitted and
expansion airspace. This estimate includes such costs as landfill liner material and installation, excavation for airspace,
landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater
and landfill gas, directly related engineering, capitalized interest, on-site road construction and other capital infrastructure
costs. Additionally, landfill development includes all land purchases for the landfill footprint and required landfill buffer
property. The projection of these landfill costs is dependent, in part, on future events. The remaining amortizable basis of
each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts
previously expended and capitalized, net of accumulated airspace amortization, and projections of future purchase and
development costs.
Final Capping Costs — We estimate the cost for each final capping event based on the area to be capped and the
capping materials and activities required. The estimates also consider when these costs are anticipated to be paid and factor
in inflation and discount rates. Our engineering personnel allocate landfill final capping costs to specific final capping
events. The landfill airspace associated with each final capping event is then quantified and the final capping costs for
each event are amortized over the related airspace associated with the event as waste is disposed of at the landfill. We
review these costs annually, or more often if significant facts change. Changes in estimates, such as timing or cost of
construction, for final capping events immediately impact the required liability and the corresponding asset. When the
change in estimate relates to a fully consumed asset, the adjustment to the asset must be amortized immediately through
expense. When the change in estimate relates to a final capping event that has not been fully consumed, the adjustment to
the asset is recognized in income prospectively as a component of landfill airspace amortization.
Closure and Post-Closure Costs — We base our estimates for closure and post-closure costs on our interpretations of
permit and regulatory requirements for closure and post-closure monitoring and maintenance. The estimates for landfill
closure and post-closure costs also consider when the costs are anticipated to be paid and factor in inflation and discount
rates. The possibility of changing legal and regulatory requirements and the forward-looking nature of these types of costs
make any estimation or assumption less certain. Changes in estimates for closure and post-closure events immediately
impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed asset,
the adjustment to the asset must be amortized immediately through expense. When the change in estimate relates to a
landfill asset that has not been fully consumed, the adjustment to the asset is recognized in income prospectively as a
component of landfill airspace amortization.
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and
surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace
62
is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill
topography.
Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining
permitted and expansion airspace in certain circumstances. First, to include airspace associated with an expansion effort,
we must generally expect the initial expansion permit application to be submitted within one year and the final expansion
permit to be received within five years. Second, we must believe that obtaining the expansion permit is likely, considering
the following criteria:
• Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and
local, state or provincial approvals;
• We have a legal right to use or obtain land to be included in the expansion plan;
• There are no significant known technical, legal, community, business, or political restrictions or similar issues
that could negatively affect the success of such expansion; and
• Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion
meets Company criteria for investment.
For unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, the
expansion effort must meet all the criteria listed above. These criteria are evaluated by our field-based engineers,
accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace
is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace
even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit,
based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved
through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also
include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure
and post-closure of the expansion in the amortization basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor
(“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using
the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The
amount of settlement that is forecasted will take into account several site-specific factors including current and projected
mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying
waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In
addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the
AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the
impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches
its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the
per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the
corresponding number of tons. We calculate per ton amortization rates for each landfill for assets associated with each
final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be
capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-
closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be
significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove
to be significantly different than actual results, lower profitability may be experienced due to higher amortization rates or
higher expenses; or higher profitability may result if the opposite occurs. Most significantly, if it is determined that
expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required
63
to recognize an asset impairment or incur significantly higher amortization expense. If at any time management makes the
decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
Environmental Remediation Liabilities
A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental
protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our
landfills subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws
and regulations, we may have liabilities for environmental damage caused by operations, or for damage caused by
conditions that existed before we acquired a site. These liabilities include PRP investigations, settlements, and certain legal
and consultant fees, as well as costs directly associated with site investigation and clean up, such as materials, external
contractor costs and incremental internal costs directly related to the remedy. We provide for expenses associated with
environmental remediation obligations when such amounts are probable and can be reasonably estimated. We routinely
review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a
number of estimates and assumptions.
Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on
site-specific facts and circumstances. We routinely review and evaluate sites that require remediation, considering whether
we were an owner, operator, transporter, or generator at the site, the amount and type of waste hauled to the site and the
number of years we were associated with the site. Next, we review the same type of information with respect to other
named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal
resources or by third-party environmental engineers or other service providers. Internally developed estimates are based
on:
• Management’s judgment and experience in remediating our own and unrelated parties’ sites;
•
Information available from regulatory agencies as to costs of remediation;
• The number, financial resources and relative degree of responsibility of other PRPs who may be liable for
remediation of a specific site; and
• The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Fair Value of Nonfinancial Assets and Liabilities
Significant estimates are made in determining the fair value of long-lived tangible and intangible assets (i.e., property,
plant and equipment, intangible assets and goodwill) during the impairment evaluation process. In addition, the majority
of assets acquired and liabilities assumed in a business combination are required to be recognized at fair value under the
relevant accounting guidance.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value
of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally
using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining
to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of
recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows.
If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment
has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess
of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset
group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is
generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset
group; (ii) actual third-party valuations and/or (iii) information available regarding the current market for similar assets.
Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually
realized, which could impact our ability to accurately assess whether an asset has been impaired.
64
The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and
related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated
permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator
may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management
may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill
may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the
ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because,
after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit.
As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach,
may indicate that no impairment loss should be recorded.
Indefinite-Lived Intangible Assets, Including Goodwill — At least annually, and more frequently if warranted, we
assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3
inputs.
We first performed a qualitative assessment to determine if it was more likely than not that the fair value of a reporting
unit was less than its carrying value. If the assessment indicated a possible impairment, we completed a quantitative review,
comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge
was recognized if the asset’s estimated fair value was less than its carrying amount. Fair value is typically estimated using
an income approach. However, when appropriate, we may also use a market approach. The income approach is based on
the long-term projected future cash flows of the reporting units. We discount the estimated cash flows to present value
using a weighted average cost of capital that considers factors such as market assumptions, the timing of the cash flows
and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides a fair value
estimate based upon the reporting units’ expected long-term performance considering the economic and market conditions
that generally affect our business. The market approach estimates fair value by measuring the aggregate market value of
publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. We then
apply that multiple to the reporting units’ earnings to estimate their fair values. We believe that this approach may also be
appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with
operations and economic characteristics comparable to our reporting units.
Fair value is computed using several factors, including projected future operating results, economic projections,
anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related
to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating
the fair value of our reporting units is reasonable.
Acquisitions — In accordance with the purchase method of accounting, the purchase price paid for an acquisition is
allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the
excess of the purchase price over the net assets acquired recorded as goodwill. When we are in the process of valuing all
of the assets and liabilities acquired in an acquisition, there can be subsequent adjustments to our estimates of fair value
and resulting preliminary purchase price allocation.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss
from Divestitures, Asset Impairments and Unusual Items, Net.
Insured and Self-Insured Claims
We have retained a significant portion of the risks related to our health and welfare, general liability, automobile
liability and workers’ compensation claims programs. The exposure for unpaid claims and associated expenses, including
incurred but not reported losses, are based on an actuarial valuations and internal estimates. The accruals for these liabilities
could be revised if future occurrences or loss developments significantly differ from our assumptions used. Estimated
recoveries associated with our insured claims are recorded as assets when we believe that the receipt of such amounts is
probable.
65
We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and
workers’ compensation claims programs. We continue to maintain conventional insurance policies with third-party
insurers. In addition to certain business and operating benefits of having a wholly-owned insurance captive, we expect to
receive certain cash flow benefits related to the timing of tax deductions related to these claims. WM pays an annual
premium to the insurance captive, typically in the first quarter of the year, for estimated losses based on an external
actuarial analysis. These premiums are held in a restricted escrow account to be used solely for paying insurance claims,
resulting in a transfer of risk from WM to the insurance captive, and are allocated between current and long-term assets in
our Consolidated Balance Sheets depending on timing on the use of funds.
Off-Balance Sheet Arrangements
We have financial interests in unconsolidated variable interest entities as discussed in Note 19 to the Consolidated
Financial Statements. Additionally, we are party to guarantee arrangements with unconsolidated entities as discussed in
the Guarantees section of Note 11 to the Consolidated Financial Statements. These arrangements have not materially
affected our financial position, results of operations or liquidity during the year ended December 31, 2020, nor are they
expected to have a material impact on our future financial position, results of operations or liquidity.
Inflation
While inflationary increases in costs can affect our income from operations margins, we believe that inflation
generally has not had, and in the near future is not expected to have, any material adverse effect on our results of operations.
However, as of December 31, 2020, approximately 34% of our collection revenues are generated under long-term
agreements with price adjustments based on various indices intended to measure inflation. Additionally, management’s
estimates associated with inflation have had, and will continue to have, an impact on our accounting for landfill and
environmental remediation liabilities.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
In the normal course of business, we are exposed to market risks, including changes in interest rates, certain
commodity prices and Canadian currency rates. From time to time, we use derivatives to manage some portion of these
risks. The Company had no derivatives outstanding as of December 31, 2020.
Interest Rate Exposure — Our exposure to market risk for changes in interest rates relates primarily to our financing
activities. As of December 31, 2020, we had $13.9 billion of long-term debt, excluding the impacts of accounting for debt
issuance costs, discounts, premiums and fair value adjustments attributable to terminated interest rate derivatives. We have
$3.1 billion of debt that is exposed to changes in market interest rates within the next 12 months comprised of
(i) $1.8 billion of short-term borrowings under our commercial paper program; (ii) $1.2 billion of tax-exempt bonds with
term interest rate periods that expire within the next 12 months and (iii) $54 million of variable-rate tax-exempt bonds that
are subject to repricing on either a daily or weekly basis. We currently estimate that a 100-basis point increase in the
interest rates of our outstanding variable-rate debt obligations would increase our 2021 interest expense by $12 million.
Our remaining outstanding debt obligations have fixed interest rates through either the scheduled maturity of the debt
or, for certain of our fixed-rate tax-exempt bonds, through the end of a term interest rate period that exceeds 12 months.
The fair value of our fixed-rate debt obligations can increase or decrease significantly if market interest rates change.
We performed a sensitivity analysis to determine how market rate changes might affect the fair value of our market
risk-sensitive debt instruments. This analysis is inherently limited because it reflects a singular, hypothetical set of
assumptions. Actual market movements may vary significantly from our assumptions. An instantaneous, 100-basis point
increase in interest rates across all maturities attributable to these instruments would have decreased the fair value of our
debt by approximately $1.1 billion as of December 31, 2020.
We are also exposed to interest rate market risk from our cash and cash equivalent balances, as well as assets held in
restricted trust funds and escrow accounts. These assets are generally invested in high-quality, liquid instruments including
66
money market funds that invest in U.S. government obligations with original maturities of three months or less. We believe
that our exposure to changes in fair value of these assets due to interest rate fluctuations is insignificant as the fair value
generally approximates our cost basis. We also invest a portion of our restricted trust and escrow account balances in
available-for-sale securities, including U.S. Treasury securities, U.S. agency securities, municipal securities, mortgage-
and asset-backed securities and equity securities, which generally mature over the next nine years.
Commodity Price Exposure — In the normal course of our business, we are subject to operating agreements that
expose us to market risks arising from changes in the prices for commodities such as diesel fuel; recyclable materials,
including old corrugated cardboard, plastics and electricity, which generally correlates with natural gas prices in many of
the markets in which we operate. We attempt to manage these risks through operational strategies that focus on capturing
our costs in the prices we charge our customers for the services provided. Accordingly, as the market prices for these
commodities increase or decrease, our revenues may also increase or decrease.
Currency Rate Exposure — We have operations in Canada as well as certain support functions in India. Where
significant, we have quantified and described the impact of foreign currency translation on components of income,
including operating revenue and operating expenses. However, the impact of foreign currency has not materially affected
our results of operations.
67
Item 8. Financial Statements and Supplementary Data.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2020 and 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018 . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018 . . .
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018 . . . . . . . . . . . . . .
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018 . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
69
75
76
76
77
78
79
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Waste Management, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Waste Management, Inc.’s internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Waste Management, Inc. (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on
the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Advanced Disposal Services, Inc., which is included in the 2020 consolidated financial statements of the
Company and constituted approximately 10.6% of total consolidated assets, excluding goodwill, as of December 31, 2020,
approximately 1.3% of total consolidated revenues and less than 1% of consolidated operating income, for the year then
ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the
internal control over financial reporting of Advanced Disposal Services, Inc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the 2020 consolidated financial statements of the Company, and our report dated February 22, 2021
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
69
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Houston, Texas
February 22, 2021
/s/ ERNST & YOUNG LLP
70
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Waste Management, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Waste Management, Inc. (the Company) as of
December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, cash flows, and
changes in equity for each of the three years in the period ended December 31, 2020, and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework), and our report dated February 22, 2021 expressed an unqualified opinion
thereon.
Adoption of ASU No. 2016-02 (Topic 842)
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases
in the 2019 financial statements to reflect the accounting method change due to the adoption of ASU No. 2016-02, Leases
(Topic 842), and the related amendments.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
71
Description of
Matter
the
How We Addressed
in Our
the Matter
Audit
Landfill Amortization
At December 31, 2020, the Company’s landfill assets, net of accumulated amortization,
totaled $7.2 billion and the associated amortization expense for 2020 was $568 million.
As discussed in Note 3 of the financial statements, the Company updates the estimates
used to calculate individual landfill amortization rates at least annually, or more often if
significant facts change. Landfill amortization rates are used in the computation of landfill
amortization expense.
Auditing landfill amortization rates and related amortization expense is complex due to
the highly judgmental nature of assumptions used in estimating the rates. Significant
assumptions used in the calculation of the rates include: estimated future development
costs associated with the construction and retirement of the landfill, estimated remaining
permitted airspace and unpermitted expansion airspace, airspace utilization factors,
projected annual tonnage intakes, and projected timing of retirement activities.
We obtained an understanding, evaluated the design, and tested the operating effectiveness
of the Company’s controls over determining landfill amortization rates and calculating
amortization expense. Our audit procedures included, among others, testing controls over:
the Company’s process for evaluating and updating the significant assumptions used in
the development of the landfill amortization rates, management’s review of those
significant assumptions, and the mathematical accuracy of the calculation and recording
of amortization expense.
To test the landfill asset amortization rates, our audit procedures included, among others,
assessing methodologies used by the Company and testing the significant assumptions
discussed above, inclusive of the underlying data used by the Company in its development
of these assumptions. We compared the significant assumptions used by management to
historical trends and, when available, to comparable size landfills accepting a similar type
of waste. Regarding unpermitted expansion airspace, we evaluated the Company’s criteria
for inclusion in remaining airspace. In addition, we considered the professional
qualifications and objectivity of management’s internal engineers responsible for
developing the assumptions. We involved EY’s engineering specialists to assist with the
evaluation of the Company’s landfill future development cost and airspace assumptions.
We also tested the completeness and accuracy of the historical data utilized in the
development of the landfill amortization rates.
72
Landfill – Final Capping, Closure and Post-Closure Costs
Description of
Matter
the
At December 31, 2020, the carrying value of the Company’s landfill asset retirement
obligations related to final capping, closure and post-closure costs totaled $2.2 billion. As
discussed in Note 3 of the financial statements, the Company updates the estimates used
to measure the asset retirement obligations annually, or more often if significant facts
change.
Auditing the landfill asset retirement obligation is complex due to the highly judgmental
nature of the assumptions used in the measurement process. These assumptions include:
estimated future costs associated with the capping, closure and post closure activities at
each specific landfill; airspace consumed to date in relation to total estimated permitted
airspace; the projected annual tonnage intake; and the projected timing of retirement
activities.
How We Addressed
the Matter
in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness
of the Company’s controls over the calculation of asset retirement obligations. Our audit
procedures included, among others, testing the Company’s controls over the landfill asset
retirement obligation estimation process and management’s review of the significant
assumptions used in the estimation of the liability, including the amount and timing of
retirement costs.
To test the landfill asset retirement obligation valuation, we performed audit procedures
that included, among others, assessing methodologies used by the Company, testing the
completeness of activities included in the estimate (e.g., gas monitoring and extraction),
and testing the significant assumptions discussed above, inclusive of the underlying data
used by the Company in its development of these assumptions. We compared the
significant assumptions used by management to historical trends and, when available, to
comparable size landfills accepting the same type of waste. In addition, we considered the
professional qualifications and objectivity of management’s internal engineers responsible
for developing the assumptions. We involved EY and external engineering specialists to
assist us with these procedures. Specifically, we utilized the EY engineering specialists to
evaluate the reasons for significant changes in assumptions from the historical trend, and
to determine whether the change from the historical trend was appropriate and identified
timely. We utilized the external engineers to evaluate the estimates of remaining landfill
airspace. We also tested the completeness and accuracy of the historical data utilized in
preparing the estimate.
73
Description of
Matter
the
Acquisition of Advanced Disposal Services, Inc. – Valuation of Customer Relationship
and Landfill rights/permits
As described in Note 18 to the consolidated financial statements, during the year ended
December 31, 2020, the Company completed the acquisition of Advanced Disposal
Services, Inc. (“Advance Disposal”) for net consideration of $4.1 billion. The transaction
was accounted for as a business combination.
Auditing the Company’s accounting for its acquisition of Advance Disposal was complex
due to the significant estimation required by management in determining the fair value of
the acquired customer relationships and landfill assets included within Other intangible
assets and Property and equipment, respectively, in Note 18, both of which utilize
prospective financial information. The Company valued the customer relationship asset
using an income approach; specifically, the multi-period excess earnings model. The
significant assumptions used to value customer relationships included, among others, the
attrition rate, revenue growth rate, and discount rate. The Company valued the landfill
assets using an income approach; specifically, a discounted cash flow model. The
significant assumptions used to value landfill assets included, among others, the forecasted
revenue and revenue growth (including forecasted waste volumes and rate per ton),
discount rate, and forecasted capital expenditures. These assumptions are forward-looking
and could be affected by future economic and market conditions.
How We Addressed
the Matter
in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness
of the Company’s controls over its accounting for the Advance Disposal acquisition. For
example, we tested controls over the valuation of customer relationships and landfill
assets, including management’s review of the valuation models, and underlying data and
assumptions used to develop the estimated fair value of these assets.
To test the estimated fair value of the customer relationship and landfill assets, we
performed audit procedures that included, among others, evaluating the Company’s
selection of the valuation methodology, evaluating the significant assumptions used to
determine the valuation calculations, and testing the completeness and accuracy of the
underlying data supporting the significant assumptions. We involved our valuation
specialists to assist with evaluating the methodology and significant assumptions used by
the management to determine the fair value estimates. Additionally, we performed
sensitivity analyses of the identified significant assumptions and compared them, as
applicable, to current industry and market trends, the assumptions used by the Company
to value similar assets in other acquisitions, as well as historical results, among other
procedures.
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 2002.
Houston, Texas
February 22, 2021
74
WASTE MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Par Value Amounts)
Current assets:
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accounts receivable, net of allowance for doubtful accounts of $33 and $28, respectively . . .
Other receivables, net of allowance for doubtful accounts of $7 and $1, respectively . . . . . . .
Parts and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
553 $ 3,561
1,949
370
106
223
6,209
2,097
527
124
239
3,540
Property and equipment, net of accumulated depreciation and amortization of $20,095 and
December 31,
2020
2019
$18,657, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted trust and escrow accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,893
6,532
521
313
483
792
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,345 $ 27,743
14,148
8,994
1,024
347
426
866
Current liabilities:
LIABILITIES AND EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landfill and environmental remediation liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,121 $ 1,065
1,327
1,342
534
539
218
551
3,144
3,553
13,280
13,259
1,407
1,806
1,930
2,222
912
1,051
20,673
21,891
Commitments and contingencies
Equity:
Waste Management, Inc. stockholders’ equity:
Common stock, $0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares
6
issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,049
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,592
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,571)
Treasury stock at cost, 207,480,827 and 205,956,366 shares, respectively . . . . . . . . . . . . . . .
7,068
Total Waste Management, Inc. stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,070
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,345 $ 27,743
6
5,129
11,159
39
(8,881)
7,452
2
7,454
See Notes to Consolidated Financial Statements.
75
WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except per Share Amounts)
Year Ended December 31,
2019
2020
2018
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,218 $ 15,455 $ 14,914
Costs and expenses:
Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) loss from divestitures, asset impairments and unusual items, net . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense):
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in net losses of unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income (loss) attributable to noncontrolling interests . . . . . . . . . . . .
Net income attributable to Waste Management, Inc. . . . . . . . . . . . . . . . . . . . . . . . $
Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,341
1,728
1,671
9
35
12,784
2,434
9,496
1,631
1,574
6
42
12,749
2,706
(425)
(53)
(68)
5
(541)
1,893
397
1,496
—
1,496 $
3.54 $
3.52 $
(411)
(85)
(55)
(50)
(601)
2,105
434
1,671
1
1,670 $
3.93 $
3.91 $
9,249
1,453
1,477
4
(58)
12,125
2,789
(374)
—
(41)
2
(413)
2,376
453
1,923
(2)
1,925
4.49
4.45
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
Year Ended December 31,
2019
1,671 $
2020
1,496 $
2018
1,923
15
11
20
1
47
1,543
—
1,543 $
8
15
55
1
79
1,750
1
1,749 $
8
5
(105)
2
(90)
1,833
(2)
1,835
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss), net of tax:
Derivative instruments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Post-retirement benefit obligation, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Comprehensive income (loss) attributable to noncontrolling interests . .
Comprehensive income attributable to Waste Management, Inc. . . . . . . . . . . . . . $
See Notes to Consolidated Financial Statements.
76
WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Year Ended December 31,
2019
2018
2020
Cash flows from operating activities:
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjustments to reconcile consolidated net income to net cash provided by operating
1,496 $
1,671 $
1,923
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest accretion on landfill liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) loss from divestitures, asset impairments and other, net . . . . . . . . . . . . . . . . . . . .
Equity in net losses of unconsolidated entities, net of dividends . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenues and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from divestitures of businesses and other assets (net of cash divested) . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
New borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premiums paid on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net commercial paper borrowings (repayments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock repurchase program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of common stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax payments associated with equity-based compensation transactions . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase in cash, cash equivalents and restricted cash and cash equivalents . . . .
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period . . . .
Cash, cash equivalents and restricted cash and cash equivalents at end of period . . . . . . . . . $
1,671
165
103
54
94
(9)
43
60
53
(179)
10
53
(37)
(174)
3,403
(4,085)
(1,632)
885
(15)
(4,847)
5,790
(7,807)
(30)
1,808
(402)
(927)
63
(34)
(20)
(1,559)
4
(2,999)
3,647
648 $
1,574
100
98
39
86
(27)
113
55
85
(53)
(23)
10
243
(97)
3,874
(521)
(1,818)
49
(86)
(2,376)
4,683
(533)
(84)
(1,001)
(248)
(876)
67
(33)
(11)
1,964
1,477
25
95
54
89
(47)
(58)
41
—
(16)
(16)
(14)
203
(186)
3,570
(460)
(1,694)
208
(223)
(2,169)
359
(499)
—
453
(1,004)
(802)
52
(29)
(38)
(1,508)
2
3,464
183
3,647 $
(3)
(110)
293
183
Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at
end of period:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Restricted cash and cash equivalents included in other current assets . . . . . . . . . . . . . . . . . .
Restricted cash and cash equivalents included in restricted trust and escrow accounts . . . . .
Cash, cash equivalents and restricted cash and cash equivalents at end of period . . . . . . . . . $
553 $
28
67
648 $
3,561 $
15
71
3,647 $
61
49
73
183
See Notes to Consolidated Financial Statements.
77
WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Millions, Except Shares in Thousands)
Waste Management, Inc. Stockholders’ Equity
Common Stock
Additional
Paid-In Retained Comprehensive Treasury Stock
Accumulated
Other
Total Shares Amounts Capital Earnings Income (Loss) Shares Amounts
Noncontrolling
Interests
Balance, December 31, 2017 . . . . . $ 6,042 630,282 $
Adoption of new accounting
6 $
4,933 $
8,588 $
8 (196,964) $ (7,516) $
standards . . . . . . . . . . . . . . . . . .
80
Consolidated net income . . . . . . . . 1,923
Other comprehensive income
—
—
—
—
—
—
85
1,925
(5)
—
—
—
—
—
(loss), net of tax . . . . . . . . . . . . .
(90)
—
—
—
—
(90)
—
—
Cash dividends declared of $1.86
per common share . . . . . . . . . . .
(802)
—
—
—
(802)
—
—
—
Equity-based compensation
transactions, net of tax . . . . . . . .
151
—
—
60
1
—
2,345
90
Common stock repurchase
program . . . . . . . . . . . . . . . . . . . (1,008)
—
—
—
—
—
(11,673) (1,008)
Divestiture of noncontrolling
interest . . . . . . . . . . . . . . . . . . .
—
—
Other, net . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2018 . . . . . $ 6,276 630,282 $
Consolidated net income . . . . . . . . 1,671
—
Other comprehensive income
(19)
(1)
—
—
6 $
—
—
—
4,993 $
—
—
—
9,797 $
1,670
—
—
—
—
—
(7)
(87) (206,299) $ (8,434) $
—
—
—
(loss), net of tax . . . . . . . . . . . . .
79
—
—
—
—
79
—
—
Cash dividends declared of $2.05
per common share . . . . . . . . . . .
(876)
—
—
—
(876)
—
—
—
Equity-based compensation
transactions, net . . . . . . . . . . . . .
164
—
—
56
1
—
2,585
107
Common stock repurchase
—
program . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . .
—
Balance, December 31, 2019 . . . . . $ 7,070 630,282 $
Adoption of new accounting
(244)
—
—
—
6 $
—
—
—
—
5,049 $ 10,592 $
(244)
(2,247)
—
—
—
5
(8) (205,956) $ (8,571) $
standards . . . . . . . . . . . . . . . . . .
(2)
Consolidated net income . . . . . . . . 1,496
Other comprehensive income
—
—
—
—
—
—
(2)
1,496
—
—
—
—
—
—
(loss), net of tax . . . . . . . . . . . . .
47
—
—
—
—
47
—
—
Cash dividends declared of $2.18
per common share . . . . . . . . . . .
(927)
—
—
—
(927)
—
—
—
Equity-based compensation
transactions, net . . . . . . . . . . . . .
172
—
—
80
1
—
2,158
91
Common stock repurchase
—
program . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . .
—
Balance, December 31, 2020 . . . . . $ 7,454 630,282 $
(402)
—
—
—
6 $
—
—
—
(1)
5,129 $ 11,159 $
(402)
(3,687)
—
—
1
4
39 (207,481) $ (8,881) $
See Notes to Consolidated Financial Statements.
23
—
(2)
—
—
—
—
(19)
(1)
1
1
—
—
—
—
—
2
—
—
—
—
—
—
—
2
78
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2020, 2019 and 2018
1. Business
The financial statements presented in this report represent the consolidation of Waste Management, Inc., a Delaware
corporation; its wholly-owned and majority-owned subsidiaries; and certain variable interest entities for which Waste
Management, Inc. or its subsidiaries are the primary beneficiaries as described in Note 19. Waste Management, Inc. is a
holding company and all operations are conducted by its subsidiaries. When the terms “the Company,” “we,” “us” or “our”
are used in this document, those terms refer to Waste Management, Inc., its consolidated subsidiaries and consolidated
variable interest entities. When we use the term “WM,” we are referring only to Waste Management, Inc., the parent
holding company.
We are North America’s leading provider of comprehensive waste management environmental services, providing
services throughout the United States (“U.S.”) and Canada. We partner with our residential, commercial, industrial and
municipal customers and the communities we serve to manage and reduce waste at each stage from collection to disposal,
while recovering valuable resources and creating clean, renewable energy. Our “Solid Waste” business is operated and
managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and
recycling and resource recovery services. Through our subsidiaries, we are also a leading developer, operator and owner
of landfill gas-to-energy facilities in the U.S.
We evaluate, oversee and manage the financial performance of our Solid Waste business subsidiaries through our
17 Areas. On October 30, 2020, we acquired Advanced Disposal Services, Inc. (“Advanced Disposal”), the operations of
which are presented in this report within our existing Solid Waste tiers. We also provide additional services that are not
managed through our Solid Waste business, which are presented in this report as “Other.” Additional information related
to our acquisition of Advanced Disposal and segments is included in Notes 18 and 20, respectively.
2. New Accounting Standards and Reclassifications
Adoption of New Accounting Standards
Leases — In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) 2016-02 associated with lease accounting. There were further amendments, including practical
expedients, with the issuance of ASU 2018-01 in January 2018, ASU 2018-11 in July 2018 and ASU 2018-20 in
December 2018. On January 1, 2019, we adopted this ASU using the optional transition method which allows entities to
continue to apply historical accounting guidance in the comparative periods presented in the year of adoption. Accordingly,
our financial statements for the reported periods after January 1, 2019 are presented under this amended guidance, while
prior period amounts are not adjusted and continue to be reported in accordance with historical accounting guidance.
We elected to apply the following package of practical expedients on a consistent basis permitting entities not to
reassess: (i) whether any expired or existing contracts are or contain a lease; (ii) lease classification for any expired or
existing leases and (iii) whether initial direct costs for any expired or existing leases qualify for capitalization under the
amended guidance. In addition, we applied (i) the practical expedient for land easements, which allows the Company to
not apply the lease standard to certain existing land easements at transition and (ii) the practical expedient to include both
the lease and non-lease components as a single component and account for it as a lease. See Note 8 for additional
information.
Financial Instruments-Credit Losses — In June 2016, the FASB issued ASU 2016-13 associated with the
measurement of credit losses on financial instruments. On January 1, 2020, we adopted this ASU using the modified
retrospective transition method. The amended guidance replaced the previous incurred loss impairment methodology of
recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires
79
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
consideration of a broader range of reasonable and supportable information to assess credit loss estimates. This expected
loss model generally results in earlier recognition of an allowance for losses. We recognized a net $2 million after tax
decrease to retained earnings as of January 1, 2020 for the cumulative impact of adopting the amended guidance. See
Note 3 for additional information and disclosures related to this amended guidance.
Implementation Costs Incurred in a Cloud Computing Arrangement — In August 2018, the FASB issued
ASU 2018-15 associated with a customer’s accounting for implementation costs incurred in a cloud computing
arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs
incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs
incurred to develop or obtain internal-use software. Costs for implementation activities in the application development
stage are capitalized as prepayments depending on the nature of the costs, while costs incurred during the preliminary
project and post-implementation stages are expensed as the activities are performed. The Company adopted this amended
guidance on January 1, 2020 prospectively, and it did not have a material impact on our consolidated financial statements.
Guarantor Financial Information — In March 2020, the Securities and Exchange Commission (“SEC”) adopted final
rules that simplify the disclosure requirements related to certain registered securities under SEC Regulation S-X,
Rules 3-10 and 3-16, permitting registrants to provide certain alternative financial disclosures and non-financial
disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt
securities (which we previously included within the notes to our financial statements included in our Annual Reports on
Form 10-K and Quarterly Reports on Form 10-Q) if certain conditions are met. The disclosure requirements, as amended,
are now located in newly-created Rules 13-01 and 13-02 of Regulation S-X and are generally effective for filings on or
after January 4, 2021, with early adoption permitted. We early adopted the new disclosure requirements effective as of
April 1, 2020 and are providing the summarized financial information and related disclosures in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations (“Item 7”) in this Form 10-K.
Amendments to and Modernization of Regulation S-K — In August and November 2020, the SEC adopted final
amendments to Regulation S-K intended to (i) modernize the disclosure requirements related to the description of business,
legal proceedings and risk factors (Items 101, 103 and 105) and (ii) simplify and enhance certain financial disclosure
requirements (Items 301, 302(a) and 303). Among other things, the amendments: (i) require registrants to include a
description of human capital resources to the extent such disclosures would be material to an understanding of the
registrant’s business (Item 101); (ii) increase the threshold for disclosure of governmental environmental proceedings from
those reasonably likely to result in penalties in excess of $100,000 to $300,000 (Item 103); (iii) refine the risk factors
disclosure to require disclosure of material risks and require that such risk factors be organized using sub-headings
(Item 105); (iv) allow registrants to omit the table of selected quarterly financial data currently provided for each quarter
of the two most recent fiscal years (Item 302(a)); (v) eliminates the table of selected financial data for each of its last five
years required within annual reports (Item 301) and (vi) eliminate the requirement to present a contractual obligations table
within Item 7 and instead describe known contractual and other obligations within liquidity and capital resources of Item 7
(Item 303).
We adopted the amended disclosure requirements for Item 101, Item 103 and Item 105 effective as of
December 31, 2020, and the changes are reflected within Item 1, Business and Item 1A. Risk Factors. The amended
guidance for Item 301, Item 302(a) and Item 303 is required for all registrants beginning with their first fiscal year ending
on or after August 9, 2021. Registrants who have not currently filed their annual reports may early adopt the entire amended
rule or Item 301 and Item 302(a) effective on February 10, 2021. We have elected to early adopt the amendments to
Item 301 and Item 302(a). We are assessing the remaining provisions of this amended guidance and evaluating the impact
on our consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Reclassifications
When necessary, reclassifications have been made to our prior period financial information to conform to the
current year presentation and are not material to our consolidated financial statements.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of WM, its wholly-owned and
majority-owned subsidiaries and certain variable interest entities for which we have determined that we are the primary
beneficiary. All material intercompany balances and transactions have been eliminated. Investments in unconsolidated
entities are accounted for under the appropriate method of accounting.
Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for
and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and
assumptions because certain information that we use is dependent on future events, cannot be calculated with precision
from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must
exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates
and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental
remediation liabilities, long-lived asset impairments, the fair value of assets and liabilities acquired in business
combinations or as asset acquisitions and reserves associated with our insured and self-insured claims. Each of these items
is discussed in additional detail below. Actual results could differ materially from the estimates and assumptions that we
use in the preparation of our financial statements.
Cash and Cash Equivalents
Cash in excess of current operating requirements is invested in short-term interest-bearing instruments with maturities
of three months or less at the date of purchase and is stated at cost, which approximates market value.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash
equivalents, investments held within our restricted trust and escrow accounts, and accounts receivable. We make efforts
to control our exposure to credit risk associated with these instruments by (i) placing our assets and other financial interests
with a diverse group of credit-worthy financial institutions; (ii) holding high-quality financial instruments while limiting
investments in any one instrument and (iii) maintaining strict policies over credit extension that include credit evaluations,
credit limits and monitoring procedures, although generally we do not have collateral requirements for credit extensions.
We also control our exposure associated with trade receivables by discontinuing service, to the extent allowable, to
non-paying customers. However, our overall credit risk associated with trade receivables is limited due to the large number
and diversity of customers we serve. As of December 31, 2020 and 2019, no single customer represented greater than
5% of total accounts receivable.
Accounts and Other Receivables
Our receivables, which are recorded when billed, when services are performed or when cash is advanced, are claims
against third parties that will generally be settled in cash. The carrying value of our receivables, net of the allowance for
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
doubtful accounts, represents the estimated net realizable value. We estimate our allowance for doubtful accounts based
on historical collection trends; type of customer, such as municipal or commercial; the age of outstanding receivables and
existing as well as expected economic conditions. If events or changes in circumstances indicate that specific receivable
balances may be impaired, further consideration is given to the collectability of those balances and the allowance is
adjusted accordingly. Past-due receivable balances are written off when our internal collection efforts have been
unsuccessful. Also, we recognize interest income on long-term interest-bearing notes receivable as the interest accrues
under the terms of the notes. We no longer accrue interest once the notes are deemed uncollectible.
The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the year ended
December 31 (in millions):
Balance as of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adoption of new accounting standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions charged to expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts written-off, net of recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, divestitures and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
2019
28 $
(1)
51
(44)
(1)
33 $
29
—
39
(43)
3
28
For trade receivables the Company relies upon, among other factors, historical loss trends, the age of outstanding
receivables, and existing as well as expected economic conditions. Due to the adoption of ASU 2016-13, we recognized a
$1 million pre-tax decrease to our allowance for doubtful accounts on trade receivables. We determined that all of our
trade receivables share similar risk characteristics. We monitor our credit exposure on an ongoing basis and assess whether
assets in the pool continue to display similar risk characteristics.
In January 2020, a novel strain of coronavirus (“COVID-19”) was declared a Public Health Emergency of
International Concern and subsequently declared a global pandemic in March 2020. Throughout the COVID-19 pandemic,
the Company has proactively taken steps to put our employees’ and customers’ needs first and we continue to work with
the appropriate regulatory agencies to ensure we can provide our essential waste services safely and efficiently. With this
in mind, during the first half of 2020 we extended payment terms and postponed collections and service discontinuation
for customers who were negatively impacted by the COVID-19 pandemic. These actions contributed to an increase in the
aging of outstanding balances. Improved economic conditions during the second half of 2020 have allowed us to return to
more regular business practices, in accordance with our contractual terms.
As of December 31, 2020, we had $2,097 million of trade receivables, net of allowance for doubtful accounts of
$33 million. The allowance for doubtful accounts has increased by $5 million during 2020, largely due to the COVID-19
pandemic. Based on aging analyses as of December 31, 2020 and 2019, approximately 90% of our trade receivables were
outstanding less than 60 days.
For other receivables, as well as loans and other instruments, the Company relies primarily on credit ratings and
associated default rates based on the maturity of the instrument. All receivables, as well as other instruments, are adjusted
for our expectation of future market conditions and trends. Due to the adoption of ASU 2016-13, we recognized a
$4 million pre-tax increase to our allowance for doubtful accounts on notes and other receivables. As of
December 31, 2020, we had $703 million of notes and other receivables, net of allowance of $8 million. As of
December 31, 2019, we had $544 million of notes and other receivables, net of allowance of $1 million. Based on an aging
analysis as of December 31, 2020 and 2019, approximately 75% and 70%, respectively, of our other receivables were due
within 12 months or less.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other receivables, as of December 31, 2020 and 2019, include receivables related to income tax payments in excess
of our current income tax obligations of $414 million and $231 million, respectively. Other receivables as of
December 31, 2020 and 2019 also included a receivable of $20 million and $70 million, respectively, related to federal
natural gas fuel credits.
Parts and Supplies
Parts and supplies consist primarily of spare parts, fuel, tires, lubricants and processed recycling materials. Our parts
and supplies are stated at the lower of cost, using the average cost method, or market.
Landfill Accounting
Cost Basis of Landfill Assets — We capitalize various costs that we incur to make a landfill ready to accept waste.
These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property);
permitting; excavation; liner material and installation; landfill leachate collection systems; landfill gas collection systems;
environmental monitoring equipment for groundwater and landfill gas; and directly related engineering, capitalized
interest, on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes
asset retirement costs, which represent estimates of future costs associated with landfill final capping, closure and post-
closure activities. These costs are discussed below.
Final Capping, Closure and Post-Closure Costs — Following is a description of our asset retirement activities and
our related accounting:
• Final Capping — Involves the installation of flexible membrane liners and geosynthetic clay liners, drainage and
compacted soil layers and topsoil over areas of a landfill where total airspace has been consumed. Final capping
asset retirement obligations are recorded on a units-of-consumption basis as airspace is consumed related to the
specific final capping event with a corresponding increase in the landfill asset. Each final capping event is
accounted for as a discrete obligation and recorded as an asset and a liability based on estimates of the discounted
cash flows and airspace associated with each final capping event.
• Closure — Includes the construction of the final portion of methane gas collection systems (when required),
demobilization and routine maintenance costs. These are costs incurred after the site ceases to accept waste, but
before the landfill is certified as closed by the applicable state regulatory agency. These costs are recorded as an
asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in
the landfill asset. Closure obligations are recorded over the life of the landfill based on estimates of the discounted
cash flows associated with performing closure activities.
• Post-Closure — Involves the maintenance and monitoring of a landfill site that has been certified closed by the
applicable regulatory agency. Generally, we are required to maintain and monitor landfill sites for a 30-year
period. These maintenance and monitoring costs are recorded as an asset retirement obligation as airspace is
consumed over the life of the landfill with a corresponding increase in the landfill asset. Post-closure obligations
are recorded over the life of the landfill based on estimates of the discounted cash flows associated with
performing post-closure activities.
We develop our estimates of these obligations using input from our operations personnel, engineers and accountants.
Our estimates are based on our interpretation of current requirements and proposed regulatory changes and are intended
to approximate fair value. Absent quoted market prices, the estimate of fair value is based on the best available information,
including the results of present value techniques. In many cases, we contract with third parties to fulfill our obligations for
final capping, closure and post-closure. We use historical experience, professional engineering judgment and quoted or
actual prices paid for similar work to determine the fair value of these obligations. We are required to recognize these
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
obligations at market prices whether we plan to contract with third parties or perform the work ourselves. In those instances
where we perform the work with internal resources, the incremental profit margin realized is recognized as a component
of operating income when the work is completed.
Once we have determined final capping, closure and post-closure costs, we inflate those costs to the expected time of
payment and discount those expected future costs back to present value. As of December 31, 2020, we inflated these costs
in current dollars to the expected time of payment using an inflation rate of 2.25%. During the years ended
December 31, 2019 and 2018, we used an inflation rate of 2.5%. We discounted these costs to present value using the
credit-adjusted, risk-free rate effective at the time an obligation is incurred, consistent with the expected cash flow
approach. Any changes in expectations that result in an upward revision to the estimated cash flows are treated as a new
liability and discounted at the current rate while downward revisions are discounted at the historical weighted average rate
of the recorded obligation. As a result, the credit-adjusted, risk-free discount rate used to calculate the present value of an
obligation is specific to each individual asset retirement obligation. The weighted average rate applicable to our long-term
asset retirement obligations as of December 31, 2020 was approximately 5.0%.
We record the estimated fair value of final capping, closure and post-closure liabilities for our landfills based on the
airspace consumed through the current period. The fair value of final capping obligations is developed based on our
estimates of the airspace consumed to date for each final capping event and the expected timing of each final capping
event. The fair value of closure and post-closure obligations is developed based on our estimates of the airspace consumed
to date for the entire landfill and the expected timing of each closure and post-closure activity. Because these obligations
are measured at estimated fair value using present value techniques, changes in the estimated cost or timing of future final
capping, closure and post-closure activities could result in a material change in these liabilities, related assets and results
of operations. We assess the appropriateness of the estimates used to develop our recorded balances annually, or more
often if significant facts change.
Changes in inflation rates or the estimated costs, timing or extent of future final capping, closure and post-closure
activities typically result in both (i) a current adjustment to the recorded liability and landfill asset and (ii) a change in
liability and asset amounts to be recorded prospectively over either the remaining permitted and expansion airspace (as
defined below) of the related discrete final capping event or the remaining permitted and expansion airspace of the landfill,
as appropriate. Any changes related to the capitalized and future cost of the landfill assets are then recognized in accordance
with our amortization policy, which would generally result in amortization expense being recognized prospectively over
the remaining permitted and expansion airspace of the final capping event or the remaining permitted and expansion
airspace of the landfill, as appropriate. Changes in such estimates associated with airspace that has been fully utilized result
in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill
airspace amortization expense.
Interest accretion on final capping, closure and post-closure liabilities is recorded using the effective interest method
and is recorded as final capping, closure and post-closure expense, which is included in operating expenses within our
Consolidated Statements of Operations.
Amortization of Landfill Assets — The amortizable basis of a landfill includes (i) amounts previously expended and
capitalized; (ii) capitalized landfill final capping, closure and post-closure costs; (iii) projections of future purchase and
development costs required to develop the landfill site to its remaining permitted and expansion airspace and (iv) projected
asset retirement costs related to landfill final capping, closure and post-closure activities.
Amortization is recorded on a units-of-consumption basis, applying expense as a rate per ton. The rate per ton is
calculated by dividing each component of the amortizable basis of a landfill by the number of tons needed to fill the
corresponding asset’s airspace. For landfills that we do not own, but operate through lease or other contractual agreements,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
the rate per ton is calculated based on expected airspace to be utilized over the lesser of the contractual term of the
underlying agreement or the life of the landfill.
We apply the following guidelines in determining a landfill’s remaining permitted and expansion airspace:
• Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and
surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted
airspace is determined by an annual survey, which is used to compare the existing landfill topography to the
expected final landfill topography.
• Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining
permitted and expansion airspace in certain circumstances. First, to include airspace associated with an expansion
effort, we must generally expect the initial expansion permit application to be submitted within one year and the
final expansion permit to be received within five years. Second, we must believe that obtaining the expansion
permit is likely, considering the following criteria:
• Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use
and local, state or provincial approvals;
• We have a legal right to use or obtain land to be included in the expansion plan;
• There are no significant known technical, legal, community, business, or political restrictions or similar
issues that could negatively affect the success of such expansion; and
• Financial analysis has been completed based on conceptual design, and the results demonstrate that the
expansion meets Company criteria for investment.
For unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, the
expansion effort must meet all the criteria listed above. These criteria are evaluated by our field-based engineers,
accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace
is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace
even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit,
based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved
through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis. Of
the 15 landfill sites with expansions included as of December 31, 2020, two landfills required the Chief Financial Officer
to approve the inclusion of the unpermitted airspace because the permit application process did not meet the one- or
five-year requirements.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also
include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure
and post-closure of the expansion in the amortization basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor
(“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using
the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The
amount of settlement that is forecasted will take into account several site-specific factors including current and projected
mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying
waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In
addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the
AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the
impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches
its highest point under the permit requirements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the
per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the
corresponding number of tons. We calculate per ton amortization rates for each landfill for assets associated with each
final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be
capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and
post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be
significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove
to be significantly different than actual results, lower profitability may be experienced due to higher amortization rates or
higher expenses; or higher profitability may result if the opposite occurs. Most significantly, if it is determined that
expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required
to recognize an asset impairment or incur significantly higher amortization expense. If at any time management makes the
decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
Environmental Remediation Liabilities
A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental
protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our
landfills, subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws
and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by
conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities,
such liabilities include potentially responsible party (“PRP”) investigations. The costs associated with these liabilities can
include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated
with site investigation and clean up.
Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on
site-specific facts and circumstances. We routinely review and evaluate sites that require remediation, considering whether
we were an owner, operator, transporter, or generator at the site, the amount and type of waste hauled to the site and the
number of years we were associated with the site. Next, we review the same type of information with respect to other
named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal
resources or by third-party environmental engineers or other service providers. Internally developed estimates are based
on:
• Management’s judgment and experience in remediating our own and unrelated parties’ sites;
•
Information available from regulatory agencies as to costs of remediation;
• The number, financial resources and relative degree of responsibility of other PRPs who may be liable for
remediation of a specific site; and
• The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Estimating our degree of responsibility for remediation is inherently difficult. We recognize and accrue for an
estimated remediation liability when we determine that such liability is both probable and reasonably estimable.
Determining the method and ultimate cost of remediation requires that a number of assumptions be made. There can
sometimes be a range of reasonable estimates of the costs associated with the likely site remediation alternatives identified
in the environmental impact investigation. In these cases, we use the amount within the range that is our best estimate. If
no amount within a range appears to be a better estimate than any other, we use the amount that is the low end of such
range. If we used the high ends of such ranges, our aggregate potential liability would be approximately $140 million
higher than the $230 million recorded in the Consolidated Balance Sheet as of December 31, 2020. Our ultimate
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responsibility may differ materially from current estimates. It is possible that technological, regulatory or enforcement
developments, the results of environmental studies, the inability to identify other PRPs, the inability of other PRPs to
contribute to the settlements of such liabilities, or other factors could require us to record additional liabilities. Our ongoing
review of our remediation liabilities, in light of relevant internal and external facts and circumstances, could result in
revisions to our accruals that could cause upward or downward adjustments to our balance sheet and income from
operations. These adjustments could be material in any given period.
Where we believe that both the amount of a particular environmental remediation liability and the timing of the
payments are fixed or reliably determinable, we inflated the cost in current dollars by 2.25% and 2.50% as of
December 31, 2020 and 2019, respectively, until the expected time of payment and discount the cost to present value using
a risk-free discount rate, which is based on the rate for U.S. Treasury bonds with a term approximating the weighted
average period until settlement of the underlying obligation. We determine the risk-free discount rate and the inflation rate
on an annual basis unless interim changes would materially impact our results of operations. For remedial liabilities that
have been discounted, we include interest accretion, based on the effective interest method, in operating expenses in our
Consolidated Statements of Operations. The following table summarizes the impacts of revisions in the risk-free discount
rate applied to our environmental remediation liabilities and recovery assets for the year ended December 31 (in millions)
and the risk-free discount rate applied as of December 31:
Increase (decrease) in operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Risk-free discount rate applied to environmental remediation liabilities and
2020
2019
2018
8
$
9
$
(2)
recovery assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.00 %
1.75 %
2.75 %
The portion of our recorded environmental remediation liabilities that were not subject to inflation or discounting, as
the amounts and timing of payments are not fixed or reliably determinable, was $34 million and $36 million as of
December 31, 2020 and 2019, respectively. Had we not inflated and discounted any portion of our environmental
remediation liability, the amount recorded would have decreased by $12 million and $8 million as of December 31, 2020
and 2019, respectively.
Property and Equipment (exclusive of landfills, discussed above)
We record property and equipment at cost. Expenditures for major additions and improvements are capitalized and
maintenance activities are expensed as incurred. We depreciate property and equipment over the estimated useful life of
the asset using the straight-line method. We assume no salvage value for our depreciable property and equipment. When
property and equipment are retired, sold or otherwise disposed of, the cost and accumulated depreciation are removed from
our accounts and any resulting gain or loss is included in results of operations as an offset or increase to operating expense
for the period.
The estimated useful lives for significant property and equipment categories are as follows (in years):
Vehicles — excluding rail haul cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicles — rail haul cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment — including containers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Useful Lives
3 to 10
10 to 30
3 to 30
5 to 40
3 to 10
We include capitalized costs associated with developing or obtaining internal-use software within long-term other
assets and these costs are amortized over a useful life of the relevant subscription period including any renewal options
that are reasonably certain of being exercised. These costs include direct external costs of materials and services used in
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developing or obtaining the software and internal costs for employees directly associated with the software development
project. As of December 31, 2020, significantly all of the costs incurred to date are related to internal-use software that is
currently under development.
Leases
We lease property and equipment in the ordinary course of our business. Our operating lease activities primarily
consist of leases for real estate, landfills and operating equipment. Our financing lease activities primarily consist of leases
for operating equipment, railcars and landfill assets. Our leases have varying terms. Some may include renewal or purchase
options, escalation clauses, restrictions, penalties or other obligations that we consider in determining minimum lease
payments. The leases are classified as either operating leases or financing leases, as appropriate. See Note 8 for additional
information.
Operating Leases (excluding landfill leases discussed below) — The majority of our leases are operating leases. This
classification generally can be attributed to either (i) relatively low fixed minimum lease payments as a result of real
property lease obligations that vary based on the volume of waste we receive or process or (ii) minimum lease terms that
are much shorter than the assets’ economic useful lives. Management expects that in the normal course of business our
operating leases will be renewed, replaced by other leases or replaced with fixed asset expenditures. Our rent expense
during each of the last three years and our future minimum operating lease payments for each of the next five years for
which we are contractually obligated as of December 31, 2020 are disclosed in Note 8.
Financing Leases (excluding landfill leases discussed below) — Assets under financing leases are capitalized using
interest rates determined at the commencement of each lease and are amortized over either the useful life of the asset or
the lease term, as appropriate, on a straight-line basis. The present value of the related lease payments is recorded as a debt
obligation. Our future minimum annual financing lease payments are disclosed in Note 8.
Landfill Leases — From an operating perspective, landfills that we lease are similar to landfills we own because
generally we will operate the landfill for the life of the operating permit. The most significant portion of our rental
obligations for landfill leases is contingent upon operating factors such as disposal volume and often there are no
contractual minimum rental obligations. Contingent rental obligations are expensed as incurred. For landfill financing
leases that provide for minimum contractual rental obligations, we record the present value of the minimum obligation as
part of the landfill asset, which is amortized on a units-of-consumption basis over the shorter of the lease term or the life
of the landfill. Our future minimum annual lease payments for our landfill leases are disclosed in Note 8.
Acquisitions
We generally recognize assets acquired and liabilities assumed in business combinations, including contingent assets
and liabilities, based on fair value estimates as of the date of acquisition.
Contingent Consideration — In certain acquisitions, we agree to pay additional amounts to sellers contingent upon
achievement by the acquired businesses of certain negotiated goals, such as targeted revenue levels, targeted disposal
volumes or the issuance of permits for expanded landfill airspace. We have recognized liabilities for these contingent
obligations based on their estimated fair value as of the date of acquisition with any differences between the acquisition-
date fair value and the ultimate settlement of the obligations being recognized as an adjustment to income from operations.
Acquired Assets and Assumed Liabilities — Assets and liabilities arising from contingencies such as pre-acquisition
environmental matters and litigation are recognized at their acquisition-date fair value when their respective fair values
can be determined. If the fair values of such contingencies cannot be determined, they are recognized as of the acquisition
date if the contingencies are probable and an amount can be reasonably estimated.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these
contingencies becomes available to further define and quantify assets acquired and liabilities assumed. Subsequent to
finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations. All
acquisition-related transaction costs are expensed as incurred. During the year ended December 31, 2020, we acquired
four businesses related to our Solid Waste business, including the acquisition of Advanced Disposal. See Note 18 for
additional information related to the acquisitions.
Goodwill and Other Intangible Assets
Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not
amortize goodwill, but as discussed in the Long-Lived Asset Impairments section below, we assess our goodwill for
impairment at least annually.
Other intangible assets consist primarily of customer and supplier relationships, covenants not-to-compete, licenses,
permits (other than landfill permits, as all landfill-related intangible assets are combined with landfill tangible assets and
amortized using our landfill amortization policy), and other contracts. Other intangible assets are recorded at fair value on
the acquisition date and are generally amortized using either a 150% declining balance approach or a straight-line basis as
we determine appropriate. Customer and supplier relationships are typically amortized over terms of 10 to 15 years.
Covenants not-to-compete are amortized over the term of the non-compete covenant, which is generally five years.
Licenses, permits and other contracts are amortized over the definitive terms of the related agreements. If the underlying
agreement does not contain definitive terms and the useful life is determined to be indefinite, the asset is not amortized.
Long-Lived Asset Impairments
We assess our long-lived assets for impairment as required under the applicable accounting standards. If necessary,
impairments are recorded in (gain) loss from divestitures, asset impairments and unusual items, net in our Consolidated
Statement of Operations.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value
of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally
using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining
to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of
recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows.
If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment
has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess
of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset
group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is
generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset
group; (ii) actual third-party valuations and/or (iii) information available regarding the current market for similar assets.
Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually
realized, which could impact our ability to accurately assess whether an asset has been impaired.
The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and
related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated
permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator
may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management
may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill
may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because,
after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit.
As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach,
may indicate that no impairment loss should be recorded.
Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1,
and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting
units for impairment.
We first performed a qualitative assessment to determine if it was more likely than not that the fair value of a reporting
unit was less than its carrying value. If the assessment indicated a possible impairment, we completed a quantitative review,
comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge
was recognized if the asset’s estimated fair value was less than its carrying amount. Fair value is typically estimated using
an income approach using Level 3 inputs. However, when appropriate, we may also use a market approach. The income
approach is based on the long-term projected future cash flows of the reporting units. We discount the estimated cash flows
to present value using a weighted average cost of capital that considers factors such as market assumptions, the timing of
the cash flows and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides
a fair value estimate based upon the reporting units’ expected long-term performance considering the economic and market
conditions that generally affect our business. The market approach estimates fair value by measuring the aggregate market
value of publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. We
then apply that multiple to the reporting units’ earnings to estimate their fair values. We believe that this approach may
also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities
with operations and economic characteristics comparable to our reporting units.
Fair value is computed using several factors, including projected future operating results, economic projections,
anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related
to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating
the fair value of our reporting units is reasonable.
Refer to Note 12 for information related to impairments recognized during the reported periods.
Insured and Self-Insured Claims
We have retained a significant portion of the risks related to our health and welfare, general liability, automobile
liability and workers’ compensation claims programs. The exposure for unpaid claims and associated expenses, including
incurred but not reported losses, generally is estimated with the assistance of external actuaries and by factoring in pending
claims and historical trends and data. The gross estimated liability associated with settling unpaid claims is included in
accrued liabilities in our Consolidated Balance Sheets if expected to be settled within one year; otherwise, it is included in
other long-term liabilities. Estimated insurance recoveries related to recorded liabilities are reflected as other current
receivables or other long-term assets in our Consolidated Balance Sheets when we believe that the receipt of such amounts
is probable.
We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and
workers’ compensation claims programs. We continue to maintain conventional insurance policies with third-party
insurers. In addition to certain business and operating benefits of having a wholly-owned insurance captive, we expect to
receive certain cash flow benefits related to the timing of tax deductions related to these claims. WM pays an annual
premium to the insurance captive, typically in the first quarter of the year, for estimated losses based on an external
actuarial analysis. These premiums are held in a restricted escrow account to be used solely for paying insurance claims,
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
resulting in a transfer of risk from WM to the insurance captive, and are allocated between current and long-term assets
depending on timing on the use of funds.
Restricted Trust and Escrow Accounts
Our restricted trust and escrow accounts consist principally of funds deposited for purposes of funding insurance
claims and settling landfill final capping, closure, post-closure and environmental remediation obligations. These funds
are generally allocated between cash, money market funds and available-for-sale securities depending on the estimated
timing and purpose of the use of funds. We use a wholly-owned insurance captive to insure the deductibles for certain
claims programs, as discussed above in Insured and Self-Insured Claims, and the premiums paid were directly deposited
into a restricted escrow account to be used solely for paying insurance claims. At several of our landfills, we provide
financial assurance by depositing cash into restricted trust or escrow accounts for purposes of settling final capping,
closure, post-closure and environmental remediation obligations. Balances maintained in these restricted trust and escrow
accounts will fluctuate based on (i) changes in statutory requirements; (ii) future deposits made to comply with contractual
arrangements; (iii) the ongoing use of funds; (iv) acquisitions or divestitures and (v) changes in the fair value of the
financial instruments held in the restricted trust or escrow accounts. The current portion of restricted trust and escrow
accounts as of December 31, 2020 and 2019 of $75 million and $70 million, respectively, is included in other current
assets in our Consolidated Balance Sheets.
See Note 19 for additional discussion related to restricted trust and escrow accounts for final capping, closure,
post-closure or environmental remediation obligations.
Investments in Unconsolidated Entities
Investments in unconsolidated entities over which the Company has significant influence are accounted for under the
equity method of accounting. Equity investments in which the Company does not have the ability to exert significant
influence over the investees’ operating and financing activities are measured using a quantitative approach as these
investments do not have readily determinable fair values. The quantitative approach, or measurement alternative, is equal
to its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions
for the identical or a similar investment of the same issuer. The fair value of our redeemable preferred stock has been
measured based on third-party investors’ recent or pending transactions in these securities, which are considered the best
evidence of fair value. The following table summarizes our investments in unconsolidated entities as of December 31 (in
millions):
Equity method investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Investments without readily determinable fair values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
314 $
63
49
Investments in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
426 $
377
57
49
483
2020
2019
We monitor and assess the carrying value of our investments throughout the year for potential impairment and write
them down to their fair value when other-than-temporary declines exist. Fair value is generally based on (i) other
third-party investors’ recent transactions in the securities; (ii) other information available regarding the current market for
similar assets; (iii) a market or income approach, as deemed appropriate and/or (iv) a quantitative approach, or
measurement alternative, as noted above. Impairments of our investments are recorded in equity in net losses of
unconsolidated entities or other, net in the Consolidated Statements of Operations in accordance with appropriate
accounting guidance.
Refer to Note 12 for information related to impairments and other adjustments recognized during the reported periods.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Foreign Currency
We have operations in Canada, as well as certain support functions in India. Local currencies generally are considered
the functional currencies of our operations and investments outside the U.S. The assets and liabilities of our foreign
operations are translated to U.S. dollars using the exchange rate as of the balance sheet date. Revenues and expenses are
translated to U.S. dollars using the average exchange rate during the period. The resulting translation difference is reflected
as a component of other comprehensive income (loss). Foreign currency translation adjustments were impacted by
decreases in the U.S. dollar/Canadian dollar exchange rate from 1.3639 at December 31, 2018, to 1.2990 at
December 31, 2019 and to 1.2734 at December 31, 2020. Refer to Note 13 for information regarding the impacts of foreign
currency on our comprehensive income and results of operations.
Revenue Recognition
Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal,
and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy
operations. Revenues from our collection operations are influenced by factors such as collection frequency, type of
collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or
material recovery facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are
generally based on the type and weight or volume of waste being disposed of at our disposal facilities. Fees charged at
transfer stations are generally based on the weight or volume of waste deposited, taking into account our cost of loading,
transporting and disposing of the solid waste at a disposal site. Recycling revenues generally consist of tipping fees and
the sale of recycling commodities to third parties. The fees we charge for our services generally include our environmental,
fuel surcharge and regulatory recovery fees, which are intended to pass through to customers direct and indirect costs
incurred. We also provide additional services that are not managed through our Solid Waste business, including operations
managed by both our Strategic Business Solutions (“WMSBS”) and Energy and Environmental Services (“EES”)
businesses, recycling brokerage services, landfill gas-to-energy services and certain other expanded service offerings and
solutions.
Our revenue from sources other than customer contracts primarily relates to lease revenue associated with compactors
and balers. Revenue from our leasing arrangements was not material and represented approximately 1% of total revenue
for each of the reported periods.
We generally recognize revenue as services are performed or products are delivered. For example, revenue typically
is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling commodities are
collected or delivered as product. We bill for certain services prior to performance. Such services include, among others,
certain commercial and residential contracts and equipment rentals. These advance billings are included in deferred
revenues and recognized as revenue in the period service is provided.
See Note 20 for additional information related to revenue by reportable segment and major lines of business.
Deferred Revenues
We record deferred revenues when cash payments are received or due in advance of our performance and classify
them as current since they are earned within a year and there are no significant financing components. Substantially all
our deferred revenues during the reported periods are realized as revenues within one to three months, when the related
services are performed.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Contract Acquisition Costs
Our incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are generally deferred
and amortized to selling, general and administrative expense over the estimated life of the relevant customer relationship,
ranging from 5 to 13 years. Contract acquisition costs that are paid to the customer are deferred and amortized as a
reduction in revenue over the contract life. Our contract acquisition costs are classified as current or noncurrent based on
the timing of when we expect to recognize amortization and are included in other assets in our Consolidated Balance Sheet.
As of December 31, 2020 and 2019, we had $159 million and $153 million of deferred contract costs, respectively,
of which $118 million and $117 million was related to deferred sales incentives, respectively. During the years ended
December 31, 2020, 2019 and 2018, we amortized $23 million, $23 million and $22 million of sales incentives to selling,
general and administrative expense, respectively.
Long-Term Contracts
Approximately 25% of our total revenue is derived from contracts with a remaining term greater than one year. The
consideration for these contracts is primarily variable in nature. The variable elements of these contracts primarily include
the number of homes and businesses served and annual rate changes based on consumer price index, fuel prices or other
operating costs. Such contracts are generally within our collection, recycling and other lines of business and have a
weighted average remaining contract life of approximately four years. We do not disclose the value of unsatisfied
performance obligations for these contracts as our right to consideration corresponds directly to the value provided to the
customer for services completed to date and all future variable consideration is allocated to wholly unsatisfied performance
obligations.
Capitalized Interest
We capitalize interest on certain projects under development, including landfill expansion projects, certain assets
under construction, including operating landfills and landfill gas-to-energy projects and internal-use software. During
2020, 2019 and 2018, total interest costs were $473 million, $485 million and $400 million, respectively, of which
$16 million, $21 million and $16 million was capitalized in 2020, 2019 and 2018, respectively.
Income Taxes
The Company is primarily subject to income tax in the U.S. and Canada. Current tax obligations associated with our
income tax expense are reflected in the accompanying Consolidated Balance Sheets as a component of accrued liabilities
and our deferred tax obligations are reflected in deferred income taxes.
Deferred income taxes are based on the difference between the financial reporting and tax basis of assets and liabilities.
Deferred income tax expense represents the change during the reporting period in the deferred tax assets and liabilities,
net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carry-forwards and are
reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. We establish reserves for uncertain tax positions when, despite our belief that our
tax return positions are supportable, we believe that certain positions may be challenged and potentially disallowed. When
facts and circumstances change, we adjust these reserves through our income tax expense.
Should interest and penalties be assessed by taxing authorities on any underpayment of income tax, such amounts
would be accrued and classified as a component of our income tax expense in our Consolidated Statements of Operations.
See Note 9 for discussion of our income taxes.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Contingent Liabilities
We estimate the amount of potential exposure we may have with respect to claims, assessments and litigation in
accordance with authoritative guidance on accounting for contingencies. We are party to pending or threatened legal
proceedings covering a wide range of matters in various jurisdictions. It is difficult to predict the outcome of litigation, as
it is subject to many uncertainties. Additionally, it is not always possible for management to make a meaningful estimate
of the potential loss or range of loss associated with such contingencies. See Note 11 for discussion of our commitments
and contingencies.
Supplemental Cash Flow Information
The following table shows supplemental cash flow information for the year ended December 31 (in millions):
Interest, net of capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
461 $
422
397 $
292
339
349
2020
2019
2018
During 2020, we had $50 million of non-cash financing activities primarily related to new financing leases, a portion
of which are attributed to our acquisition of Advanced Disposal. During 2019 and 2018, we had $299 million and
$250 million, respectively, of non-cash financing activities from federal low-income housing investments and new
financing leases. Non-cash investing and financing activities are generally excluded from the Consolidated Statements of
Cash Flows.
4. Landfill and Environmental Remediation Liabilities
Liabilities for landfill and environmental remediation costs as of December 31 are presented in the table below (in
millions):
Landfill
2020
Environmental
Remediation
Total
Landfill
2019
Environmental
Remediation
Total
Current (in accrued liabilities) . . $
Long-term . . . . . . . . . . . . . . . . . .
$
138 $
2,018
2,156 $
26 $
164 $
138 $
204
230 $ 2,386 $
2,222
1,717
1,855 $
27 $
213
240 $
165
1,930
2,095
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The changes to landfill and environmental remediation liabilities for the year ended December 31, 2020 are reflected
in the table below (in millions):
Landfill
Environmental
Remediation
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Obligations incurred and capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions in estimates and interest rate assumptions (a) (b) . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, divestitures and other adjustments (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,855 $
83
(103)
103
(27)
245
2,156 $
240
—
(23)
2
11
—
230
(a) The amount reported for our landfill liabilities includes a reduction of $104 million related to the change in inflation
rate from 2.5% to 2.25% as of December 31, 2020, of which $26 million was an immediate reduction to amortization
expense. This reduction to landfill liabilities was partially offset by (i) an increase of $69 million primarily from
changes in the timing and amount of costs as well as changes in estimates of remaining airspace and (ii) an increase
of $8 million due to a business decision to close one of our landfills, which resulted in the acceleration of the expected
timing of capping, closure and post-closure activities. This business decision also resulted in an impairment that is
discussed in Note 12.
(b) The amount reported for our environmental remediation liabilities includes an increase of $9 million due to a decrease
in the risk-free discount rate used to measure our liabilities from 1.75% at December 31, 2019 to 1.00% at
December 31, 2020.
(c) The amount reported for our landfill liabilities includes (i) $261 million related to our acquisition of Advanced
Disposal offset by (ii) a reduction of $17 million for the sale of certain landfills to GFL Environmental Inc.
(“GFL Environmental”) in connection with the Advanced Disposal acquisition. These items are discussed further in
Note 18.
Our recorded liabilities as of December 31, 2020 include the impacts of inflating certain of these costs based on our
expectations of the timing of cash settlement and of discounting certain of these costs to present value. Anticipated
payments of currently identified environmental remediation liabilities, as measured in current dollars, are $26 million
in 2021, $48 million in 2022, $40 million in 2023, $33 million in 2024, $12 million in 2025 and $61 million thereafter.
At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds or escrow
accounts for purposes of settling final capping, closure, post-closure and environmental remediation obligations.
Generally, these trust funds are established to comply with statutory requirements and operating agreements. See
Notes 17 and 19 for additional information related to these trusts.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
5. Property and Equipment
Property and equipment as of December 31 consisted of the following (in millions):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Landfills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Containers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Accumulated depreciation of tangible property and equipment . . . . . . . . . . . . . . . . .
Less: Accumulated amortization of landfill airspace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
740 $
16,842
6,219
3,293
2,869
3,529
751
34,243
(10,403)
(9,692)
14,148 $
2019
656
15,910
5,344
3,140
2,616
3,174
710
31,550
(9,331)
(9,326)
12,893
Depreciation and amortization expense, including amortization expense for assets recorded as financing leases,
consisted of the following for the year ended December 31 (in millions):
Depreciation of tangible property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . $
Amortization of landfill airspace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
2019
996 $
568
1,564 $
893 $
575
1,468 $
2018
838
538
1,376
We include capitalized costs associated with developing or obtaining internal-use software within long-term other
assets, and these costs are amortized over the useful life of the relevant subscription period including any renewal options
that are reasonably certain of being exercised. These costs include direct external costs of materials and services used in
developing or obtaining the software and internal costs for employees directly associated with the software development
project. As of December 31, 2020, total costs capitalized for our internal-use software were $21 million. Additionally,
amortization expense for the period was immaterial as substantially all costs incurred to date are related to internal-use
software that is currently under development.
6. Goodwill and Other Intangible Assets
Goodwill was $8,994 million and $6,532 million as of December 31, 2020 and 2019, respectively. The $2,462 million
increase in goodwill during 2020 is primarily related to our acquisition of Advanced Disposal as discussed further in
Note 18.
As discussed in Note 3, we perform our annual impairment test of goodwill balances for our reporting units using a
measurement date of October 1. We will also perform interim tests if an impairment indicator exists.
See Note 20 for allocation of our goodwill by segment.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Our other intangible assets consisted of the following as of December 31 (in millions):
Covenants Licenses,
Customer
and Supplier
Not-to-
Relationships Compete and Other
Permits
Total
2020
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2019
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,436 $
(497)
939 $
68 $
(46)
22 $
142 $ 1,646
(79)
(622)
63 $ 1,024
906 $
(469)
437 $
72 $
(36)
36 $
110 $ 1,088
(567)
(62)
521
48 $
Amortization expense for other intangible assets was $107 million, $106 million and $101 million for 2020, 2019 and
2018, respectively. As of December 31, 2020, we had $19 million of licenses, permits and other intangible assets that are
not subject to amortization because they do not have stated expirations or have routine, administrative renewal processes.
Additional information related to other intangible assets acquired through business combinations is included in Note 18.
As of December 31, 2020, we expect annual amortization expense related to other intangible assets to be $146 million
in 2021, $125 million in 2022, $112 million in 2023, $101 million in 2024 and $93 million in 2025.
7. Debt
The following table summarizes the major components of debt as of each balance sheet date (in millions) and provides
the maturities and interest rate ranges of each major category as of December 31:
Commercial paper program (weighted average interest rate of 0.4% as of
December 31, 2020) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,814 $
—
2020
2019
Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75%
(weighted average interest rate of 3.3% as of December 31, 2020 and 3.9% as of
December 31, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6% . . . .
Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from
0.1% to 4.3% (weighted average interest rate of 1.7% as of December 31, 2020 and
2.3% as of December 31, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing leases and other, maturing through 2085, weighted average interest rate
of 4.6% (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs, discounts and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
8,465
393
9,965
385
2,571
2,523
652
(85)
13,810
551
13,259 $
710
(85)
13,498
218
13,280
(a) Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend
through 2059.
97
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Debt Classification
As of December 31, 2020, we had $3.3 billion of debt maturing within the next 12 months, including (i) $1.8 billion
of short-term borrowings under our commercial paper program; (ii) $1.2 billion of tax-exempt bonds with term interest
rate periods that expire within the next 12 months, which is prior to their scheduled maturities, and (iii) $242 million of
other debt with scheduled maturities within the next 12 months, including $127 million of tax-exempt bonds. As of
December 31, 2020, we have classified $2.7 billion of debt maturing in the next 12 months as long-term because we have
the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity
under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”), as
discussed below. The remaining $551 million of debt maturing in the next 12 months is classified as current obligations.
As of December 31, 2020, we also had $54 million of variable-rate tax-exempt bonds with long-term scheduled
maturities supported by letters of credit under our $3.5 billion revolving credit facility. The interest rates on our variable-
rate tax-exempt bonds are generally reset on either a daily or weekly basis through a remarketing process. All recent tax-
exempt bond remarketings have successfully placed Company bonds with investors at market-driven rates and we currently
expect future remarketings to be successful. However, if the remarketing agent is unable to remarket our bonds, the
remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the availability under our
$3.5 billion revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have
classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our
Consolidated Balance Sheet as of December 31, 2020.
Access to and Utilization of Credit Facilities and Commercial Paper Program
$3.0 Billion, 364-Day Revolving Credit Facility — On July 28, 2020, we entered into a supplemental $3.0 billion,
364-day, U.S. revolving credit facility (“364-day revolving credit facility”), which was drawn upon and used to partially
fund our acquisition of Advanced Disposal, discussed further in Note 18, and refinancing of indebtedness. During the
fourth quarter of 2020, we repaid the outstanding borrowings under our 364-day revolving credit facility and
contemporaneously terminated the facility, at which time we recognized a $2 million loss on early extinguishment of debt
in our Consolidated Statement of Operations related to unamortized debt issuance costs.
$3.5 Billion Revolving Credit Facility — Our $3.5 billion revolving credit facility, maturing November 2024, provides
us with credit capacity to be used for cash borrowings, to support letters of credit and to support our commercial paper
program. The agreement provides the Company with two one-year extension options. Waste Management of Canada
Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WM, are borrowers under the $3.5 billion
revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of
$375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings, a wholly-owned subsidiary of WM,
guarantees all the obligations under the $3.5 billion revolving credit facility.
The rates we pay for outstanding U.S. or Canadian loans are generally based on LIBOR or CDOR, respectively, plus
a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. As of
December 31, 2020, we had no outstanding borrowings under this facility. We had $270 million of letters of credit issued
and $1.8 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program,
both supported by this facility, leaving unused and available credit capacity of $1.4 billion as of December 31, 2020.
Commercial Paper Program — We have a commercial paper program that enables us to borrow funds for up to
397 days at competitive interest rates. The rates we pay for outstanding borrowings are based on the term of the notes. The
commercial paper program is fully supported by our $3.5 billion revolving credit facility. As of December 31, 2020, we
had $1.8 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program.
98
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other Letter of Credit Lines — As of December 31, 2020, we had utilized $566 million of other uncommitted letter
of credit lines with terms maturing through April 2022.
Debt Borrowings and Repayments
364-Day Revolving Credit Facility — In October 2020, we borrowed $3.0 billion under this revolving credit facility
to partially fund our acquisition of Advanced Disposal, discussed further in Note 18. Upon closing our acquisition of
Advanced Disposal on October 30, 2020, we repaid $870 million of borrowings primarily with proceeds from the sale of
certain net assets to GFL Environmental, discussed further in Note 18, and to a lesser extent, available cash on hand. In
November 2020, we repaid the remainder of outstanding borrowings with proceeds from our November 2020 issuance of
senior notes discussed below, and we contemporaneously terminated this facility, at which time we recognized a $2 million
loss on early extinguishment of debt in our Consolidated Statement of Operations related to unamortized debt issuance
costs.
Commercial Paper Program — During the year ended December 31, 2020, we had net cash borrowings of $1.8 billion
(net of related discount on issuance), the proceeds of which were used for the redemption of senior notes discussed further
below and to partially fund our acquisition of Advanced Disposal.
Senior Notes — In May 2019, we issued $4.0 billion of senior notes, $3.0 billion of which were due 2024, 2026, 2029
and 2039 and included a special mandatory redemption feature (the “SMR Notes”). The SMR Notes were issued with the
intention to partially fund our acquisition of Advanced Disposal. Pursuant to the terms of the SMR Notes, we were required
to redeem all of such outstanding notes, paying debt holders 101% of the aggregate principal amounts of such notes, plus
accrued but unpaid interest, as a result of the acquisition not being completed by July 14, 2020. Accordingly, the
redemption was completed on July 20, 2020 using available cash on hand and, to a lesser extent, commercial paper
borrowings. The cash paid included the $3.0 billion principal amount of debt redeemed, $30 million of related premiums
and $8 million of accrued interest. We recognized a $52 million loss on early extinguishment of debt in our Consolidated
Statement of Operations related to the redemption during the third quarter of 2020, including $30 million of premiums
paid and $22 million of unamortized discounts and debt issuance costs.
In November 2020, WM issued $2.5 billion of senior notes consisting of:
•
•
•
•
$500 million of 0.750% senior notes due November 15, 2025;
$500 million of 1.150% senior notes due March 15, 2028;
$1.0 billion of 1.500% senior notes due March 15, 2031 and
$500 million of 2.500% senior notes due November 15, 2050.
The net proceeds from these debt issuances were $2.48 billion. We used the net proceeds to repay the remaining
outstanding borrowings under our 364-day revolving credit facility as discussed above, to redeem our $400 million
aggregate principal amount of 4.60% senior notes due March 2021, including $5 million of accrued but unpaid interest,
and for general corporate purposes.
In June 2020, we repaid $600 million of 4.75% senior notes with available cash at their scheduled maturity.
Advanced Disposal Senior Notes — At the time of acquisition, Advanced Disposal had outstanding $425 million of
5.625% senior notes due November 2024, the fair value of which was $438 million, representing our carrying value upon
acquisition due to purchase accounting. Upon closing of the acquisition of Advanced Disposal, the Company gave notice
of redemption of the Advanced Disposal senior notes, pursuant to an optional redemption feature. The redemption was
completed on November 30, 2020 using borrowings under our 364-day revolving credit facility and our commercial paper
program. Pursuant to the optional redemption feature, we redeemed such outstanding notes for 102.813% of the aggregate
principal amount, or $437 million, and $13 million of accrued but unpaid interest. Upon redemption, we recognized a
99
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
$1 million gain on early extinguishment of debt in our Consolidated Statement of Operations due to the difference in
carrying value and redemption price.
Tax-Exempt Bonds — We issued $131 million of new tax-exempt bonds in 2020. The proceeds from the issuance of
these bonds were deposited directly into a restricted trust fund and may only be used for the specific purpose for which
the money was raised, which is generally to finance expenditures for landfill and solid waste disposal facility construction
and development. In the third quarter of 2020, we elected to refund and reissue $130 million of tax-exempt bonds.
Additionally, during the year ended December 31, 2020, we repaid $82 million of our tax-exempt bonds with available
cash at their scheduled maturities.
Financing Leases and Other — The decrease in 2020 is due to $108 million of cash repayments primarily related to
our federal low-income housing investments, financing leases and other obligations, partially offset by an increase of
$50 million mainly associated with non-cash financing leases and our acquisition of Advanced Disposal.
Scheduled Debt Payments
Principal payments of our debt for the next five years and thereafter, based on scheduled maturities are as follows:
$2,056 million in 2021, $665 million in 2022, $647 million in 2023, $468 million in 2024, $1,451 million in 2025 and
$8,700 million thereafter. Our recorded debt and financing lease obligations include non-cash adjustments associated with
debt issuance costs, discounts, premiums and fair value adjustments attributable to terminated interest rate derivatives,
which have been excluded from these amounts because they will not result in cash payments. See Note 8 below for further
discussion of our financing lease arrangements.
Secured Debt
Our debt balances are generally unsecured, except for financing leases and the notes payable associated with our
investments in low-income housing properties.
Debt Covenants
The terms of certain of our financing arrangements require that we comply with financial and other covenants. Our
most restrictive financial covenant is the one contained in our $3.5 billion revolving credit facility, which sets forth a
maximum total debt to consolidated earnings before interest, taxes, depreciation and amortization ratio (the “Leverage
Ratio”). This covenant requires that the Leverage Ratio for the preceding four fiscal quarters will not be more than
3.75 to 1, provided that if an acquisition permitted under the $3.5 billion revolving credit facility involving aggregate
consideration in excess of $200 million occurs during the fiscal quarter, the Company shall have the right to increase the
Leverage Ratio to 4.25 to 1 during such fiscal quarter and for the following three fiscal quarters (the “Elevated Leverage
Ratio Period”). Given the strength of the Company’s financial position and its expectation to maintain significant
headroom within the Leverage Ratio, the Company has not elected to increase the Leverage Ratio for an Elevated Leverage
Ratio Period since the acquisition of Advanced Disposal. There shall be no more than two Elevated Leverage Ratio Periods
during the term of the $3.5 billion revolving credit facility, and the Leverage Ratio must return to 3.75 to 1 for at least one
fiscal quarter between Elevated Leverage Ratio Periods. The calculation of all components used in the Leverage Ratio
covenant are as defined in the $3.5 billion revolving credit facility.
Our $3.5 billion revolving credit facility, senior notes and other financing arrangements also contain certain
restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the
ability of the Company and its subsidiaries to, among other things, incur liens; engage in sale-leaseback transactions and
engage in mergers and consolidations. We monitor our compliance with these restrictions, but do not believe that they
significantly impact our ability to enter into investing or financing arrangements typical for our business. As of
100
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
December 31, 2020 and 2019, we were in compliance with all covenants and restrictions under our financing arrangements
that may have a material effect on our Consolidated Financial Statements.
8. Leases
Our operating lease activities primarily consist of leases for real estate, landfills and operating equipment. Our
financing lease activities primarily consist of leases for operating equipment, railcars and landfill assets. Leases with an
initial term of 12 months or less, which are not expected to be renewed beyond one year, are not recorded on the balance
sheet and are recognized as lease expense on a straight-line basis over the lease term. Most leases include one or more
options to renew, with renewal terms generally ranging from one to 10 years. The exercise of lease renewal options is at
our sole discretion. We include the renewal term in the calculation of the right-of-use asset and related lease liability when
such renewals are reasonably certain of being exercised. Certain leases also include options to purchase the leased property.
The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer
of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments based
on usage and other lease agreements include rental payments adjusted periodically for inflation; these payments are treated
as variable lease payments. Our lease agreements do not contain any material residual value guarantees or material
restrictive covenants.
When the implicit interest rate is not readily available for our leases, we discount future cash flows of the remaining
lease payments using the current interest rate that would be paid to borrow on collateralized debt over a similar term, or
incremental borrowing rate, at the commencement date.
Supplemental balance sheet information for our leases as of December 31 is as follows (in millions):
Leases
Classification
2020
2019
Assets
Long-term:
Operating . . . . . . . . . . . . . . . Other assets
Financing . . . . . . . . . . . . . . .
Property and equipment, net of accumulated
depreciation and amortization
Total lease assets . . . . . . .
Liabilities
Current:
Operating . . . . . . . . . . . . . . . Accrued liabilities
Financing . . . . . . . . . . . . . . . Current portion of long-term debt
Long-term:
Operating . . . . . . . . . . . . . . . Other liabilities
Financing . . . . . . . . . . . . . . .
Total lease liabilities . . . .
Long-term debt, less current portion
$
$
$
$
466
$
386
852
63
50
453
314
880
$
$
$
424
374
798
79
36
366
323
804
Operating lease expense was $140 million, $132 million and $129 million during 2020, 2019 and 2018, respectively,
and is included in operating and selling, general and administrative expenses in our Consolidated Statement of Operations.
Financing lease expense for 2020 and 2019 was $51 million and $48 million, respectively, and is included in depreciation
and amortization expense and interest expense, net in our Consolidated Statement of Operations.
101
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Minimum contractual obligations for our leases (undiscounted) as of December 31, 2020 are as follows (in millions):
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total undiscounted lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discounted lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating
Financing
59 $
71
64
55
42
362
653 $
(137)
516 $
61
52
47
43
39
234
476
(112)
364
Cash paid during 2020 for our operating and financing leases was $91 million and $51 million, respectively.
During 2020, right-of-use assets obtained in exchange for lease obligations for our operating and financing leases were
$128 million and $35 million, respectively. Cash paid during 2019 for our operating and financing leases was $87 million
and $40 million, respectively. During 2019, right-of-use assets obtained in exchange for lease obligations for our operating
and financing leases were $149 million and $134 million, respectively.
As of December 31, 2020, the weighted average remaining lease terms of our operating and financing leases were
approximately 16 years and 15 years, respectively. The weighted average discount rates used to determine the lease
liabilities as of December 31, 2020 for our operating and financing leases were approximately 2.90% and 3.70%,
respectively.
9. Income Taxes
Income Tax Expense
Our income tax expense consisted of the following for the year ended December 31 (in millions):
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
2019
2018
114 $
204 $
91
27
232
94
36
334
149
10
6
165
397 $
94
8
(2)
100
434 $
256
132
40
428
59
(32)
(2)
25
453
102
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended
December 31 as follows:
Income tax expense at U.S. federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . .
State and local income taxes, net of federal income tax benefit . . . . . . . . . . . .
Impacts of enactment of tax reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxing authority audit settlements and other tax adjustments . . . . . . . . . . . . . .
Tax impact of equity-based compensation transactions . . . . . . . . . . . . . . . . . . .
Tax impact of impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax rate differential on foreign income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
21.00 %
4.46
—
(3.78)
(0.17)
(1.12)
(0.35)
0.33
0.57
20.94 %
2019
21.00 %
4.39
—
(4.38)
(0.74)
(0.91)
0.72
0.40
0.13
20.61 %
2018
21.00 %
4.41
(0.51)
(2.44)
(3.85)
(0.54)
0.03
0.43
0.51
19.04 %
The comparability of our income tax expense for the reported periods has been primarily affected by (i) variations in
our income before income taxes; (ii) federal tax credits; (iii) the tax implications of impairments; (iv) excess tax benefits
associated with equity-based compensation transactions; (v) the realization of state net operating losses and credits; (vi) tax
audit settlements; (vii) adjustments to our accruals and deferred taxes and (viii) the impacts of enactment of tax reform.
For financial reporting purposes, income before income taxes by source for the year ended December 31 was as
follows (in millions):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Foreign (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
1,780 $
113
1,893 $
2019
2,025 $
80
2,105 $
2018
2,235
141
2,376
(a) Foreign income before income taxes for the year ended December 31, 2019 includes a $52 million impairment charge
related to our minority-owned investment in a waste conversion technology business. See Note 12 for further
discussion.
Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to
invest in and manage low-income housing properties. We support the operations of these entities in exchange for a pro-rata
share of the tax credits they generate. The low-income housing investments qualify for federal tax credits that we expect
to realize through 2030 under Section 42 or Section 45D of the Internal Revenue Code. We also held a residual financial
interest in an entity that owns a refined coal facility that qualified for federal tax credits under Section 45 of the Internal
Revenue Code through 2019. The entity sold the majority of its assets in the first quarter of 2020, which resulted in a
$7 million non-cash impairment of our investment at that time. We account for our investments in these entities using the
equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value
of our investments in equity in net losses of unconsolidated entities within our Consolidated Statements of Operations.
During the years ended December 31, 2020, 2019 and 2018, we recognized $73 million (including the $7 million
impairment of the refined coal facility noted above), $46 million and $30 million of net losses, respectively, and a
reduction in our income tax expense of $87 million, $96 million and $57 million, respectively, primarily due to tax credits
realized from these investments. In addition, during the years ended December 31, 2020, 2019 and 2018, we recognized
interest expense of $11 million, $9 million and $3 million, respectively, associated with our investments in low-income
housing properties. See Note 19 for additional information related to these unconsolidated variable interest entities.
103
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other Federal Tax Credits — During 2020, 2019 and 2018, we recognized federal tax credits in addition to the tax
credits realized from our investments in low-income housing properties and the refined coal facility, resulting in a
reduction in our income tax expense of $7 million, $11 million and $10 million, respectively.
Non-Deductible Transaction Costs — During 2020 and 2019, we recognized the detrimental tax impact of $27 million
and $10 million, respectively, of non-deductible transaction costs related to our acquisition of Advanced Disposal. The tax
rules require the capitalization of certain facilitative costs on the acquisition of stock of a company resulting in the
applicable costs not being deductible for tax purposes.
Tax Implications of Impairments — Portions of the impairment charges recognized during 2019 and 2018 were not
deductible for tax purposes resulting in an increase in income tax expense of $15 million and $1 million, respectively. The
non-cash impairment charges recognized during 2020 were deductible for tax purposes. See Note 12 for more information
related to our impairment charges.
Equity-Based Compensation — During 2020, 2019 and 2018, we recognized excess tax benefits related to the vesting
or exercise of equity-based compensation awards resulting in a reduction in our income tax expense of $27 million,
$25 million and $17 million, respectively.
State Net Operating Losses and Credits — During 2020, 2019 and 2018, we recognized state net operating losses and
credits resulting in a reduction in our income tax expense of $12 million, $14 million and $22 million, respectively.
Tax Audit Settlements — We file income tax returns in the U.S. and Canada, as well as other state and local
jurisdictions. We are currently under audit by various taxing authorities, as discussed below, and our audits are in various
stages of completion. During the reported periods, we settled various tax audits which resulted in a reduction in our income
tax expense of $10 million, $2 million and $40 million for the years ended December 31, 2020, 2019 and 2018,
respectively.
We participate in the IRS’s Compliance Assurance Process, which means we work with the IRS throughout the year
towards resolving any material issues prior to the filing of our annual tax return. Any unresolved issues as of the tax return
filing date are subject to routine examination procedures. We are currently in the examination phase of IRS audits for the
2017 through 2020 tax years and expect these audits to be completed within the next 15 months. We are also currently
undergoing audits by various state and local jurisdictions for tax years that date back to 2014.
Adjustments to Accruals and Deferred Taxes — Adjustments to our accruals and deferred taxes due to the filing of
our income tax returns, analysis of our deferred tax balances and changes in state and foreign laws resulted in a reduction
in our income tax expense of $3 million, $22 million and $52 million for the years ended December 31, 2020, 2019 and
2018, respectively.
Enactment of Tax Reform – In accordance with applicable accounting guidance, the Company recognized the
provisional tax impacts and subsequent measurement period adjustments related to the remeasurement of our deferred
income tax assets and liabilities and the one-time, mandatory transition tax on deemed repatriation of previously
tax-deferred and unremitted foreign earnings, resulting in a reduction in our income tax expense of $12 million for the
year ended December 31, 2018.
Unremitted Earnings in Foreign Subsidiaries — In the third quarter of 2020, we modified our permanent reinvestment
assertion and began providing additional income taxes for the undistributed current year earnings of our foreign
subsidiaries. No additional income taxes have been provided for any remaining undistributed foreign earnings prior to
2020 not subject to the one-time, mandatory transition tax, or any additional outside basis difference, as these amounts
continue to be indefinitely reinvested in foreign operations.
104
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Deferred Tax Assets (Liabilities)
The components of net deferred tax liabilities as of December 31 are as follows (in millions):
Deferred tax assets:
Net operating loss, capital loss and tax credit carry-forwards . . . . . . . . . . . . . . . . . . . . . . . $
Landfill and environmental remediation liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous and other reserves, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
2020
2019
186 $
57
131
99
473
(150)
150
156
114
150
570
(162)
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(956)
(1,059)
(114)
(1,806) $
(842)
(865)
(108)
(1,407)
As of December 31, 2020, we had $15 million of federal net operating loss carry-forwards with expiration dates
through 2025 and $2.3 billion of state net operating loss carry-forwards with expiration dates through 2040. We also had
$37 million of foreign tax credit carry-forwards with expiration dates through 2030 and $16 million of state tax credit
carry-forwards with expiration dates through 2036.
We have established valuation allowances for uncertainties in realizing the benefit of certain tax loss and credit
carry-forwards and other deferred tax assets. While we expect to realize the deferred tax assets, net of the valuation
allowances, changes in estimates of future taxable income or in tax laws may alter this expectation.
Liabilities for Uncertain Tax Positions
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued interest,
is as follows (in millions):
Balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . .
Additions based on tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
40 $
5
—
2
—
(10)
37 $
36 $
5
—
2
—
(3)
40 $
109
6
12
2
(88)
(5)
36
2020
2019
2018
These liabilities are included as a component of other long-term liabilities in our Consolidated Balance Sheets because
the Company does not anticipate that settlement of the liabilities will require payment of cash within the next 12 months.
As of December 31, 2020, we had $31 million of net unrecognized tax benefits that, if recognized in future periods, would
impact our effective income tax rate.
We recognize interest expense related to unrecognized tax benefits in our income tax expense, which was not material
for the reported periods. We did not have any accrued liabilities or expense for penalties related to unrecognized tax
benefits for the reported periods.
105
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
10. Employee Benefit Plans
Defined Contribution Plans — Waste Management sponsors a 401(k) retirement savings plan that covers employees,
except those working subject to collective bargaining agreements that do not provide for coverage under the plan.
U.S. employees who are not subject to such collective bargaining agreements are generally eligible to participate in the
plan following a 90-day waiting period after hire and may contribute as much as 50% of their eligible annual compensation
and 80% of their annual incentive plan bonus, subject to annual contribution limitations established by the IRS. Under the
retirement savings plan, for non-union employees, we match 100% of employee contributions on the first 3% of their
eligible annual compensation and 50% of employee contributions on the next 3% of their eligible annual compensation,
resulting in a maximum match of 4.5% of eligible annual compensation. Non-union employees are automatically enrolled
in the plan at a 3% contribution rate upon eligibility. Both employee and Company contributions are in cash and vest
immediately. Certain U.S. employees who are subject to collective bargaining agreements may participate in the
401(k) retirement savings plan under terms specified in their collective bargaining agreement. Certain employees outside
the U.S., including those in Canada, participate in defined contribution plans maintained by the Company in compliance
with laws of the appropriate jurisdiction. Charges to operating and selling, general and administrative expenses for our
defined contribution plans totaled $92 million, $88 million and $80 million for the years ended December 31, 2020, 2019
and 2018, respectively.
Defined Benefit Plans (other than multiemployer defined benefit pension plans discussed below) — WM Holdings
sponsors a defined benefit plan for certain employees who are subject to collective bargaining agreements that provide for
participation in this plan. Further, certain of our Canadian subsidiaries sponsor defined benefit plans that are frozen to new
participants. As of December 31, 2020, the combined benefit obligation of these pension plans was $154 million supported
by $150 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of
$4 million. As of December 31, 2019, the combined benefit obligation of these pension plans was $141 million supported
by $136 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of
$5 million.
In addition, WM Holdings and certain of its subsidiaries provided post-retirement health care and other benefits to
eligible retirees. In conjunction with our acquisition of WM Holdings in July 1998, we limited participation in these plans
to participating retirees as of December 31, 1998. The unfunded benefit obligation for these plans was $14 million as of
December 31, 2020 and 2019.
Our accrued benefit liabilities for our defined benefit pension and other post-retirement plans were $18 million and
$19 million as of December 31, 2020 and 2019, respectively, and are included as components of accrued liabilities and
long-term other liabilities in our Consolidated Balance Sheets.
Multiemployer Defined Benefit Pension Plans — We are a participating employer in a number of trustee-managed
multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for employees who are covered by
collective bargaining agreements. The risks of participating in these Multiemployer Pension Plans are different from
single-employer plans in that (i) assets contributed to the Multiemployer Pension Plan by one employer may be used to
provide benefits to employees or former employees of other participating employers; (ii) if a participating employer stops
contributing to the plan, the unfunded obligations of the plan may be required to be assumed by the remaining participating
employers and (iii) if we choose to stop participating in any of our Multiemployer Pension Plans, we may be required to
106
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
pay those plans a withdrawal amount based on the underfunded status of the plan. The following table outlines our
participation in Multiemployer Pension Plans considered to be individually significant (dollars in millions):
Pension Fund
Automotive Industries Pension Plan . . . . . . . . . EIN: 94-1133245;
Plan Number: 001
EIN: 36-6140097;
Plan Number: 001
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Midwest Operating Engineers Pension Trust
EIN/Pension Plan
Number
Pension Protection Act
Reported Status(a)
2019
2020
FIP/RP
Status(b)(c)
Implemented $
Company
Contributions(d)
2019
2020
2018
Expiration Date
of Collective
Bargaining
Agreement(s)
1 $
1 $
1
9/30/2021
Implemented
2
2
2 Various dates
Critical and
Declining
Endangered
as of
3/31/2019
Critical and
Declining
Not
Endangered
or Critical
as of
3/31/2020
Not
Endangered
or Critical
Not
Endangered
or Critical
Not
Endangered
or Critical
Not
Applicable
3
3
33
32
through
5/31/2023
3 Various dates
through
11/28/2025
29 Various dates
through
6/30/2025
Suburban Teamsters of Northern Illinois
Pension Plan . . . . . . . . . . . . . . . . . . . . . . .
EIN: 36-6155778;
Plan Number: 001
Endangered Implemented
Western Conference of Teamsters Pension
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EIN: 91-6145047;
Plan Number: 001
Contributions to other Multiemployer Pension
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total contributions to Multiemployer Pension
Plans (e) . . . . . . . . . . . . . . . . . . . . . . . . . .
$
39 $
38 $
35
15
14
12
$
54 $
52 $
47
(a) Unless otherwise noted in the table above, the most recent Pension Protection Act zone status available in 2020 and
2019 is for the plan’s year-end as of December 31, 2019 and 2018, respectively. The zone status is based on
information that we received from the plan and is certified by the plan’s actuary. As defined in the Pension Protection
Act of 2006, among other factors, plans reported as critical are generally less than 65% funded and plans reported as
endangered are generally less than 80% funded. Under the Multiemployer Pension Reform Act of 2014, a plan is
generally in critical and declining status if it (i) is certified to be in critical status pursuant to the Pension Protection
Act of 2006 and (ii) is projected to be insolvent within the next 15 years or, in certain circumstances, 20 years.
(b) The “FIP/RP Status” column indicates plans for which a Funding Improvement Plan (“FIP”) or a Rehabilitation Plan
(“RP”) has been implemented.
(c) A Multiemployer Pension Plan that has been certified as endangered, seriously endangered or critical may begin to
levy a statutory surcharge on contribution rates. Once authorized, the surcharge is at the rate of 5% for the first
12 months and 10% for any periods thereafter. Contributing employers, however, may eliminate the surcharge by
entering into a collective bargaining agreement that meets the requirements of the applicable FIP or RP.
(d) Of the Multiemployer Pension Plans considered to be individually significant, the Company was listed in the
Form 5500 of the Suburban Teamsters of Northern Illinois Pension Plan as providing more than 5% of the total
contributions for plan years ending December 31, 2019 and 2018.
(e) Total contributions to Multiemployer Pension Plans excludes contributions related to withdrawal liabilities discussed
below.
Our portion of the projected benefit obligation, plan assets and unfunded liability for the Multiemployer Pension Plans
is not material to our financial position. However, the failure of participating employers to remain solvent could affect our
portion of the plans’ unfunded liability. Specific benefit levels provided by union pension plans are not negotiated with or
known by the employer contributors.
In connection with our ongoing renegotiations of various collective bargaining agreements, we may discuss and
negotiate for the complete or partial withdrawal from one or more of these pension plans. Further, business events, such
as the discontinuation or nonrenewal of a customer contract, the decertification of a union, or relocation, reduction or
discontinuance of certain operations, which result in the decline of Company contributions to a Multiemployer Pension
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Plan could trigger a partial or complete withdrawal. In the event of a withdrawal, we may incur expenses associated with
our obligations for unfunded vested benefits at the time of the withdrawal. In 2020, 2019 and 2018, we recognized charges
of $4 million, $1 million and $3 million, respectively, to operating expenses for the withdrawal from certain underfunded
Multiemployer Pension Plans. Refer to Note 11 for additional information related to our obligations to Multiemployer
Pension Plans for which we have withdrawn or partially withdrawn.
Multiemployer Plan Benefits Other Than Pensions — During the years ended December 31, 2020, 2019 and 2018, the
Company made contributions of $48 million, $45 million and $43 million, respectively, to multiemployer health and
welfare plans that also provide other post-retirement employee benefits. Funding of benefit payments for plan participants
are made at negotiated rates in the respective collective bargaining agreements as costs are incurred.
11. Commitments and Contingencies
Financial Instruments — We have obtained letters of credit, surety bonds and insurance policies and have established
trust funds and issued financial guarantees to support tax-exempt bonds, contracts, performance of landfill final capping,
closure and post-closure requirements, environmental remediation and other obligations. Letters of credit generally are
supported by our $3.5 billion revolving credit facility and other credit lines established for that purpose. These facilities
are discussed further in Note 7. Surety bonds and insurance policies are supported by (i) a diverse group of third-party
surety and insurance companies; (ii) an entity in which we have a noncontrolling financial interest or (iii) a wholly-owned
insurance captive, the sole business of which is to issue surety bonds and/or insurance policies on our behalf.
Management does not expect that any claims against or draws on these instruments would have a material adverse
effect on our financial condition, results of operations or cash flows. We have not experienced any unmanageable difficulty
in obtaining the required financial assurance instruments for our current operations. In an ongoing effort to mitigate risks
of future cost increases and reductions in available capacity, we continue to evaluate various options to access cost-
effective sources of financial assurance.
Insurance — We carry insurance coverage for protection of our assets and operations from certain risks including
general liability, automobile liability, workers’ compensation, real and personal property, directors’ and officers’ liability,
pollution legal liability, cyber incident liability and other coverages we believe are customary to the industry. Our exposure
to loss for insurance claims is generally limited to the per-incident deductible under the related insurance policy. Our
exposure could increase if our insurers are unable to meet their commitments on a timely basis.
We have retained a significant portion of the risks related to our health and welfare, general liability, automobile
liability and workers’ compensation claims programs. “General liability” refers to the self-insured portion of specific third-
party claims made against us that may be covered under our commercial General Liability Insurance Policy. For our self-
insured portions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is
based on an actuarial valuation or internal estimates. The accruals for these liabilities could be revised if future occurrences
or loss development significantly differ from such valuations and estimates. We use a wholly-owned insurance captive to
insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs. As of
December 31, 2020, both our commercial General Liability Insurance Policy and our workers’ compensation insurance
program carried self-insurance exposures of up to $5 million per incident. As of December 31, 2020, our automobile
liability insurance program included a per-incident deductible of up to $10 million. Our receivable balance associated with
108
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
insurance claims was $139 million and $126 million as of December 31, 2020 and 2019, respectively. The changes to our
insurance reserves for the year ended December 31 are summarized below (in millions):
Balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Self-insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current portion as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term portion as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
575 $
172
(151)
68
664 $
175 $
489 $
567
171
(163)
—
575
145
430
2020(a)
2019
(a) Based on current estimates, we anticipate that most of our insurance reserves will be settled in cash over the next
six years.
(b) Insurance reserves of $68 million related to the acquisition of Advanced Disposal.
We do not expect the impact of any known casualty, property, environmental or other contingency to have a material
impact on our financial condition, results of operations or cash flows.
Operating and Financing Leases — Our operating and financing leases are discussed in Note 8.
Other Commitments
• Disposal — We have several agreements expiring at various dates through 2052 that require us to dispose of a
minimum number of tons at third-party disposal facilities. Under these put-or-pay agreements, we are required to
pay for the agreed upon minimum volumes regardless of the actual number of tons placed at the facilities. We
generally fulfill our minimum contractual obligations by disposing of volumes collected in the ordinary course
of business at these disposal facilities.
• Waste Paper — We are party to waste paper purchase agreements expiring at various dates through 2023 that
require us to purchase a minimum number of tons of waste paper. The cost per ton we pay is based on market
prices.
• Royalties — We have various arrangements that require us to make royalty payments to third parties including
prior land owners, lessors or host communities where our operations are located. Our obligations generally are
based on per ton rates for waste actually received at our transfer stations or landfills. Royalty agreements that are
non-cancelable and require fixed or minimum payments are included in our financing leases and other debt
obligations in our Consolidated Balance Sheets as disclosed in Note 7.
Our unconditional purchase obligations are generally established in the ordinary course of our business and are
structured in a manner that provides us with access to important resources at competitive, market-driven rates. As of
December 31, 2020, our estimated minimum obligations associated with unconditional purchase obligations, which are
not recognized in our Consolidated Balance Sheets, were $160 million in 2021, $147 million in 2022, $133 million
in 2023, $114 million in 2024, $100 million in 2025 and $454 million thereafter. We may also establish unconditional
purchase obligations in conjunction with acquisitions or divestitures. Our actual future minimum obligations under these
outstanding purchase agreements are generally quantity driven and, as a result, our associated financial obligations are not
fixed as of December 31, 2020. For contracts that require us to purchase minimum quantities of goods or services, we have
estimated our future minimum obligations based on the current market values of the underlying products or services or
contractually stated amounts. We currently expect the products and services provided by these agreements to continue to
109
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
meet the needs of our ongoing operations. Therefore, we do not expect these established arrangements to materially impact
our future financial position, results of operations or cash flows.
Guarantees — We have entered into the following guarantee agreements associated with our operations:
• As of December 31, 2020, WM Holdings has fully and unconditionally guaranteed all of WM’s senior
indebtedness, including its senior notes, $3.5 billion revolving credit facility and certain letter of credit lines,
which mature through 2050. WM has fully and unconditionally guaranteed the senior indebtedness of WM
Holdings, which matures in 2026. Performance under these guarantee agreements would be required if either
party defaulted on their respective obligations. No additional liabilities have been recorded for these intercompany
guarantees because all of the underlying obligations are reflected in our Consolidated Balance Sheets.
• WM and WM Holdings have guaranteed subsidiary debt obligations, including tax-exempt bonds, financing
leases and other indebtedness. If a subsidiary fails to meet its obligations associated with its debt agreements as
they come due, WM or WM Holdings will be required to perform under the related guarantee agreement.
No additional liabilities have been recorded for these intercompany guarantees because all of the underlying
obligations are reflected in our Consolidated Balance Sheets. See Note 7 for information related to the balances
and maturities of these debt obligations.
• Certain of our subsidiaries have guaranteed the market or contractually-determined value of certain homeowners’
properties that are adjacent to or near certain of our landfills. These guarantee agreements extend over the life of
the respective landfill. Under these agreements, we would be responsible for the difference, if any, between the
sale value and the guaranteed market or contractually-determined value of the homeowners’ properties. As of
December 31, 2020, we have agreements guaranteeing certain market value losses for certain properties adjacent
to or near 18 of our landfills. We do not believe that these contingent obligations will have a material adverse
effect on the Company’s financial position, results of operations or cash flows.
• We have indemnified the purchasers of businesses or divested assets for the occurrence of specified events under
certain of our divestiture agreements. Other than certain identified items that are currently recorded as obligations,
we do not believe that it is possible to determine the contingent obligations associated with these indemnities.
Additionally, under certain of our acquisition agreements, we have provided for additional consideration to be
paid to the sellers if established financial targets or other market conditions are achieved post-closing and we
have recognized liabilities for these contingent obligations based on an estimate of the fair value of these
contingencies at the time of acquisition. We do not currently believe that contingent obligations to provide
indemnification or pay additional post-closing consideration in connection with our divestitures or acquisitions
will have a material adverse effect on the Company’s business, financial condition, results of operations or cash
flows.
• WM and WM Holdings guarantee the service, lease, financial and general operating obligations of certain of their
subsidiaries. If such a subsidiary fails to meet its contractual obligations as they come due, the guarantor has an
unconditional obligation to perform on its behalf. No additional liability has been recorded for service, financial
or general operating guarantees because the subsidiaries’ obligations are properly accounted for as costs of
operations as services are provided or general operating obligations as incurred. No additional liability has been
recorded for the lease guarantees because the subsidiaries’ obligations are properly accounted for as operating or
financing leases, as appropriate.
Environmental Matters — A significant portion of our operating costs and capital expenditures could be characterized
as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation
and maintenance of our landfills, subjects us to an array of laws and regulations relating to the protection of the
environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our
operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity
required by state or local authorities, such liabilities include PRP investigations. The costs associated with these liabilities
110
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly
associated with site investigation and clean-up.
As of December 31, 2020, we have been notified by the government that we are a PRP in connection with 75 locations
listed on the Environmental Protection Agency’s (“EPA’s”) Superfund National Priorities List (“NPL”). Of the 75 sites at
which claims have been made against us, 15 are sites we own. Each of the NPL sites we own was initially developed by
others as a landfill disposal facility. At each of these facilities, we are working in conjunction with the government to
evaluate or remediate identified site problems, and we have either agreed with other legally liable parties on an arrangement
for sharing the costs of remediation or are working toward a cost-sharing agreement. We generally expect to receive any
amounts due from other participating parties at or near the time that we make the remedial expenditures. The other 60 NPL
sites, which we do not own, are at various procedural stages under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, known as CERCLA or Superfund.
The majority of proceedings involving NPL sites that we do not own are based on allegations that certain of our
subsidiaries (or their predecessors) transported hazardous substances to the sites, often prior to our acquisition of these
subsidiaries. CERCLA generally provides for liability for those parties owning, operating, transporting to or disposing at
the sites. Proceedings arising under Superfund typically involve numerous waste generators and other waste transportation
and disposal companies and seek to allocate or recover costs associated with site investigation and remediation, which
costs could be substantial and could have a material adverse effect on our consolidated financial statements. At some of
the sites at which we have been identified as a PRP, our liability is well defined as a consequence of a governmental
decision and an agreement among liable parties as to the share each will pay for implementing that remedy. At other sites,
where no remedy has been selected or the liable parties have been unable to agree on an appropriate allocation, our future
costs are uncertain.
On October 11, 2017, the EPA issued its Record of Decision (“ROD”) with respect to the previously proposed
remediation plan for the San Jacinto waste pits in Harris County, Texas. McGinnes Industrial Maintenance Corporation
(“MIMC”), an indirect wholly-owned subsidiary of WM, operated some of the waste pits from 1965 to 1966 and has been
named as a site PRP. In 1998, WM acquired the stock of the parent entity of MIMC. MIMC has been working with the
EPA and other named PRPs as the process of addressing the site proceeds. On April 9, 2018, MIMC and International
Paper Company entered into an Administrative Order on Consent agreement with the EPA to develop a remedial design
for the EPA’s proposed remedy for the site. Allocation of responsibility among the PRPs for the proposed remedy has not
been established. As of December 31, 2020 and 2019, the recorded liability for MIMC’s estimated potential share of the
EPA’s proposed remedy and related costs was $55 million and $56 million, respectively. MIMC’s ultimate liability could
be materially different from current estimates.
From time to time, we are also named as defendants in personal injury and property damage lawsuits, including
purported class actions, on the basis of having owned, operated or transported waste to a disposal facility that is alleged to
have contaminated the environment or, in certain cases, on the basis of having conducted environmental remediation
activities at sites. Some of the lawsuits may seek to have us pay the costs of monitoring of allegedly affected sites and
health care examinations of allegedly affected persons for a substantial period of time even where no actual damage is
proven. While we believe we have meritorious defenses to these lawsuits, the ultimate resolution is often substantially
uncertain due to the difficulty of determining the cause, extent and impact of alleged contamination (which may have
occurred over a long period of time), the potential for successive groups of complainants to emerge, the diversity of the
individual plaintiffs’ circumstances, and the potential contribution or indemnification obligations of co-defendants or other
third parties, among other factors. Additionally, we often enter into agreements with landowners imposing obligations on
us to meet certain regulatory or contractual conditions upon site closure or upon termination of the agreements. Compliance
with these agreements inherently involves subjective determinations and may result in disputes, including litigation.
Litigation — As a large company with operations across the U.S. and Canada, we are subject to various proceedings,
lawsuits, disputes and claims arising in the ordinary course of our business. Many of these actions raise complex factual
111
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
and legal issues and are subject to uncertainties. Actions that have been filed against us, and that may be filed against us
in the future, include personal injury, property damage, commercial, customer, and employment-related claims, including
purported state and national class action lawsuits related to: alleged environmental contamination, including releases of
hazardous material and odors; sales and marketing practices, customer service agreements and prices and fees; and federal
and state wage and hour and other laws. The plaintiffs in some actions seek unspecified damages or injunctive relief, or
both. These actions are in various procedural stages, and some are covered in part by insurance. We currently do not
believe that the eventual outcome of any such actions will have a material adverse effect on the Company’s business,
financial condition, results of operations or cash flows.
WM’s charter and bylaws provide that WM shall indemnify against all liabilities and expenses, and upon request shall
advance expenses to any person, who is subject to a pending or threatened proceeding because such person is or was a
director or officer of the Company. Such indemnification is required to the maximum extent permitted under Delaware
law. Accordingly, the director or officer must execute an undertaking to reimburse the Company for any fees advanced if
it is later determined that the director or officer was not permitted to have such fees advanced under Delaware law.
Additionally, the Company has direct contractual obligations to provide indemnification to each of the members of WM’s
Board of Directors and each of WM’s executive officers. The Company may incur substantial expenses in connection with
the fulfillment of its advancement of costs and indemnification obligations in connection with actions or proceedings that
may be brought against its former or current officers, directors and employees.
Multiemployer Defined Benefit Pension Plans — About 20% of our workforce is covered by collective bargaining
agreements with various local unions across the U.S. and Canada. As a result of some of these agreements, certain of our
subsidiaries are participating employers in a number of Multiemployer Pension Plans for the covered employees. Refer to
Note 10 for additional information about our participation in Multiemployer Pension Plans considered individually
significant. In connection with our ongoing renegotiation of various collective bargaining agreements, we may discuss and
negotiate for the complete or partial withdrawal from one or more of these Multiemployer Pension Plans. A complete or
partial withdrawal from a Multiemployer Pension Plan may also occur if employees covered by a collective bargaining
agreement vote to decertify a union from continuing to represent them. Any other circumstance resulting in a decline in
Company contributions to a Multiemployer Pension Plan through a reduction in the labor force, whether through attrition
over time or through a business event (such as the discontinuation or nonrenewal of a customer contract, the decertification
of a union, or relocation, reduction or discontinuance of certain operations) may also trigger a complete or partial
withdrawal from one or more of these pension plans.
In 2020, 2019 and 2018, we recognized $4 million, $1 million and $3 million, respectively, of charges to operating
expenses for the withdrawal from certain underfunded Multiemployer Pension Plans. We do not believe that any future
liability relating to our past or current participation in, or withdrawals from, the Multiemployer Pension Plans to which we
contribute will have a material adverse effect on our business, financial condition or liquidity. However, liability for future
withdrawals could have a material adverse effect on our results of operations or cash flows for a particular reporting period,
depending on the number of employees withdrawn and the financial condition of the Multiemployer Pension Plan(s) at the
time of such withdrawal(s).
Tax Matters — We maintain a liability for uncertain tax positions, the balance of which management believes is
adequate. Results of audit assessments by taxing authorities are not currently expected to have a material adverse effect
on our financial condition, results of operations or cash flows. See Note 9 for additional discussion regarding income taxes.
112
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12. Asset Impairments and Unusual Items
(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual
items, net for the year ended December 31 (in millions):
Gain from divestitures, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2020
2019
2018
(33) $
68
35 $
— $
42
42 $
(96)
38
(58)
During the year ended December 31, 2020, we recognized $35 million of net charges primarily related to the
following:
Gain from Divestitures, Net — As discussed further in Note 18, we and Advanced Disposal entered into an agreement
that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal to address
divestitures required by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal (as
subsequently amended, the “Divestiture Agreement”). Immediately following the closing of the Advanced Disposal
acquisition, the transactions contemplated by the Divestiture Agreement were consummated and the Company
subsequently received cash proceeds of $856 million, subject to certain post-closing adjustments. We recognized a net
gain of $33 million on our net assets divested under the Divestiture Agreement, primarily within our Tier 2 segment.
Energy Services Asset Impairments — During the second quarter of 2020, the Company tested the recoverability of
certain energy services assets in our Tier 1 segment. Indicators of impairment included (i) the sharp downturn in oil demand
that has led to a significant decline in oil prices and production activities, which we project will have long-term impacts
on the utilization of our assets and (ii) significant shifts in our business, including increases in competition and customers
choosing to bury waste on site versus in a landfill, reducing our revenue outlook. The Company determined that the
carrying amount of the asset group was not fully recoverable. As a result, we recognized $41 million of non-cash
impairment charges primarily related to two landfills and an oil field waste injection facility in our Tier 1 segment. We
wrote down the net book value of these assets to their estimated fair value using an income approach based on estimated
future cash flow projections (Level 3). The aggregate fair value of the impaired asset group was $8 million as of
June 30, 2020. The Company tested the recoverability of an additional $239 million in energy services assets and
determined that the carrying amount was recoverable as of June 30, 2020. No new indicators of impairment were identified
during the second half of 2020.
Other Impairments — In addition to the energy services impairments noted above, we recognized a $20 million
non-cash impairment charge in our Tier 3 segment due to management’s decision to close a landfill once its constructed
airspace is filled and abandon any remaining permitted airspace, which was considered an impairment indicator. As the
carrying value was not recoverable, we wrote off the entire net book value of the asset using an income approach based
on estimated future cash flow projections (Level 3). The impairment charge was comprised of $12 million related to the
carrying value of the asset and $8 million related to the acceleration of the expected timing of capping, closure and post-
closure activities, which is discussed further in Note 4.
Additionally, during the third quarter of 2020, we recognized $7 million of net charges primarily related to non-cash
impairments of certain assets within our WM Renewable Energy business in our Other segment. As the carrying values of
the assets were not recoverable, we wrote off their entire net carrying value using an income approach based on estimated
future cash flow projections (Level 3).
113
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
During the year ended December 31, 2019, we recognized asset impairments of $42 million, related to (i) $27 million
of goodwill impairment charges of which $17 million related to our EES business and $10 million related to our
LampTracker® reporting unit and (ii) $15 million of asset impairment charges primarily related to certain solid waste
operations.
During the year ended December 31, 2018, we recognized net gains of $58 million, primarily related to (i) a
$52 million gain associated with the sale of certain hauling operations in our Tier 1 segment and (ii) net gains of
$44 million substantially all from divestitures of certain ancillary operations. These gains were partially offset by (i) a
$30 million charge to impair a landfill in our Tier 3 segment based on an internally developed discounted projected cash
flow analysis, taking into account continued volume decreases and revised capping cost estimates and (ii) $8 million of
impairment charges primarily related to our LampTracker® reporting unit.
See Note 3 for additional information related to the accounting policy and analysis involved in identifying and
calculating impairments. See Note 20 for additional information related to the impact of impairments on the results of
operations of our reportable segments.
Equity in Net Losses of Unconsolidated Entities
During the year ended December 31, 2020 we recorded a non-cash impairment charge of $7 million related to our
investment in a refined coal facility which is discussed further in Notes 9 and 19. The fair value of our investment was not
readily determinable; thus, we determined the fair value using management assumptions pertaining to investment value
(Level 3).
Other, Net
During the first quarter of 2019, we recognized a $52 million non-cash impairment charge related to our minority-
owned investment in a waste conversion technology business. We wrote down our investment to its estimated fair value
as the result of recent third-party investor’s transactions in these securities. The fair value of our investment was not readily
determinable; thus, we determined the fair value utilizing a combination of quoted price inputs for the equity in our
investment (Level 2) and certain management assumptions pertaining to investment value (Level 3).
114
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Accumulated Other Comprehensive Income (Loss)
The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, which
is included as a component of WM stockholders’ equity, are as follows (in millions, with amounts in parentheses
representing decreases to accumulated other comprehensive income):
Foreign
Available- Currency Retirement
Post-
Balance, December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
for-Sale Translation
Derivative
Instruments Securities Adjustments Obligations Total
(3) $ 8
(33) $
29 $
15 $
Benefit
Other comprehensive income (loss) before reclassifications,
net of tax expense (benefit) of $0, $2, $0 and $1,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive
(income) loss, net of tax (expense) benefit of $3, $0, $0 and
$0, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net current period other comprehensive income (loss) . . . . . . . . . .
Adoption of new accounting standard (a) . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss) before reclassifications,
net of tax expense (benefit) of $0, $5, $0 and $1,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive
(income) loss, net of tax (expense) benefit of $3, $0, $0 and
$0, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net current period other comprehensive income (loss) . . . . . . . . . .
Balance, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss) before reclassifications,
net of tax expense (benefit) of $2, $4, $0 and $1,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified from accumulated other comprehensive
(income) loss, net of tax (expense) benefit of $2, $0, $0 and
$(1), respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net current period other comprehensive income (loss) . . . . . . . . . .
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
5
(105)
2 (98)
8
8
(7)
(32) $
—
5
3
23 $
—
(105)
—
(76) $
—
8
2 (90)
(5)
(1)
(2) $ (87)
—
15
55
2 72
8
8
(24) $
—
15
38 $
—
55
(21) $
(1)
7
1 79
(1) $ (8)
7
12
20
2 41
8
15
(9) $
(1)
11
49 $
—
20
(1) $
(1)
6
1 47
— $ 39
(a) As of January 1, 2018, we adopted ASU 2018-02 and reclassified stranded tax effects to retained earnings.
14. Capital Stock, Dividends and Common Stock Repurchase Program
Capital Stock
We have 1.5 billion shares of authorized common stock with a par value of $0.01 per common share. As of
December 31, 2020, we had 422.8 million shares of common stock issued and outstanding. The Board of Directors is
authorized to issue preferred stock in series, and with respect to each series, to fix its designation, relative rights (including
voting, dividend, conversion, sinking fund, and redemption rights), preferences (including dividends and liquidation) and
limitations. We have 10 million shares of authorized preferred stock, $0.01 par value, none of which is currently
outstanding.
115
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Dividends
Our quarterly dividends have been declared by our Board of Directors. Cash dividends declared and paid were
$927 million in 2020, or $2.18 per common share, $876 million in 2019, or $2.05 per common share, and $802 million in
2018, or $1.86 per common share.
In December 2020, we announced that our Board of Directors expects to increase the quarterly dividend from
$0.545 to $0.575 per share for dividends declared in 2021. However, all future dividend declarations are at the discretion
of the Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for
future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant.
Common Stock Repurchase Program
The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board
of Directors. Share repurchases during the reported periods were completed through accelerated share repurchase (“ASR”)
agreements and, to a lesser extent, open market transactions. The terms of these ASR agreements required that we deliver
cash at the beginning of each ASR repurchase period. In exchange, we received a portion of the total 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 are delivered to us once the repurchase period is complete. Shares repurchased are
reflected in the period the shares are delivered to us. The following is a summary of our share repurchases under our
common stock repurchase program for the year ended December 31:
Shares repurchased (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted average price per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total repurchases (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,687
108.92 $
402 $
2,247
108.60 $
244 $
2020(a)
2019(b)
2018(c)
11,673
86.35
1,008
(a) During 2020, we executed and completed an ASR agreement to repurchase $313 million of our common stock and
received 2.8 million shares in connection with this ASR agreement. We also repurchased an additional 0.9 million
shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the
Securities Exchange Act of 1934 (“Exchange Act”) for $89 million, inclusive of per-share commissions.
(b) During 2019, we executed and completed an ASR agreement to repurchase $180 million of our common stock and
received 1.6 million shares in connection with this ASR agreement. We also repurchased an additional 0.7 million
shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the
Exchange Act for $64 million, inclusive of per-share commissions.
(c) During 2018, we executed and completed four ASR agreements to repurchase $850 million of our common stock and
we received 9.8 million shares in connection with these ASR agreements. We also repurchased an additional
1.9 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18
of the Exchange Act for $158 million, inclusive of per-share commissions, which includes $4 million paid in 2019.
We announced in December 2020 that the Board of Directors has authorized up to $1.35 billion in future share
repurchases, which supersedes and replaces remaining authority under any prior Board of Directors’ authorization for
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 of Directors in making dividend declarations, including our net earnings, financial
condition and cash required for future business plans, growth and acquisitions.
116
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15. Equity-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. Subject to limitations set forth in the plan and under IRS regulations,
eligible employees may elect to have up to 10% of their base pay deducted during the offering period. The total number
of shares issued under the plan for the offering periods in 2020, 2019 and 2018 was approximately 570,000, 537,000 and
582,000, respectively. After the January 2021 issuance of shares associated with the July to December 2020 offering
period, 3.2 million shares remain available for issuance under the ESPP, which includes 3.0 million additional shares that
stockholders approved in May 2020 for future issuance.
As a result of our ESPP, annual compensation expense increased by $13 million, or $10 million net of tax expense,
for 2020, $10 million, or $7 million net of tax expense, for 2019 and $9 million, or $7 million net of tax expense, for 2018.
Employee Stock Incentive Plans
In May 2014, our stockholders approved our 2014 Stock Incentive Plan (the “2014 Plan”) to replace our 2009 Stock
Incentive Plan (the “2009 Plan”). The 2014 Plan authorized 23.8 million shares of our common stock for issuance pursuant
to the 2014 Plan, plus the approximately 1.1 million shares that then remained available for issuance under the 2009 Plan,
and any shares subject to outstanding awards under both incentive plans that are subsequently cancelled, forfeited,
terminate, expire or lapse. In May 2020, the Company’s Board of Directors amended the 2014 Plan to provide that future
shares surrendered in payment of the exercise or purchase price of an award, or any future shares used to satisfy the
withholding obligations, shall no longer be available for the grant of another award under the 2014 Plan. As of
December 31, 2020, approximately 18.0 million shares were available for future grants under the 2014 Plan. All of our
equity-based compensation awards described herein have been made pursuant to either our 2009 Plan or our 2014 Plan,
collectively referred to as the “Incentive Plans”. We currently utilize treasury shares to meet the needs of our equity-based
compensation programs.
Pursuant to the Incentive Plans, we have the ability to issue stock options, stock appreciation rights and stock awards,
including restricted stock, restricted stock units (“RSUs”) and performance share units (“PSUs”). The terms and conditions
of equity awards granted under the Incentive Plans are determined by the Management Development and Compensation
Committee of our Board of Directors.
The 2020 annual incentive plan awards granted to the Company’s senior leadership team, which generally includes
the Company’s executive officers, included a combination of PSUs and stock options. The Incentive Plans awards granted
to other eligible employees included a combination of PSUs, RSUs and stock options in 2020. The Company also
periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to
field-based managers.
117
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Restricted Stock Units — A summary of our RSUs is presented in the table below (units in thousands):
Unvested as of January 1, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average
Per Share
Fair Value
Units
348 $
122 $
(125) $
(14) $
331 $
86.15
123.21
73.78
100.82
103.84
The total fair market value of RSUs that vested during the years ended December 31, 2020, 2019 and 2018 was
$14 million, $15 million and $13 million, respectively. During the year ended December 31, 2020, we issued
approximately 89,000 shares of common stock for these vested RSUs, net of approximately 36,000 units deferred or used
for payment of associated taxes.
RSUs may not be voted or sold by award recipients until time-based vesting restrictions have lapsed. RSUs primarily
provide for three-year cliff vesting and include dividend equivalents accumulated during the vesting period. Unvested
units are subject to forfeiture in the event of voluntary or for-cause termination. RSUs are subject to pro-rata vesting upon
an employee’s retirement or involuntary termination other than for cause and generally payout at the end of the three-year
vesting period and become immediately vested in the event of an employee’s death or disability.
Compensation expense associated with RSUs is measured based on the grant-date fair value of our common stock and
is recognized on a straight-line basis over the required employment period, which is generally the vesting period.
Compensation expense is only recognized for those awards that we expect to vest, which we estimate based upon an
assessment of expected forfeitures.
Performance Share Units — Two types of PSUs are currently outstanding: (i) PSUs for which payout is dependent on
total shareholder return relative to the S&P 500 (“TSR PSUs”) and (ii) PSUs for which payout is dependent on the
Company’s performance against pre-established adjusted cash flow metrics (“Cash Flow PSUs”). Both types of PSUs are
payable in shares of common stock after the end of a three-year performance period, when the Company’s financial
performance for the entire performance period is reported, typically in mid- to late-February of the succeeding year. At
the end of the performance period, the number of shares awarded can range from 0% to 200% of the targeted amount,
depending on the performance against the pre-established targets. A summary of our PSUs, at 100% of the targeted amount,
is presented in the table below (units in thousands):
Unvested as of January 1, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average
Per Share
Fair Value
Units
1,077 $
301 $
(362) $
(17) $
999 $
99.66
153.34
84.54
121.81
120.95
The determination of achievement of performance results and corresponding vesting of PSUs for the three-year
performance period ended December 31, 2020 was performed by the Management Development and Compensation
Committee in February 2021. Accordingly, vesting information for such awards is not included in the table above as of
December 31, 2020. The “vested” PSUs are for the three-year performance period ended December 31, 2019, as
achievement of performance results and corresponding vesting was determined in February 2020. The performance of the
118
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Company’s common stock for purposes of the TSR PSUs exceeded target and neared maximum performance criteria, and
the Company’s financial results, as measured for purposes of the Cash Flow PSUs, achieved the maximum performance
criteria. Accordingly, recipients of the PSU awards received a payout of 194.7% of the vested TSR PSUs and 200% of the
vested Cash Flow PSUs. In February 2020, approximately 715,000 PSUs vested and we issued approximately 476,000
shares of common stock for these vested PSUs, net of units deferred or used for payment of associated taxes. The shares
of common stock that were issued or deferred during the years ended December 31, 2020, 2019 and 2018 for prior PSU
award grants had a fair market value of $89 million, $84 million and $78 million, respectively.
PSUs have no voting rights. PSUs receive dividend equivalents that are paid out in cash based on the number of shares
that vest at the end of the awards’ performance period. Subject to attainment of the performance metrics described above,
PSUs are payable to an employee (or his beneficiary) upon death or disability as if that employee had remained employed
until the end of the performance period. PSUs are generally subject to pro-rata vesting upon an employee’s involuntary
termination other than for cause and are subject to forfeiture in the event of voluntary or for-cause termination. The terms
of the award agreements for outstanding PSUs provide for continued vesting following retirement as if the employee had
remained employed until the end of the performance period, and compensation expense for PSUs granted to
retirement-eligible employees is accelerated over the period that the recipient becomes retirement-eligible plus a defined
service requirement.
Compensation expense associated with our Cash Flow PSUs is based on the grant-date fair value of our common
stock. Compensation expense is recognized ratably over the performance period based on our estimated achievement of
the established performance criteria. Compensation expense is only recognized for those awards that we expect to vest,
which we estimate based upon an assessment of both the probability that the performance criteria will be achieved and
expected forfeitures. The grant-date fair value of our TSR PSUs is based on a Monte Carlo valuation and compensation
expense is recognized on a straight-line basis over the vesting period. Compensation expense is recognized for all TSR
PSUs whether or not the market conditions are achieved less expected forfeitures.
Deferred Units — Certain employees can elect to defer some or all of the vested RSU or PSU awards until a specified
date or dates they choose. Deferred units are not invested, nor do they earn interest, but deferred amounts do receive
dividend equivalents paid in cash during deferral at the same time and at the same rate as dividends on the Company’s
common stock. Deferred amounts are paid out in shares of common stock at the end of the deferral period. As of
December 31, 2020, we had approximately 197,000 vested deferred units outstanding.
Stock Options — Stock options granted vest primarily in 25% increments on the first two anniversaries of the date of
grant with the remaining 50% vesting on the third anniversary. The exercise price of the options is the average of the high
and low market value of our common stock on the date of grant, and the options have a term of 10 years. A summary of
our stock options is presented in the table below (options in thousands):
Weighted Average
Per Share
Outstanding as of January 1, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding as of December 31, 2020 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercisable as of December 31, 2020 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options
3,938 $
684 $
(1,039) $
(40) $
3,543 $
1,910 $
Exercise Price
69.66
126.01
116.18
102.11
82.86
62.21
(a) Stock options outstanding as of December 31, 2020 have a weighted average remaining contractual term of 6.5 years
and an aggregate intrinsic value of $130 million based on the market value of our common stock on
December 31, 2020.
119
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(b) Stock options exercisable as of December 31, 2020 have an aggregate intrinsic value of $106 million based on the
market value of our common stock on December 31, 2020.
We received cash proceeds of $63 million, $67 million and $52 million during the years ended December 31, 2020,
2019 and 2018, respectively, from employee stock option exercises. The aggregate intrinsic value of stock options
exercised during the years ended December 31, 2020, 2019 and 2018 was $58 million, $71 million and $41 million,
respectively.
Stock options exercisable as of December 31, 2020 were as follows (options in thousands):
Range of Exercise Prices
$33.49-$50.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$50.01-$70.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$70.01-$100.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$100.01-$126.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$33.49-$126.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
520 $
564 $
825 $
1 $
1,910 $
Weighted Average
Per Share
Options Exercise Price
Weighted Average
Remaining Years
2.0
4.7
6.8
9.1
4.9
38.54
55.53
81.66
126.01
62.21
All unvested stock options shall become exercisable upon the award recipient’s death or disability. In the event of a
recipient’s retirement, stock options shall continue to vest pursuant to the original schedule set forth in the award
agreement. If the recipient is terminated by the Company without cause or voluntarily resigns, the recipient shall be entitled
to exercise all stock options outstanding and exercisable within a specified time frame after such termination. All
outstanding stock options, whether exercisable or not, are forfeited upon termination for cause.
We account for our employee stock options under the fair value method of accounting using a Black-Scholes valuation
model to measure stock option expense at the date of grant. The weighted average grant-date fair value of stock options
granted during the years ended December 31, 2020, 2019 and 2018 was $15.82, $12.22 and $12.16, respectively. The fair
value of stock options at the date of grant is amortized to expense over the vesting period less expected forfeitures, except
for stock options granted to retirement-eligible employees, for which expense is accelerated over the period that the
recipient becomes retirement-eligible. The following table presents the weighted average assumptions used to value
employee stock options granted during the year ended December 31 under the Black-Scholes valuation model:
Expected option life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 %
1.7 %
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.4 %
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.5 %
2.1 %
2.5 %
17.9 %
2.2 %
2.6 %
2020
4.6 years
2019
4.2 years
2018
4.3 years
The Company bases its expected option life on the expected exercise and termination behavior of its optionees and an
appropriate model of the Company’s future stock price. The expected volatility assumption is derived from the historical
volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of
the Company’s stock options, combined with other relevant factors including implied volatility in market-traded options
on the Company’s stock. The dividend yield is the annual rate of dividends per share over the exercise price of the option
as of the grant date.
For the years ended December 31, 2020, 2019 and 2018, we recognized $79 million, $75 million and $79 million,
respectively, of compensation expense associated with RSU, PSU and stock option awards as a component of selling,
general and administrative expenses in our Consolidated Statements of Operations. Our income tax expense for the years
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
ended December 31, 2020, 2019 and 2018 includes related income tax benefits of $15 million, $17 million and
$17 million, respectively. We have not capitalized any equity-based compensation costs during the reported periods.
As of December 31, 2020, we estimate that $46 million of currently unrecognized compensation expense will be
recognized over a weighted average period of 1.5 years for our unvested RSU, PSU and stock option awards issued and
outstanding.
Non-Employee Director Plan
Our non-employee directors currently receive annual grants of shares of our common stock, generally payable in two
equal installments, under the 2014 Plan described above.
16. Earnings Per Share
Basic and diluted earnings per share were computed using the following common share data for the year ended
December 31 (shares in millions):
Number of common shares outstanding at end of period . . . . . . . . . . . . . . . . . . . . . . .
Effect of using weighted average common shares outstanding . . . . . . . . . . . . . . .
Weighted average basic common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of equity-based compensation awards and other contingently
issuable shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average diluted common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . .
Potentially issuable shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of anti-dilutive potentially issuable shares excluded from diluted common
2020
422.8
0.2
423.0
2.1
425.1
6.1
2019
424.3
0.3
424.6
2.9
427.5
6.7
2018
424.0
5.1
429.1
3.1
432.2
7.4
shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.6
0.7
1.5
17. Fair Value Measurements
Assets and Liabilities Accounted for at Fair Value
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. When measuring assets and liabilities that are required
to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company
would transact. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure
fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available
and significant to the fair value measurement:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices
for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that
market participants would use in pricing the asset or liability.
We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
In measuring the fair value of our assets and liabilities, we use market data or assumptions that we believe market
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
participants would use in pricing an asset or liability, including assumptions about risk when appropriate. Our assets and
liabilities that are measured at fair value on a recurring basis include the following as of December 31 (in millions):
Quoted prices in active markets (Level 1):
Cash equivalents and money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
530 $
3,527
Significant other observable inputs (Level 2):
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
390
350
Significant unobservable inputs (Level 3):
Redeemable preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
49
969 $
49
3,926
2020
2019
See Note 12 for information related to our nonrecurring fair value measurements and the impact of impairments. See
Note 18 for information related to the nonrecurring fair value measurement of assets and liabilities acquired in connection
with our acquisition of Advanced Disposal.
Cash Equivalents and Money Market Funds
Cash equivalents primarily include short-term interest-bearing instruments with maturities of three months or less.
We invest portions of our restricted trust and escrow account balances in money market funds and we measure the fair
value of these investments using quoted prices in active markets for identical assets. The fair value of our cash equivalents
and money market funds approximates our cost basis in these instruments. The decrease in 2020 is primarily due to funding
our acquisition of Advanced Disposal. See Notes 7 and 18 for additional information.
Available-for-Sale Securities
Our available-for-sale securities include restricted trust and escrow account balances and an investment in an
unconsolidated entity, as discussed in Note 19. We invest primarily in debt securities, including U.S. Treasury securities,
U.S. agency securities, municipal securities and mortgage- and asset-backed securities, which generally mature over the
next nine years. Additionally, some funds are invested in equity securities. We measure the fair value of these securities
using quoted prices for identical or similar assets in inactive markets. Any changes in fair value of these trusts related to
unrealized gains and losses have been appropriately reflected as a component of accumulated other comprehensive income
(loss).
Redeemable Preferred Stock
Redeemable preferred stock is related to noncontrolling investments in unconsolidated entities and is included in
investments in unconsolidated entities in our Consolidated Balance Sheets. The fair value of our investments have been
measured based on third-party investors’ recent or pending transactions in these securities, which are considered the best
evidence of fair value. When this evidence is not available, we use other valuation techniques as appropriate and available.
These valuation methodologies may include transactions in similar instruments, discounted cash flow techniques,
third-party appraisals or industry multiples and public company comparable transactions.
Fair Value of Debt
As of December 31, 2020 and 2019, the carrying value of our debt was $13.8 billion and $13.5 billion, respectively.
The estimated fair value of our debt was approximately $15.2 billion and $14.5 billion as of December 31, 2020 and 2019,
respectively. The increase in the fair value of debt was primarily attributable to decreases in current market rates for similar
types of instruments.
122
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Although we have determined the estimated fair value amounts using available market information and commonly
accepted valuation methodologies, considerable judgment is required in interpreting market data to develop the estimates
of fair value. Accordingly, our estimates are not necessarily indicative of the amounts that we, or holders of the instruments,
could realize in a current market exchange. The use of different assumptions or estimation methodologies could have a
material effect on the estimated fair values. The fair value estimates are based on Level 2 inputs of the fair value hierarchy
available as of December 31, 2020 and 2019. These amounts have not been revalued since those dates, and current
estimates of fair value could differ significantly from the amounts presented.
18. Acquisitions and Divestitures
Acquisitions
We continue to pursue the acquisition of businesses that are accretive to our Solid Waste business and enhance and
expand our existing service offerings. During the year ended December 31, 2020, we acquired four businesses related to
our Solid Waste business, including the acquisition of Advanced Disposal discussed further below. Total consideration,
net of cash acquired of $36 million, for all acquisitions was $4.1 billion, none of which related to other consideration such
as purchase price holdbacks. In 2020, we paid $3 million of holdbacks, all of which related to prior year acquisitions.
Contingent consideration obligations are primarily based on achievement by the acquired businesses of certain negotiated
goals, which generally include targeted financial metrics.
Advanced Disposal — On October 30, 2020, we completed the acquisition of all outstanding shares of Advanced
Disposal for $30.30 per share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on
June 24, 2020. Total enterprise value of the acquisition was $4.6 billion when including approximately $1.8 billion of
Advanced Disposal’s net debt. This acquisition grows our footprint and allows us to provide differentiated, sustainable
waste management and recycling services to approximately three million new commercial, industrial and residential
customers, primarily located in the Eastern half of the U.S. The acquisition was funded using our 364-day revolving credit
facility and our commercial paper program, as discussed further in Note 7. For the year ended December 31, 2020, we
incurred $156 million of acquisition and integration related costs, which are primarily classified as “Selling, general and
administrative, expenses”. The post-closing operating results of Advanced Disposal have been included in our consolidated
financial statements, within our existing reportable segments. Since the acquisition date, Advanced Disposal has
recognized $205 million, $142 million and $60 million of revenue, operating expenses and selling, general and
administrative expenses, respectively, which are included in our Consolidated Statement of Operations.
Our consolidated financial statements have not been retroactively restated to include Advanced Disposal’s historical
financial position or results of operations. The acquisition is accounted for as a business combination. In accordance with
the purchase method of accounting, the purchase price paid has been allocated to the assets and liabilities acquired based
upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired
recorded as goodwill. The Company valued the customer relationship asset using an income approach; specifically, the
multi-period excess earnings method. The significant assumptions used to value customer relationships included, among
others, attrition rates, revenue growth rate, and discount rate. The Company valued the landfill assets using an income
approach; specifically, the multi-period excess earnings method. The significant assumptions used to value landfill assets
included, among others, the forecasted revenue and revenue growth (including forecasted waste volumes and rate per ton),
discount rate, and forecasted capital expenditures. We are in the process of valuing all of the assets and liabilities acquired
in the acquisition, and, until we have completed our valuation process, there may be adjustments to our estimates of fair
value and resulting preliminary purchase price allocation.
Goodwill of $2.5 billion was calculated as the excess of the consideration paid over the net assets recognized and
represents the future economic benefits expected to arise from other assets acquired that could not be individually identified
and separately recognized. Goodwill has been assigned to our Areas that have integrated these operations as they are
123
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
benefitting from the synergies of the combination. Goodwill related to this acquisition is not deductible for income tax
purposes.
The allocation of the purchase price for the Advanced Disposal acquisition is preliminary and subject to change based
on the finalization of our detailed valuations. The following table shows the preliminary purchase price allocation
(in millions):
October 30, 2020
Accounts and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Parts and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets held for sale (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities held for sale (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, less current portion (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landfill and environmental remediation liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
159
8
17
1,022
1,278
2,470
604
9
27
(107)
(155)
(19)
(12)
(234)
(441)
(242)
(223)
(79)
4,082
(a) In connection with our acquisition of Advanced Disposal, we were required by the U.S. Department of Justice to
divest assets, including a portion of the assets acquired from Advanced Disposal. Upon acquisition these assets met
the criteria for reporting discontinued operations and were classified as held for sale and included within the “Assets
held for sale” and “Liabilities held for sale” line items in the above preliminary allocation of purchase price. In
accordance with the Divesture Agreement, we sold the net assets to GFL Environmental for total consideration of
$856 million as discussed further in the Divestitures section below.
(b) At the time of acquisition, Advanced Disposal had outstanding $425 million of 5.625% senior notes due
November 2024, the fair value of which was $438 million. In November 2020, we redeemed the notes pursuant to an
optional redemption feature. See Note 7 for additional information.
The preliminary allocation of $604 million for other intangibles includes $575 million for customer relationships with
an amortization period of 15 years and $29 million of other intangibles with a weighted average amortization period of 7
years.
124
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The unaudited pro forma financial information in the table below summarizes the combined results of operations for
Waste Management and Advanced Disposal as though the companies had been combined as of January 1, 2019. Examples
of adjustments made to arrive at the pro forma amounts include, but are not limited to, the following:
• The effect of divestitures required by the U.S. Department of Justice;
•
Intercompany true-ups based on acquisition/divestiture activity;
• Transaction expenses incurred by us and Advanced Disposal;
• Adjustments to depreciation and amortization expense due to step-up in fair value of the acquired assets; and
•
Interest expense adjustments.
The following unaudited pro forma financial information is for informational purposes only and is not necessarily
indicative of the results of operations that would have been achieved as if the acquisition had taken place as of
January 1, 2019 for the year ended December 31 (in millions, except per share amounts):
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,192 $ 16,660
1,472
Net income attributable to Waste Management, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.47
Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.44
Weighted average common shares outstanding:
1,685
3.99
3.96
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
423
425
425
428
2020
2019
During the year ended December 31, 2019, we acquired 18 businesses, including Petro Waste Environmental LP
(“Petro Waste”) discussed below, primarily related to our Solid Waste business. Total consideration, net of cash acquired,
for all acquisitions was $515 million, which included $501 million in cash paid and other consideration of $14 million,
primarily purchase price holdbacks. In 2019, we paid $6 million of contingent consideration, of which $4 million was
related to acquisitions completed prior to 2019. In addition, we paid $20 million of holdbacks, of which $9 million related
to current year acquisitions. Contingent consideration obligations are primarily based on achievement by the acquired
businesses of certain negotiated goals, which generally include targeted financial metrics.
Total consideration for our 2019 acquisitions was primarily allocated to $350 million of property and equipment,
$53 million of other intangible assets and $111 million of goodwill. Other intangible assets included $38 million of
customer and supplier relationships and $15 million of covenants not-to-compete. The goodwill was primarily a result of
expected synergies from combining the acquired businesses with our existing operations and was tax deductible.
Petro Waste — On March 8, 2019, Waste Management Energy Services Holdings, LLC, an indirect wholly-owned
subsidiary of WM, acquired Petro Waste. The acquired business provides comprehensive oilfield environmental services
and solid waste disposal facilities in the Permian Basin and the Eagle Ford Shale. The acquisition has expanded our
offerings and enhanced the quality of solid waste disposal services for oil and gas exploration and production operations
in Texas. Our purchase price was primarily allocated to seven landfills, which are included in our property and equipment.
The acquisition was funded using commercial paper borrowings, and the acquisition accounting for this transaction was
finalized in 2019. The operating results of the acquired business did not have a material impact to our consolidated financial
statements for the periods presented herein. Given the significant change in energy market dynamics since the time of the
acquisition, we have seen a decline in the fair value of certain of these assets. The impairment recognized during 2020 is
discussed further in Note 12.
During the year ended December 31, 2018, we acquired 32 businesses primarily related to our Solid Waste business.
Total consideration, net of cash acquired, for all acquisitions was $471 million, which included $440 million in cash paid
and $31 million of other consideration, primarily purchase price holdbacks. In 2018, we paid $6 million of contingent
125
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
consideration associated with acquisitions completed prior to 2018. In addition, we paid $20 million of holdbacks, of
which $15 million related to current year acquisitions.
Total consideration for our 2018 acquisitions was primarily allocated to $115 million of property and equipment,
$141 million of other intangible assets and $248 million of goodwill. Other intangible assets included $124 million of
customer and supplier relationships, $16 million of covenants not-to-compete and $1 million of other intangible assets.
The goodwill is primarily a result of expected synergies from combining the acquired businesses with our existing
operations and substantially all is tax deductible.
Divestitures
In 2020, 2019 and 2018, the aggregate sales price for divestitures of certain landfill assets, as well as hauling and
ancillary operations, was $856 million, $8 million and $153 million, and we recognized net gains of $33 million, net losses
of less than $1 million and net gains of $96 million, respectively. Divestitures made in 2020 primarily consisted of assets
required to be sold by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, as discussed
above. In 2019 and 2018, the divestitures were made as part of our continuous focus on improving or divesting certain
non-strategic or underperforming operations. The remaining amounts reported in the Consolidated Statements of Cash
Flows generally relate to the sale of fixed assets.
19. Variable Interest Entities
Following is a description of our financial interests in unconsolidated and consolidated variable interest entities that
we consider significant:
Low-Income Housing Properties and Refined Coal Facility Investments
We do not consolidate our investments in entities established to manage low-income housing properties and a refined
coal facility because we are not the primary beneficiary of these entities as we do not have the power to individually direct
the activities of these entities. Accordingly, we account for these investments under the equity method of accounting. Our
aggregate investment balance in these entities was $228 million and $309 million as of December 31, 2020 and 2019,
respectively. The debt balance related to our investments in low-income housing properties was $210 million and
$269 million as of December 31, 2020 and 2019, respectively. During the first quarter of 2020, the entity that owned the
investment in the refined coal facility sold the majority of its assets, which resulted in a $7 million non-cash impairment
of our investment. Additional information related to these investments is discussed in Note 9.
Trust Funds for Final Capping, Closure, Post-Closure or Environmental Remediation Obligations
Unconsolidated Variable Interest Entities — Trust funds that are established for both the benefit of the Company and
the host community in which we operate are not consolidated because we are not the primary beneficiary of these entities
as (i) we do not have the power to direct the significant activities of the trusts or (ii) power over the trusts’ significant
activities is shared. Our interests in these trusts are accounted for as investments in unconsolidated entities and receivables.
These amounts are recorded in other receivables, investments in unconsolidated entities and long-term other assets in our
Consolidated Balance Sheets, as appropriate. We also reflect our share of the unrealized gains and losses on
available-for-sale securities held by these trusts as a component of our accumulated other comprehensive income (loss).
Our investments and receivables related to these trusts had an aggregate carrying value of $106 million and $101 million
as of December 31, 2020 and 2019, respectively.
Consolidated Variable Interest Entities — Trust funds for which we are the sole beneficiary are consolidated because
we are the primary beneficiary. These trust funds are recorded in restricted trust and escrow accounts in our Consolidated
126
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Balance Sheets. Unrealized gains and losses on available-for-sale securities held by these trusts are recorded as a
component of accumulated other comprehensive income (loss). These trusts had a fair value of $114 million and
$109 million as of December 31, 2020 and 2019, respectively.
20. Segment and Related Information
We evaluate, oversee and manage the financial performance of our Solid Waste business subsidiaries through our
17 Areas. The 17 Areas constitute operating segments and we have evaluated the aggregation criteria and concluded that,
based on the similarities between our Areas, including the fact that our Solid Waste business is homogenous across
geographies with the same services offered across the Areas, aggregation of our Areas is appropriate for purposes of
presenting our reportable segments. Accordingly, we have aggregated our 17 Areas into three tiers that we believe have
similar economic characteristics and future prospects based in large part on a review of the Areas’ income from operations
margins. The economic variations experienced by our Areas are attributable to a variety of factors, including regulatory
environment of the Area; economic environment of the Area, including level of commercial and industrial activity;
population density; service offering mix and disposal logistics, with no one factor being singularly determinative of an
Area’s current or future economic performance.
In 2019, as part of our annual review process, we analyzed the Areas’ income from operations margins for purposes of
segment reporting and realigned our Solid Waste tiers to reflect recent changes in their relative economic characteristics
and prospects. These changes are the results of various factors including acquisitions, divestments, business mix and the
economic climate of various geographies. As a result, we reclassified Western Canada from Tier 1 to Tier 2 and Northern
California from Tier 3 to Tier 2. Reclassifications have been made to our prior period consolidated financial information
to conform to the current year presentation. No realignment was necessary as part of our 2020 annual review process. The
results from Advanced Disposal are included within our Tiers.
Tier 1 is comprised of our operations across the Southern U.S., with the exception of the Southern California Area and
the Florida Area, and also includes the New England Area and the tri-state Area of Michigan, Indiana and Ohio. Tier 2
includes California, Canada, and the Wisconsin and Minnesota Area. Tier 3 encompasses all the remaining operations
including the Pacific Northwest, the Mid-Atlantic region of the U.S., the Florida Area, and the Illinois and Missouri Valley
Area.
The operating segments not evaluated and overseen through the 17 Areas are presented herein as “Other” as these
operating segments do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative
criteria to be separately reported.
127
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Summarized financial information concerning our reportable segments as of December 31 and for the year then ended
is shown in the following table (in millions):
Gross
Intercompany
Operating
Operating
Revenues Revenues(c) Revenues
Net
Operating Operations
Depreciation
and
Amortization
Capital
Expenditures
(f)
Income
from
(d)(e)
Total
Assets
(g)(h)
Years Ended December 31:
2020
Solid Waste:
Tier 1 . . . . . . . . . . . . . . . . . . . . $ 6,052 $
Tier 2 . . . . . . . . . . . . . . . . . . . .
Tier 3 . . . . . . . . . . . . . . . . . . . .
Solid Waste . . . . . . . . . . . . .
Other (a) . . . . . . . . . . . . . . . . . . . .
3,827
6,235
16,114
2,364
18,478
—
Corporate and Other (b) . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . $ 18,478 $
2019
Solid Waste:
Tier 1 . . . . . . . . . . . . . . . . . . . . $ 6,136 $
Tier 2 . . . . . . . . . . . . . . . . . . . .
Tier 3 . . . . . . . . . . . . . . . . . . . .
Solid Waste . . . . . . . . . . . . .
Other (a) . . . . . . . . . . . . . . . . . . . .
3,865
6,386
16,387
2,317
18,704
—
Corporate and Other (b) . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . $ 18,704 $
2018
Solid Waste:
Tier 1 . . . . . . . . . . . . . . . . . . . . $ 5,730 $
Tier 2 . . . . . . . . . . . . . . . . . . . .
Tier 3 . . . . . . . . . . . . . . . . . . . .
Solid Waste . . . . . . . . . . . . .
Other (a) . . . . . . . . . . . . . . . . . . . .
3,675
6,132
15,537
2,487
18,024
—
Corporate and Other (b) . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . $ 18,024 $
(1,158) $ 4,894 $ 1,575 $
(815)
(1,187)
(3,160)
(100)
(3,260)
—
3,012
5,048
12,954
2,264
15,218
—
(3,260) $ 15,218 $ 2,434 $
849
1,071
3,495
(38)
3,457
(1,023)
(1,141) $ 4,995 $ 1,719 $
(777)
(1,209)
(3,127)
(122)
(3,249)
—
3,088
5,177
13,260
2,195
15,455
—
(3,249) $ 15,455 $ 2,706 $
881
1,173
3,773
(161)
3,612
(906)
(1,045) $ 4,685 $ 1,655 $
(724)
(1,146)
(2,915)
(195)
(3,110)
—
2,951
4,986
12,622
2,292
14,914
—
(3,110) $ 14,914 $ 2,789 $
812
1,028
3,495
(29)
3,466
(677)
603 $
347
589
1,539
87
1,626
45
1,671 $
392 $ 9,527
6,244
287
10,004
323
25,775
1,002
2,064
75
27,839
1,077
1,810
508
1,585 $ 29,649
551 $
327
585
1,463
75
1,538
36
1,574 $
508 $ 7,519
5,558
329
8,243
453
21,320
1,290
1,648
118
22,968
1,408
5,042
407
1,815 $ 28,010
493 $
317
546
1,356
91
1,447
30
1,477 $
584 $ 6,736
5,224
322
7,878
493
19,838
1,399
1,571
72
21,409
1,471
1,487
200
1,671 $ 22,896
(a) “Other” includes (i) our Strategic Business Solutions (‘WMSBS”) business; (ii) those elements of our landfill gas-to-
energy operations and third-party subcontract and administration revenues managed by our Energy and Environmental
(“EES”) and WM Renewable Energy businesses that are not included in the operations of our reportable segments;
(iii) our recycling brokerage services and (iv) certain other expanded service offerings and solutions. In addition, our
“Other” segment reflects the results of non-operating entities that provide financial assurance and self-insurance
support for our Solid Waste business, net of intercompany activity.
Income from operations for the Other segment for the twelve months ended December 31, 2020 was impacted
primarily by an increase in revenue for (i) our WMSBS business as a result of new contract activities in the current
128
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
year periods and (ii) our WM Renewable Energy business, as a result of a new renewable energy facility coming
online, which drove an increase in commodity sales. Additionally, the twelve month period is impacted by a
$16 million non-cash charge to write off certain equipment costs recorded in the prior year period offset, in part, by
(i) a decrease in revenue within our EES business and (ii) the non-cash impairment of certain assets within our WM
Renewable Energy business in the current year period.
(b) Corporate operating results reflect certain costs incurred for various support services that are not allocated to our
reportable segments. These support services include, among other things, treasury, legal, digital, tax, insurance,
centralized service center processes, other administrative functions and the maintenance of our closed landfills.
Income from operations for “Corporate and Other” also includes costs associated with our long-term incentive
program and any administrative expenses or revisions to our estimated obligations associated with divested operations.
(c) Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales
within a segment and between segments. Transactions within and between segments are generally made on a basis
intended to reflect the market value of the service.
(d) For those items included in the determination of income from operations, the accounting policies of the segments are
the same as those described in Note 3.
(e) The income from operations provided by our Solid Waste business is generally indicative of the margins provided by
our collection, landfill, transfer and recycling lines of business. From time to time, the operating results of our
reportable segments are significantly affected by certain transactions or events that management believes are not
indicative or representative of our results. In 2020, we revised allocations between our segments including (i) the
discontinuation of certain allocations from Corporate and Other to Solid Waste and (ii) allocating certain insurance
costs from Other to Solid Waste. Reclassifications have been made to our prior period information for comparability
purposes.
In the second quarter of 2020, we recognized $61 million of non-cash impairment charges, including $41 million
related to our energy services assets in our Tier 1 segment. Refer to Note 12 for additional information. Our 2020
operating results were also negatively impacted by revenue declines, as a result of the COVID-19 pandemic, in our
landfill and industrial and commercial collection businesses beginning in March 2020 and continuing through the date
of this report, although we began to experience improvement in volumes during the second half of 2020 when
compared to the more acute impacts we experienced earlier in the year.
(f) Includes non-cash items. Capital expenditures are reported in our reportable segments at the time they are recorded
within the segments’ property and equipment balances and, therefore, may include amounts that have been accrued
but not yet paid.
(g) The reconciliation of total assets reported above to total assets in the Consolidated Balance Sheets as of
December 31 is as follows (in millions):
2020
2019
2018
Total assets, as reported above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,649 $ 28,010 $ 22,896
Elimination of intercompany investments and advances . . . . . . . . . . . . . . . . . . . . . .
(246)
Total assets, per Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,345 $ 27,743 $ 22,650
(304)
(267)
129
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(h) Goodwill is included within each segment’s total assets. For segment reporting purposes, our material recovery
facilities are included as a component of their respective Areas and our recycling brokerage services are included as
part of our “Other” operations. The following table presents changes in goodwill during the reported periods by
segment (in millions):
Solid Waste
Tier 1
Tier 2
Tier 3
Other
Total
Balance, December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,193 $ 1,584 $ 2,556 $
Acquired goodwill (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Divested goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation and other . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,283 $ 1,617 $ 2,562 $
Acquired goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Divested goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation and other . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,391 $ 1,988 $ 3,545 $
1,109
—
—
(1)
374
(12)
—
9
987
(3)
—
(1)
12
—
—
21
6
—
—
—
90
—
—
—
97 $ 6,430
108
—
—
—
(27)
(27)
—
21
70 $ 6,532
2,470
—
(15)
—
—
—
—
7
70 $ 8,994
(a) Includes $3 million of post-closing acquisition adjustments related to prior year acquisitions.
The mix of operating revenues from our major lines of business for the years ended December 31 are as follows
(in millions):
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Industrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landfill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intercompany (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2019
4,102 $ 4,229 $ 3,972
2,529
2,613
2,716
2,773
2,916
2,770
450
482
465
9,724
10,240
10,053
3,560
3,846
3,667
1,711
1,820
1,855
1,293
1,040
1,127
1,736
1,758
1,776
(3,110)
(3,249)
(3,260)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,218 $ 15,455 $ 14,914
2018
(a) The “Other” line of business includes (i) our WMSBS business; (ii) our landfill gas-to-energy operations; (iii) certain
services within our EES business, including our construction and remediation services and our services associated
with the disposal of fly ash and (iv) certain other expanded service offerings and solutions. In addition, our “Other”
line of business reflects the results of non-operating entities that provide financial assurance and self-insurance support
for our Solid Waste business, net of intercompany activity. Activity related to collection, landfill, transfer and
recycling within “Other” has been reclassified to the appropriate line of business for purposes of presentation in this
table.
(b) Intercompany revenues between lines of business are eliminated in the Consolidated Financial Statements included
within this report.
Fluctuations in our operating results may be caused by many factors, including period-to-period changes in the relative
contribution of revenue by each line of business, changes in commodity prices and general economic conditions. Typically,
our revenues and income from operations reflect seasonal patterns. Our operating revenues tend to be somewhat higher in
130
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
summer months, primarily due to the higher construction and demolition waste volumes. The volumes of industrial and
residential waste in certain regions where we operate also tend to increase during the summer months.
Our financial results for 2020 reflect declines in our collection and disposal lines of business as a result of the negative
impacts of COVID-19. These impacts began in March 2020 and continued through the date of this report, although we
began to experience improvement in volumes during the second half of 2020 when compared to the more acute impacts
we experienced earlier in the year. Improved economic conditions in the second half of 2020 positioned us to resume most
business practices in accordance with our contractual terms.
Service disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly
affect the operating results of the Areas affected. On the other hand, certain destructive weather and climate conditions,
such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern
U.S. during the second half of the year, can increase our revenues in the Areas affected as a result of the waste volumes
generated by these events. While weather-related and other event driven special projects can boost revenues through
additional work for a limited time, as a result of significant start-up costs and other factors, such revenue can generate
earnings at comparatively lower margins.
Net operating revenues relating to operations in the U.S. and Canada for the year ended December 31 are as follows
(in millions):
2020
2019
2018
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,505 $ 14,701 $ 14,167
747
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,218 $ 15,455 $ 14,914
713
754
Property and equipment, net of accumulated depreciation and amortization, relating to operations in the U.S. and
Canada for the year ended December 31 are as follows (in millions):
2020
2019
2018
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,168 $ 11,941 $ 11,044
898
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,148 $ 12,893 $ 11,942
952
980
131
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Effectiveness of Controls and Procedures
Our management, with the participation of our principal executive and financial officers, has evaluated the
effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in reports
that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is
accumulated and communicated to management (including the principal executive and financial officers) as appropriate
to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial
officers have concluded that such disclosure controls and procedures were effective as of December 31, 2020 (the end of
the period covered by this Annual Report on Form 10-K).
On October 30, 2020, we consummated our acquisition of Advanced Disposal Services, Inc. (“Advanced Disposal”).
As permitted by the SEC rules and regulations, management's assessment did not include the internal controls of the
acquired operations of Advanced Disposal, which are included in our consolidated financial statements as of
December 31, 2020 and for the period from the acquisition date through December 31, 2020. In accordance with our
integration efforts, we plan to incorporate the acquired operations of Advanced Disposal into our internal control over
financial reporting program within the time period provided by applicable SEC rules and regulations. The assets, excluding
goodwill, of the acquired operations of Advanced Disposal constituted approximately 10.6% of our total consolidated
assets as of December 31, 2020. Operating results of the acquired operations of Advanced Disposal comprised
approximately 1.3% of our total consolidated revenues and less than 1% our consolidated operating income for the year
ended December 31, 2020.
Based on the results of its evaluation, which excluded assessments of the internal control of the acquired operations
of Advanced Disposal, management believes that as of December 31, 2020, our internal control over financial reporting
is effective based on those criteria.
Management’s Report on Internal Control Over Financial Reporting
Management of the Company, including the principal executive and financial officers, is responsible for establishing
and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the
Securities Exchange Act of 1934, as amended. Our internal controls are designed to provide reasonable assurance as to the
reliability of our financial reporting and the preparation of the consolidated financial statements for external purposes in
accordance with accounting principles generally accepted in the United States and includes those policies and procedures
that:
i. pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and directors of the Company;
and
iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
132
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management of the Company assessed the effectiveness of our internal control over financial reporting as of
December 31, 2020 based on the Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework). On October 30, 2020, we consummated our acquisition
of Advanced Disposal Services, Inc. (“Advanced Disposal”). As permitted by the SEC rules and regulations, management's
assessment did not include the internal controls of the acquired operations of Advanced Disposal, which are included in
our consolidated financial statements as of December 31, 2020 and for the period from the acquisition date through
December 31, 2020. In accordance with our integration efforts, we plan to incorporate the acquired operations of Advanced
Disposal into our internal control over financial reporting program within the time period provided by applicable SEC
rules and regulations. The assets, excluding goodwill, of the acquired operations of Advanced Disposal constituted
approximately 10.6% of our total consolidated assets as of December 31, 2020. Operating results of the acquired operations
of Advanced Disposal comprised approximately 1.3% of our total consolidated revenues and less than 1% of our
consolidated operating income for the year ended December 31, 2020. Based on this assessment, management has
concluded that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of our internal control over financial reporting has been audited by Ernst & Young LLP, the
independent registered public accounting firm that audited our consolidated financial statements, as stated in their report,
which is included within this report.
Changes in Internal Control over Financial Reporting
Management, together with our CEO and CFO, evaluated the changes in our internal control over financial reporting
during the quarter ended December 31, 2020. We determined that there were no changes in our internal control over
financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The information required by this Item is incorporated by reference to the sections entitled “Board of Directors” and
“Executive Officers” in the Company’s definitive Proxy Statement for its 2021 Annual Meeting of Stockholders (the
“Proxy Statement”), to be held May 11, 2021. The Proxy Statement will be filed with the SEC within 120 days of the end
of our fiscal year.
We have adopted a code of ethics that applies to our CEO, CFO and Chief Accounting Officer, as well as other
officers, directors and employees of the Company. The code of ethics, entitled “Code of Conduct,” is posted on our website
at www.wm.com in the section “ESG — Corporate Governance” on the “Investors” page.
Item 11. Executive Compensation.
The information required by this Item is incorporated herein by reference to the sections entitled “Board of
Directors — Compensation Committee Report,” “— Compensation Committee Interlocks and Insider Participation,”
“— Non-Employee Director Compensation,” “Executive Compensation — Compensation Discussion and Analysis” and
“— Executive Compensation Tables” in the Proxy Statement.
133
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item is incorporated herein by reference to the sections entitled “Executive
Compensation — Executive Compensation Tables — Equity Compensation Plan Table,” “Director and Officer Stock
Ownership,” and “Security Ownership of Certain Beneficial Owners” in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item is incorporated herein by reference to the sections entitled “Board of
Directors — Related Party Transactions” and “— Independence of Board Members” in the Proxy Statement.
Item 14. Principal Accounting Fees and Services.
The information required by this Item is incorporated herein by reference to the section entitled “Ratification of
Independent Registered Public Accounting Firm — Independent Registered Public Accounting Firm Fee Information” in
the Proxy Statement.
134
Item 15. Exhibits, Financial Statement Schedules.
(a) (1) Consolidated Financial Statements:
PART IV
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
(a) (2) Consolidated Financial Statement Schedules:
All schedules have been omitted because the required information is not significant or is included in the financial
statements or notes thereto, or is not applicable.
(a) (3) Exhibits:
Exhibit No.
3.1
3.2
4.1
4.2
4.3
4.4
4.5
— Third Restated Certificate of Incorporation of Waste Management, Inc. [incorporated by reference to
Exhibit 3.1 to Form 10-Q for the quarter ended June 30, 2010].
— Amended and Restated By-laws of Waste Management, Inc. [incorporated by reference to Exhibit 3.2
to Form 8-K dated November 17, 2020].
— Specimen Stock Certificate [incorporated by reference to Exhibit 4.1 to Form 10-K for the year ended
Description
December 31, 1998].
— Third Restated Certificate of Incorporation of Waste Management Holdings, Inc. [incorporated by
reference to Exhibit 4.2 to Form 10-K for the year ended December 31, 2014].
— Amended and Restated By-laws of Waste Management Holdings, Inc. [incorporated by reference to
Exhibit 4.3 to Form 10-Q for the quarter ended June 30, 2014].
— Indenture for Subordinated Debt Securities dated February 3, 1997, among the Registrant and The Bank
of New York Mellon Trust Company, N.A. (the current successor to Texas Commerce Bank National
Association), as trustee [incorporated by reference to Exhibit 4.1 to Form 8-K dated February 7, 1997].
— Indenture for Senior Debt Securities dated September 10, 1997, among the Registrant and The Bank of
New York Mellon Trust Company, N.A. (the current successor to Texas Commerce Bank National
Association), as trustee [incorporated by reference to Exhibit 4.1 to Form 8-K dated September 10,
1997].
4.6
— Description of Waste Management, Inc.’s Common Stock [incorporated by reference to Exhibit 4.9 to
Form 10-K for the year ended December 31, 2019].
4.7*
— Schedule of Officers’ Certificates delivered pursuant to Section 301 of the Indenture dated
September 10, 1997 establishing the terms and form of Waste Management, Inc.’s Senior Notes. Waste
Management and its subsidiaries are parties to debt instruments that have not been filed with the SEC
under which the total amount of securities authorized under any single instrument does not exceed 10%
of the total assets of Waste Management and its subsidiaries on a consolidated basis. Pursuant to
paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Waste Management agrees to furnish a copy of
such instruments to the SEC upon request.
4.8*
4.9*
— Officers’ Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997
establishing the terms and form of the 0.750% Senior Notes due 2025.
— Guarantee Agreement by Waste Management Holdings, Inc. in favor of The Bank of New York Mellon
Trust Company, N.A., as Trustee for the holders of the 0.750% Senior Notes due 2025.
4.10*
— Officers’ Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997
establishing the terms and form of the 1.150% Senior Notes due 2028.
135
4.11*
— Guarantee Agreement by Waste Management Holdings, Inc. in favor of The Bank of New York Mellon
Trust Company, N.A., as Trustee for the holders of the 1.150% Senior Notes due 2028.
4.12*
— Officers’ Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997
establishing the terms and form of the 1.500% Senior Notes due 2031.
4.13*
— Guarantee Agreement by Waste Management Holdings, Inc. in favor of The Bank of New York Mellon
Trust Company, N.A., as Trustee for the holders of the 1.500% Senior Notes due 2031.
4.14*
— Officers’ Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997
establishing the terms and form of the 2.500% Senior Notes due 2050.
4.15*
— Guarantee Agreement by Waste Management Holdings, Inc. in favor of The Bank of New York Mellon
Trust Company, N.A., as Trustee for the holders of the 2.500% Senior Notes due 2050.
10.1†
10.2†
— 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated May 13, 2014].
— First Amendment to 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.2 to Form 8 K
dated May 12, 2020].
10.3†
— 2009 Stock Incentive Plan [incorporated by reference to Appendix B to the Proxy Statement on
Schedule 14A filed March 25, 2009].
10.4†
— 2005 Annual Incentive Plan [incorporated by reference to Appendix D to the Proxy Statement on
Schedule 14A filed April 8, 2004].
10.5†
— Waste Management, Inc. Employee Stock Purchase Plan (As Amended and Restated effective May 12,
2020) [incorporated by reference to Exhibit 10.1 to Form 8-K dated May 12, 2020].
10.6†
10.7
— Waste Management, Inc. 409A Deferral Savings Plan as Amended and Restated effective January 1,
2014 [incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2014].
— $3.5 Billion Fifth Amended and Restated Revolving Credit Agreement dated as of November 7, 2019
by and among Waste Management, Inc., Waste Management of Canada Corporation, WM Quebec Inc.
and Waste Management Holdings, Inc., certain banks party thereto, and Bank of America, N.A., as
administrative agent [incorporated by reference to Exhibit 10.1 to Form 8-K dated November 7, 2019].
10.8
— Commercial Paper Dealer Agreement, substantially in the form as executed with each of Mizuho
Securities USA Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities
LLC, as Dealer, dated August 22, 2016 [incorporated by reference to Exhibit 10.11 to Form 10-K for
the year ended December 31, 2016].
10.9
— Commercial Paper Issuing and Paying Agent Agreement between Waste Management, Inc. and Bank of
America, National Association dated August 15, 2016 [incorporated by reference to Exhibit 10.12 to
Form 10-K for the year ended December 31, 2016].
10.10† — First Amended and Restated Employment Agreement between USA Waste-Management Resources,
LLC and James C. Fish, Jr. dated December 22, 2017 [incorporated by reference to Exhibit 10.2 to
Form 8-K dated December 22, 2017].
10.11† — Employment Agreement between USA Waste-Management Resources, LLC and Devina A. Rankin
dated December 22, 2017 [incorporated by reference to Exhibit 10.3 to Form 8-K dated December 22,
2017].
10.12† — First Amended and Restated Employment Agreement between USA Waste-Management Resources,
LLC and John J. Morris, Jr. [incorporated by reference to Exhibit 10.4 to Form 8-K dated December 22,
2017].
10.13† — Employment Agreement between USA Waste-Management Resources, LLC and Charles C. Boettcher
dated December 22, 2017 [incorporated by reference to Exhibit 10.23 to Form 10-K for the year ended
December 31, 2017].
10.14† — Form of Director and Executive Officer Indemnity Agreement [incorporated by reference to
Exhibit 10.43 to Form 10-K for the year ended December 31, 2012].
10.15† — Waste Management Holdings, Inc. Executive Severance Plan [incorporated by reference to Exhibit 10.1
to Form 8-K dated December 22, 2017].
10.16† — Form of 2018 Long Term Incentive Compensation Award Agreement for Senior Leadership Team
[incorporated by reference to Exhibit 10.1 to Form 8-K dated February 19, 2018].
10.17† — Form of 2019 Long Term Incentive Compensation Award Agreement for Senior Leadership Team
[incorporated by reference to Exhibit 10.1 to Form 8-K dated February 19, 2019].
10.18† — Form of 2020 Long Term Incentive Compensation Award Agreement for Senior Leadership Team
[incorporated by reference to Exhibit 10.1 to Form 8-K dated February 19, 2020].
136
21.1*
22.1*
23.1*
31.1*
— Subsidiaries of the Registrant.
— Guarantor Subsidiary.
— Consent of Independent Registered Public Accounting Firm.
— Certification Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
amended, of James C. Fish, Jr., President and Chief Executive Officer.
31.2*
— Certification Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
amended, of Devina A. Rankin, Executive Vice President and Chief Financial Officer.
32.1** — Certification Pursuant to 18 U.S.C. §1350 of James C. Fish, Jr., President and Chief Executive Officer.
32.2** — Certification Pursuant to 18 U.S.C. §1350 of Devina A. Rankin, Executive Vice President and Chief
Financial Officer.
— Mine Safety Disclosures.
95*
101.INS* — Inline XBRL Instance.
101.SCH* — Inline XBRL Taxonomy Extension Schema.
101.CAL* — Inline XBRL Taxonomy Extension Calculation.
101.LAB* — Inline XBRL Taxonomy Extension Labels.
101.PRE* — Inline XBRL Taxonomy Extension Presentation.
101.DEF* — Inline XBRL Taxonomy Extension Definition.
104*
— Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Furnished herewith.
† Denotes management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary.
None.
137
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
WASTE MANAGEMENT, INC.
By:
/s/ JAMES C. FISH, JR.
James C. Fish, Jr.
President, Chief Executive Officer and Director
Date: February 22, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ JAMES C. FISH, JR.
James C. Fish, Jr.
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 22, 2021
/s/ DEVINA A. RANKIN
Devina A. Rankin
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
February 22, 2021
/s/ LESLIE K. NAGY
Leslie K. Nagy
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
February 22, 2021
/s/ FRANK M. CLARK, JR.
Frank M. Clark, Jr.
/s/ ANDRÉS R. GLUSKI
Andrés R. Gluski
/s/ VICTORIA M. HOLT
Victoria M. Holt
/s/ KATHLEEN M. MAZZARELLA
Kathleen M. Mazzarella
/s/ WILLIAM B. PLUMMER
William B. Plummer
/s/ JOHN C. POPE
John C. Pope
/s/ THOMAS H. WEIDEMEYER
Thomas H. Weidemeyer
Director
Director
Director
Director
Director
Director
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
Chairman of the Board and Director
February 22, 2021
138
Corporate Information
BOARD OF DIRECTORS
OFFICERS
FRANK M. CLARK, JR. (A, C)
Former Chairman
and Chief Executive Officer
ComEd
JAMES C. FISH, JR.
President and Chief Executive Officer
Waste Management, Inc.
ANDRÉS R. GLUSKI (A, C)
President and Chief Executive Officer
The AES Corporation
VICTORIA M. HOLT (A, N)
Former President
and Chief Executive Officer
Proto Labs, Inc.
KATHLEEN M. MAZZARELLA (C, N)
Chairman, President and
Chief Executive Officer
Graybar Electric Company, Inc.
SEAN E. MENKE (A)
President and Chief Executive Officer
Sabre Corporation
WILLIAM B. PLUMMER (A, C)
Former Executive Vice President
and Chief Financial Officer
United Rentals, Inc.
JOHN C. POPE (C, N)
Chairman
PFI Group
MARYROSE T. SYLVESTER (C)
Former U.S. Managing Director
and U.S. Head of Electrification
ABB Ltd.
THOMAS H. WEIDEMEYER (A, C, N)
Non-Executive Chairman of the Board,
Former Senior Vice President
and Chief Operating Officer
United Parcel Service, Inc.
(A) Audit Committee
(C) Management Development and
Compensation Committee
(N) Nominating and Governance
Committee
JAMES C. FISH, JR.
President and Chief Executive Officer
STEVEN R. BATCHELOR
Senior Vice President, Operations
CHARLES C. BOETTCHER
Executive Vice President, Corporate
Development and Chief Legal Officer
TARA J. HEMMER
Senior Vice President, Operations
JOHN J. MORRIS, JR.
Executive Vice President and
Chief Operating Officer
TAMLA D. OATES-FORNEY
Senior Vice President and
Chief People Officer
DEVINA A. RANKIN
Executive Vice President and
Chief Financial Officer
NIKOLAJ H. SJOQVIST
Senior Vice President and
Chief Digital Officer
MICHAEL J. WATSON
Senior Vice President and
Chief Customer Officer
JEFF R. BENNETT
Assistant Treasurer
MARK A. LOCKETT
Vice President, Tax
LESLIE K. NAGY
Vice President and
Chief Accounting Officer
DAVID L. REED
Vice President and Treasurer
CHARLES S. SCHWAGER
Vice President and
Chief Compliance and Ethics Officer
COURTNEY A. TIPPY
Vice President and Corporate Secretary
CORPORATE HEADQUARTERS
Waste Management, Inc.
800 Capitol Street, Suite 3000
Houston, Texas 77002
Telephone: (713) 512-6200
Facsimile: (713) 512-6299
WEB SITE
www.wm.com
INVESTOR RELATIONS
Security analysts, investment professionals,
and shareholders should direct inquiries to
Investor Relations at the corporate address
or call (713) 265-1656.
ANNUAL MEETING
We will be holding a virtual annual meeting
of the stockholders of the Company this year.
The virtual annual meeting is scheduled to be
held at 11:00 a.m. CT on May 11, 2021 at:
www.virtualshareholdermeeting.com/WM2021
INDEPENDENT AUDITORS
Ernst & Young LLP
5 Houston Center, Suite 2400
1401 McKinney Street
Houston, Texas 77010
(713) 750-1500
COMPANY STOCK
The Company’s common stock is traded on
the New York Stock Exchange (NYSE)
under the symbol “WM.” The number of
holders of record of common stock based on
the transfer records of the Company at
March 8, 2021 was 8,394.
Based on security position listings, the
Company believes that, as of March 1, 2021,
,
it had approximately 959 634 beneficial owners.
TRANSFER AGENT AND REGISTRAR
Computershare
Jersey City, New Jersey
(800) 969-1190
800 Capitol Street - Suite 3000 - Houston, Texas 77002
www.wm.com