How we govern and manage our company and footprint impacts the communities in which we operate, the people we employ and the customers we serve. How we address these issues is also vital to demonstrating the sincerity of our commitment to sustainability. While many companies work hard to protect the environment from the potentially harmful impacts of their business, at WM, protecting the environment is our business. That’s why our sustainability strategy is fully integrated into our governance and management systems and reflected in a set of ambitious sustainability goals.

Board Structure, Composition and Diversity

Nine members serve on the WM Board of Directors, all of whom, with the exception of our President & Chief Executive Officer, are independent as defined by the New York Stock Exchange. The role of Board Chair has been performed by a non-executive, independent director since 2004. Board members are elected annually. For more information, please visit Board of Directors | WM.

There are three standing Board committees: the Audit Committee, the Management Development and Compensation (MD&C) Committee, and the Nominating and Governance Committee.

Our Audit Committee oversees the accounting and financial reporting process of WM as well as audits of Company financial statements. This oversight includes aspects of sustainability risk and performance. The Audit Committee receives quarterly reports on our compliance programs, including ethics, environmental and safety audits, with an annual in-depth review and risk assessment of our compliance programs. Our Audit Committee is also responsible for oversight of information and cyber security including assessment of cyber threats and defenses. Topics historically covered in such reports include third-party evaluation of our technology infrastructure and information security management system against the industry-standard National Institute of Standards and Technology (NIST) cyber security 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; review of the Company’s incident response plan and consideration of applicable laws and regulations, including those related to privacy.

The MD&C Committee is appointed by the Board to discharge the Board’s responsibilities relating to executive compensation and benefits, and management succession and development. The Committee oversees the policies governing all compensation and benefits programs for executive officers and the Senior Leadership Team (SLT) including risk associated with compensation programs. The Committee also provides review and approval of corporate goals and objectives relevant to compensation for the CEO.

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 those best suited 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. The Committee reviews the overall effectiveness of the Board of Directors and tracks key competencies of Board members. 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. Our Board of Directors’ biographies, Committee charters, and our Corporate Governance Guidelines are posted on our website.

Sustainability Oversight

As North America’s leading provider of comprehensive environmental services, sustainability and environmental stewardship is embedded in all that we do. As a result, it would not be effective, or possible, to assign responsibility for oversight of sustainability-related opportunities, performance and risk to any one Committee of our Board of Directors. Rather, various aspects of sustainability are already organically addressed as a part of our Board and Committees’ oversight of our performance, risk management and strategic vision through different committees and with our full Board of Directors, as appropriate depending on the subject matter. For example, issues that are integral to our business, including recycling, fleet optimization and energy, and aspects of these issues, are discussed by the full Board of Directors at every meeting.

Our Board has a dedicated annual strategic planning session with our SLT and receives focused strategic updates quarterly. Given the nature of our business, those sessions will address topics such as our people, sustainable operations, waste diversion, recycling business improvements, sustainability growth investments, potentially disruptive technologies, and environmental impacts, risks and opportunities. Additionally, reflective of the importance of diversity and inclusion 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 and a detailed annual health and safety report. Additionally, the Company’s Chief Sustainability Officer presents a quarterly dashboard to the entire Board to highlight critical focus areas and track progress toward sustainability-related ambitions and goals, including our climate impact target. Through these reports and the dashboard, our Board directly oversees our progress toward our sustainability goals and ambitions.

Our Audit Committee also plays a significant role in the oversight of sustainability-related risk and performance. Our Audit Committee receives regular Enterprise Risk Management (ERM) updates with in-depth discussion on specific risk topics, and at least annually, one of the in-depth discussions will look at an aspect of sustainability-related risk. Additional areas of oversight managed by our MD&C Committee include review of employee health, welfare and benefit programs. The Committee also engages in quarterly sessions with our President & CEO and our Senior Vice President and Chief Human Resources 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 diversity and inclusion are fundamental Company values. Recognizing the importance of diversity, our Human Resources programs, overseen by our MD&C Committee, embrace and cultivate respect, trust, open communication and diversity of thought and people. The Committee is also responsible for executive compensation incentive plan design and the incorporation and measurement of the sustainability scorecard performance modifier discussed below.

Aspects of WM’s sustainability service offerings are discussed at most Board meetings because these services are linked so closely with company strategy. Topics discussed include sustainability growth strategy, progress and trends; recycling goals, market conditions and operations; generation of renewable energy and investment in related infrastructure; innovations in operations to increase efficiency and provide environmentally superior service and support customers’ sustainability goals, such as waste reduction, recycling and materials reuse, and expansion of renewable energy capacity.

As investors, stakeholders and policymakers are increasing their focus on companies’ sustainability reporting, policies and initiatives, WM has established an internal ESG Disclosure Committee which is comprised of a cross-functional group of leaders that participate in the oversight of sustainability-related data, policy and disclosure. The Committee meets to collectively discuss and review proposed sustainability messaging and applicable regulations and standards.

Compensation Incentives

The objective of our compensation programs 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. We believe that positive financial results, including those for the performance measures on which our executives are compensated, are naturally aligned with the successful execution of our goal to put our People First, positioning them to serve and care for our customers, the environment, the communities in which we work and our stockholders. At the same time, we believe our company would not be successful, with financial performance measures or otherwise, without our industry-leading focus on sustainability.

The use of long-term equity-based incentives and our annual cash incentive program are intended to motivate and sustain high performance levels from our senior leaders. A direct relationship is created between employee compensation and company performance by aligning the company’s and leadership’s long-term strategic objectives. These incentives reflect corporate financial performance, which in turn is impacted by the success of safety and sustainability platforms like recycling and the sale of green energy and sustainability consulting services.

Beginning in 2023, the MD&C Committee of the Board of Directors also incorporated a sustainability modifier into the annual cash incentive program, such that annual cash incentive payouts to executive officers may be increased, or decreased, by up to ten percent for 2024, depending on achievement calculated using a sustainability scorecard. The 2024 scorecard contains four quantifiable performance measures, one each in the areas of safety, employee engagement, circularity and climate. The MD&C Committee believes that these performance measures align with the Company’s commitments and values, sustainability growth strategy and 2030 goals.

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 MD&C Committee also believes that consistency in program design reinforces its efforts to maintain a compensation program that is straightforward, easy to communicate and readily translates into actionable goals.

The MD&C Committee has considered the impact of the Company’s strategy to accelerate investments in recycling and renewable energy on the cash flow generation performance measure. The Committee anticipates that it will be appropriate to exclude the impact of such incremental strategic capital investments already approved by the Board. The MD&C Committee also anticipates a corresponding exclusion of the benefits resulting from such incremental strategic capital expenditures that were not anticipated when the performance measures were established. The MD&C Committee believes that these exclusions are supportive of positive actions by management to advance sustainable growth.

Additional information on governance strategies can be found in the Annual 10K, Annual Proxy Statement and on our governance web page.

Risk Management

At the company level, WM uses an ERM process to assess the materiality of all risks across the company, including climate-related risk and opportunities. Our process is designed to generate actionable insights that are actively discussed and reviewed with the SLT and our Board. Risks and opportunities are identified through “top-down” interviews with the SLT and “bottom-up” interviews with risk owners. Risks and opportunities are assessed and then prioritized using internal evaluations of 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.

Based on findings from these reviews, certain risks are identified as “Priority Risks”. The SLT 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.

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 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.

Management is encouraged to communicate with individual members of our Board of 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.

We also consult with a range of outside advisors and experts throughout the year, depending on the subject matter of the risk being evaluated. We believe the use of outside advisors and experts complements our ERM process by ensuring our efforts are comprehensive and balanced. Our process is periodically reviewed and discussed with our Chief Compliance and Ethics Officer and our Vice President of Internal Audit and Controls to enhance alignment with our disclosure controls and procedures. Additionally, our Compliance and Ethics department conducts periodic risk assessments for a range of ongoing risks that are monitored. If those risks rise to certain materiality or frequency thresholds, they receive further analysis and review through the ERM base evaluation and priority risk evaluation processes.

For a more in-depth discussion on risks and uncertainties that could affect our business and financial performance, please see our latest 10K, our Annual Report and our Climate Brief prepared in alignment with the TCFD framework.

Training Employees on Risk Identification

Risk identification and reduction is considered a core element of every employee’s responsibility. Our Safety, Internal Audit, Internal Controls, Compliance and ERM departments perform tailored trainings and information sessions for employees, focused on building a culture of risk awareness and response.

Our Safety and Operations departments have integrated tools to support a culture of zero tolerance for unsafe behaviors and conditions. The objective is to conduct operations in a manner that engages our employees to be safe, operate efficiently, protect the environment and respect our neighbors. There are specific meetings by discipline area (Safety, Internal Audit, Internal Controls, Compliance and Enterprise Risk Management) and reporting tools (such as Safety’s Incident Reporting Tool) to identify and report risks throughout the organization, and employees are encouraged to do so.

Post-Employment Covenants and Clawback Policies

In 2023, the MD&C Committee adopted the executive compensation clawback policy mandated by the New York Stock Exchange, which is accessible through the Exhibit List to the Company’s Annual Report on Form 10-K. This policy provides for the recovery of erroneously awarded incentive-based compensation received by current and former executive officers in connection with a financial restatement, regardless of fault or misconduct. No obligation has arisen to recover executive compensation pursuant to this policy.

Additionally, employment agreements with our CEO and EVPs contain noncompetition and non-solicitation restrictions that apply during employment and for a two-year period following termination. Additionally, our Executive 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 said 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 which state that 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. Clawback terms applicable to our incentive awards allow recovery to occur one year after discovery of misconduct and the second anniversary of the employee’s termination of employment.