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HomeMy WebLinkAboutBack-Up DocumentsCITY OF MIAMI, FLORIDAINTER-OFFICE MEMORANDUM Arthur Noriega V City Manager (J Iissa CatityttA. FROM: R Petez, CPPO Director/Chief Procurement Officer Department of Procurement DATE: March 24, 2025 FILE: SUBJECT: Recommendation for Approval to Award Clean Yard Waste Disposal REFERENCES: Invitation for Bid ("IFB") No. 1848386 ENCLOSURES: Bid Tabulation Survey RECOMMENDATION: Based on the findings below, the Department of Procurement ("Procurement"), hereby recommends award of Invitation for Bid, ("IFB") No. 1848386 to the sole responsive and responsible Bidder, Waste Management Inc. of Florida, ("Waste Management") for clean yard waste disposal, on a weekly basis. The awarded vendor, contract terms, and amount is shown below: IFB No./Title: Contract Amount: Contract Term: Recommended Vendor: IFB No. 1848386 Clean Yard Waste Disposal $62.00 per Ton Three (3) years with the option to renew for two (2) additional two (2) year periods Waste Management Inc. of Florida BACKGROUND: On September 20, 2024, Procurement on behalf of the City of Miami's Department of Solid Waste ("Solid Waste"), issued IFB No. 1848386 for clean yard waste disposal, on a weekly basis, under full and open competition. On November 1, 2024, at bid closing two (2) bids were received. All Bids were evaluated and tabulated following the guidelines published in the IFB. One (1) Bidder was found non -responsive as they did not have a facility within twelve (12) mile radius of the Solid Waste Fleet Yard, as required by the Solicitation. On January 29, 2025, a survey was conducted, and no responses were received. On February 7, 2025, a Best and Final Offer Letter ("BAFO") was sent to Waste Management the apparent responsive and responsible bidder. Consequently, approval of this recommendation to award is requested. Your signature below will indicate approval of this recommendation. Approved: Na1FiL Coft�non4-W l&4,'4 Arthur Noriega V, City Manager Date: April 4, 2025 1 13:28:46 EDT c: Larry M. Spring, Jr., CPA, Assistant City Manager, Chief Financial Officer Barbara Hernandez, Assistant City Manager, Chief of Operations Wade Sanders, Director, Department of Solid Waste Yadissa A. Calderon, CPPB, Assistant Director, Department of Procurement PR24306 TABULATION OF BIDS IFB 1846386 CLEAN YARD WASTE DISPOSAL Best and Final WASTE Offer -WASTE JMP GROUP MANAGEMENT MANAGEMENT LLC INC. OF FLORIDA INC. OF FLORIDA Item Description Est. Qty UOM Total Unit Cost Total Unit Cost Total Unit Cost 1 Clean Yard Waste Disposal 1 Ton $62.00 $62.00 Total $62.00 $62.00 Non - Responsive Prepared by: Teresa Soto, February, 2025 Approved by: IFB No. 1848386 Clean Yard Waste Disposal Survey The following survey was sent to vendors registered with the City of Miami that received notification of the Invitation to Bid. The above referenced solicitation was advertised on September 20, 2024. The due date was November 1, 2024. The solicitation requested that the vendor have a facility located within a twelve (12) mile radius of the City of Miami Solid Waste Fleet Yard, as well as insurance requirements.. Due to lack of participation, Procurement reached out to the some of the identified vendors to determine whether barriers existed in their decision not to compete. For example: 1. My firm was unable to meet the timeline for proposal due date. 2. My firm did not have enough time to ask the City questions necessary to complete the IFB. 3. Not enough information in the Scope of Services. 4. Not interested. Following are the responses as received from firms: Firm Response 1 39 Waste Service iav©39waste.com No Response 2 Bid Dog Express of S. Florida tuiwarehouse(a�vahoo.com No Response 3 Coastal Waste & Recycling, Inc. edamaso(a�coastalwasteinc.com No Response 4 Evergreen Junk Removal Services info(c�evergreeniunkremoval.com No Response 5 Kin Space, Inc. bids(c�klenspace.com No Response 6 Uno Federation Community Service ralphalexemmanuelliggmail.com No Response DIVISION OF CORPORATIONS { ° g r) L.) I fOr tw official _5iate of Florida w?'b_lJfy Department of State / Division of Corporations / Search Records / Search by FEI/EIN Number / Detail by FEI/EIN Number Florida Profit Corporation WASTE MANAGEMENT INC. OF FLORIDA Filing Information Document Number 279946 FEI/EIN Number 59-1094518 Date Filed 03/30/1964 State FL Status ACTIVE Last Event CORPORATE MERGER Event Date Filed 03/22/2024 Event Effective Date 12/31/2021 Principal Address 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Changed: 04/13/2021 Mailing Address 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Changed: 04/13/2021 Registered Agent Name & Address CT CORPORATION SYSTEM 1200 SOUTH PINE ISLAND ROAD PLANTATION, FL 33324 Name Changed: 06/23/1992 Address Changed: 04/19/2011 Officer/Director Detail Name & Address Title President, Director MYHAN, DAVID M 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP SHAW, BRANDON C. 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP BAUMAN, BRIAN J 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP, CFO, CONTROLLER CARROLL, JOHN A. 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP, Treasurer NAGY, LESLIE K. 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP, Asst. Treasurer LOCKETT, MARK A 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP, Asst. Secretary LAMBROS , JAMES F 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title Asst. Secretary MUELKER , RUTH A. 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP, Secretary, Director TIPPY , COURTNEYA 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title VP Wilson, James A 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title Asst. Treasurer BENNETT, JEFF R 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title Asst. Secretary SILVA, LISA 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Title Asst. Secretary DEANGELIS, CHRISTINA D. 800 CAPITOL STREET, SUITE 3000 HOUSTON, TX 77002 Annual Reports Report Year Filed Date 2022 04/18/2022 2023 2024 04/03/2023 03/26/2024 Document Images 03/26/2024 --ANNUAL REPORT 03/22/2024 -- Merger 04/03/2023 --ANNUAL REPORT 04/18/2022 --ANNUAL REPORT 01/03/2022 -- Merger 04/13/2021 --ANNUAL REPORT 04/08/2020 --ANNUAL REPORT 07/15/2019 -- Merger 01/02/2019 --ANNUAL REPORT 04/18/2018 --ANNUAL REPORT 04/06/2017 --ANNUAL REPORT 03/17/2016 --ANNUAL REPORT 01/13/2015 --ANNUAL REPORT 01/15/2014 --ANNUAL REPORT 04/24/2013 --ANNUAL REPORT 10/03/2012 --ANNUAL REPORT 08/29/2012 --ANNUAL REPORT 01/11/2012 --ANNUAL REPORT 04/19/2011 --ANNUAL REPORT 03/10/2011 -- Merger 04/27/2010 --ANNUAL REPORT 04/21/2009 --ANNUAL REPORT View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format I I View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format 07/02/2008 --ANNUAL REPORT 04/28/2008 --ANNUAL REPORT 12/21/2007 -- Merger 12/21/2007 -- Merger 12/21/2007 -- Merger 12/21/2007 -- Merger 12/21/2007 -- Merger 07/23/2007 --ANNUAL REPORT 06/27/2007 -- Merger 04/30/2007 --ANNUAL REPORT 04/27/2006 --ANNUAL REPORT 10/19/2005 -- REINSTATEMENT 07/27/2005 -- Merger 06/29/2005 -- Merger 06/29/2005 -- Merger 06/29/2005 -- Merger 06/29/2005 -- Merger 06/20/2005 --ANNUAL REPORT 04/25/2005 --ANNUAL REPORT 04/15/2004 --ANNUAL REPORT 12/23/2003 -- Merger 12/23/2003 -- Merger 12/23/2003 -- Merger 12/23/2003 -- Merger 12/23/2003 -- Merger 09/22/2003 -- REINSTATEMENT View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format 06/02/2003 --ANNUAL REPORT 02/25/2003 --ANNUAL REPORT 12/23/2002 -- Merger 12/23/2002 -- Merger 12/23/2002 -- Merger 12/23/2002 -- Merger 12/23/2002 -- Merger 12/23/2002 -- Merger 09/09/2002 --ANNUAL REPORT 06/28/2002 -- Merger 02/28/2002 --ANNUAL REPORT 12/26/2001 -- Merger 05/03/2001 --ANNUAL REPORT 12/15/2000 -- Merger 12/15/2000 -- Merger 12/15/2000 -- Merger 08/30/2000 --ANNUAL REPORT 05/12/2000 -- Merger 05/11/2000 --ANNUAL REPORT 12/22/1999 -- Merger 05/27/1999 -- Court Order 04/14/1999 --ANNUAL REPORT 12/29/1998 -- Merger 12/29/1998 -- Merger 12/29/1998 -- Merger 12/29/1998 -- Merger View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format 12/29/1998 -- Merger 12/29/1998 -- Merger 05/01/1998 --ANNUAL REPORT 05/02/1997 --ANNUAL REPORT 04/09/1996 --ANNUAL REPORT 04/20/1995 --ANNUAL REPORT 03/30/1964 -- Filings Prior to 1995 View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format Florida Department of State, Division of Corporations CITY OF MIAMI IFB 18483861 Due December 20, 2024, at 2:00 p.m. SUBMITTED BY Waste Management Inc. of Florida CONTACT Jason Neal I Government Affairs Director (305) 986-6107 I jneal2©a wm.com w December 20, 2024 City of Miami, Dept. of Solid Waste 1290 NW 20th Street Miami, FL 33142 Dear Ms. Giraldo: Waste Management Inc. of Florida 1800 N. Military Trail, Suite 201 Boca Raton, FL 33431 Attached please find the bid response from Waste Management Inc. of Florida ("WM") for acceptance of the City's clean yard waste. As you know, WM is the incumbent and has provided this service reliably and responsibly for over ten years. WM is uniquely qualified in every way to continue to provide the service through the new contract term, with no risk of transition. Additionally, WM meets or exceeds all minimum requirements as set forth in Sections 2.6 (1) through 2.6 (6) and all other Sections of the IFB. WM's proposed site remains the same as the current site, WM Hialeah Recycling, 5000 NW 37 Ave in Hialeah. This site is less than four miles from the City's Solid Waste Department facility at 1290 NW 20 St. WM also maintains a facility within City limits located at 2120 NW 11 Ave., Miami, FL 33127, and as such, WM qualifies for Local Preference. WM's financial stability can be verified via Annual Reports located online at: Annual Reports I WM . Thank you for considering WM for this award. We hope to remain as your trusted environmental services provider for many years to come. Sincerely, Jason Neal Government Affairs Director CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Cty Of M iml Soliciation Ira 18{839& Certification Statement Please quote on this form, if applicable, net prices for the items) listed. Return signed original and retain a copy for your files. Prices should include all costs, including transportation to the destination. The City reserves the right to accept or reject all or any part of this submission Prices should be firm for a minimum of 180 days following the time set for closing of the submissions. In the event of errors in extension of totals. the unit prices shall govern in determining the quoted paces. We (I) certify that we have read your soticrlation, completed the necessary documents, and prnpnse to fiamich and rlaIiv r, F.O H DESTINATION. the items or services specified herein. The undersigned hereby certifies that neither the contractual party nor any of its principal owners or personnel have been convicted of any of the violat+ons or debarred or suspended as set in section 18.107 or Ordinance No. 12271. All exceptions to this submission have been documented In the section below (refer to paragraph and section) EXCEPTIONS We (I) certify that any and all information contained in this submission is true: and we (I) further certify that this submission is made without prior understanding, agreement, or connection with any corporation, firm, or person submitting a submission for the same materials, supplies, equipment, or service. and is in all respects fair and without collusion or fraud. We (I) agree to abide by all terms and conditions of this solicitation and certify that I am authorized to sign this submission for the submitter. Please print the following and sign your name: BIDDER'S NAME Waste Managernent Inc. of Florida ADDRESS: 5000 NW 37th Avenue, I Iialeah, FL 33142 PHONE: (305) 986-6107 EMAIL JNEAL2@WM.COM FAX CELL( 'h,,tional) SIGNED BY, David M. Myhan f TITLE: President DATE: October 23. 2024 FAILURE TO COMPLETE, SIGN, AND RETURN THIS FORM SHALL DEEM YOUR BID NON RESPONSIVE. 9t20/2021 8 02 AM p. a 1 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City or Marrs Solicitation IFB 1848380 Certifications Legal Name of Firm: Waste Management Inc. of Florida Entity Type: Partnership, Sole Proprietorship, Corporation, etc. Corporation Year Established: 1964 Office Location: City of Miami, Miami -Dade County, or Other Offices throughout County: City of Miami, Miami -Dade County, Medley, & Hialeah Federal Employer Identification Number ("EINIFEIN"): 59-1094510 Business Tax Receipt/ Occupational License Number 562211B2 Business Tax Receipt/ Occupational License Issuing Agency: City of Hialeah Business Tax Receipt/ Occupational License Expiration Date: 9/30I2025 Will subcontractor(s) be used? (Yes or No) Yes, only for transfer of material from the drop-off site If subcontractor(s) will be utilized, provide their name, address, and the portion of the work they will be responsible for under this contract (a copy of their license(s) must be submitted with your bid response). If no subcontractor(s) will be utilized, please enter N/A. Transfer materials only Please list and acknowledge all addendum/addenda received. List the addendum/addenda number and date of receipt (i.e„ Addendum No. 1, 1/1/24.) If no addendum/addenda wastwere issued, please enter N/A. Addendurns 1 - 10/24/24, 2 - 10/31/24, 3 - 11/14/24, 4 - 11/26/24, 5 - 12/4/24 Does Bidder have any pending lawsuits with or against the City of Miami, any of its agencies and/or instrumentalities? (Yes or No) If Yes, plea list. No. Does Bidder have any record of criminal activities? (Yes or No) If Yes, please list. No. ;!2Oi2O24 OM AM P. 7 2 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Cay or At,ami Saieitat n IFB 1848388 -las Bidder declared bankruptcy within the past seven (5) years? (Yes or No) If Yes, when? No. Does Bidder have any prior or pending litigation, either civil or criminal, involving a governmental agency, or which may affect the performance of the services to be rendered herein, in which the Bidder, any of its employees. or subcontractors is, or has been involved in within the last five (5) years? (Yes or No) If Yes. please list. No. Reference No. 1: Name of Company/Agency for which Bidder is currently providing the services/goods as descnbed in this solicitation, or has provided such serviceslgoods in the past: City of Miami Reference No. 1: Address, City, State, and Zip for above referenced company/agency listed:: 1290 NW 20 Street, Miami, FL 33142 Reference No. 1: Name of Contact Person, Email. and Telephone Number for above referenced No. 1 Wade L. Sanders, Solid Waste Director, WaSanders@miarnigov.corn (305) 960-2801 Reference No. 1: Date of Contract or Sale for above referenced No. 1 2018 (Clean Yard Waste Disposal - we are the current service provider for over 6 years) Reference No. 2: Name of Company/Agency for which Bidder is currently providing the services/goods as described in this solicitation, or has provided such services/goods in the past: Miami Shores Village Reference No. 2: Address. City. State, and Zip for above referenced company/agency listed: 10050 NE 2nd Avenue, Miami Shores, FL 33138 Reference No. 2: Name of Contact Person, Email, and Telephone Number for above referenced No. 2 Esmond Scott, Village Manager, ScottE@msvfl.gov (305) 795-2207 Reference No. 2: Date of Contract or Sale for above referenced No, 2 2018 (Clean Yard Waste Disposal - we are the current service provider for over 6 years) 9r02024 0 02 AM p. 9 3 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of Mann, Solioitatan EFB 1848388 Reference No. 3: Name of Company/Agency for which Bidder is currently providing the services/goods as described in this solicitation, or has provided such servicesfgoods in the past: City of Miami Springs Reference No. 3: Address, City, State, and Zip for above referenced company/agency listed: 201 Westward Drive, Miami Springs, FL 33166 Reference No. 3: Name of Contact Person, Email. and Telephone Number for above referenced No. 3 Tammy Romero, Assistant City Manager, RomeraT@miamisprings-fi.gov (305) 805-5036 Reference No. 3: Date of Contract or Sale for above referenced No. 3 2018 (Clean Yard Waste Disposal - we are the current service provider for over 6 years) Does the Bidder have a facility(ies) within a 12 miles radius of the City's Solid Waste Fleet Yard, which is located at 1290 NW 20th Street, Miami, FL 33142, If so, state each location. Yes, 5000 NW 37th Avenue, Hialeah. FL 33142 The Bidder can provide prompt payment discount, pursuant to Section 1.66, Prompt Payment of the Temis and Conditions. If no prompt payment discount is being offered, the Bidder must enter zero (0) for the percentage discount to indicate no discount. If the Bidder fails to enter a percentage, it is understood and agreed that the terms shall be two percent (2%), 20 days effective after receipt of invoice or final acceptance by the City, whichever is later. 0% (No discount) 9,2012024 8: €Y2 w,s p. 2 4 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of kriarri AttachmentoDon IFB te4saee CITY OF MIAMI LOCAL OFFICE CERTIFICATION (City Code. Chapter 18. Article III. Section 18-73) Solicitation Type and Number IFB 1848386 (i.e. IFQ/IFB RFP RFQ RFLINo. 123455) Solicitation Title: CLEAN YARD WASTE DISPOSAL Waste Management Inc. of Florida (Bidder Proposer) hereby° certifies compliance with the Local Office requirements stated under Chapter 18 Article M. Section 1 S-73. of the Code of the City of Miami. Florida. as amended. Local office means a business within the city which meets all of the following criteria: (1) Has had a staffed and fixed office or distribution point. operating within a permanent structure with a verifiable street address that is located within the corporate limits of the city. for a minimum of twelve (12) months inunediately preceding the date bids or proposals were received for the purchase or contract at issue: for purposes of this section. "staffed" shall mean verifiable. full-time. on -site employment at the local office for a minimum of forty (40) hours per calendar week whether as a duly authorized employee. officer, principal or owner of the local business: a post Office box shall not be sufficient to constitute a local office within the city: (2) If the business is located in the permanent structure pursuant to a lease. such lease must be in writing. for a term of no less than twelve (12) months. been is effect for no less than the twelve (12) months immediately preceding the date bids or proposals were received. and be available for review and approval by the chief procurement officer or its designee; for recently -executed leases that have been in effect for any period less than the twelve (12) months immediately preceding the date bids or proposals were received a prior fully -executed lease within the corporate limits of the city that documents. in writing. continuous business residence within the corporate limit of the city for a term of no less than the twelve (12) months immediately preceding the date bids or proposals were received shall be acceptable to satisfy the requirements of this section' and shall be available for review and approval by the chief procurement officer or its designee: further requiring that historical, cleared rent checks or other rent payment documentation in writing that documents local office tenancy shall be available for review and approval by the chief procurement officer or its designee: (3) Has had. for a minimum of twelve (12) months immediately preceding the date bids or proposals were received for the purchase or contract at issue. a current business tax receipt issued by both the city and Mianli- Dade County. if applicable: and (4) Has had. for a nrniiirnam of twelve (12) months immediately preceding the date bids or proposals were received for the purchase or contract at issue. any license or certificate of competency and certificate of use required by either the city or Miami -Dade County that authorizes the performance of said business operations: and (5) Has certified in writing its compliance with the foregoing at the time of submitting its bid or proposal to be eligible for consideration wider this section: provided. however. that the burden of proof to provide all supporting documentation in support of this local office certification is bome by the business applicant submitting a bid or proposal. 02012024 0:02 AM p. 61 5 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City *Mann 3clintall9n IF ib48060 PLEASE PROVIDE THE FOLLOW!NC INFORMATION: Bidder/Proposer Local Office Address: 2120 NW 11 Avenue, Miami, FL 33142 Does BidderfProposer conduct verifiable, full- time, on -site employment at the local office for a minimum of forty (40) hours per calendar week? _YES QNO If BidderfProposer's Local Office tenancy is pursuant to a lease, has BidderlProposer enclosed a copy of the lease? Has Bidder/Proposer enclosed a copy of the Business Tax Receipt (BTR) issued by the City of Miami and Miami -Dade County? ❑ YES ❑ N City of Miami: _ r■ ,.. YES allo ❑ Exempt Cite Exemption: Miami -Dade County: Z YES ❑ NO ❑ Exempt Cite Exemption: Has Bidder/Proposer enclosed a copy of the license, certificate of competency and wrtifivutr of use that audrurirxs the performance of BidderlPropoaer's business Operations? El YES ❑ NO BidderfProposer's signature below certifies compliance with the Local Office requirements stated under Chapter 18fArticic 111, Section 18-73, of the Code of the City of Miami, Florida, as amended. David M. Myhan Print Name (Bidder/Proposer Authorized Representative) LA, Signature 6+ttfl2024 6 2 AM October 23, 2024 Date A. 82 6 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal STATE OF FLORIDA COUNTY OF Pairs Beach city o! Minn' SoIamb= Fe 1848386 Certified to and subscribed before me this 23 day of October , 2024 , by David M. Myhan, President (NOTARY SEAL) Personally Known (Si, cunt 1401A,mi IrxDOIY MIMtson (Name of Notary Tvod. reillict or Starrrpcd) Type of identification Produced COMMA Rir7 AM OR Produced Identification W V1 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of Miaird Sol+ctatron IFS 18413386 ANTI-RU MAN Ti RAFFIC'KINC; AFFIDAVIT 1. The undersigned affirms, certifies, attests, and stipulates as follows: The entity is a non -governmental entity authorised to transact business in the State of Florida and in good standing with the Florida Department of State, Division of Corporations. b. the nongovernmental entity is either executing, renewing, or extending a contract (including, but not limited to, say amatdments, as applicable) with the City of Miami ("City") or one :Ails agencies, authorities, board; tress, or other City entity which constitutes a governmental entity as defined in Section 287.138(11, Fiotida Statutes (20241. c. The nongovernmental entity is not in violation of Sectioet 7137.06, Florida Statutes (2024), titled 1 lumen trafficking " d. The nongovernmental entity does not use "coercion- for labor or services as defined in Section 787.06, Florida Statutes (2024), attached and incorporated herein as Exhibit Affidavit- 1. 2. Under penalties of perjury. I declare the following: a. 1 have read and understand the foregoing Anti -Human Trafficking Affidavit and that the fads. statements and representations provided in Section 1 are true and correct. b. 1 am an officer or a representative of the nongovernmental entity authorized to execute this Anti. Human Trafficking Affidavit. Nongovernmental Entity: Waste Medic 4oc. of Honda Name: David M. Wee OftiThC,:r-J,. 'itle: President Signature ofofficv: It"riff, Office Address: IlOO N. Military Trsl, State 201, Row RE Fl. 33431 Email Address: dtnyhap ot.00tes Maim Phone Number: (954) 984-2035 FEI N No. 5/9 - 110 /9 f4 /S R t6 STATE OF FLORDDA 1 COUNTY OF MIAMI-DADE The c oio/ iestruataot was arsons to and subscribed before ow by means of 41 physics/ presence of f] calico notarization. tb is 23 day of Ocaubrr .2024 by David M. MIban ,as the authorized officer or reprrsentab +e for the aoagoreramentai rstit)... Ha/she it passosaliy broil io are or lass produced as idevtificaeion (NOTARY PUBLIC My (rrmmissxm Expires: Morro of Pesos Tak ms Oadr (Printed, Typed, or Suopsd Naas ofNatary Public) Ar711/70.71. S rt7 AIJ p. 6T 8 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of h43mi Solicitation IFB 1848386 PROCUREMENT SOLICITATION SUBMITTAL CHECKLIST Clean Yard Waste Disposal Solicitation Title: Solicitation Number: IFB 1248386 Use this checklist as an aid to confirm that all required documents for this solicitation have been submitted and read. 1. Certification Statement and Certifications section found in the Solicitation document. cifiSigned nCompleted171 Attached 2. Does the firm meet all minimum requirements pursuant to Section 2.6, Minimum Qualifications/Requirements as listed below'? EYes No (-FEIN-) for the last three (3) years. Have a record of performance with the same Federal Employee Identification Number Have a facility located within the State of Florida. Submit three (3) references, for your firm, for Clean Yard Waste Disposal Services performed within the past three (3) years in the Certification Section. The references must include the entity's name, and the name, title, address, and telephone number of the contact person who verify that the Bidder has successfully provided Clean Yard Waste Disposal Services. These references shall ascertain to the City's satisfaction that the Bidder has sufficient experience and expertise in performing Clean Yard Waste Disposal Services. The Bidder may only use one (1) department as a reference from each entity. This is reflected in the Certifications section of this Solicitation. Wage 1 of 3 SC20v2024 6.02 Alin p. 73 9 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of Mann, Sa crtaton IFB 1848386 Have a performance record of at least three ( 3 ) consecutive years: and have sufficient financial support, equipment and organization to ensure that they can satisfactorily provide the services if awarded a Contract under the temis and conditions herein. Not have any member, officer, or stockholder that is in arrears or is in default of any debt or contract involving the City, is a defaulter surety otherwise, upon any obligation to the City. and/or has failed to perform faithfully on any previous contract with the City. Have no record of pending lawsuits or cnminal activities and have never been declared bankrupt. Notes: 3. Bid Price Sheet/Bidsync Line Items: ✓Applicable El Not applicable Bid Pricing Sheet ri Bidsync Line Items 4. Addendum Acknowledgements: Read [Signed 'attached 5. Read the Solicitation document in its entirety Ekes I1No 6. Read/ Reviewed all the following attachments: IFB -1848386 Clean Yard Waste Disposal • • • • • A City of Miami Living Wage Ordinance B. APM 2-19 Eliminating the Process of Cunng Irregulanties in Documents Submitted C. City of Miami local Office Certification D. Insurance Addendum • E. Anti -Human Trafficking Affidavit Page 2 of 3 01262024 6:02 AM p. 74 10 CITY OF MIAMI IFB 1848386 — Clean Yard Waste Disposal ANNIE PEREZ CPPO U itCTOr kr Pnot we,}9lt ADDENDUM NO. 1 ARTHUR NDRIEGA V. City A4anako IFB No. 1848386 October 24, 2024 INVITATION FOR BID f"IFB"j FOR CLEAN YARD WASTE DISPOSAL TO: ALL PRC)SPFCTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added The remaining provisions are now in effect and remain unchanged. Please note the contents herein, reflect same on the documents you have on hand The WFB's closing date and time has been changed to Friday, 'November 1, 2024, at 2:00 pm. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. AP: vtg CC. Annie Perez, CPPO Director/Chief Procurement Officer City of Miami Procurement Department Larry Spring, Assistant City Manager, Chief Financial Officer Thomas M. Fossfer. Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A Calderon. CPPB, Assistant Director. Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: Whyte Management Inc. of Florida SIGNATURE David M. Myhan, Presid DATE: 10/25/2024 11 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal ANNIE PEREZ, CPPO Caw CI of PfoCUmfmga[ ADDENDUM NO. 2 ARTHUR NORIEGA V. City Men Agrr IFB NO. 1848386 October 31, 2024 INVITATION FOR BID {°°IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions. clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contrail Documents. Words and/or figures stricken through shall be deleted. Underscored ed words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged, Please note the contents herein, reflect same on the documents you have on hand. The IFB's closing date and time has been changed to Friday, November 15. 2024, at 2:00 pm. ALL OTHER TERMS AND CONDITIONS OF THE IFS REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. AP:vg cc. 4 2- ,rQ. Ca i 'cam Annie Peres CPPO Director/Chief Procurement Officer City of Miami Procurement Department Larry Spring, Assistant City Manager, Chief Financial Officer Thomas M. Fossler. Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A. Calderon. CPPB, Assistant Director, Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM- Waste Management Inc. of Florida DATE: 10/31 /2024 SIGNATURE: D id M. Myhan, Presid 12 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal ANNIE PEREZ, CPPO Daector or Prccureme:x ADDENDUM NO. 3 IFB No. 18483B6 ARTIIUR NORIrGA V. Gty Ntelager November 14. 2024 INVITATION FOR BID ("IFB"] FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes. additions. clarifications. and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shall be deleted. Underscored words and./or figures shall be added. the remaining provisions are now in effect and remain unchanged Please note the contents herein, reflect same on the documents you have on hand. The IFB's closing date and time has been changed to Tuesday, November 26, 2024, at 2.00 pm. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. Annie Perez, CPPO Director/Chief Procurement Officer City of Miami Procurement Department AP:vg CC, Larry Spring. Assistant City Manager, Chief Financial Officer Thomas M Fosslcr, Assistant City Attorney. City of Miami Office of the City Attomey Yadissa A Calderon, CPPB, Assistant Director. Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: Waste Management Inc. of Florida DALE: 11/19/2024 SIGNATURE: David M Myhan, P ent 13 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of Mianv Solicitmvn !FB 1848386 7. Attached the Local Office Certification and included the required supporting documentation. nApplicable ONot Applicable 8. Anti -Human Trafficking Affidavit: (Mandatory) El Read 7Signed n Attached Note: Failure to submit required documentation will deem your bid/proposal non- responsive. BIDS SUBMITTED WITH IRREGULARITIES. DEFICIENCIES. AND/OR TECHNICALITIES THAT DEVIATE FROM THE MINIMUM QUALIFICATIONS AND SUBMISSION REQUIREMENTS OF THE IFB SHALL RESULT IN A NON -RESPONSIVE DETERMINATION. THE CITY WILL NOT GIVE CONSIDERATION TO THE CURING OF ANY BIDS THAT FAIL TO MEET THE MINIMUM QUALIFICATIONS AND SUBMISSION REQUIREMENTS OF THIS IFB. BIDDER UNDERSTANDS THAT NON -RESPONSIVE BIDS WILL NOT BE EVALUATED. page 3 of 3 9i20r2024 8:02 AM p. 75 14 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal ANNIE PEREZ, CPPO et kw o+rioc+.o+mtnl ADDENDUM NO.4 ARTHUR NBRIECA V. City Mower IFB Ho. 1848326 November 26, 2024 INVITATION FOR MO ("WW1 FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the alcove captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shaft be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged Please note the contents herein, reflect same on the documents you have on hand. A. The IFB's closing data and time has been changed to Friday, December 20, 2024, at 2:00 peyr. B. Section 2.8 Bidder's Minimum Qualifications section of the solicitation has been deleted in its entirety and replaced with the following: (1) Have a record of performance with the same Federal Empoyee Identification Number ('FEINT for the past five (5) consecutive years; (2) Have a facility located within a twelve (12) mules radius of the City Solid Waste Fleet Yard, which is located at 1290 NW 20th Street, Miami, F1. 33142. (3) Submit three (3) references, for clean yard waste disposal services performed within the past five (5) years by your firm in the Certification Section of this Solicitation The references must include the entity's name, and the name. title, address, and telephone number of the contact person who can confirm that the Bidder has successfully provided clean yard waste disposal services These references shall ascertain to the City's satisfaction that the Bidder has sufficient experience and experbso in performing clean yard waste disposal services. The Bidder may only use one (1) department from each entity as a reference. This is reflected in the Certifications section of this Solicitation (4) a) Bidder shall include with their Bid response. a minimum of the three (3) most recent completed Annual Financial Reports. The City would prefer the past (3) years of audited financia'• statements. Additionally. a current Dun & Bradstreet number and a cunrent Dun & Bradstreet Comprehensive Report must be submitted with your response. Failure to submit the above documents as requested may deem your bid non -responsive W CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal b) Bidder shall provide a detailed fist. of ail owned trucks and equipment in its possession to service the City with Clean Yard Waste Disposal Services at the time of submittal. Bidder shall provide at a minimum,, the type o1 truck or equipment, make, model, license plate number. State registered in, truck or equipment vehicle identification number (VIN') with pictures of all trucks and equipment. and copies of ownership. purchase, or leasing documentation for each. Failure to demonstrate an adequate number of trucks and equipment to service this contract and to submit required detailed list of trucks and equipment with proof of ownership, purchase, or leasing documents may render your response non -responsive or Bidder non -responsible. (5) Not have a member, principal. officer. or stockholder who is in arrears or in default of any debt or contract involving the City, is a defaulter or surety upon any obligation to the City, andfor has failed to perform faithfully any contact with the City. (6) Have no record of pending lawsuits or criminal activities and have not been declared bankrupt within the last five (5) years C. The following are Inquiries received from Prospective Bldder(s)snd the City's corresponding responses: 01. Although the bid rate will clearly affect the City's drsposaUprocessing cost, 1t does not take into account the City's trucking, labor, and transportation costs to deliver the materials to various distances within the allowable 12 mile radius as specified in the IFB. WIII the City award the contract to the responsive and responsible bidder with the lowest disposal price, irrespective of relative distance of the various Bidders' delivery sites from the City's reference point of 1290 NW 20°' St? ff not, please clarify exactly how the City will consider the Impact of relative differences In distance within the 12- mile radius comparing various Bidder's responses? Al. Yes the City will award to the lowest responsive and responsible Bidder who meets the minimum requirements The 17 mile radius is one of the minimum requirements Q2. Section 2.10 Equitable Adjustment references CPI-U at the City's sole discretion. 11 a Bidder Is not ensured of receiving the CPI each year, It will be necessary for the Bidder to anticipate inflation over a term of up to 7 years. and then include all the estimated future costa increases with the initial bid. in order to obtain the most favorable pricing, would the City consider making the CP1 automatic each year rather than making it " at the City's sole discretion" 7 A2. The yearly price can be adjusted to the general CPI-U as staled on Section 2 10 Equitable Adjustment. Q3. Section 2.10 Equitable Adjustment references CPI-U mentioned is for general goods and services, such as bread and milk, and is not directly related to the actual cost of providing waste -related to the actual cost of providing waste -related services. Will the City instead consider utilizing the CPi based on "Garbage and Trash", which is published by the same government agency that publishes CPI-U, but is more closely aligned to the scope of service for this IFB? A3. The City prefers to use the general CPI-U for the general goods and services. 2 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Q#. Section 2.22 Performance Bond references a performance bond, but a bid bond is not ciearty addressed. Is a bid bond required with the Bid submittal? A4. No Bid bond is required however. refer to Section 2 22 Performance Bond 05. Can the City clarify if the refereed options are at the City's sole option or iT they require mutual consent This is particularly important given that the significant inflatloaary risks over the potential 7.6 years of this agreement (throe (3) year with an option to renew for two (2) additional two (2) year periods, plus a 1110-lay extension.) Mutual consent renewals reduce the inflationary risk somewhat and are likely to result in more favorable responses. A6. Per the IFS. the Cily will retain the options at its sole discre0on, the vendors can always request CPI-U under Section 2.10 Equitable Adjustment. 06. What is the commencement date for the work to be performed through this contract? A6. Commencement would depend on the date the award has been finalized and approved by the C.ry s Commission 07. The definition of 'Clean Yard Waste" states that plastic bags are accepted and are not Included as contamination. Plastic through can interfere with processing, However, will the City change the definition so that plastic bags (and any materials contained therein) are not accepted as Clean Yard Waste and shalt be considered contamination? AT. Plastic bags shall be accepted solely when they are containing the items descnbed above. Q8. On Section 2.4 Tenn of the Contract it states the potential of a contract for 7.6 years, during which the Successful Bidder must maintain capacity for the City's Clean Yard Waste, but it also mentions on Section 2.27 Termination it states a termination for convenience for the City, which means that a Bidder could go through great expense to provide long-term capacity, and then have it's contract terminated at any time, without a cause. Will the City delete the termination for convenience? If not, will the City make the terminadon for convenience a right of both parties? Ati. No. the termination for convenience language will remain as written Ln the IFB on Section 2.27 -termination This language is standard to at Crty contracts Q. How Is It that the Solicitation requests bids for "disposal" only? A9. The collection is not subject to bidding. The Department of Solid Waste ('SW) is exclusively solicuting to dispose of Clean Yard Waste collected by the department 010. Nothing is mentioned about recycling, Why? A10. The scope of work for this solicitation does not specify recycling. therefore the Crty is not requesting such services Q11. Is the City aware of the facility in Miami Dade County, that has been recycling yard waste for 30 years? Actually, that the facility happens to have a contract with Miami Dade County for the Recycling of Clean Yard Waste. Why doesn't the City of Miami piggyback on that contract? 3 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Alt WortoA_1g. Q12. In Section 2.6 MINIMUM QUALIFICATIONS, (4) Have adequate financial support, equipment, and organization to ensure that they can satisfactorily provide the goods and/or services If awarded a Contract under the terms and conditions herein stated. How will the City determine if a Bidder has "adequate financial support" to provide the services over a terra that may be as long as 7.5 years? Al2. Refer to Section B above. Q13. Is it required to submit financial statements with the bid response? A13. Refer to Section B. above. ❑14. We understand that the Contractors are responsible for their own actions, but it would be unreasonable to expect contractor* to be held responsible for negligent or wrongful conduct from any customer. Would the City agree to change the language to the indemnity provisions making clear that the Contractor is not responsible for Indemnifying the City or any other party for the City's own negligent or wrongful conduct? A14. The City does not agree to change the language to the indemnity provisions on Section 2.9 Insurance Requirements. Q15. On Section 2.6 MINIMUM REQUIREMENTS (2) Have a facility located within a twelve (12) mile radius of the City Solid Waste Fleet Yard, which is located at 1290 NW 20a Street, Miami, FL 33142. Is it required that, as of the bid submittal data, the proposed facility located within 12 miles must be fully permitted by all relevant government and/or regulatory egencles to accept Clean Yard Waste deliveries from the Chy? A15. Yes, the facility must be fully permitted by all relevant governmental and/or regulatory ag to accept Clean Yard Waste deliveries from the City. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. Qr dd1�. t41. rc. Annie Perez, CPPO Director/Chief ProcurNMnt Officer City of Miami Procurement Department AP vg cc Larry M. Spring Jr.. CPA. Assistant City Manager. Chief Financial Officer 4 WM CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Thomas M. Fossler, Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A Calderon, CPPB, Assistant Director, Department of Procurement This Addendum shalt be signed by an authorized representative and dated by the Bidder and submitted as prod of receipt with the sub risston of the Bid NAME OF FIRM: to Mortolornont loco( Florida DATE: December 3,2024 SIGNATURE: t� David M. Myttan, Preside 5 19 W CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal ANNIE PE EZ, CPPO n+.ono, of a.ec4..nynt ADDENDUM NO. 5 ARTHUR NORItGA v City Manage. IFB 1848386 DECEMBER 4, 2024 INVITATION FOR 81D ("IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: 1 he following changes. additions. clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract 'Documents. Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are new in effect and remain unchanged. Please note the contents herein. reflect same on the documents you have on hand. The Procurement Contracting Officer for IFS No. 1848386 has been changed to Teresa Soto. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. 9r„/„.„ . 4, w Annie Perez, CPPO Director/Chief Procurement Officer Procurement Department AP:ts e. Larry M Spring, Jr., CPA, Assistant City Manager. Chief Financial Officer Thomas M. Fossler, Assistant City Attorney Yadissa A. Calderon. CPPB, Assistant Director of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAMC OF FIRM. Waste Management Inc of Florida SIGNATURE: David M. Myhan, Presiden DATE 12/17/2024 20 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal D&B Comprehensive Report for WM DUNS D&B REport for Waste Managerr WM Annual Reports Annual Reports I WM CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal **Since this bid is for disposal and not collection, no company -owned trucks will be utilized. Any yard waste transferred from the delivery site will be transferred by the subcontractor. Fleet information for the subcontractor is included with this proposal.** reg 2237 exp 12.31.24.pdf LEM reg 1706 exp 12.31.24.pdf reg 1704 exp 12.31.24.pdf reg 1622 exp 12.31.24.pdf • reg 2295 exp 12.31.24.pdf reg 1703 exp 12.31.24.pdf reg 2176 exp 12.31.24.pdf Dispatcher Truck Trailer Type Name Telephone SERVICE Ruben 2237 5175 Tipper Jose Galindez 786.514.9961 KIMMINGS Ruben 1704 5176 Tipper Pablo Hernandez 786.307.6420 KIMMINGS Lazaro 1622 5184 Tipper Juan C Lugo 786-256- 9317 KIMMINGS Ruben 2295 5185 Tipper Idalberto Hernandez 904-554- 3127 KIMMINGS Ruben 1703 5187 Tipper Roberto Balsa 813.333,3047 KIMMINGS Ruben 2176 5200 Tipper Francisco Hernandez 786-452- 3308 KIMMINGS Ruben 1706 5252 Tipper Gilberto Frias 786.333.0663 KIMMINGS DUI_ environmental & industrial Vice President of Operations Byron Hurtado 0: 305-637-5567 M: 678-618-5250 Byron.liurtadotilbaexpress corn wt•.•.hut<erw onmentat.com Amway Hauling and Soil Tech Distributors are now part of Bulk Envfroornental & Industrial W CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal State of Florida Department of State I certify from the records of this office that WASTE MANAGEMENT INC. OF FLORIDA is a corporation organized under the laws of the State of Florida. filed on March 30. 1964_ The document number of this corporation is 2 79946_ I further certify that said corporation has paid all fees due this office through December 31. 2024. that its most recent annual report/uniform business report was filed on March 26. 2024. and that its status is active. I further certify that said corporation has not filed Articles of Dissolution. Given under nry hand and the Great Seal oldie Stale of Florida at Tallahassee, the Capital, this the Fourteenth dal• of 3fai, 2024 Secretary of taste Tracking Number: 3364S36361CC To authenticate this eertifieate,wisit the following site,enter this nu rn t r .., nd c f, en follow the instructions displayed. ltonns:iisersices.sunbix orgirilings eettiffwateOfstatiatiCertific, reAutbentieatioal 23 WW1, CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Local Business Tax Receipt Miami -Dade County, State of Florida -7HIS IS NOT A BILL - D0 N0' PAY 7233604 ELPSEVESS NAMEROCATION WASTE MANAGEMENT INC Of FLORIDA 2120 NW 11T11ST MIAI.II. FL 33125 OWNER WASTE MANAGEMENT INC OF FLORIDA Empbyee{s) 5 RECEIPT NO. RENFWAI. 7519256 LBT: EXPIRES SEPTEMBER 30, 2025 Muse lea dlsplaye.i at {lace or business Pursuant to County Coda Cltepler SA - A 1. 9 & 10 SEC. TYPE OF ROPINESS 213 SERVICE BUSINESS PAYMENT RECEIVED MY TPA COLLECTOR 51.75 1 1,`58:7D24 0217.25-0D02941 TMra meal eh lr.sr Tas Evir.st urge calm Formal ol Waal Bvs.sesa T. T'r�s looses i1 sat a he. es s m 'wad, sr a caheM+oe or Pr bolder pw l.s:ebon, W M Ire as Molder mesa C..WIA say so pet lone Mal Or *eaaorereeaMM►l regveaMry teen aloe reiturtagetaMich rely.1 the ea boost the MCCIPT IIO above t sl M dnplar ed as ail vagrant rnal .e+ieIet - M.►w.-Gale Code Sec Is-211 FP mut lettettlet44.wlilwww.mamnfadr:TAt.Stsc911tstat 24 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Local Business Tax Receipt Miami -Dade County. State of Florida -TI.5r3liar AML-fl MN PAY S0©B31? PJ Nett e1VMAXAPOle .tans oa WASTE MANAGEMENT INC OF FLORIDA INC RFT;EWA1 MUNICIPALITIES LOC 5229679 WASTE MITNICaINT PC CF UM* NC Aggregate eq. ft sew Mir i ILBTI EXPIRES SEPTEMBER * 2025 Mud r.. dsrptarwl Si OW, of agree'. PLnusart to County Bade Chopp F lA -Ana 8 w tat me• MINOS 192 COMMFRCLplcU$TIOCRCESPACE IT GILI oronaiII $1500 WI IJ2074 IN'T- 44-474487 Tor Laud Seise" Tim Ames aril casinos dlateed SONIMSTr Tie ReserInei.irr'..L rnre.i6re■camisole' et Ow Aide sT..YirSi.S la /. besides IroWsiwed rpm* wok aft S►...sm..M es Mopeeetlweryrl reprieser lees W milioioni.111iFit *RA Y Oa iselM antsMp PTI erne wit M ispMpd e. Memos000li spews. Wirer lei COW SnM-ill swage imionliftiiillIfiltiloordrev aonrsocurcier Fr err haNri.e.remere+wwn iliddi tlas: ae.Ia Local Business Tax Receipt Miami --Dade County. State of Florida -T}WS IS NOT A SR L. - DO NOT PAY 4526225 RAMS; %/MLcaCAeWll WASTE MANAGEMENT INC OF FLORIDA S000 NW 37TH AVE MIAMI FL 33142-3231 Oq►fe RAVE eAtricasim K Or ROHN tmp&grer(s) $ LWvWT r. RENEWAL 47251ii9 EXPIRES SEPTEMBER 30, 2025 Must le deployed at piece of bower+. Perim* to C unry Code ampler 8A - An. 9& w id nil M SWAM 2M IGIFICYCLAGPROCESSING elate IT I lahli lama tt.srce. 54500 07/11/2024 INT-24-424482 Tie laird PI'Lw.Tot Ile ret.IlrroWS.ww .IfYr tool' l.deerTao. Tin llr.s4ir e.r.I1w.R Fermi err nut%dlw gr Iree W rrr iced rl sr.. is is Urskwa *the sea.IWMir sh►.ipl.renwrMd I../Iwear._W_ IysiltgI9 1.a1 wfiwt pp is do MMM.wt Tle wart in gore we" t. 4. pi rr rd .a .e r. earerpal Wish" -Moil Deis Csi. Sp Sr4/t fat .ore ii..s.Ya., 'S�fGlr[ ire "may 25 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal CITY OF MIAMI CERTIFICATE OF USE FIRE SAFETY PERMIT FY 24- 25 ISSUED: Mar 28 208 BUSINESS NAME: Waste Management Inc of Florid DBA: BUSINESS ADDRESS: EXPIRES: ACCOUNT NUMBER: CERTIFICATE NUMBER: COMMENTS: RESTRICTIONS: Waste Management Inc. of Flondi 2120NW11AV 2025-09-30 137255 1803000679 Waste Transfer Station APPROVED USE(5): CU05 -Industrial- Manufactunng & Processing - PLEASE DISPLAY THIS CERTIFICATE IN A CONSPICUOUS LOCATION AT OCCUPANCY ADDRESS- - FAVOR DE MOSTRAR EST£ CERTIFICADO EN UN 51TI0 VISIBLE EN LA DIRECCION DEL COMERCIO. - TAHPRI AFICHE SETIFIKA SA A NAN YON KOTE KONSIDEB NAN ADRES OKIPANS. www.m1emlgov.com 26 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal Subcontractors Info 80631 — DOT carrier number 6951686—Miami Dade County Business License number >)BULK environmental & industrial Arraway Hauling and Soil Tech Disrribu€ors are now pan of Bulk Environmental & Industrial Director of Finance Richard Gonzalez 0: 305-637-5567 x6027 ruchard.gonzater@bulkexpress.com www,bulkenvironmental.com 27 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal City of Hialeah BUSINESS TAX RECEIPT 501 Palm Avenue, 1st Floor, Hialeah, FL 33010 (305) 883-5890 Mayor Esteban Bova Business Name: WASTE MANAGEMENT INC OF FLORIDA Business location: 5000 NW 3/ AVE Mailing Address: 5000 NW 37 AVE Hialeah, FL 33142 Owner: JAMES LAMBROS License Number: 562211B2 License Type: Solid Waste Issued Date: 9/24/7024 Classification: Recycle Center (Transfer Station) Expiration Date: 0/30/207S Fees Paid: 51,405.45 Industry Class: S62211 Hazardous Waste 1 reatrnent and Disposal IMPORTANT INSTRUCTIONS Report any changes immediately to the Local Business Tax Receipt Division 501 Palm Avenue, 1st Floor, Hialeah, Florida 33010 1305} 883-5890 As per City Ordinances and Cod 86.44 EXPIRATION DATE OF BUSINESS TAX RECEIPT, DELINQUENCY Except as otherwise provided, business tax receipts shall expire on the 30th day of September. Those business tax receipts not renewed by Ottuber 1st, shall be considered delinquent and subject to a delinquency penally_ 86.47 BILLS OR NOTICES DECLARED UNECESSARY At license renewals are due on Octoaer 1st of each year. Therefore, it is hereby declared to be unnecessary for the City to send out bills 0—prices to persons engaged in business in Hialeah 86.48 BUSINESS TAX POSTING & EXHIBITION Every license shad be posted in a consoiicLous place in the place of business far which it is issued and the holder of such license shall exhibit same to the City License Inspector, his deputy, or any police officer upon request. LAS LICENCIAS VENCEN TODAS EL 30 DE SEPTIEMBRE, SI NOSE RENUEVAN A TIEMPO, SE COBRARA UN RECARGO ADICIONAL POR LOS PAGOS ATRASADOS LA LEY EXIGE QUE ESTAS UCENCIAS tsSTEN EN UN LUGAR VISIBLE EN EL ESTABLESIMIENTO PARA QUE PUEDASER VISTA POR INSPECT0RE5 DE LA CIUDAD. LACIUDAD DE HIALEAH NO ESTA OBLIGADA A ENVIAR UNA CUENTA POR COBRAR, 51ND QUE CORRESPONDS A USTED RENOVAR SU LICIENCIA ANTES DE OCTUBRE PRIMERO DE CADA AIVO. PARA CUALQUIFR OTRA INFORMACION EN ESPANOL. LLAME AL 305-883-5890. Por favor, reporte cuatquier cambio de su negocio al departamento de lieencia ocupacional: S01 Palm Avenue, 1 piso, Hialeah. FL 33010. TO BE PO5TE0IN A CONSPICUOUS PLACE 28 CITY OF MIAMI IFB 1848386 - Clean Yard Waste Disposal CITY OF MIAMI BUSINESS TAX RECEIPT FY 24- 25 ISSUED: OCt 24. 2024 Rabart Santos-Mbarna GMOO,..:tCa CJ" I40,1vIei BUSINESS NAME: DBA: BTR HOLDER NAME: BUSINESS ADDRESS: EXPIRES: ACCOUNT NUMBER: RECEIPT NUMBER: COMMENTS: RESTRICTIONS: Waste Manaiement Inc of Florid Waste Management Inc. of Honda Waste Management Inc of Florid 2120 NW 11 AV Effective Year Oct, 1 2024 Thru Sep. 30 2025 137255 171418 WASTE COLLECTORS (COMMERCIAL) This issuance of a business tax receipt does not permit the holder to violate any zoning laws of the City nor does it exempt the holder from any licenseor permits that may be required by law. This document does not constitute a certification that the holder is oualified to engage in the business, profession or occupation specified herein. The document indicates payment of the business tax receipt only. PLEASE DISPLAY THIS CERTIFICATE IN A CONSPICUOUS LOCATION AT OCCUPANCY ADDRESS. 17 FAVOR DE MOSTRAR ESTE CERTIFICADO EN UN SITIO VISIBLE EN LA DIRECCION DEL CONERCIO. I f. TANPRI AFICHE SETIFIKA SA A NAN YON KOTE KONSIDEB NAN ADRES OKIPANS. www.mlamlgov.com 29 ANNIE PEREZ, CPPO Director of Procurement February 7, 2025 Mr. Jason Neal Waste Management Inc. of Florida 5000 NW 37 Avenue Hialeah, FL 33142 ARTHUR NORIEGA V City Manager SENT VIA EMAIL jneal2 cr.wm.com RE: BEST AND FINAL OFFER ("BAFO") — INVITATION FOR BID ("IFB") 1848386 CLEAN YARD WASTE DISPOSAL Dear Mr. Neal, The City of Miami ("City") is in receipt of the Bid submitted by Waste Management Inc. of Florida ("Waste Management") in response to Invitation for Bid ("IFB") No. 1848386 for Clean Yard Waste Disposal. The IFB closed on Friday, November 1, 2024, and Waste Management is the apparent responsive and responsible Bidder. Pursuant to Section 18-85 of the City of Miami Code, the City has the authority to negotiate for better pricing or re -bid, whichever is in the best interest of the City. The City hereby requests that you carefully analyze your bid price for any cost savings you can in turn extend to the City and provide what is considered your firm's "best and final offer" as it pertains to your cost for clean yard waste disposal. Waste Management's response to this notice shall be returned to the attention of Ms. Teresa Soto, via fax to (305) 400-5024, or via email at tsotoa,miamiuov.com, by no later than 5:00 P.M., on Tuesday, February 11, 2025, 2025. Please indicate your firm's best and final offer in the spaces provided in the last column of this table Line Number Line Description Unit Price Number of Units Unit Price (Best and Final Offer) 1 Clean Yard Waste Disposal/Ton $62.00/ton 1 $62.00/ton Please sign and date below to certify your response abov . Jason Neal Print Name Signatu Government Affairs Directior 2/7/2 Date Title Sincerely, ya-a4-,,-4 .A. (_ �C .4.4- FOR Annie Perez, CPPO Director/Chief Procurement Officer Department of Procurement AP:ts INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right comer of license plate. 14ANAM 21410936 12624 Mail To: BULK EXPRESS TRANSPORT INC 3355 NW 41 ST MIAMI, FL 33142 MTRFS020K IMPORTANT INFORMATION Section 316.613, Horida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Return Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. CO/AGY 1 / 28 FLORIDA TRUCK/TRACTOR REGISTRATION PLATE YR/MK VIN Plate Type 14ANAM DECAL 21410936 2022/KW BODY TR 1XKZDK0X0NJ458714 RGS NET WT 16367 DL/FEID 650457069-01 Date Issued 5/13/2024 Plate Issued BULK EXPRESS TRANSPORT INC 3355 NW 41 ST MIAMI, FL 33142 RGS - SUNSHINE STATE 8/24/2021 Expires Midnight Tue 12/31/2024 COLOR TITLE GVW WHI 143836960 80000 2ND DL# 2237 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total T# 1963335453 B# 1554155 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 684.20 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. I understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right corner of license plate. 98AFGK 21426396 12.24' Mail To: BULK EXPRESS TRANSPORT INC 3355 NW 41 ST MIAMI, FL 33142. MTRFS020K IMPORTANT INFORMATION Section 316.613, Florida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Return Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. FLORIDA TRUCK/TRACTOR REGISTRATION PLATE 98AFGK DECAL 21426396 YR/MK 2022/KW BODY TR VIN 1 XKZDKOX2NJ458701 Plate Type RGS NET WT 16367 DL/FEID 650457069-01 Date Issued 5/16/2024 Plate Issued 5/27/2021 BULK EXPRESS TRANSPORT INC 3355 NW 41 ST MIAMI, FL 33142 RGS - SUNSHINE STATE 1 CO/AGY 1 / 28 T# 1964832427 B# 1554740 Expires Midnight Tue 12/31/2024 COLOR WHI TITLE 142796494 GVW 80000 2ND DL# 2295 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 684.20 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. I understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right corner of license plate. QDVY60 21408818 Mail To: BULK EXPRESS TRANSPORT INC 3355 NW 41 ST MIAMI, FL 33142 MTRFS020K IMPORTANT INFORMATION Section 316.613, Florida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Return Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. FLORIDA TRUCK/TRACTOR REGISTRATION PLATE QDVY60 DECAL 21408818 YR/MK 2021/KW BODY TR VIN 1XKZDK0X4MJ458682 Plate Type RGS NET WT 16437 DL/FEID 650457069-01 Date Issued 5/13/2024 Plate Issued 1/14/2021 BULK EXPRESS TRANSPORT INC 3355 NW 41 ST MIAMI, FL 33142 RGS - SUNSHINE STATE CO/AGY 1 / 28 T# 1963187739 B# 1554037 Expires Midnight Tue 12/31/2024 COLOR TITLE GVW WHI 141109819 80000 2ND DL# 2176 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 684.20 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. I understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right comer of license plate. AX46GZ 21426555 114 Mail To: BULK EXPRESS INC 3355 NW 41 ST MIAMI, FL 33142 MTRFS020K IMPORTANT INFORMATION Section 316.613, Florida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Return Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. CO/AGY 1 / 28 FLORIDA TRUCK/TRACTOR REGISTRATION PLATE AX46GZ DECAL 21426555 YR/MK 2017/FRHT BODY TR VIN 1FUJGBDV8HLHS7944 Plate Type RGS NET WT 17255 DL/FEID - Date Issued 5/16/2024 Plate Issued 2/3/2023 BULK EXPRESS INC 3355 NW 41 ST MIAMI, FL 33142 RGS - SUNSHINE STATE Expires Midnight Tue 12/31/2024 COLOR TITLE GVW WHI 145314461 80000 2ND DL# 1704 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total T# 1964842469 B# 1554747 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 684.20 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. I understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right comer of license plate. Mail To: BULK EXPRESS INC 3355 NW 41 ST MIAMI, FL 33142 MTRFS020K IMPORTANT INFORMATION Section 316.613, Florida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Return Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. CO/AGY 1 / 28 FLORIDA TRUCK/TRACTOR REGISTRATION PLATE RBCE65 DECAL 21446124 YR/MK VIN Plate Type 2017/FRHT BODY TR 3AKJGEDVOHSHT9298 RGS NET WT 17000 DL/FEID - Date Issued 5/21/2024 Plate Issued 4/3/2024 BULK EXPRESS INC 3355 NW 41 ST MIAMI, FL 33142 RGS - SUNSHINE STATE Expires Midnight Tue 12/31/2024 COLOR TITLE GVW WHI 154372150 80000 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total 684.20 T# 1966694339 B# 1555444 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. I understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right corner of license plate. AX44GZ 21426548 '12.241 Mail To: BULK EXPRESS INC 3355 NW 41 ST MIAMI, FL 33142 MTRFS020K IMPORTANT INFORMATION Section 316.613, Florida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Return Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. FLORIDA TRUCK/TRACTOR REGISTRATION PLATE AX44GZ DECAL 21426548 YR/MK 2017/FRHT BODY TR VIN 1FUJGBDV2HLHS7793 Plate Type RGS NET WT 17200 DL/FEID - Date Issued 5/16/2024 Plate Issued 2/3/2023 BULK EXPRESS INC 3355 NW 41 ST MIAMI, FL 33142 RGS - SUNSHINE STATE CO/AGY 1 / 28 T# 1964842053 B# 1554747 Expires Midnight Tue 12/31/2024 COLOR TITLE GVW WHI 145505744 80000 2ND DL# 1703 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 684.20 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. 1 understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. INSTRUCTIONS FOR ATTACHING DECAL 1. Clean area where new annual decal is to be affixed. 2. Peel decal from this document. 3. Affix decal in the upper right corner of license plate. I 1 Mail To: BULK EXPRESS TRANSPORT INC 3355 NW 41ST ST MIAMI, FL 33142-4305 MTRFS020K IMPORTANT INFORMATION Section 316.613, Florida Statutes, requires every operator of a motor vehicle transporting a child in a passenger car, van, autocycle or pickup truck registered in this state and operated on the highways of this state, shall, if the child is 5 years of age or younger, provide the protection of the child by properly using a crash -tested, federally approved child restraint device. For children aged through 3 years, such restraint device must be a separate carrier or a vehicle manufacturer's integrated child seat. For children aged 4 through 5 years, a separate carrier, an integrated child seat, or a child booster seat may be used. For limited exceptions, see s. 316.613, F.S. S. 320.0605, F.S., requires the registration certificate, or true copy of a rental or lease agreement, issued for any motor vehicle to be in the possession of the operator or carried in the vehicle while the vehicle is being used or operated on roads of this state. S. 320.02 and 627.733, F.S., requires personal injury protection and property damage liability to be continuously maintained throughout the registration period. Failure to maintain the mandatory coverage may result in the suspension of your driver license and registration. Important note: If you cancel the insurance for this vehicle, immediately return the license plate from this registration to a Florida driver license or tax collector office or mail it to: DHSMV, Retum Tags, 2900 Apalachee Parkway, Tallahassee, FL 32399. Surrendering the plate will prevent your driving privilege from being suspended. FLORIDA TRUCK/TRACTOR REGISTRATION PLATE RBCE64 DECAL 21446137 YR/MK VIN Plate Type 2016/FRHT BODY TR 1FUJGBDV7GLGW3233 RGS NET WT 17000 DL/FEID - Date Issued 5/21/2024 Plate Issued 4/3/2024 BULK EXPRESS TRANSPORT INC 3355 NW 41ST ST MIAMI, FL 33142-4305 RGS - SUNSHINE STATE CO/AGY 1 / 28 Expires Midnight Tue 12/31/2024 COLOR TITLE GVW WHI 154371992 80000 Reg. Tax Init. Reg. County Fee Mail Fee Sales Tax Voluntary Fees Grand Total T# 1966695899 B# 1555445 681.20 Class Code Tax Months 3.00 Back Tax Mos Credit Class Credit Months 684.20 41 6 0 IMPORTANT INFORMATION 1. The Florida license plate must remain with the registrant upon sale of vehicle. 2. The registration must be delivered to a Tax Collector or Tag Agent for transfer to a replacement vehicle. 3. Your registration must be updated to your new address within 30 days of moving. 4. Registration renewals are the responsibility of the registrant and shall occur during the 30-day period prior to the expiration date shown on this registration. Renewal notices are provided as a courtesy and are not required for renewal purposes. 5. I understand that my driver license and registrations will be suspended immediately if the insurer denies the insurance information submitted for this registration. CITY OF MIAMI CERTIFICATE OF USE FIRE SAFETY PERMIT FY 24- 25 ISSUED: Mar 28 2018 BUSINESS NAME: Waste Management Inc of Florid DBA: BUSINESS ADDRESS: EXPIRES: ACCOUNT NUMBER: CERTIFICATE NUMBER: Waste Management Inc. of Florida 2120 NW 11 AV 2025-09-30 137255 1803000679 COMMENTS: Waste Transfer Station RESTRICTIONS: APPROVED USE(S): CU05 -Industrial- Manufacturing & Processing PLEASE DISPLAY THIS CERTIFICATE IN A CONSPICUOUS LOCATION AT OCCUPANCY ADDRESS. FAVOR DE MOSTRAR ESTE CERTIFICADO EN UN SITIO VISIBLE EN LA DIRECCION DEL COMERCIO. • TANPRI AFICHE SETIFIKA SA A NAN YON KOTE KONSIDEB NAN ADRES OKIPANS. www.miamigov.com Learn more at wm.com/CNG NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Date and Time: Tuesday, May 14, 2024 at 10:30 a.m. Central Time Place: Waste Management, Inc. 800 Capitol Street, Suite 3000 Houston, Texas 77002 Record Date: March 19, 2024 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, 2024; • To vote on a non -binding, advisory proposal to approve our executive compensation; • To vote on a proposal to approve an amendment to the Certificate of Incorporation to provide for officer exculpation; 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, 2023 are available at investors.wm.com. 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. If you received printed copies of the materials in accordance with 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 13, 2024. If you received printed copies of the proxy materials in accordance with 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. 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. 0 k Your vote is important. We urge all stockholders to vote and submit their proxies as soon as possible using one of the methods described above. Courtney A. Tippy Corporate Secretary April 2, 2024 Enroll in Electronic Delivery Today. Help us save paper, time and money! If your shares are held in street name through a bank or broker, visit www.proxyvote.com or follow the instructions on the Notice, proxy card or voting instructions. ALL stockholders may enroll at enroll.icsdelivery.com/wmi. PROXY STATEMENT TABLE OF CONTENTS Page GENERAL INFORMATION 1 BOARD OF DIRECTORS 4 Nominees for Director 4 Leadership Structure 4 Independence of Board Members 5 Meetings and Board Committees 5 Role in Risk Oversight 5 Oversight of Sustainability Risk and Performance 6 Audit Committee 9 Audit Committee Report 10 Management Development and Compensation Committee 11 Compensation Committee Report 11 Compensation Committee Interlocks and Insider Participation 12 Nominating and Governance Committee 12 Related Party Transactions 13 Board of Directors Governing Documents 14 Non -Employee Director Compensation 15 ELECTION OF DIRECTORS (Item 1 on the Proxy Card) 17 DIRECTOR AND OFFICER STOCK OWNERSHIP . 29 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 30 DELINQUENT SECTION 16(A) REPORTS 30 EXECUTIVE OFFICERS 31 EXECUTIVE COMPENSATION 32 Compensation Discussion and Analysis 32 Introduction 32 Executive Summary 32 2023 Compensation Program Results and Company Performance 33 Consideration of Stockholder Advisory Vote 35 2024 Compensation Program Preview 35 Our Compensation Philosophy for Named Executive Officers 36 Page Overview of Elements of Our 2023 Executive Compensation Program 37 How Named Executive Officer Compensation Decisions are Made 38 Named Executives' 2023 Compensation Program and Results 42 Post -Employment and Change in Control Compensation; Clawback Policies 47 Other Compensation Policies and Practices 47 Executive Compensation Tables 49 Summary Compensation Table 49 Grant of Plan -Based Awards in 2023 51 Outstanding Equity Awards as of December 31, 2023 52 Option Exercises and Stock Vested 53 NonquaLified Deferred Compensation in 2023 54 Potential Payments Upon Termination or Change in Control 55 Potential Consideration Upon Termination of Employment 57 Chief Executive Officer Pay Ratio 58 Equity Compensation Plan Table 58 Pay Versus Performance 59 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Item 2 on the Proxy Card) 63 ADVISORY VOTE ON EXECUTIVE COMPENSATION (Item 3 on the Proxy Card) 64 APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR OFFICER EXCULPATION (Item 4 on the Proxy Card) 65 APPENDIX A A-1 GENERAL INFORMATION Waste Management, Inc. is a holding company, and all operations are conducted by its subsidiaries. Our subsidiaries are operated and managed locally and generally focus on providing services in distinct geographic areas. Through our subsidiaries, we are North America's Leading provider of comprehensive environmental solutions, providing services throughout the United States ("U.S.") and Canada. We partner with our 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 Board of Directors is soliciting your proxy for the 2024 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 April 2, 2024, 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 April 2, 2024, 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 at investors.wm.com 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 and helps Lower our printing and postage costs. If you are a beneficial owner, visit www.proxyvote.com or follow the instructions on the Notice, proxy card or voting instructions. ALL stockholders may also enroll at enrolLicsdelivery.com/wmi. Shares Outstanding on the Record Date There were 401,296,564 shares of common stock of Waste Management, Inc. (our "Common Stock") outstanding and entitled to vote as of March 19, 2024, the record date for the Annual Meeting. Attending the Meeting Only stockholders, their proxy holders and our invited guests may attend the Annual Meeting. If you plan to attend, please bring identification. If you are a beneficial owner that holds shares in street name through a bank or broker, you must also bring your bank or broker statement showing your beneficial ownership of Waste Management, Inc. Common Stock in order to be admitted to the meeting. If you are planning to attend our Annual Meeting and require directions to the meeting, please contact our Corporate Secretary at 713-512-6200. The only items that we anticipate will be discussed at the Annual Meeting are the items set out in the Notice. We do not anticipate that there will be any presentations. Voting Instructions You can submit your proxy by Internet, phone or mail. You may receive more than one proxy card depending on how you hold your shares. You should complete and return each proxy or other voting instruction request provided to you. If you are a beneficial owner that holds shares in street name through a bank or broker, you will receive instructions from your bank, broker or nominee that you must follow in order to have your shares of Common Stock voted at the Annual Meeting, and your ability to submit your voting instructions by phone or over the Internet depends on your bank's or broker's voting process. 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 set forth below. 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. Voting and Asking Questions at the Meeting Stockholders can vote and ask questions at the Annual Meeting relevant to the items to be voted on or the business of the Company. If you are a beneficial owner that holds shares in street name, you must bring a legal proxy from the record holder in order to vote your shares at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Please read the Notice 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 IANt 2024 Proxy Statement I 1 GENERAL INFORMATION before the Annual Meeting revoking the proxy or by voting during the Annual Meeting. Attendance at the Annual Meeting, by itself, will not revoke a proxy. If you hold shares through a bank or broker, you may revoke any prior voting instructions by contacting that firm. The Proposals The following proposals are being presented for a vote of the stockholders at the Annual Meeting: Proposal Board Vote Matter Recommendation 1 Election of Director Nominees set forth in this Proxy Statement FOR each director nominee 2 Ratification of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm for fiscal year 2024 FOR 3 Approval of the Company's Executive Compensation FOR 4 Approval of an Amendment to the Certificate of Incorporation to Provide for Officer Exculpation FOR Votes Required to Adopt the 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 proposal. Proposal 1: 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. Proposal 2 and 3: In order to be adopted, each of proposals 2 and 3 require the affirmative vote of the holders of a majority of the outstanding shares of Common Stock present, in person or by proxy, and entitled to vote on the matter. Proposal 4: In order to be adopted, proposal 4 requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote on the matter. Effect of Abstentions 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. Effect of Broker Non -Votes 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 instruct your broker how to vote your shares using the instructions your broker provides to you, your broker may vote your shares at its discretion on proposal 2 regarding ratification of the Company's independent registered public accounting firm, but not for any other proposal. When this happens, it is called a "broker non -vote." To be sure your shares are voted in the manner you desire, you should instruct your broker how to vote your shares. With respect to proposal 1 and proposal 3, broker non -votes will have no effect on the outcome. With respect to proposal 4, a broker non -vote is the same as a vote against the proposal because, as stated above, approval of proposal 4 requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote on the matter. 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 to constitute a quorum necessary to conduct the Annual Meeting. Abstentions and broker non -votes are counted for purposes of determining a quorum. Stockholder Proposals and Nominees for the 2025 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 2 It 2024 Proxy Statement GENERAL INFORMATION to GCLegal@wm.com. A copy of our By -Laws may be obtained free of charge by writing to our Corporate Secretary at 800 CapitoL Street, Suite 3000, Houston, Texas 77002 and is avaiLabLe in the "ESG — Corporate Governance" section of investors.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 2025 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 December 3, 2024. 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 2025 AnnuaL Meeting. 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 2025 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 15, 2024 and no Later than January 14, 2025 and must contain the information specified in the Company's By -Laws. In addition to satisfying the foregoing advance notice requirements under our By -Laws, to compLy with the universal proxy ruLes under the Exchange Act, a stockhoLder who intends to solicit proxies in support of director nominees other than Company's nominees must provide notice that sets forth the information required by RuLe 14a-19 under the Exchange Act no Later than January 14, 2025, and must also comply with aLL other requirements of RuLe 14a-19 under the Exchange Act. The Company wiLL disregard any proxies solicited for a stockhoLder's director nominee(s) if such stockhoLder faiLs to compLy with such requirements. 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 November 3, 2024, and no Later than December 3, 2024, 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 the Company's 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 2024 AnnuaL Meeting for a fee of $17,500 plus associated costs and expenses. Annual Report A copy of our AnnuaL Report on Form 10-K for the year ended December 31, 2023, which includes our financial statements for fiscal year 2023, 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 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. iiNt 2024 Proxy Statement I 3 BOARD OF DIRECTORS Our Board of Directors currently has 10 members. Each member of our Board is eLected annually. Mr. John C. Pope 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 2024 AnnuaL Meeting. The Board of Directors intends to reduce the size of the Board to nine members effective as of the expiration of Mr. Pope's term at the 2024 AnnuaL Meeting. Nominees for Director Name Committee Management Development & Nominating & Age Tenure Independent Audit Compensation Governance Thomas L. Berle 61 2024 — Present Bruce E. Chinn 67 2023 — Present ✓ 8 James C. Fish, Jr. 61 2016 — Present Andres R. GLuski 66 2015 — Present Victoria M. HoLt 66 2013 — Present ✓ 8 Kathleen M. MazzareLLa 64 2015 — Present ✓ 8 8 8 Sean E. Menke 55 2021 — Present ✓ 8 8 William B. Plummer 65 2019 — Present ✓ © 8 Maryrose T. Sylvester 58 2021 — Present ✓ 8 8 Chair © Member 8 Leadership Structure Ms. Kathleen M. MazzareLLa's service as Non -Executive Chair of the Board began in May 2023, following the retirement of Mr. Thomas H. Weidemeyer. The Board eLected Ms. Mazzarella to serve as Non -Executive Chair of the Board due to her extensive Leadership experience, expertise in Board governance, and deep understanding of our Company and our strategic vision. Ms. MazzareLLa presides over aLL meetings of the Board, including executive sessions that only non - employee directors attend. The Non -Executive Chair also serves on aLL three Board committees. Stockholders and interested parties wishing to communicate with the Board or the non -employee directors should address their communications to Non -Executive Chair of the Board, c/o Waste Management, Inc., P.O. Box 53569, Houston, Texas 77052-3569. We separated the roLes of Chair of the Board and Chief Executive Officer at our Company in 2004. We beLieve that having a Non -Executive Chair 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 Chair 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. At this time, we do not contemplate a situation in which our Company would not have a Non -Executive Chair of the Board. 4 It 2024 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: Thomas L. Berle, Bruce E. Chinn, Andres R. Gluski, Victoria M. Holt, Kathleen M. Mazzarella, Sean E. Menke, William B. Plummer and Maryrose T. Sylvester. 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 by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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., The AES Corporation, Chevron Phillips Chemical Company LLC and Sabre Corporation. Ms. Mazzarella, Mr. Gluski, Mr. Chinn and Mr. Menke served as chief executive officer of these entities, respectively, for all or a portion of calender year 2023. The Board concluded there are no transactions between the Company and any entity with which a non -employee director is affiliated that are prohibited by our categorical standards of independence or 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 two special meetings, and each committee of the Board met independently as set forth below. Each incumbent director attended at least 75% of the meetings of the Board and the committees on which he or she served. In addition, seven of the then -serving directors attended the 2023 Annual Meeting of Stockholders. Mr. Gluski and Mr. Pope did not attend the 2023 Annual Meeting of Stockholders, after notifying the Chair of the Board and the Company of unavoidable conflicts due to travel requirements. Our Corporate Governance Guidelines provide that directors are expected to attend the annual meeting of stockholders, and if an unavoidable conflict arises, the director must notify the Chair of the Board in advance. 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 business performance or strategic priorities on a short-term, intermediate or long-term basis. IANt 2024 Proxy Statement I 5 BOARD OF DIRECTORS 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 that use of outside advisors and experts complement our ERM process by ensuring our efforts are comprehensive and balanced. Our ERM 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 the most significant or immediate 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 financial impact, likelihood and potential timing 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 regularly provides an in-depth update 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, Chief Legal Officer, Chief Human Resources and Diversity & Inclusion Officer and Chief Sustainability 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 and Controls, Environmental Audit, Ethics and Compliance, Human Resources, 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: emissions and climate impact; industry disruption; revenue management; legal and regulatory; capital allocation; supply chain management; service to customers; cost discipline; physical infrastructure; brand management; environmental, health & safety; human capital; information security and privacy; 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 Chair of the Board and our committee chairs. Our Non -Executive Chair 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 Sustainability Risk and Performance As North America's leading provider of comprehensive environmental services, sustainability and environmental stewardship are embedded in all that we do. We have enabled a people -first, technology -led focus to drive our mission to maximize resource value, while minimizing environmental impact, and deliver on our brand promise ALWAYS WORKING FOR A SUSTAINABLE TOMORROW®. As a result, it would not be effective, or possible, to assign responsibility for oversight of sustainability, which includes environmental and human capital management risk and performance, to any one committee of our Board of Directors. Rather, various aspects of sustainability risk and performance, 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. 6 It 2024 Proxy Statement BOARD OF DIRECTORS 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 our people, sustainable operations, waste diversion, recycling business improvements, sustainability growth investments, potentially disruptive technologies and environmental impacts, risks and opportunities. In 2023, the Board received several dedicated updates regarding sustainability topics, including our sustainability growth strategy, and the Board receives regular updates from our Chief Human Resources and Diversity & Inclusion Officer with respect to our people -first strategy, including workforce evolution, labor market developments and employee retention. 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 Sustainability Scorecard to the entire Board to highlight critical focus areas. Through these reports, our Board directly oversees our sustainability-related performance, including progress toward our sustainability goals and our decarbonization plan for meeting a science -based climate target, detailed in our 2023 Sustainability Report. The Company previously announced that, in response to the civil rights audit stockholder proposal that was approved at the 2022 Annual Meeting of Stockholders, it engaged a team led by former U.S. Attorney General Loretta Lynch, now a partner at Paul, Weiss, Rifkind, Wharton & Garrison, to perform an independent assessment of the impact of the Company's policies and practices on the civil rights of Company stakeholders, and to provide recommendations for further improvement. The assessment included a broad review and analysis in the areas of environmental justice and diversity and inclusion of employees and suppliers, with input from internal and external stakeholders. Our Board received several updates from our senior executives, including our Chief Legal Officer, Chief Human Resources and Diversity & Inclusion Officer and Chief Sustainability Officer, on the structure and progress of the assessment, and the Board engaged directly with former U.S. Attorney General Loretta Lynch on the assessment findings and recommendations. The assessment was recently completed, and the report is available at sustainability.wm.com. Our Audit Committee also plays a significant role in oversight of sustainability risk and performance. As discussed above, our Audit Committee receives regular ERM updates with in-depth discussion on specific risk topics. At least annually, one of the in-depth discussions will look at an aspect of sustainability 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 with risk assessments. During 2023, our Audit Committee received updates on proposed regulatory disclosure requirements related to climate and cybersecurity and the Company's preparations. Our Audit Committee also has responsibility for oversight of information and cybersecurity and assessment of cyber threats and defenses. Our Audit Committee receives reports from our most senior executives in the Digital organization, and the Company's executive officers, at least twice a year. Topics historically covered in such reports include third -party evaluation of our technology infrastructure and information security against the industry -standard NIST (National Institute of Standards and Technology) cybersecurity framework; risk mitigation through the Company's enterprise -wide cybersecurity 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. Our MD&C Committee has primary oversight of human capital management, including review of employee health, welfare and benefit programs and compensation plan risk assessment. The MD&C Committee is also responsible for executive compensation incentive plan design and the incorporation and measurement of the annual cash incentive program sustainability scorecard performance modifier discussed in our Compensation Discussion and Analysis below. The Committee also engages in quarterly sessions with our President and Chief Executive Officer and our Chief Human Resources and Diversity & Inclusion 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. IANt 2024 Proxy Statement I 7 BOARD OF DIRECTORS 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. Please see the discussion of the Nominating and Governance Committee below for more information on this robust process. For additional information about the topics discussed above, including sustainability goals, metrics and progress, we encourage stockholders to review our 2023 Sustainability Report at sustainability.wm.com. The Sustainability Report conveys the strong linkage between the Company's sustainability goals and our growth strategy, inclusive of the planned and ongoing expansion of the Company's recycling and renewable energy businesses. Our 2023 Sustainability Report and the civil rights assessment report referenced above do not constitute a part of, and are not incorporated by reference into, this Proxy Statement or any report we file with (or furnish to) the SEC. 8 It 2024 Proxy Statement BOARD OF DIRECTORS THE AUDIT COMMITTEE Members: William B. Plummer, Chair Bruce E. Chinn Andres R. Gluski Victoria M. Holt Kathleen M. Mazzarella Sean E. Menke Number of Meetings Held in 2023: 9 Mr. Plummer has been the Chair of our Audit Committee since May 2020. 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 Chair Mr. Plummer, Mr. Chinn, Mr. Gluski, Ms. Holt, Ms. Mazzarella and Mr. Menke 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 by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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 • Provide 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. iimit 2024 Proxy Statement I 9 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, 2023 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 on Form 10-K. • First, the Audit Committee discussed with Ernst & Young LLP, the Company's independent registered public accounting firm for fiscal year 2023, 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, 2023, 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, 2023, and consolidated statements of operations, comprehensive income, cash flows and changes in equity for the fiscal year ended December 31, 2023, 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 on Form 10-K for its fiscal year ended December 31, 2023. The Committee has also approved the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal year 2024. The Audit Committee of the Board of Directors William B. Plummer, Chair Bruce E. Chinn Andres R. Gluski Victoria M. Holt Kathleen M. Mazzarella Sean E. Menke 10 I iiMit 2024 Proxy Statement BOARD OF DIRECTORS THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE Members: Andres R. Gluski, Chair Thomas L. Bene Kathleen M. Mazzarella William B. Plummer John C. Pope Maryrose T. Sylvester Number of Meetings Held in 2023: 5 Mr. Gluski has served as the Chair of our MD&C Committee since May 2021. Mr. Berle was appointed to the MD&C Committee effective March 1, 2024, after the 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. 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 by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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 incentive 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 included in this Proxy Statement 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 Andres R. Gluski, Chair Kathleen M. Mozzarella William B. Plummer John C. Pope Maryrose T. Sylvester lAjnit 2024 Proxy Statement I 11 BOARD OF DIRECTORS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2023, Ms. Mazzare[[a, Ms. Sylvester and Messrs. G[uski, Plummer and Pope served on the MD&C Committee, as well as retired director Mr. Thomas H. Weidemeyer. No member of the MD&C Committee was an officer or employee of the Company during 2023; no member of the MD&C Committee is a former officer of the Company; and during 2023, 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: Number of Meetings Held in 2023: 6 Victoria M. Holt, Chair John C. Pope Kathleen M. Mazzarella Maryrose T. Sylvester Sean E. Menke Ms. Holt was named Chair of our Nominating and Governance Committee in May 2023. Each member of our Nominating and Governance Committee is independent in accordance with the rules and regulations of the New York Stock Exchange. Key Functions The Nominating and Governance Committee has a written charter that has been approved by the Board of Directors and can be found by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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, and 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 Chair 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 non -employee 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. Thomas L. Berle as a potential director candidate. Following a robust consideration process summarized below and recommendation by the Nominating and Governance Committee, the Board increased its size to 10 members and elected Mr. Berle to serve as a member of our Board, effective March 1, 2024. The Nominating and Governance Committee also recommended, and the Board approved, appointment of Mr. Berle to the MD&C Committee. Mr. Berle is a nominee for re-election at the Annual Meeting. 12 I iNnAa 2024 Proxy Statement BOARD OF DIRECTORS The Nominating and Governance Committee considers current and future needs of the Board as a whole and reviews a matrix of experience, skills and expertise to inform nominee criteria. The Committee recommends individuals as nominees based on an evaluation of all factors deemed 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 of background, thoughts and opinions on the Board obtained through, among other factors, 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. Plummer's and Mr. Chinn'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 or re -nominating individuals to serve as directors of the Company, the Nominating and Governance Committee also considers prior contributions to the Board, evaluation feedback, tenure and age of the Board as a whole and tenure and age of the individual. The Nominating and Governance Committee takes into account the nature and extent of the directors' other commitments when determining whether to re -nominate that individual for election to the Board. In addition to complying with the Limitations on public company board memberships set forth in the Corporate Governance Guidelines, the Committee expects each director to ensure that his or her other commitments do not interfere with his or her duties as a director of the Company. 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, having considered the foregoing factors, recommends 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 Chair of the Nominating and Governance Committee, and the Non -Executive Chair of the Board, as well as additional members of the Board and an external 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 Chair of the Nominating and Governance Committee, Waste Management, Inc., 800 Capitol Street, Suite 3000, Houston, Texas 77002, between November 3, 2024 and December 3, 2024. Related Party Transactions The Board of Directors has adopted a written Related Party Transactions Policy for the review and approval of related party transactions. Our policy generally defines related party transactions as current or proposed transactions since the beginning of the Last fiscal year in excess of $120,000 in which (a) the Company is a participant and (b) any director; executive officer; immediate family member of any director or executive officer; or party known to be the owner of more than 5% of the Company's Common Stock 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; a beneficial owner of the Company's Common Stock that reports such ownership on a Schedule 13G due to Lack of control or intent to influence control; 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 as soon as practicable of any potential related party transaction that involves the Company. The Chief Legal Officer will determine whether such transaction or relationship constitutes a related party transaction that must be referred to the Nominating and Governance Committee. In the event that the Chief Legal Officer is a participant in a potential related party transaction, the determination whether the transaction must be referred to the Nominating and Governance Committee shall be made by the Chief Executive iiint 2024 Proxy Statement I 13 BOARD OF DIRECTORS Officer, with consultation from the Corporate Secretary and the Chief Compliance and Ethics Officer. 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. In determining whether to approve a related party transaction, the Nominating and Governance Committee will consider, among other things, the following factors: • whether the terms of the related party transaction are fair to the Company and such terms would be reasonable in an arms -Length transaction; • whether there are business reasons for the Company to enter into the related party transaction; • whether the related party transaction would impair the independence of any non -employee director; • whether the related party transaction would present an improper conflict of interest for any director or executive officer of the Company; and • whether 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. Based on its review processes for potential related party transactions in 2023, the Company identified certain continuing transactions involving employment of immediate family members of executive officers that the Nominating and Governance Committee had previously considered and approved. The Nominating and Governance Committee re - reviewed the employment relationships set forth below and again concluded that such transactions are not inconsistent with the interests of the Company and its stockholders. Other than as reported below, we are not aware of any other transactions in 2023 that are required to be disclosed. Two brothers of Kelly Rooney, our Senior Vice President and Chief Human Resources and Diversity & Inclusion Officer, continue to be employed by subsidiaries of Waste Management, Inc. as Senior District Managers. Each received total cash compensation in 2023 in excess of $120,000 but Less than $260,000, and an equity incentive grant with a target value of Less than $15,000. The compensation of Ms. Rooney's brothers is determined in accordance with the compensation practices generally applicable to employees of Company subsidiaries with comparable qualifications and responsibilities and holding similar positions, and without the involvement, input or approval of Ms. Rooney. In addition, Ms. Rooney is not directly or indirectly responsible for managing or overseeing the work of her brothers. The brother -in -Law of John Morris, our Executive Vice President and Chief Operating Officer, continues to be employed by a subsidiary of Waste Management, Inc. as a Senior Manager of Talent Management & Learning Optimization. In 2023, he received total cash compensation in excess of $120,000, but Less than $200,000. The compensation of Mr. Morris's brother -in -Law is determined in accordance with the compensation practices generally applicable to employees of Company subsidiaries with comparable qualifications and responsibilities and holding similar positions, and without the involvement, input or approval of Mr. Morris. In addition, Mr. Morris is not directly or indirectly responsible for managing or overseeing the work of his brother -in -Law. 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, Waste Management, Inc., 800 Capitol Street, Suite 3000, Houston, Texas 77002 or by accessing the "ESG — Corporate Governance" section of investors.wm.com. 14 I iiMit 2024 Proxy Statement BOARD OF DIRECTORS Non -Employee Director Compensation Our non -employee director compensation program consists of equity awards and cash consideration. Director compensation is reviewed 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. Following its annual review, the MD&C Committee did not recommend any changes to director compensation for 2023. As a result, the 2023 non -employee director compensation levels are consistent with the levels established in 2022. Equity Compensation Non -employee directors receive an annual grant of shares of Common Stock under the Company's current stock incentive plan. The shares are fully vested at the time of grant; however, non -employee directors are required to hold all net shares throughout their tenure on the Board 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 $90,000 in January 2023 and July 2023. Additionally, any director serving as Non -Executive Chair of the Board receives an additional grant of Common Stock valued at approximately $50,000 in January and July of each year. Cash Compensation Non -employee directors received an annual cash retainer of $120,000 for Board service in 2023. Committee chairs received the additional annual retainer payments set forth below. 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. Annual Chair Retainers: $100,000 for Non -Executive Chair of the Board $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 throughout their tenure as a director. The ownership guideline for non -employee directors is equal to five times the non -employee directors' annualized cash retainer. As of December 31, 2023, this amount was $600,000. There is no deadline for non -employee directors to reach their ownership guideline; however, the MD&C Committee performs regular reviews to confirm that all non -employee directors are in compliance or are showing sustained progress toward achievement of their ownership guideline. Based on the closing price of our Common Stock on March 5, 2024, all non - employee directors have reached the ownership guideline with the exception of our two newest directors, Mr. Berle and Mr. Chinn, who are making appropriate progress toward the ownership guideline. Additionally, our Insider Trading Policy provides that directors are not permitted to hedge their ownership of Company securities, including trading in options, warrants, puts and calls or similar derivative instruments on any security of the Company or selling any security of the Company "short." iiint 2024 Proxy Statement I 15 BOARD OF DIRECTORS 2023 Director Compensation Table The table below shows the aggregate cash paid, and stock awards issued, to the non -employee directors in 2023 in accordance with the descriptions set forth above: Fees Earned Stock or Paid in Awards Name Cash ($) ($)( Total ($) Bruce E. Chinn(2) 106,800 160,125 266,925 Andres R. Gluski 140,000 179,992 319,992 Victoria M. Holt(3) 133,775 179,992 313,767 Kathleen M. Mazzarella(4) 198,785 248,798 447,583 Sean E. Menke 120,000 179,992 299,992 William B. Plummer 145,000 179,992 324,992 John C. Pope 120,000 179,992 299,992 Maryrose T. Sylvester 120,000 179,992 299,992 Thomas H. Weidemeyer(5) 110,000 140,045 250,045 (1) Amounts in this column represent the grant date fair value of stock awards granted in 2023, 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) Mr. Chinn was elected to our Board effective February 10, 2023 and received prorated equity and cash compensation for service as a director from the date of election until the next regular installment of compensation payments in July 2023. (3) Ms. Holt received prorated cash compensation for service as Chair of the Nominating and Governance Committee from May 9, 2023 until the next regular installment of compensation payments in July 2023. (4) Ms. Mazzarella received prorated equity and cash compensation for service as Non -Executive Chair of the Board from May 9, 2023 until the next regular installment of compensation payments in July 2023. (5) As of the 2023 Annual Meeting, Mr. Weidemeyer had reached the retirement age set forth in the Company's Corporate Governance Guidelines; therefore, he did not stand for re-election. His term as a director of the Company expired, and his service as Non -Executive Chair of the Board ended, on May 9, 2023. 16 I iiMit 2024 Proxy Statement ELECTION OF DIRECTORS (Item 1 on the Proxy Card — Director Nominees) The first item on the proxy card is the eLection of nine directors to serve until the 2025 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. Each of the director nominees currently serves on our Board of Directors. If any nominee is unable or unwiring 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. Below we present biographical information of each director nominee, as well as information about the qualifications, skills and areas of expertise that make each of these individuals a valuable member of our Board and that were considered by the Board when nominating them for re-eLection. Definitions of the categories of skiLL and expertise presented in the following chart are provided beLow. This is intended as a high-level summary to support an understanding of director qualifications and is not an exhaustive List of the areas of skill and expertise that our director nominees contribute to the Board. BOARD COMPOSITION, SKILLS AND EXPERTISE BOARD DIVERSITY Directors are diverse based on gender and race/ethnicity • Racial/ethnically diverse • Women INDEPENDENCE • Independent ▪ President and CEO TENURE • 0-3 years • 4-8 years • 9-12 years Vint 2024 Proxy Statement I 17 ELECTION OF DIRECTORS L N Y N 0 O x Mazzarella N Y N SKILLS AND EXPERIENCE Executive Leadership Public Company Board and Governance Strategic Planning Operational Excellence Financial Expertise and Capital Allocation Human Capital Management Sustainability/ Environmental/ Renewable Energy Digital / Information Technology / Cybersecurity Risk Management * • * * * * * * • * • * * * * • * • • * * * • * • • * * * • • • * • * • * • • * • • * • • * * * • • DEMOGRAPHICS Gender Race/Ethnicity Male White/ Caucasian Male Black/ African American Mate White/ Caucasian Mate Hispanic * Each director nominee's identification of the top four categories of skill and expertise through which they contribute to the Board. This is not an indication that any director nominee does not possess any particular category of skill or expertise, but rather, a targeted reflection of the key areas through which each director nominee supports the effectiveness of the Board and furthers the long-term success of the Company 18 I w 2024 Proxy Statement Female White/ Caucasian Female White/ Caucasian Mate White/ Caucasian Mate Black/ African American Female White/ Caucasian • Each director nominee's identification of additional categories of skill and expertise in which they have substantial experience and in-depth knowledge ELECTION OF DIRECTORS Executive Leadership Directors who hold or have held significant executive leadership positions with large organizations provide unique insights. These individuals have valuable experience developing talent and solving problems in large, complex organizations and can capably and confidently advise the Company's senior leadership team on a wide range of issues. These individuals often possess extraordinary leadership qualities and have the ability to identify and develop these qualities in others. Operational Excellence Directors with experience in a significant operations role help the Company to develop, implement and assess its operating plan and capital plan and execute on commitments to cost optimization and continuous improvement. Individuals with extensive operational experience in heavily regulated industries, including a focus on capital intensive and labor intensive businesses with sophisticated logistics, transportation and supply chain elements, provide valuable insights on management's ability to operate effectively and efficiently. Sustainability/Environmental/ Renewable Energy Directors with experience overseeing development, implementation and assessment of sustainability strategies, and risks and opportunities related to sustainability and provision of environmental services, support the Company's ability to deliver on its sustainability growth strategy, goals and commitments. These individuals understand the importance of linking sustainability and renewable energy to the creation of long-term stockholder value, while also operating in an environmentally sound and responsible manner. These individuals also understand the regulatory environment in which the Company operates and the connection of sustainability and corporate responsibility to the Company's long- standing commitment to environmental stewardship. oo 000 Public Company Board and Governance Directors with a history of service on other public company boards help our Board function effectively by drawing on knowledge of governance best practices. These individuals bring a practical understanding of organizations and processes and the importance of management accountability, transparency, and the protection of stockholder interests. These individuals help our Board structure and execute its independent oversight of management. Financial Expertise and Capital Allocation Directors with a deep understanding of finance and financial reporting lead our Board's oversight of financial performance and robust internal controls. These individuals have expertise in designing and implementing financing and capital allocation strategies, evaluating stockholder returns and accessing capital markets. These individuals have knowledge of corporate finance and accounting standards necessary for effective oversight of public company financial reporting. Digital/Information Technology/ Cybersecurity Directors with experience in digital and information technology leadership provide valuable perspectives on technology innovation, digital solutions, innovative business models, data analytics, e-commerce applications, marketing strategy and cyber risks. These individuals are particularly engaged in our Board's oversight of the Company's comprehensive information security and cybersecurity programs. These individuals also bring knowledge of use of technology to further the Company's strategy to enhance customer experience and reduce costs and labor intensity through automation. Strategic Planning Directors with experience developing and driving the strategic direction and growth of large organizations provide valuable guidance to the Company's senior leadership team. These individuals have expertise in areas including transformation, innovation and change management. These individuals often also have sophisticated experience in growth through large corporate transactions, including mergers & acquisitions. 0 Human Capital Management Directors with experience in human capital management provide valuable guidance in support of the Company's People First strategy. These individuals understand the dynamics of attracting, motivating, and retaining talented and engaged employees. These individuals have expertise in talent management, succession planning and creating a diverse and inclusive workplace that prioritizes safety as a core value. Risk Management Directors that have participated in development, implementation and evaluation of sophisticated risk management programs are critical in helping our Board fulfill its responsibilities with respect to risk oversight and mitigation. These individuals have experience in effectively identifying, prioritizing and managing a broad spectrum of complex and significant risks facing a large public company. Vint 2024 Proxy Statement I 19 ELECTION OF DIRECTORS THOMAS L. BENE Age: 61 Director since: March 2024 Board Committee: Management Development & Compensation POSITION AND BUSINESS EXPERIENCE President and Chief Executive Officer — Breakthru Beverage Group, LLC (private beverage wholesale distributor) since October 2021. Former President and Chief Executive Officer — NationaL Restaurant Association, served from June 2020 to September 2021. Former President and Chief Executive Officer — Sysco Corporation (multinational wholesale restaurant distributor), served from 2018 to January 2020; also served as Executive Advisor from February 2020 to March 2020. Director of Sysco Corporation from 2018 to January 2020. QUALIFICATIONS Tom Berle has four decades of experience executing on strategic business priorities and delivering financial growth for Large companies. Since 2021, he has served as President and Chief Executive Officer of Breakthru Beverage Group, where he is focused on Leading the company through a period of growth and expansion by driving new capabilities and innovation. Prior to his current role, he held several operations and business Leadership roLes at Sysco Corporation, including serving as President, Chief Executive Officer, and Chairman. Before joining Sysco in 2013, Mr. Berle spent over 20 years at PepsiCo in numerous roles of increasing responsibility and scale. Mr. Berle has a proven track record of driving growth and modernizing business models throughout his career. Through his prior operations and management positions, Mr. Berle has gained valuable insight and knowledge in the areas of Leadership and management deveLopment, corporate strategy deveLopment, merchandising, sales, marketing, revenue management, shared services and distribution and supply chain management. Mr. Berle shares his deep experience in Logistics, as well as his focus on differentiation through the use of technology and providing outstanding customer service, to further our Company's growth and optimization strategy. In addition, his dedication to employee deveLopment complements the Company's People First commitment. Mr. Berle hoLds a bachelor of science degree in business administration from the University of Kansas. 20 I w 2024 Proxy Statement ELECTION OF DIRECTORS RUCE E. CHINN Age: 67 Director since: February 2023 Board Committee: Audit POSITION AND BUSINESS EXPERIENCE Retired President and Chief Executive Officer —Chevron Phillips Chemical Company LLC, or CPChem, (global petrochemical joint venture of Chevron USA Inc. and Philips 66 Company), served from April 2021 to March 2024; currently serving as Executive Advisor to CPChem since March 2024. Director of CPChem from November 2020 to March 2024. Also served as President, Chemicals for Chevron Corporation (multinational energy corporation) from May 2020 to March 2021 and President, Chevron Oronite (global lubricant and fuel additives business) for Chevron Corporation from 2018 to April 2020. QUALIFICATIONS In his recent position as President, Chief Executive Officer and a Director of CPChem, Bruce Chinn focused on leading the company through a period of sustainable growth. Mr. Chinn has over 40 years of experience driving operational, safety, and financial results. Previously, he held several operations and business roles at Chevron Corporation, leading large, diverse organizations. In these roles, Mr. Chinn focused on performance, partnership, and safety, while striving for continued success in the business and community. Mr. Chinn began his career at DuPont, where he held positions of increasing responsibility in manufacturing, technical, commercial and business leadership at the U.S. and international level. Mr. Chinn brings extensive knowledge of circular solutions and renewable energy that is aligned with our Company's strategic focus on making sustainability growth investments in our recycling and renewable energy businesses. His operations leadership expertise bolsters our continued efforts to drive operating efficiencies, enhance our safety culture and differentiate our service offerings. Mr. Chinn's broad and expansive dedication to operating excellence and developing strong corporate culture provides valuable perspective to the Board, and his experience allows him to share specific insight into focus areas such as renewable energy transition, environmental regulation and compliance, international exposure and risk management. Mr. Chinn serves on the American Institute of Chemical Engineers Foundation Board of Trustees, and he serves as a board director and executive committee member of the Alliance to End Plastic Waste and the American Chemistry Council. Mr. Chinn holds a bachelor of science degree in chemical engineering from Texas A&M University. Vint 2024 Proxy Statement I 21 ELECTION OF DIRECTORS JAMES C. FISH, JR. Age: 61 Director since: November 2016 POSITION AND BUSINESS EXPERIENCE President, Chief Executive Officer and Director — Waste Management, Inc. since 2016. Director of Caterpillar Inc. since March 2023. QUALIFICATIONS Jim Fish has served as our President and Chief Executive Officer and a Director since 2016. Over more than 20 years, Mr. Fish has held several key positions in our Company, including President and Chief Financial Officer; Senior Vice President — Eastern Group; Area Vice President for Pennsylvania and West Virginia; Market Area General Manager for Massachusetts and Rhode Island; Vice President of Price Management; and Director of Financial Planning and Analysis. Before joining our Company, Mr. Fish held finance and revenue management positions at Westex, a Yellow -Roadway subsidiary, Trans World Airlines, and America West Airlines. He began his professional career at KPMG Peat Marwick. Mr. Fish's extensive Leadership and operational experience, together with his tremendous understanding of the environmental services industry, are instrumental to the development and successful execution of our growth strategy to deliver stockholder value. Additionally, through his professional and educational experience, Mr. Fish has developed valuable expertise in accounting, external reporting, investor relations, human capital and performance management, and risk management. Mr. Fish oversees our Digital organization, and participates directly in matters related to cybersecurity and information security risk mitigation and response strategies. As North America's Largest comprehensive environmental solutions provider, sustainability is embedded in all aspects of our business. As our President and Chief Executive Officer, Mr. Fish has a thorough understanding of the risks and opportunities presented in the areas of sustainability and environmental protection. Mr. Fish is deeply involved in our efforts to mitigate such risks and capitalize on such opportunities in order to deliver on our brand promise, ALWAYS WORKING FOR A SUSTAINABLE TOMORROW®. Mr. Fish also champions the importance of our people -first commitment and the necessity of creating a culture that truly puts the needs of WM employees first. As part of that people -first culture, Mr. Fish has been actively involved in developing initiatives to promote inclusion and diversity throughout the Company's population of approximately 48,000 employees. Mr. Fish earned a bachelor's degree in accounting from Arizona State University and a master's degree in business administration, with emphasis on finance, from the University of Chicago. He is also a Certified Public Accountant. 22 I w 2024 Proxy Statement ELECTION OF DIRECTORS ANDRES R. GLUSKI Age: 66 Director since: January 2015 Board Committees: Audit and Management Development & Compensation (Chair) POSITION AND BUSINESS EXPERIENCE President, Chief Executive Officer and Director — The AES Corporation (global energy company) since 2011. Director of AES Gener (Chile) from 2005 to January 2020. QUALIFICATIONS Andres Gluski has served as President, Chief Executive Officer and a Director of The AES Corporation, a Fortune 500 global energy company, since 2011. Mr. Gluski began his tenure at AES in 2000 and previously served as Executive Vice President and Chief Operating Officer. Under his leadership, AES has become a leader in implementing clean technologies, including energy storage and renewable power. Through his professional experience, Mr. Gluski has extensive knowledge with respect to evaluating renewable energy strategies, and he has developed expertise in considering and evaluating climate -related risks and opportunities, which is directly applicable to our business and our sustainability growth strategy. Mr. Gluski also has experience in the development of sustainability and corporate social responsibility goals, as well as oversight of compliance programs. Prior to joining AES, Mr. Gluski served in a broad range of roles in the public and private sectors, including working as Executive Vice President of Corporate and Investment Banking in Grupo Santander. Mr. Gluski served as a member of the President's Export Council from 2013 to 2016 and served as an expert witness at U.S. Congressional hearings on the subject of energy policy. He currently serves as Chairman of Council of the Americas. Mr. Gluski has also focused on shaping an inclusive, innovative workplace at AES with a diverse and inclusive culture throughout the world. These efforts have given Mr. Gluski valuable expertise in the areas of human capital management and diversity, equity and inclusion that he utilizes in his role as Chair of the Management Development & Compensation Committee of the Board. Mr. Gluski has been named amongst the 100 Most Influential Latinos by Latino Leaders Magazine. The depth and breadth of Mr. Gluski's international business and finance background, and experience in managing growth opportunities while focusing on operational innovation, allow him to provide invaluable risk management, government affairs, public policy, public relations, communications and investor relations insight in his role as a member of the Board. Mr. Gluski holds a bachelor's degree from Wake Forest University, as well as a master's degree and a PhD in economics from the University of Virginia. iiint 2024 Proxy Statement I 23 ELECTION OF DIRECTORS VICTORIA M. HOLT Age: 66 Director since: January 2013 Board Committees: Audit and Nominating & Governance (Chair) POSITION AND BUSINESS EXPERIENCE Retired President and Chief Executive Officer — Proto Labs, Inc. (online and technology -enabled quick -turn manufacturer), served from 2014 to March 2021; also served as Director from 2014 — May 2021. Director of Piper Sandler Companies since September 2019. Director of A. 0. Smith Corp. since April 2021. QUALIFICATIONS Victoria Holt joined Proto Labs, Inc. as President, Chief Executive Officer and a Director in 2014, retiring in 2021. With manufacturing facilities in five countries, Proto Labs is a leading e-commerce technology enabled digital manufacturer of custom prototypes and on -demand product parts. Ms. Holt began her career at Monsanto Company, where she held various assignments of increasing responsibility before moving to Solutia, Inc., a divestiture of the Monsanto Company's chemical business, as Vice President and General Manager Performance Films. Ms. Holt later held various roles with PPG Industries, Inc., a leading coatings and specialty products company, including Senior Vice President of Glass and Fiber Glass. Ms. Holt then served as President and Chief Executive Officer of Spartech Corporation, a leading provider of plastic sheet, compounds and packaging products, until its sale to PolyOne in 2013. Ms. Holt has a diverse international business background serving a wide spectrum of customers looking for sustainable solutions across diverse end markets including plastics, materials, automotive, medical, aerospace, consumer and general industrial. Ms. Holt brings passion and extensive experience in the areas of sustainable innovation, environmental solutions, plastics operations and management and recycling to the Board. Ms. Holt's proven success leading large global companies across a broad range of manufacturing, chemical and materials industries has demonstrated her deep understanding of risk management, operations, strategic planning and performance measurement. Ms. Holt provides tremendous insight into the areas of continuous improvement, use of data analytics, e-commerce, digitally connected operations and execution of our technology -led, sustainability-linked strategy to grow our business and mitigate climate risks. Ms. Holt has developed expertise in corporate governance as a member of the public company boards listed above, in addition to experience serving on private company boards, and she shares this expertise with the Company's Board in her position as Chair of the Nominating and Governance Committee. She also serves on the board of trustees of Dunwoody College. Ms. Holt holds a bachelor's degree in chemistry from Duke University and a master's degree in business administration from Pace University. Ms. Holt has completed the National Association of Corporate Directors (NACD) Cyber Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight. 24 I w 2024 Proxy Statement ELECTION OF DIRECTORS ATHLEEN M. MAZZARELLA Age: 64 Director since: October 2015 Chair of the Board since: May 2023 Board Committees: Audit, Management Development & Compensation and Nominating & Governance 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. Director of Cigna Corporation since 2018. Director of Express Scripts Holding Company from 2017 until acquisition by Cigna Corporation in 2018. Director of Core & Main since January 2019. QUALIFICATIONS Kathleen MazzareLLa has served as President and Chief Executive Officer of Graybar ELectric Company, Inc. since 2012, and as Chairman since 2013. During her more than 40-year tenure at Graybar, Ms. Mazzarella has held numerous executive -level positions in operations, sales, human resources, strategic pLanning and marketing, incLuding Executive Vice President and Chief Operating Officer, Senior Vice President — Sales and Marketing and Senior Vice President— Human Resources and Strategic Planning. Ms. MazzareLLa has been instrumental in developing and communicating Graybar's commitment to sustainabiLity initiatives. Graybar focuses on sustainabiLity in the way it operates and in the innovative soLutions it provides to its customers. The company offers energy -saving products, renewable energy soLutions and suppLy chain services that support sustainable construction, renovation and maintenance of infrastructure and facilities. The company aLso invests in the communities it serves and emphasizes integrity, incLusion and opportunity for all employees. Ms. MazzareLLa brings her deep and valuable experience Leading a diverse range of business functions necessary for an employee -driven, customer -focused business, similar to our Company. Through her role as Chief Executive Officer and her service on the board of directors for other pubLic companies, she has developed expertise in evolving social and governance initiatives. In addition to her experience overseeing financial reporting and controls, technology systems and platforms, and other functional and operationaL areas, she has particular experience in the area of human capital management, incLuding succession pLanning and diversity, equity and incLusion initiatives. Ms. MazzareLLa aLso brings expertise in labor relations, pubLic policy, operationaL innovation and strategic pLanning. Ms. MazzareLLa hoLds an associate degree in telecommunications engineering, a bachelor's degree in applied behavioral sciences from NationaL Louis University, and a master's degree in business administration from Webster University. In addition to the pubLic company boards Listed above, Ms. MazzareLLa aLso serves on the board of the NationaL Association of Wholesaler -Distributors (NAW) and previousLy served on the board of the NAW Institute for Distribution Excellence. Ms. MazzareLLa previousLy served as Chairman of the Federal Reserve Bank of St. Louis, and she has experience serving on various organizational and charitable boards, such as Greater St. Louis Inc., United Way of Greater St. Louis and the Saint Louis CLub. iiint 2024 Proxy Statement I 25 ELECTION OF DIRECTORS SEAN E. MENKE Age: 55 Director since: March 2021 Board Committees: Audit and Nominating & Governance POSITION AND BUSINESS EXPERIENCE Executive Chairman of the Board — Sabre Corporation (software and technology solutions provider to the traveL industry) since April 2022. Director of Sabre Corporation since 2016. Also served as Chief Executive Officer of Sabre Corporation from 2016 to April 2023 and as President of Sabre Corporation from 2016 to December 2021. QUALIFICATIONS As Chair of the Board of Directors of Sabre Corporation and recent Chief Executive Officer, Sean Menke has experience heading a gLobaL network of development, saLes, operations and corporate functions. In 2015, Mr. Menke joined Sabre as president of Sabre Travel Network, Sabre's Largest Line of business. Under Mr. Menke's Leadership, Sabre won major new business opportunities, increased gLobaL market share, secured Sabre's position as the Leading gLobaL distribution system in North America, Latin America and Asia -Pacific, and Led innovation to enable sales of more customized fares and ancillary products that help drive the changing traveL industry Landscape. Before joining Sabre, Mr. Menke spent more than 20 years in executive Leadership roles in the airline industry. He served as Chief Executive Officer at Frontier AirLines and at Pinnacle AirLines, and he held senior level marketing, operations, customer experience, strategy, pLanning, saLes, distribution and revenue management roles, including with Air Canada and Hawaiian AirLines. He also served as Executive Vice President at IHS Inc., a gLobaL information technology company. Mr. Menke is a proven transformation Leader, and uses his extensive experience in technology and transportation operations to bring together strategy and data to address complex issues as a member of the Board. His expertise in Logistics and commitment to delivering efficient, customer - focused innovation through imaginative technology -led solutions heLps advance our strategy to differentiate our services. Mr. Menke has extensive executive experience in technology -driven companies. He is aware of the importance and challenges of cybersecurity and privacy issues, and he has experience overseeing risk mitigation and implementing systems to protect major corporations. Mr. Menke shares with the Board his experience in the areas of cyber intrusion response pLanning and remediation. Mr. Menke hoLds a bachelor's degree in economics and aviation management from Ohio State University and a master's degree in business administration from the University of Denver. 26 I w 2024 Proxy Statement ELECTION OF DIRECTORS WILLIAM B. PLUMMER Age: 65 Director since: August 2019 Board Committees: Audit (Chair) and Management Development & Compensation POSITION AND BUSINESS EXPERIENCE Retired Executive Vice President and Chief Financial Officer — United Rentals, Inc. (world's largest equipment rental company), served from 2008 to 2018. Director of Global Payments Inc. since 2017. Director of Mason Industrial Technology, Inc. from February 2021 to February 2023. Director of Nesco Holdings, Inc. from July 2019 to March 2021. Director of John Wiley & Sons, Inc. from 2003 to September 2019. QUALIFICATIONS William Plummer served as Executive Vice President and Chief Financial Officer for United Rentals, Inc., where he was responsible for the development of the company's finance activities and investor relations, and he co -Led its mergers, acquisitions and divestitures strategies. He also Led the company's safety function and its data and analytics efforts. Mr. Plummer was instrumental in helping the company execute a strategy focused on improving the profitability of its core equipment rental business through revenue growth, margin expansion, operational efficiencies and acquisitions. Mr. Plummer brought more than two decades of financial Leadership experience when he joined United Rentals, having served in a several executive roles, including as Executive Vice President and Chief Financial Officer of Dow Jones & Company, Inc., where he set policy for its global finance and corporate strategy functions. Prior to Dow Jones, Mr. Plummer was Vice President and Treasurer of Alcoa Inc., where he was responsible for global treasury policy and capital markets transactions. Mr. Plummer also held several executive positions at Mead Corporation, including President of its Gilbert Paper division, Vice President of Corporate Strategy and Planning, and Treasurer. Mr. Plummer brings extensive accounting, audit, internal control, and risk management experience to the Board and as Chair of the Audit Committee. In particular, he has first-hand experience developing, enhancing and overseeing risk management programs at Large public companies, including identification and oversight of risks related to human capital, climate, cybersecurity and information technology. He provides insight based on his broad and substantial background in finance, Logistics, operational improvement, mergers and acquisitions and capital markets transactions. He also brings valuable experience executing a customer -focused strategy, driving organic revenue growth and improving free cash flow. Mr. Plummer is deeply engaged in advancing and overseeing results from our Company's diversity, equity and inclusion initiatives. Mr. Plummer holds bachelor's and master's degrees in aeronautics and astronautics from Massachusetts Institute of Technology and a master's degree in business administration from Stanford University. iNnit 2024 Proxy Statement I 27 ELECTION OF DIRECTORS MARYROSE T. SYLVESTER Age: 58 Director since: March 2021 Board Committees: Management Development & Compensation and Nominating & Governance FOR POSITION AND BUSINESS EXPERIENCE Retired U.S. Managing Director and U.S. Head of Electrification — ABB Ltd. (global technology company focused on electrification, robotics, power and automation), served from August 2019 to August 2020. Former President and Chief Executive Officer — Current, powered by GE (energy services and information technology subsidiary of General Electric subsequently acquired by private equity investors), served from 2015 to June 2019. Director of Harley-Davidson, Inc. since 2016. Director of Vontier Corporation since March 2021. Director of Flex Ltd. since September 2022. QUALIFICATIONS As U.S. Managing Director and U.S. Head of Electrification for ABB Ltd., Maryrose Sylvester was responsible for ABB's largest geographical market and the implementation of operational innovations. Ms. Sylvester also championed the company's diversity and inclusion efforts and accelerated ABB's Encompass Diversity program. Prior to joining ABB Ltd., Ms. Sylvester spent more than 30 years at General Electric, where she held a number of leadership roles, including serving as President and Chief Executive Officer of each of GE Lighting, GE Intelligent Platforms, which focused on industrial automation, and GE Current, a digital power service business that delivers integrated energy systems. Ms. Sylvester was instrumental in launching the GE Women's Network. Ms. Sylvester is a strategic, growth -oriented leader with a focus on the areas of technology, innovation and automation. Through her prior experience, Ms. Sylvester has developed expertise in delivering technology -enabled and energy -efficient sustainable solutions. Ms. Sylvester provides experience and extensive knowledge of product development, marketing, technology and supply chain strategy to the Board. Ms. Sylvester has in-depth expertise in the area of improving energy efficiency in response to climate risk. Ms. Sylvester also shares insight from her prior experience to inform our strategy to improve processes and drive efficiency through automation. Ms. Sylvester is passionate about advancing diversity, equity and inclusion and has expertise developing and driving such initiatives in the workplace. Ms. Sylvester also brings valuable governance experience from her service on the public company boards listed above. She holds a bachelor's degree in procurement and production management from Bowling Green State University and a master's degree in business administration from Cleveland State University. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NINE DIRECTOR NOMINEES. 28 I w 2024 Proxy Statement 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 5, 2024, as weLt 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 Shares of Common Stock Covered by Name Stock Owned") Exercisable 0ptions1 4 Thomas L. Berle 579 Bruce E. Chinn(3) 1,321 Andres R. GLuski 15,975 Victoria M. Holt(``) 21,473 Kathleen M. Mazzarella(5) 14,574 Sean E. Menke 3,767 William B. Plummer16 5,992 John C. Pope 56,461 Maryrose T. Sylvester 3,767 James C. Fish, Jr.(" 298,540 63,930 Devina A. Rankin 59,170 65,398 John J. Morris, Jr. 90,205 32,503 Rafael E. Carrasco 11,006 20,883 Tara J. Hemmer 50,489 52,800 ALL directors and executive officers as a group (21 persons)(8) 740,508 383,475 (1) The tabLe reports beneficial ownership in accordance with RuLe 13d-3 under the Exchange Act. The amounts reported above incLude 4,218 stock equivaLents attributed to Mr. Fish and 2,372 stock equivaLents attributed to Mr. Morris, 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 has 2,575 phantom stock equivaLents under the 409A DeferraL PLan. (2) Includes the number of options currently exercisabLe and options that will become exercisabLe within 60 days of the record date. (3) Shares are heLd by the Chinn Family Trust, for which Mr. Chinn and his wife serve as trustees. (4) Shares are heLd by the Victoria M. HoLt Trust, for which Ms. HoLt and her husband serve as trustees. (5) Shares are heLd by the MazzareLLa Living Trust, for which Ms. Mazzaretla and her husband serve as trustees. (6) Of this total, 1,623 shares are heLd by TPO Collectibles LLC, an entity wholly -owned and controlled by Mr. Plummer and his wife. Vint 2024 Proxy Statement I 29 (7) Includes 95,977 shares held in trusts for the benefit of Mr. Fish's children. (8) Included in the "All directors and executive officers as a group" are 13,718 stock equivalents attributable to the executive officers' collective holdings in the Company's 401(k) Retirement Savings Plan stock fund. 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 19, 2024. Name and Address Shares Beneficially Owned Number Percent(' The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 36,159,856(2) 9.0% Melinda French Gates; William H. Gates III 500 Fifth Avenue North Seattle, WA 98109 Bill & Melinda Gates Foundation Trust 2365 Carillon Point Kirkland, WA 98033 35,238,154(3) 8.8% BlackRock, Inc. 50 Hudson Yards New York, NY 10001 28,665,838(4) 7.1 % (1) Percentage is calculated based on 401,598,077 shares of Common Stock outstanding as of February 8, 2024, as reported on the cover of the most recent Annual Report on Form 10-K. (2) This information is based on a Schedule 13G/A filed with the SEC on February 13, 2024. The Vanguard Group reports that it has shared voting power over 521,224 shares of Common Stock, shared dispositive power over 1,655,291 shares of Common Stock and sole dispositive power over 34,504,565 shares of Common Stock beneficially owned. (3) This information is based on a Schedule 13G/A filed with the SEC on February 10, 2023, which is the most recent Schedule 13G filed by the investor with respect to ownership of our Common Stock. Ms. Gates, Mr. Gates and the Bill & Melinda Gates Foundation Trust each report shared voting and dispositive power over 35,234,344 shares of Common Stock beneficially owned. Ms. Gates also reports sole voting and dispositive power of 3,810 additional shares of Common Stock beneficially owned. (4) This information is based on a Schedule 13G/A filed with the SEC on January 26, 2024. BlackRock, Inc. reports that it has sole voting power over 25,826,390 shares of Common Stock and sole dispositive power over 28,665,838 shares of Common Stock beneficially owned. DELINQUENT SECTION 16(A) REPORTS The federal securities laws require our executive officers and directors to file reports of their holdings and transactions in our Common Stock with the SEC. Based on a review of the forms and written representations from our executive officers and directors, we are aware of one delinquent report. In April 2023, Ms. Nagy learned that her investment adviser executed unauthorized purchases of our Common Stock totaling 13 shares in her individual retirement account. The purchases occurred in 2022 when Ms. Nagy was serving as Vice President and Chief Accounting Officer, although she transitioned to a new role with the Company in March 2023 and is no longer serving as an executive officer. Due to Ms. Nagy not being aware of the purchases, the transactions were not timely reported on a Form 4 but upon discovery were reported on a Form 4 in April 2023. 30 I WWI.2024 Proxy Statement EXECUTIVE OFFICERS The following is a listing of our current executive officers, their ages and their business experience for 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 Age Positions Held and Business Experience for Past Five Years Charles C. Boettcher 50 • 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 201 7 to May 2019. Rafael E. Carrasco 52 • Senior Vice President — Enterprise Strategy since September 2023. • Senior Vice President — Operations from July 2021 to September 2023. • Area Vice President — Greater Mid -Atlantic Area from 2017 to June 2021. John A. Carroll 51 • Vice President and Chief Accounting Officer since March 2023. • Vice President, Internal Audit and Controls from 2018 to March 2023. Christopher P. DeSantis 60 • Senior Vice President — Operations since October 2023 • Area Vice President — New England from 2009 to October 2023. Tara J. Hemmer 51 • Senior Vice President and Chief Sustainability Officer since July 2021. • Senior Vice President — Operations from January 2019 to June 2021. John J. Morris, Jr. 54 • Executive Vice President and Chief Operating Officer since January 2019. Devina A. Rankin 48 • Executive Vice President and Chief Financial Officer since February 2020. • Senior Vice President and Chief Financial Officer from 201 7 to February 2020. Kelly C. Rooney 50 • Senior Vice President and Chief Human Resources and Diversity & Inclusion Officer since February 2023. • Senior Vice President and Chief People Officer from August 2022 to February 2023. • Vice President — People Solutions from September 2021 to August 2022. • Area General Manager from July 2020 to September 2021. • Area Director Collection Operations from April 2019 to July 2020. • Regional Manager, Advanced Disposal Services, Inc. (a waste and environmental services company acquired by our Company in 2020), from 201 5 to April 2019. Donald J. Smith 57 • Senior Vice President — Operations since January 2023. • Area Vice President —Texas & Oklahoma Area from 2012 to December 2022. Johnson Varkey 52 • Senior Vice President and Chief Information Officer since January 2024. • Vice President and Chief Information Officer from March 2023 to December 2023. • Vice President — Enterprise Digital Services from September 2019 to March 2023. • Senior Vice President and Chief Information Officer, Centrica (an international energy and services company) from March 2019 to August 2019. Michael J. Watson 54 • Senior Vice President and Chief Customer Officer since 2018. 2024 Proxy Statement I 31 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, 2023 aligned with the Company's 2023 financial goats 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 2023, 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. • Mr. John J. Morris, Jr. — Executive Vice President and Chief Operating Officer since January 2019. • Mr. Rafael E. Carrasco — Senior Vice President — Operations from JuLy 2021 to September 2023; Senior Vice President — Enterprise Strategy since September 2023. • Ms. Tara J. Hemmer — Senior Vice President and Chief SustainabiLity Officer since JuLy 2021. 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 goat 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 to deliver on our brand promise, ALWAYS WORKING FOR A SUSTAINAIBLE TOMORROW®. Our strategy 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 are 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. We believe our CompanywouLd not be successful, on financial performance measures or otherwise, without our industry -Leading focus on sustainabitity. The following key structural elements and policies further the objective of our executive compensation program: • a substantial majority of executive compensation is linked to Company performance, through annual cash incentive performance criteria and tong -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 equity awards with a three-year performance period ended 2023 and the 2023 annual cash incentive award; • at target, 73% of total compensation of our President and Chief Executive Officer was tied to tong -term equity awards, and 61 % of total compensation of our other named executives, on average, was tied to long-term equity awards, which aligns executives' interests with those of stockholders; 32 I iiN,a 2024 Proxy Statement 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- year period, Link executives' interests with Long-term performance and reduce incentives to maximize 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; • in addition to adoption of the executive compensation cLawback poLicy mandated by the New York Stock Exchange in 2023, 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 (the "Severance Limitation Policy"); and • the Company has adopted a poLicy that prohibits it from entering into agreements with executive officers that provide for certain death benefits or tax gross -up payments. 2023 Compensation Program Results and Company Performance During 2023, we continued to focus on our priorities to advance our strategy — enhancing employee engagement, permanently reducing our cost to serve through the use of technology and automation, and investing in growth through our recycling and renewabLe energy businesses. This strategic focus, combined with strong operationaL execution, resuLted in increased revenue, income from operations and income from operations margin. We remain diligent in offering a competitive and differentiated service that meets the needs of our customers, and we are focused on driving operating efficiencies and reducing discretionary spend. We continue to invest in our people through market wage adjustments, investments in our digital platform and training for our team members. We also continue to make investments in automation and optimization to enhance our operationaL efficiency and improve Labor productivity for aLL Lines of business. The Company allocated $2.438biLLion of available cash to our shareholders during 2023 through dividends and Common Stock repurchases. During 2023, the Company allocated $2.895 billion of available cash to capital expenditures. The increase in capitaL spending continues to be driven in Large part by our acceleration of investments in our recycling and renewabLe energy businesses. Following is a summary of the 2023 compensation program results: Total Shareholder Return With respect to the haLf of the performance share units ("PSUs") granted in 2021 with a three-year performance period ended December 31, 2023 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 77.27%, resulting in a maximum 200% payout on these PSUs in shares of Common Stock. This performance directly benefited our stockholders, delivering total shareholder return of 58.25% 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 2021, of $7.789 biLLion, exceeding the target performance level of $7.032 biLLion and the maximum performance level of $7.50 biLLion for the three-year performance period ended December 31, 2023. These results exclude the impact of $1.325 biLLion of incremental sustainabiLity growth investments in 2022 and 2023, as such capitaL expenditures were not contemplated at the time this performance measure was established but were subsequently approved by our Board in furtherance of the Company's strategy. This performance resuLted in a 200% payout on these PSUs in shares of Common Stock. The robust iiint 2024 Proxy Statement I 33 EXECUTIVE COMPENSATION cash flow generation of our business over the three-year performance period has allowed the Company to fulfill its priorities of investing in the business, funding acquisitions with strong returns, and returning available cash to stockholders through dividend growth and Common Stock repurchases. Annual Cash Incentive Performance Measures Company performance on annual cash incentive performance measures for named executive officers is set forth below. Additional information about the definition and calculation of these performance measures is below under "Named Executives' 2023 Compensation Program and Results — Annual Cash Incentive." Based on these financial results, the named executives earned an annual cash incentive payment for 2023 equal to 1 17.85% of target. Operating EBITDA (generally defined as the Company's income from operations, excluding depreciation, depletion and amortization, "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" reported in our Annual Report on Form 10-K, and also excluding the impacts of our recycling brokerage business) — $5.892 billion, yielding a payout of 98.98% Income from Operations Margin (generally defined as the Company's income from operations, excluding "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" reported in our Annual Report on Form 10-K, as a percentage of revenue, also excluding the impacts of our recycling brokerage business from both income from operations and revenue) — 19.30%, yielding a payout of 133.46% Internal Revenue Growth (defined as internal revenue growth from yield, plus internal revenue growth from volume, at the consolidated level for the collection and disposal business) — 5.96%, yielding a payout of 139.99%. Incentive compensation measures presented in this proxy statement are defined differently than corresponding measures reported in the Company's quarterly earnings press release. See Appendix A for additional information and reconciliations of non-GAAP measures to the most comparable GAAP measures. Sustainability Modifier to Annual Cash Incentive Awards Beginning in 2023, the MD&C Committee has incorporated a sustainability modifier into the annual cash incentive program. As a result, annual cash incentive payouts to executive officers for 2023 were eligible to be increased, or decreased, up to 5% depending on achievement calculated using a sustainabitity scorecard. The 2023 sustainability scorecard contained quantifiable performance measures in the areas of safety; diversity & inclusion ("D&I"); circularity and climate. As discussed further below under "Named Executives' 2023 Compensation Program and Results —Annual Cash Incentive," the Company earned sufficient points on the sustainability scorecard to correlate to a 2% increase to the annual cash incentive payment for 2023 otherwise earned. In 2023, each of the executive compensation incentive awards continued to demonstrate strong alignment between executive pay and Company performance. The payouts on the PSUs granted in 2021 correlate with outstanding cash flow generation and total shareholder return over the three-year performance period. Additionally, the above -target combined results on our annual cash incentive performance measures are reflective of another year of strong business growth and overall financial performance. The Company's results on each of the performance measures evidence that our executives have taken the right actions to deliver on operational, strategic and financial priorities in the face of broader macroeconomic pressures, including inflation, supply chain disruption, labor market constraints, rising interest rates and commodity price volatility. Management continues to successfully develop and advance strategic initiatives to grow our business while driving efficiencies. As a result, both stockholders and executives were rewarded by above -target results on executive compensation financial performance measures in 2023, coupled with positive results on the sustainability scorecard. 34 I w 2024 Proxy Statement EXECUTIVE COMPENSATION Maximum Target Threshold 2023 Actual Performance and Compensation Payouts Annual Cash Incentive 19.30% Actual 18.80% Target (25% weight) $5.892B Actual $5.900B Target (50% weight) 98.98% 133.46% • 5.96% Actual 5.40% Target (25% weight) 139.99% • Long -Term Performance Share Units 77.27th Percentile Actual 50th Percentile Target (50% weight) Combined Results: (Financial Performance Payout of 117.85%, Sustainability Modifier of 2%) 120.21% 200% $7.789B Actual $7.032B Target (50% weight) 200% Combined Results 200% Operating EBITDA Income from Internal Annual Cash Relative TSR Cash Flow PSU Award Operations Revenue Incentive (S&P 500) Generation Payout Margin Growth Award Payout Consideration of Stockholder Advisory Vote When establishing 2023 compensation for the named executives, the MD&C Committee noted the results of the 2022 advisory stockholder vote on executive compensation, with more than 90% of shares present and entitled to vote at the annual meeting voting in favor of the Company's executive compensation. Accordingly, the results of the stockholder advisory vote did not cause the MD&C Committee to make any changes to executive compensation practices for 2023, although the MD&C Committee does consider feedback received by the Company through stockholder engagement throughout the year. 2024 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 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'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 MD&C Committee has approved keeping the 2024 long-term incentive program design for stock options and PSUs consistent with prior years. As disclosed last year, with respect to the Cash Flow PSUs granted in 2022 with a performance period ended December 31, 2024, the MD&C Committee has considered the impact of the Company's strategy to accelerate investments in recycling and renewable energy growth projects on the cash flow generation performance measure. Consistent with calculation of the performance results for the Cash Flow PSUs granted in 2021, discussed above, the MD&C Committee anticipates that it will be appropriate to exclude the impact of incremental strategic capital investments that were approved by the Board after the applicable cash flow generation performance measures were established for the Cash Flow PSUs granted in 2022. 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. iiint 2024 Proxy Statement I 35 EXECUTIVE COMPENSATION The MD&C Committee has approved an annual cash incentive program for 2024 with the same performance measures and weighting as the 2023 annual cash incentive program. The MD&C Committee has also approved continued use of a sustainability modifier applicable to this program and has increased the weighting of the sustainability modifier. Annual cash incentive payouts to executive officers for 2024 may be increased, or decreased, up to 10% depending on achievement calculated using the 2024 sustainability scorecard. The 2024 sustainability scorecard contains quantifiable performance measures 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 presented in the Company's Sustainability Report. 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 generally 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. 36 I w 2024 Proxy Statement EXECUTIVE COMPENSATION Overview of Elements of Our 2023 Executive Compensation Program Timing Current Short -Term Performance Incentive Long -Term Performance Incentives Component Base Salary Annual Cash Incentive Performance Share Units Stock Options Restricted Stock Units ("RSUs") Purpose To attract and retain executives with a competitive Level of regular income To encourage and reward contributions to our annual financial objectives through performance -based compensation subject to challenging, yet attainable, objective and transparent metrics 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 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, new hire, special recognition) to make awards that encourage and reward Long-term performance and increase alignment with stockholders Key Features Adjustments to base salary primarily consider competitive market data and the executive's tenure, individual performance and responsibilities. Cash incentives are targeted at a percentage of base salary and range from zero to 200% of target based on the following performance measures: • Operating EBITDA — designed to encourage balanced growth and profitability and assess the financial outcome from execution of strategic priorities (weighted 50%); • Income from Operations Margin — designed to motivate pursuit of high margin revenue growth while also controlling costs and operating efficiently (weighted 25%); and • Internal Revenue Growth —targeted at executing on pricing strategy and appropriate volume growth aligned with strategic growth goals (weighted 25%). Payouts of cash incentives based on the performance measures above can be increased or decreased by up to 5%, depending on achievement calculated using the sustainability scorecard. The MD&C Committee has discretion to increase or decrease an individual's cash incentive 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 2023 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 2023 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 granted in 2023 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The option 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 10 years. RSUs are not routinely an element of executive compensation, but grants are made in certain circumstances, including in recognition of significant promotions and contributions. 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. Vint 2024 Proxy Statement I 37 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 2023 table and accompanying disclosure. Perquisites. The Company provides very Limited perquisites or personal benefits to executive officers, including cost to the Company for guest participation in corporate events 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 Chair of the MD&C Committee. In 2023, our President and Chief Executive Officer had 13 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, although this does not occur frequently. 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 regularly scheduled meetings 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 PSU payouts; determines the performance measures and 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 the design and grants of 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 non -employee 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 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 38 I iiN,a 2024 Proxy Statement EXECUTIVE COMPENSATION 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 our CEO and our Human Resources 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 Human Resources 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 2023 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 2022, using information from: • Size -adjusted median compensation data from two general industry surveys in which management annuaLLy participates; the 2021 Aon Radford GLobaL Compensation Executive Data (as the 2022 Aon Radford GLobaL Compensation Executive Data was not yet avaiLabLe) and the WiLLis Towers Watson 2022 Executive Compensation Database Survey. The 2021 Aon Radford GLobaL Compensation Executive Data included 1,109 organizations ranging in size from Less than $10 miLLion to $560 biLLion in annuaL revenue, and the 2022 WiLLis Towers Watson Executive Compensation Database Survey included 797 organizations ranging in size from approximately $20 miLLion to $575 biLLion in annuaL revenue. Data selected from these surveys is scoped based on Company revenue; and • Median compensation data from a comparison group of 20 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. 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 developing 2023 compensation recommendations during 2022. ALL financial and market data are taken from Standard & Poor's CapitaL IQ, with financial data as of each company's 2021 fiscal year end and market capitalization as of December 31, 2021. iiint 2024 Proxy Statement I 39 EXECUTIVE COMPENSATION Peer Company Comparison Group Net Revenue Operating Income Total Assets Total Equity Total Employees Market Capitalization WM Composite Percentile Rank 0% 1O% 20% 30% 40% 50% 60% 20 Company Comparison Group American Electric Power Avis Budget C.H. Robinson WW CSX Entergy FedEx Grainger (WW) Halliburton NextEra Energy Norfolk Southern Republic Services Ryder System Schlumberger Southern Southwest Airlines Sysco Union Pacific UPS Waste Connections XPO 70% 80% 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 2023 target compensation among base saLary, annuaL cash incentive and annuaL Long-term equity awards for (a) our President and Chief Executive Officer and (b) our other named executives, on average. These charts depict the MD&C Committee's 2023 desired totaL mix of target compensation for named executives and reflect that a substantial majority of executive compensation is Linked to Company performance, through annuaL cash incentive performance criteria and Long-term equity -based incentive awards. We consider stock options 40 I iiMit 2024 Proxy Statement EXECUTIVE COMPENSATION granted under our tong -term incentive plan to be performance -based because their value will increase as the market value of our Common Stock increases. President and CEO 10% Base Salary 17% Annual Cash Incentive 73% Long -Term Equity Awards 90% Total Performance Based Other Named Executives, on Average 61% Long -Term Equity Awards 80%Total Performance 20% Base Salary 19% Annual Cash Incentive 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 our President and Chief Executive Officer and the other executive officers, white recognizing the additional responsibilities of our 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 our President and Chief Executive Officer is reasonable compared to that of the other executive officers. 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 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' 2023 Compensation Program and Results — Long -Term Equity Incentives"), this target dollar value will differ from the grant date fair value of awards calculated pursuant to ASC Topic 718 and reported in the Summary Compensation Table. 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 white avoiding unnecessary or excessive risk taking that could harm the long-term value of the Company. During 2023, 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. 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 iiint 2024 Proxy Statement I 41 EXECUTIVE COMPENSATION 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 5%. 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, the MD&C Committee has agreed that it will 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. Named Executives' 2023 Compensation Program and Results Base Salary The MD&C Committee approved increases to the 2023 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 2023 annual base salary established by the MD&C Committee for each of our named executive officers. Named Executive Officer 2023 Base Salary Mr. Fish $1,400,000 Ms. Rankin $ 767,600 Mr. Morris $ 784,000 Mr. Carrasco $ 645,200 Ms. Hemmer $ 668,700 Annual Cash Incentive • Annual cash incentives were dependent on the following performance measures: Operating EBITDA; Income from Operations Margin and Internal Revenue Growth. • Payouts of cash incentives based on the performance measures could be increased or decreased by up to 5%, depending on achievement calculated using the 2023 sustainability scorecard. • Blended results on the performance measures yielded an annual cash incentive payment for 2023 equal to 117.85% of target, which was then increased by 2% on account of the sustainability modifier, yielding a final payout of 120.21 %. 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 Operating EBITDA measure encourages balanced focus on growth and profitability. Our Income from Operations Margin performance measure encourages responsible, high margin revenue growth and cost management and reduction. The Internal Revenue Growth performance measure supports the Company's strategic growth and creation of shareholder value. The MD&C Committee believes these financial performance measures supported and aligned with the strategy of the Company in 2023, are reflective of the Company's overall performance, and are appropriate indicators of our progress toward the Company's goals. See "2023 Compensation Program Results and Company Performance" in the Executive Summary above for further discussion and definitions of the annual cash incentive performance measures. 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 pricing and volume trends, operational factors, and macroeconomic conditions, such as the recent inflationary cost pressures. When setting the 2023 performance levels, the MD&C Committee defined the 2023 annual cash incentive awards to exclude the impacts of our recycling brokerage business. While the relatively small and traditionally lower -margin recycling brokerage business is additive to our overall customer value proposition, it can have a distorting effect on results, due in part to commodity price volatility. The table below details the performance measures set by the MD&C Committee for purposes of the named executive officers' annual cash incentive for 2023. 42 I WWI. 2024 Proxy Statement EXECUTIVE COMPENSATION Threshold Target Maximum Performance Performance Performance (60% Payment) (100% Payment) (200% Payment) Operating EBITDA $5.60 billion $5.90 billion $6.20 billion Income from Operations Margin 17.3% 18.8% 20.3% Internal Revenue Growth 4.0% 5.4% 6.8% 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. Actual Income from Internal Revenue Operating EBITDA Operations Margin Growth (weighted 50%) (weighted 25%) (weighted 25%) Total Payout Earned Payout Payout Payout (as a percentage Earned Actual Earned Actual Earned of Target) $5.892 billion 98.98% 19.30% 133.46% 5.96% 139.99% 117.85% For purposes of the Internal Revenue Growth performance measure target and calculation of results, the Company excluded benefits from Hurricane Ian and prior period recycling rebates, which collectively reduced Internal Revenue Growth performance by 0.18%. Sustainability Modifier to Annual Cash Incentive Awards. In 2023, the MD&C Committee incorporated a sustainability modifier into the annual cash incentive program. As a result, annual cash incentive payouts to executive officers for 2023 were eligible to be increased, or decreased, up to 5% depending on achievement calculated using the sustainability scorecard. Results achieved on each of the four performance measures, and corresponding points earned on a scale of one -to -five, are reported below. The Company earned 13 total points on the 2023 sustainability scorecard, which correlates to a 2% increase to the annual cash incentive payment for 2023 otherwise earned. 2023 Sustainability Modifier Performance Measures Sustainability Scorecard Range Achieved Corresponding Sustainability Scorecard Rating (1-to-5 Point Scale) Implement serious injury and fatality avoidance program and Safety Advanced Driver Assistance Systems in model year 2023 75-99% 4 collection vehicles D&I Improve frontline turnover in diverse populations (year -over -year) 3% to 4% improvement 3 Circularity Increase tons recovered in recycling business (year -over -year) 9.1 to 9.4 million 4 Climate Increase recovery of landfill gas for beneficial use (year -over -year) 2% to 3% decline 2 2023 Sustainability Modifier: Point Scale Modification to Annual Cash Incentive Payout -5% -4% -3% -2% -1% 0 +1% Total Points Earned 4 5 6 7 8 9-10 11-12 13 14 +3% +4% +5% 15-16 17-18 19-20 The MD&C Committee believes that the quantifiable performance measures for 2023, focusing on the areas of safety, D&I, circularity and climate, aligned well with the Company's commitments and values, sustainability growth strategy and 2030 goals presented in the Company's Sustainability Report. Annual Cash Incentive Payout for 2023. 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 2023 and each named executive's total annual cash incentive for 2023 paid in March 2024. Vint 2024 Proxy Statement I 43 EXECUTIVE COMPENSATION Named Executive Officer Target Percentage Annual Cash Incentive of Base Salary For 2023(1) Mr. Fish(2) 158 $2,638,116 Ms. Rankin 100 $ 915,228 Mr. Morris 110 $1,028,241 Mr. Carrasco 90 $ 686,538 Ms. Hemmer 90 $ 717,576 (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 2023. Such amounts are Lower than if calculated using the 2023 base salaries in the table above due to the timing of when base salary increases take effect. (2) In March 2023, the target percentage of base salary for Mr. Fish was increased from 150% to 160%, yielding a 158% target percentage of base salary for the full year of 2023. 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' 2023 annual Long-term incentive award, the MD&C Committee decided to 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 2023 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 2023, 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 Dollar Values of 2023 Long -Term Equity Incentives Set by the Committee (at Target) Mr. Fish $9,750,000 Ms. Rankin $2,300,000 Mr. Morris $2,700,000 Mr. Carrasco $2,000,000 Ms. Hemmer $1,800,000 Overview of Performance Share Units. • Named executives were granted new PSUs with a three-year performance period ending December 31, 2025. Half of each named executive's PSUs granted in 2023 are Cash Flow PSUs and the remaining half are TSR PSUs. • Named executives received a payout of 200% of the PSUs granted in 2021 with a three-year performance period ended December 31, 2023. The Company exceeded the maximum level of performance for the Cash Flow PSUs and the TSR PSUs. PSUs Granted in 2023. 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 44 I iiN,a 2024 Proxy Statement EXECUTIVE COMPENSATION 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 2023 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 grant date to determine the number of PSUs granted. The number of PSUs granted in 2023 are shown in the table below. Named Executive Officer Number of PSUs Mr. Fish 51,316 Ms. Rankin 12,106 Mr. Morris 14,210 Mr. Carrasco 10,526 Ms. Hemmer 9,474 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 economic conditions and business climate; (b) strategic acquisition, restructuring, and transformation and reorganization costs are excluded; (c) cash proceeds from strategic divestitures of assets and businesses are excluded; and (d) cash proceeds from divestitures of any other businesses and assets are included (the "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 2023. Threshold Target Maximum Performance Payout Performance Payout Performance Payout Cash Flow $6.60 billion 50% $7.30 billion 100% $8.0 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 2023. Total Shareholder Return Relative to the S&P 500 Performance Payout 75th percentile (Maximum) 200% 50th percentile (Target) 100% 25th percentile (Threshold) 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 2023 and beyond, including macroeconomic and market conditions and economic indicators for future periods, to align the cash flow targets with the Company's Long-range strategic plan. The 2023 cash flow targets are also reflective of planned increases in capital spending to accelerate our sustainability growth strategy. Vint 2024 Proxy Statement I 45 EXECUTIVE COMPENSATION Payout on PSUs for the Performance Period Ended December 31, 2023. Half of the PSUs granted in 2021 with the performance period ended December 31, 2023 were TSR PSUs, and the remaining half of the PSUs granted in 2021 were Cash Flow PSUs. With respect to the TSR PSUs with a three-year performance period ended December 31, 2023, the performance of the Company's Common Stock on this measure translated into a percentile rank relative to the S&P 500 of 77.27%, resuLting in a maximum 200% payout in shares of Common Stock that were issued in February 2024. For purposes of the Cash Flow PSUs with a three-year performance period ended December 31, 2023, the Company generated net cash fLow from operating activities, Less capitaL expenditures, of $7.789 biLLion, exceeding the target criteria of $7.032 biLLion and the maximum criteria of $7.50 billion; this performance level yielded a 200% payout in shares of Common Stock that were issued in February 2024. This performance was calculated in accordance with the Cash Flow PSU Definition above. Additionally, in Line with the MD&C Committee's policy on calculation adjustments discussed above, the MD&C Committee approved an adjustment to the measurement of performance on the cash fLow measure to exclude the impact of $1.325 biLLion of capitaL expenditures allocated to strategic investments in recycling and renewable energy that were not contemplated at the time the performance measures were estabLished. These strategic investments did not have a material impact on any of the other 2023 executive compensation performance measures. 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 2022 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 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. Named Executive Officer Number of Options Mr. Fish 59,415 Ms. Rankin 14,016 Mr. Morris 16,453 Mr. Carrasco 12,188 Ms. Hemmer 10,969 The stock options granted in 2023 vest ratably in three annuaL increments, beginning on the first anniversary of the date of grant. The exercise price of the options granted in 2023 is $150.115, 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 10 years. We account for our employee stock options under ASC Topic 718 using a BLack-SchoLes valuation modeL 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 accelerated over the period that the recipient becomes retirement -eligible. Restricted Stock Units. The Company did not grant any RSUs to the named executives in 2023. Each of the named executives, other than Mr. Fish, hoLds outstanding RSUs that were granted in 2022 in connection with achievement of targeted synergies from the Company's 2020 acquisition of Advanced Disposal Services, Inc. Mr. Carrasco also had RSUs vest in 2023, and wiLL have RSUs vest in 2024, that were granted prior to his promotion to the senior Leadership team. RSUs vest in full on the third anniversary of the date of grant. Dividends on the RSUs wiLL accrue and be paid in cash upon vesting. The RSUs may not be voted or sold until vested. Unvested RSUs are subject to forfeiture in the event of voluntary or for -cause termination. RSUs wiLL be prorated upon involuntary termination other than for cause, and RSUs immediately vest in the event of an employee's death or disability. 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, increased responsibilities, special recognition and to attract new hires, and that RSUs wiLL not be a routine component of named executive compensation. 46 I iiMit 2024 Proxy Statement EXECUTIVE COMPENSATION Post -Employment and Change in Control Compensation; Clawback Policies Severance Protection Plan. In December 2017, we adopted an Executive Severance Protection Plan (the "Severance 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 served 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 Mr. Carrasco nor Ms. Hemmer is a party to an employment agreement with the Company. Post -Employment Covenants and Clawback Policies. The 2017 Employment Agreements contain noncompetition and nonso[icitation 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. 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. 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 clawback 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. 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 severance arrangements with its executive officers 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 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. iiint 2024 Proxy Statement I 47 EXECUTIVE COMPENSATION 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 senior 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 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. 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 multiple of base salary and are calculated annually based on the average closing price of our Common Stock for the 20 trading days preceding April 1. Each named executive's ownership guideline multiple of base salary and ownership multiple of base salary attained as of March 5, 2024, using the closing price of our Common Stock on such date and base salaries in effect on December 31, 2023, are set forth below. Shares owned outright, vested equity awards 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. Ownership Multiple of Ownership Base Salary Guideline Multiple Attained as of of Base Salary March 5, 2024 Mr. Fish 6x 44x Ms. Rankin 3x 16x Mr. Morris 3x 24x Mr. Carrasco 3x 4x Ms. Hemmer 3x 16x As discussed under "Director and Officer Stock Ownership," the MD&C Committee also establishes ownership guidelines for the non -employee directors and performs regular reviews to ensure all non -employee 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. 48 I w 2024 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 Non -Equity Stock Option Incentive Plan All Other Salary Awards Awards Compensation Compensation ($) ($)11) ($))2) ($)(3) ($))4) Total ($) James C. Fish, Jr. President and Chief Executive Officer 2023 1,388,461(5) 8,405,433 1,950,000 2,638,116 246,844 14,628,854 2022 1,338,462(5) 8,023,256 1,750,011 3,459,049 249,906 14,820,684 2021 1,294,231(5) 7,312,195 1,700,005 2,656,497 94,435 13,057,363 Devina A. Rankin Executive Vice President and Chief Financial Officer 2023 760,792 1,982,933 460,005 915,228 95,142 4,214,100 2022 730,288 3,008,095 439,988 1,258,404 98,980 5,535,755 2021 700,671 1,806,413 420,003 958,821 56,094 3,942,002 John J. Morris, Jr. Executive Vice President and Chief Operating Officer 2023 777,031 2,327,562 539,987 1,028,241 144,151 4,816,972 2022 748,736 3,870,479 519,995 1,391,871 131,155 6,662,236 2021 728,138 1,978,522 460,006 996,408 67,420 4,230,494 Rafael E. Carrasco Senior Vice President - Enterprise Strategy 2023 633,592 1,724,132 400,010 686,538 16,036 3,460,308 Tara J. Hemmer Senior Vice President and Chief Sustainability Officer 2023 662,769 1,551,818 360,003 717,576 102,639 3,394,805 2022 630,506 2,302,032 339,992 978,476 70,648 4,321,654 2021 585,868 1,462,439 339,998 721,549 45,601 3,155,455 (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 14 in the Notes to the Consolidated Financial Statements in our 2023 Annual Report on Form 10-K. The grant date fair value of a TSR PSU granted in 2023, based on a multifactor Monte Carlo model, is $177.48, 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 2023 is $150.115, which is the average of the high and low market price of our Common Stock on the date of the grant, in accordance with our 2014 Stock Incentive Plan. The table below shows (a) the aggregate grant date fair value of Cash Flow PSUs assuming target level of performance is achieved (this is the amount included in the Stock Awards column in the Summary Compensation Table) and (b) the aggregate grant date fair value of the same PSUs assuming the Company will reach the highest level of achievement for this performance measure and maximum payouts will be earned. Vint 2024 Proxy Statement I 49 EXECUTIVE COMPENSATION Year Aggregate Grant Date Fair Value of Cash Flow PSUs Assuming Target Level of Performance Achieved ($) Aggregate Grant Date Fair Value of Cash Flow PSUs Assuming Highest Level of Performance Achieved ($) James C. Fish, Jr. 2023 3,851,651 7,703,302 2022 3,468,403 6,936,806 2021 3,304,908 6,609,816 Devina A. Rankin 2023 908,646 1,817,292 2022 871,981 1,743,962 2021 816,448 1,632,896 John J. Morris, Jr. 2023 1,066,567 2,133,134 2022 1,030,615 2,061,230 2021 894,237 1,788,474 Rafael E. Carrasco Tara J. Hemmer 2023 790,055 1,580,110 2023 711,095 1,422,190 2022 673,869 1,347,738 2021 660,982 1,321,963 (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 2023, calculated using a Black-Scholes option pricing model, is $32.82 per option. See Note 14 in the Notes to the Consolidated Financial Statements in our 2023 Annual Report on Form 10-K for additional information. (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 2023 Compensation Program and Results —Annual Cash Incentive" for additional information. (4) The amounts included in "ALL Other Compensation" for 2023 are shown below (in dollars): 401(k) Plan 409A Deferral Perquisites and Matching Plan Matching Life Insurance Other Personal Contributions Contributions Premiums Benefits(a) James C. Fish, Jr. 14,850 191,240 2,467 38,287 Devina A. Rankin 14,850 78,835 1,457 John J. Morris, Jr. 14,850 82,751 1,497 45,053 Rafael E. Carrasco 14,850 1,186 Tara J. Hemmer 14,850 59,006 1,280 27,503 (a) This column includes perquisites and personal benefits received by a named executive officer in 2023, to the extent that the total incremental cost of such perquisites and personal benefits was at Least $10,000, consisting of (i) incremental cost for personal use of Company aircraft in the following amounts: Mr. Fish—$34,930, Mr. Morris—$41,696 and Ms. Hemmer—$24,146 and (ii) $3,357 of income that was imputed for the cost of the executive's guest's participation in Company events. 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. When a deviation is made from business travel to pick up or drop off the executive in another Location for a personal purpose, 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 in the unusual event that a deadhead flight is 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 our aircraft in the direct operating cost. (5) Includes $100,000 of base salary in each of 2021 and 2022 and $200,000 of base salary in 2023 to which Mr. Fish was entitled but voluntarily relinquished to fund scholarships and other programs that benefit Company employees. 50 I iiMit 2024 Proxy Statement EXECUTIVE COMPENSATION GRANT OF PLAN -BASED AWARDS IN 2023 Estimated Possible Payouts Under Non -Equity Incentive Plan Awards') Estimated Future Payouts Under Equity Incentive Plan Awards(2) Threshold Grant Date ($) James C. Fish, Jr. Target Maximum Threshold Target Maximum ($) ($) (#) (#) (#) All other All other Stock Option Awards: Awards: Number of Number of Shares of Securities Stock or Underlying Units (#) Options(#)1 Exercise Closing or Base Market Price of Price on Option Date of Awards Grant ($/sh)(4) ($/sh) Grant Date Fair Value of Stock and Option Awards (Sr) Cash Incentive 1,316,786 2,194,643 4,389,286 3/7/23 3/7/23 Devina A. Rankin 25,658 51,316 102,632 8,405,433 59,415 150.115 149.40 1,950,000 Cash Incentive 456,826 761,377 1,522,754 3/7/23 3/7/23 John J. Morris, Jr. 6,053 12,106 24,212 1,982,933 14,016 150.115 149.40 460,005 Cash Incentive 513,235 855,392 1,710,784 3/7/23 3/7/23 Rafael E. Carrasco 7,105 14,210 28,420 2,327,562 16,453 150.115 149.40 539,987 Cash Incentive 342,678 571,130 1,142,260 3/7/23 3/7/23 Tara J. Hemmer 5,263 10,5266 21,052 1,724,132 12,188 150.115 149.40 400,010 Cash Incentive 358,170 596,950 1,193,900 3/7/23 4,737 9,474 18,948 1,551,818 3/7/23 10,969 150.115 149.40 360,003 (1) Actual payouts of cash incentive awards for 2023 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 of the three financial performance measures. The range of possible payouts does not incorporate the potential impact of the sustainability modifier, pursuant to which cash incentive payouts were eligible to be increased, or decreased, up to 5% depending on achievement calculated using a sustainability scorecard. See "Compensation Discussion and Analysis - Named Executive's 2023 Compensation Program and Results -Annual Cash Incentive" for additional information. (2) Consists of 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 Executive's 2023 Compensation Program and Results - Long -Term Equity Incentives - PSUs Granted in 2023" for additional information. The performance period for these awards ends December 31, 2025. PSUs earn dividend equivalents, which are paid out based on the number of shares earned at the end of the performance period. (3) Consists of 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 2023 Compensation Program and Results - Long -Term Equity Incentives - Stock Options" for additional information. Stock options vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 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. iiint 2024 Proxy Statement I 51 EXECUTIVE COMPENSATION OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2023 Option Awards Stock Awards" Name Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Number of Value of Market Unearned Unearned Number of Number of Number of Value of Shares, Shares, Securities Securities Shares or Shares or Units or Units or Underlying Underlying Units of Units of Other Other Unexercised Unexercised Option Stock Stock Rights Rights Options Options Exercise Option That Have That Have That Have That Have Exercisable Unexercisable Price Expiration Not Vested Not Vested Not Vested Not Vested (#)(2) (#) ($) Date (#►16) ($N6) (#)"' (Sr) James C. Fish, Jr. 59,415(3) 150.115 3/7/2033 — 98,936 35,438,875 22,063 44,125(4) 145.67 3/1/2032 32,850(5) 110.81 2/23/2031 Devina A. Rankin 14,016(3) 150.115 3/7/2033 6,803 1,218,417 24,078 8,624,740 5,547 11,094(4) 145.67 3/1 /2032 16,232 8,116(5) 110.81 2/23/2031 25,284 126.005 2/19/2030 John J. Morris, Jr. 16,453(3) 150.115 3/7/2033 10,204 1,827,536 28,360 10,158,552 6,556 13,1 1 1 (4) 145.67 3/1/2032 8,889(5) 110.81 2/23/2031 13,907 126.005 2/19/2030 Rafael E. Carrasco 12,188(3) 150.115 3/7/2033 3,061 548,225 19,778 7,084,480 4,287 8,572(5) 145.67 3/1/2032 351 62,864 1,546 773(5) 110.81 2/23/2031 2,655 126.005 2/19/2030 3,273 98.898 2/19/2029 3,207 85.34 2/20/2028 1,000 73.335 2/28/2027 Tara J. Hemmer 10,969(3) 150.115 3/7/2033 5,102 913,768 18,726 6,707,653 4,287 8,572(4) 145.67 3/1/2032 13,140 6,570(5) 110.81 2/23/2031 20,860 126.005 2/19/2030 (1) Values are based on the closing price of our Common Stock on December 31, 2023 of $1 79.10. (2) Includes vested stock options granted on February 28, 201 7; February 20, 2018; February 19, 2019; February 19, 2020, February 23, 2021 and March 1, 2022 pursuant to our 2014 Stock Incentive Plan. (3) Includes stock options granted on March 7, 2023 that vest ratably in three annual increments, beginning on the first anniversary of the date of grant. (4) Includes stock options granted on March 1, 2022 that vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 52 I w 2024 Proxy Statement EXECUTIVE COMPENSATION (5) Includes stock options granted on February 23, 2021 that vest ratably in three annual increments, beginning on the first anniversary of the date of grant. (6) Includes RSUs granted on March 1, 2022 under our 2014 Stock Incentive Plan that vest in full on the third anniversary of the date of grant. In the case of Mr. Carrasco, the table also includes 351 RSUs granted on February 23, 2021 under our 2014 Stock Incentive Plan, prior to his promotion to the senior Leadership team, that vest in full on the third anniversary of the date of grant. (7) Includes PSUs with three-year performance periods ending December 31, 2024 and December 31, 2025. 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 during the first quarter of the succeeding year. The PSUs for the performance period ended December 31, 2023 are not included in the table as they are considered earned as of December 31, 2023 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, 2022 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, 2024: Mr. Fish — 47,620; Ms. Rankin — 11,972; Mr. Morris — 14,150; Mr. Carrasco — 9,252; and Ms. Hemmer — 9,252. The following number of PSUs have a performance period ending December 31, 2025: Mr. Fish — 51,316; Ms. Rankin — 12,106; Mr. Morris — 14,210; Mr. Carrasco — 10,526; and Ms. Hemmer — 9,474. OPTION EXERCISES AND STOCK VESTED Name Option Awards Stock Awards Number of Shares Value Realized on Number of Shares Value Realized on Acquired on Exercise(#e Exercise ($) Acquired on Vesting (#)(2) Vesting ($)(2) James C. Fish, Jr. 83,419 3,626,951 119,300 23,483,609 Devina A. Rankin 29,472 5,801,416 John J. Morris, Jr. 8,889 553,792 32,280 6,354,157 Rafael E. Carrasco 2,451 467,471 Tara J. Hemmer 27,005 1,970,469 23,860 4,696,722 (1) The following number of net shares were received, after withholdings and/or sale of shares to cover option costs and taxes: Mr. Fish — 13,454; Mr. Morris — 1,940; and Ms. Hemmer — 6,954; (2) Includes shares of the Company's Common Stock issued on account of PSUs granted in 2021 with a performance period ended December 31, 2023. The determination of achievement of performance results and corresponding vesting of such PSUs was performed by the MD&C Committee in February 2024. Following such determination, shares of the Company's Common Stock earned under this award were issued on February 13, 2024. Also includes 347 RSUs granted to Mr. Carrasco prior to his promotion to the senior Leadership team that vested in 2023. The value of PSUs and RSUs is calculated using the average of the high and Low market price of our Common Stock on the date of payout. 2024 Proxy Statement I 53 EXECUTIVE COMPENSATION Nonqualified Deferred Compensation in 2023 Amounts that Can be Deferred. Under our 409A Deferral PLan, each of our named executive officers may eLect to defer receipt of portions of their base saLary and annuaL cash incentives for the appLicabLe fiscal year in excess of the annuaL compensation threshold (the "Threshold") estabLished under Section 401(a)(17) of IRC. For 2023, the Threshold was $330,000. Such deferraLs wiLL result in a deferraL of taxation on the amounts deferred. The 409A DeferraL PLan provides that a pLan participant may defer, for payment at a future date (a) up to 25% of the participant's base saLary, and up to 100% of the participant's annuaL cash incentives, payable after the aggregate of such base saLary and annuaL cash incentives reaches the Threshold; (b) any RSUs that wouLd otherwise be received by the pLan participant; and (c) any PSUs that wouLd otherwise be received by the pLan participant. Matching Contributions. 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. Timing of Distributions. 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. Executive Registrant Aggregate Contributions Contributions Earnings in Last in Last in Last Aggregate Aggregate Balance Fiscal Fiscal Fiscal Withdrawals/ at Last Fiscal Name Year (VI) Year ($)P) Year ($)03) Distributions ($)03) Year End ($)(4) James C. Fish, Jr. 250,005 191,240 2,782,176 265,563 20,355,169 Devine A. Rankin 101,352 78,835 128,916 998,839 John J. Morris, Jr. 110,334 82,751 546,764 3,159,891 Rafael E. Carrasco — — — — Tara J. Hemmer 131,124 59,006 139,619 991,541 (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 the case of Mr. Fish, who has deferred receipt of a total of 94,844 shares of Common Stock in prior years, earnings reported in the coLumn above also incLude the change in the closing price per share of the Company's Common Stock from December 31, 2022 to December 31, 2023, plus $2.80 of dividend equivaLents paid per share of Common Stock in 2023, muLtipLied by the number of shares deferred. The dividend equivaLents on the deferred shares were paid in cash to Mr. Fish during 2023 and are reflected in the Aggregate WithdrawaLs/ Distributions coLumn above. The value of Mr. Fish's deferred shares was incLuded in the Option Exercises and Stock Vested tabLe in the years such awards vested. (4) Amounts shown in this coLumn incLude the foLLowing amounts that were reported as compensation to the named executive in the Summary Compensation TabLe for 2021-2023: Mr. Fish—$852,605; Ms. Rankin—$421,888; Mr. Morris — $408,768 and Ms. Hemmer — $439,700. Mr. Carrasco has not elected to participate in the 409A DeferraL PLan. 54 I iiN,a 2024 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 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 Exhibit List to the Company's Annual Report on Form 10-K, for the full 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, 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 iiint 2024 Proxy Statement I 55 EXECUTIVE COMPENSATION 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, 2023, when the closing price of our Common Stock was $179.10 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 2021, 2022 and 2023, based on the difference between the closing price of our Common Stock on December 31, 2023 and the exercise price of those options. • For purposes of calculating the payout of performance share unit awards outstanding as of December 31, 2023, we have assumed that target performance was achieved; 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, 2023. • 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, subject to an age -based reduction provision beginning at age 65. 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 2023 table above for aggregate balances payable to the named executives under our 409A Deferral Plan pursuant to the named executive's distribution elections. 56 I w 2024 Proxy Statement EXECUTIVE COMPENSATION Potential Consideration Upon Termination of Employment Mr. Fish Ms. Rankin Mr. Morris Mr. Carrasco Ms. Hemmer 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 performance at end of performance period) • Accelerated vesting of RSUs • 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 5,440,570 1,331,368 1,522,221 692,619 1,053,163 17,719,438 4,312,370 5,079,276 3,542,240 3,353,827 — 1,218,417 1,827,536 611,089 913,768 1,250,000 739,000 754,000 595,000 643,000 24,410,008 7,601,155 9,183,033 5,440,948 5,963,758 • 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) 7,280,000 3,070,400 3,292,800 2,451,760 2,541,060 • Continued coverage under health and welfare benefit plans for two years • Prorated payment of PSUs (contingent on actual performance at end of performance period) • Prorated vesting of RSUs Total In Event of Termination Without Cause by the Company or For Good Reason by the Employee Six Months Following a Change in Control (Double Trigger) 31,324 31,324 31,324 31,324 31,324 8,749,393 2,152,185 2,537,847 1,733,091 1,670,287 — 743,235 1,114,797 394,138 557,399 16,060,717 5,997,144 6,976,768 4,610,313 4,800,070 • 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 benefit plans for two years • Accelerated vesting of stock options • Prorated accelerated payment of PSUs • Accelerated payment of PSUs replacement grant • Accelerated vesting of RSUs • Prorated annual cash bonus(') Total 7,280,000 3,070,400 3,292,800 2,451,760 2,541,060 31,324 5,440,570 8,749,393 8,970,045 4,480,000 34,951,332 31,324 1,331,368 2,152,185 2,160,185 1,218,417 1,535,200 11,499,079 31,324 1,522,221 2,537,847 2,541,429 1,827,536 1,724,800 13,477,957 31,324 692,619 1,733,091 1,809,149 611,089 580,680 7,909,712 31,324 1,053,163 1,670,287 1,683,540 913,768 601,830 8,494,972 (1) Pursuant to the Severance Protection Plan, Ms. Hemmer and Mr. Carrasco 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. iiint 2024 Proxy Statement I 57 EXECUTIVE COMPENSATION Chief Executive Officer Pay Ratio In 2022, we reconducted our analysis to identify 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"). There have been no changes to the Company's employee population, compensation arrangements, or the circumstances of the Median Employee that the Company believes would significantly impact this pay ratio disclosure and require identification of a new Median Employee. To select the Median Employee, we determined the actual taxable compensation paid to each Listed employee in 2021, 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. The Median Employee, a Senior Technician in the U.S., was identified from a List of Company employees as of December 31, 2021. Out of a total worldwide employee population of 48,687 on that date, the List included 47,617 employees and excluded the Chief Executive Officer and our 1,069 employees based in India. Approximately 95.7% of these total employees work in the U.S. and approximately 4.3% 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. For 2023, total annual compensation for the Median Employee was $97,046. The annual compensation of our Chief Executive Officer was $14,628,854, for a ratio of 1:151. 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, 2023 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 Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights Equity compensation plans approved by security holders(') 4,162,092(2) Weighted -Average Exercise Price of Outstanding Options and Rights $111.22(3) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans 16,085,724(4) (1) Includes our 2009 Stock Incentive Plan, 2014 Stock Incentive Plan, 2023 Stock Incentive Plan and Employee Stock Purchase Plan ("ESPP"). No additional awards may be granted under our 2009 Stock Incentive Plan or our 2014 Stock Incentive Plan. (2) Includes: options outstanding for 2,728,522 shares of Common Stock; 182,105 shares of Common Stock to be issued in connection with deferred compensation obligations; 370,902 shares underlying unvested RSUs and 880,563 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 880,563 shares. The total number of shares subject to outstanding awards in the table above includes 308,597 shares on account of PSUs, at target, with the performance period ended December 31, 2023. The determination of achievement of performance results on such PSUs was performed by the MD&C Committee in February 2024, and the Company achieved maximum performance criteria on the TSR PSUs and the Cash Flow PSUs, yielding a 200% payout. A total of 406,810 shares of Common Stock were issued on account of such PSUs in February 2024, net of units deferred, of which 203,405 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 the purchase price is not yet known. (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 note (2) above. (4) The shares remaining available include 1,795,378 shares under our ESPP and 14,290,346 shares under our 2023 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 2023 Stock Incentive Plan would be 15,170,909. 58 I iiN,a 2024 Proxy Statement EXECUTIVE COMPENSATION PAY VERSUS PERFORMANCE We are required to calculate and present the following compensation information in the tabular format prescribed by the SEC. The Compensation Discussion and Analysis and other executive compensation tables above should be read in conjunction with this section to gain a complete understanding of our executive compensation philosophy, programs and decisions. The tables and discussion below refer to an SEC -prescribed calculation of compensation actually paid, referred to as "CAP". However, CAP does not correlate to the total amount of compensation that the executive realized during the year. CAP is a detailed calculation that includes adjustments to Total Compensation as reported in the Summary Compensation Table (the "SCT") to reflect the increase (or decrease) in value of equity compensation over the course of the year, including equity compensation granted in prior years and equity compensation remaining unvested as of year-end. The equity compensation values used to determine CAP are calculated in accordance with ASC Topic 718, based on various methodologies and assumptions. The amount of compensation that the executive will actually realize when such equity awards vest or options are exercised may be materially different from the amounts used in the CAP calculation. The table below includes our Operating EBITDA annual cash incentive performance measure as the Company Selected Measure ("CSM") that management believes is the most important annual financial performance measure used to link executive pay and Company performance in 2023. This measure is also discussed in our Compensation Discussion and Analysis and is generally defined as the Company's income from operations, excluding depreciation, depletion and amortization, "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" reported in our Annual Report on Form 10-K, and also excluding the impacts of our recycling brokerage business. Operating EBITDA presented in this proxy statement is a non-GAAP measure and is defined differently than Operating EBITDA reported in the Company's quarterly earnings press release. See Appendix A for additional information and a reconciliation of this non-GAAP measure to the most comparable GAAP measure. Pay Versus Performance Table Year 2023 2022 2021 2020 SCT Total to CEO(') ($) 14,628,854 14,820,684 13,057,363 12,373,925 Average SCT Total for Non -CEO CEO CAP(1)(2 NEOs(') ($) ($) 26,638,740 3,971,546 13,037,001 5,202,091 44,273,994 3,637,383 15,824,928 3,372,614 Average Non -CEO NEOs CAP(1)(2 ($) 6,550,505 4,823,249 10,803,402 4,308,433 Value of Initial Fixed $100 Investment Based on:(') WM TSR ($) 168 145 152 105 Peer Group TSR ($) 166 141 149 107 Net Income ($ in billions) 2.304 2.238 1.816 1.496 CSM: Operating EBITDA ($ in billions) 5.892 5.475 4.961 4.371 (1) For all periods shown in the table above, the Company's CEO was Mr. James C. Fish, Jr. The Non -CEO NEOs for purposes of the 2023 disclosures include Ms. Devina A. Rankin, Mr. John C. Morris, Jr., Mr. Rafael E. Carrasco and Ms. Tara J. Hemmer. The Non -CEO NEOs for purposes of the 2022 and 2020 disclosures include Ms. Rankin, Mr. Morris, Ms. Hemmer and Mr. Steven R. Batchelor, the Company's retired Senior Vice President — Operations. The Non -CEO NEOs for purposes of the 2021 disclosures include Ms. Rankin, Mr. Morris, Ms. Hemmer and Mr. Charles C. Boettcher, Executive Vice President, Corporate Development & Chief Legal Officer. (2) To calculate 2023 CAP, we made specified adjustments to Total Compensation as reported in the SCT, as set forth below: Vint 2024 Proxy Statement I 59 EXECUTIVE COMPENSATION Adjustments to CEO's SCT Total Compensation to Calculate CAP: 2023 SCT Total Compensation 14,628,854 Deduction from SCT Total Compensation, in dollars • Grant date fair values of equity awards reported in the "Stock Awards" and "Options Awards" columns in the SCT Additions to SCT Total Compensation, in dollars: 10,355,433 • Fair value of stock awards granted during the year, as of 12/31(a) 11,099,138 • Fair value of option awards granted during the year, as of 12/31 (b) 2,595,049 • Change in fair value of prior years' stock awards unvested at 12/31(a) 1,765,392 • Change in fair value of prior years' option awards unvested at 12/31(b) 818,348 • Change in fair value of prior years' stock awards vesting during the year(a) 5,614,556 • Change in fair vaLue of prior years' option awards vesting during the year(b) (445,774) • Dividend equivalents paid upon stock awards vesting during the year 918,610 Total Additions to SCT Total Compensation, in dollars 22,365,319 CAP 26,638,740 Adjustments to Non -CEO NEOs Average SCT Total Compensation to Calculate Average CAP: 2023 SCT Total Compensation 3,971,546 Deduction from SCT Total Compensation, in dollars • Grant date fair values of equity awards reported in the "Stock Awards" and "Options Awards" columns in the SCT Additions to SCT Total Compensation, in dollars: 2,336,613 • Fair value of stock awards granted during the year, as of 12/31(a) 2,501,178 • Fair value of option awards granted during the year, as of 12/31 (b) 585,555 • Change in fair value of prior years' stock awards unvested at 12/31(a) 552,912 • Change in fair vaLue of prior years' option awards unvested at 12/311b1 163,643 • Change in fair vaLue of prior years' stock awards vesting during the year(a) 1,031,736 • Change in fair value of prior years' option awards vesting during the year(b) (88,919) • Dividend equivalents paid upon stock awards vesting during the year 169,467 Total Additions to SCT Total Compensation, in dollars 4,915,572 CAP 6,550,505 (a) Stock awards for all NEOs include annual grants of TSR PSUs and Cash Flow PSUs. The fair value of an unvested TSR PSU is calculated using a multifactor Monte Carlo model, and because total shareholder return is a market condition, projected achievement is embedded in the fair value. The fair value of an unvested Cash Flow PSU is equal to the average of the high and low market price of our Common Stock on the given date; we then multiply the fair vaLue of a Cash Flow PSU by our projection, for accounting purposes, of the probable outcome of the Cash Flow Generation performance measure applicable to such PSUs, based on results to -date and forecast. The following grid summarizes the projected probable outcomes utilized to calculate the value of unvested Cash Flow PSUs at year-end for years prior to the end of the performance period for purposes of 2023 CAP: 60 I w 2024 Proxy Statement EXECUTIVE COMPENSATION Projected Payout of Unvested Cash Flow PSUs at Year -End 2023 2022 Cash Flow PSUs with 3-year Performance Period Ended 12/31/2023 200% Cash Flow PSUs with 3-year Performance Period Ended 12/31/2024 100% 100% Cash Flow PSUs with 3-year Performance Period Ended 12/31/2025 100% Stock awards also includes RSUs that vested for Mr. Carrasco in 2023; unvested RSUs that were granted to Mr. Carrasco in 2021; and unvested RSUs that were granted to Ms. Rankin, Mr. Morris, Ms. Hemmer and Mr. Carrasco in 2022. The fair value of an RSU is equal to the average of the high and Low market price of our Common Stock on the given date. (b) Option award fair values are calculated using a Black-Scholes option pricing model. (3) Total shareholder return ("TSR") is based on a hypothetical $100 investment on December 31, 2019. The TSR amounts shown for 2020 represent the value of that $100 investment on December 31, 2020, and TSR is then calculated, on a cumulative basis, as of December 31, 2021, December 31, 2022 and December 31, 2023. The Peer Group TSR refers to the Dow Jones Waste & Disposal Services Index. Tabular Disclosure of Most Important Measures to Determine 2023 CAP The five items Listed below represent the most important measures used to determine CAP for 2023 for all of our NEOs, as each measure and its impact on executive compensation is further described in our Compensation Discussion and Analysis. Most Important Performance Measures TSR Relative to the S&P 500 Cash Flow Generation Operating EBITDA Income from Operations Margin Internal Revenue Growth Narrative Disclosure to Pay Versus Performance Table The following charts reflect the relationship of CAP over the four-year period ended December 31, 2023 to trends in the Company's TSR, net income and Operating EBITDA over the same period. In addition, the first chart below reflects that the Company's TSR is highly -aligned with the Peer Group TSR. We beLieve variations in CAP due to use of ASC Topic 718 fair values for four years of outstanding equity grants at specified points in time have resulted in CAP for the four-year period presented not having a direct correlation to Company performance trends. However, we generally beLieve our CAP, and our CAP reLative to our TSR, net income and Operating EBITDA, is reflective of our use of equity incentives that are tied to stock price, strong operational performance and financiaL results, consistent above -target performance on financiaL compensation metrics and our TSR reLative to the S&P 500 having exceeded the 50th percentile since 2020. Due to the size of our President and CEO's annuaL equity incentive award and the fact that nearly three-quarters of our President and CEO's compensation is tied to such equity incentive awards, above target performance has a more pronounced impact on his CAP, reLative to our non -CEO NEOs. Operating EBITDA is identified as our CSM because it is assigned the heaviest weighting, at 50%, in our annuaL cash incentive awards, making it the most important annuaL financiaL performance measure used to Link executive pay and Company performance in 2023. iiint 2024 Proxy Statement I 61 EXECUTIVE COMPENSATION CAP in Millions CAP in Millions $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $- $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $- Relationship of CAP to WM TSR and WM TSR to Peer Group TSR 2020 2021 2022 2023 CEO CAP WM TSR Non -CEO NEO Average CAP Dow Jones Waste & Disposal Services Index TSR Relationship of CAP to Net Income and Operating EBITDA 11161 2020 2021 2022 2023 CEO CAP Non -CEO NEO Average CAP Net Income Operating EBITDA 62 I 2024 Proxy Statement $170 $160 $150 $140 $130 $120 $110 $100 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $- TSR (Value of Initial Fixed $100 Investment on 12/31/19) Net Income and Operating EBITDA in Billions 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 2024, subject to ratification by our stockholders. Representatives of Ernst & Young LLP will attend the Annual Meeting. They will be able to make a statement if they want, and will be available to answer appropriate questions from stockholders. 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: 2023 2022 Audit Fees (In millions) $6.8 $6.5 Audit -Related Fees 1.0 0.2 Tax Fees All Other Fees Total $7.8 $6.7 Audit fees include 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 include attest services related to financial reporting that are not required by statute or regulations. 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 Chair has the authority to approve additional services, not previously approved, between Committee meetings. Any additional services approved by the Audit Committee Chair 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 2023 and 2022, the Audit Committee or Audit Committee Chair 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 2024. 2024 Proxy Statement I 63 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 included in 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 majority 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-year period, Link executives' interests with Long-term performance and reduce incentives to maximize 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; • in addition to adoption of the executive compensation clawback policy mandated by the New York Stock Exchange in 2023, 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 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 of Directors 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. THE BOARD RECOMMENDS THAT YOU VOTE TO APPROVE THE COMPANY'S EXECUTIVE COMPENSATION. 64 I WWI. 2024 Proxy Statement APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORTION TO PROVIDE FOR OFFICER EXCULPATION (ITEM 4 ON THE PROXY CARD) Background The State of Delaware, which is the Company's state of incorporation, enacted legislation, effective August 1, 2022, that amended Section 102(b)(7) of the Delaware GeneraL Corporation Law (the "DGCL") to enable Delaware corporations to include a provision in their certificates of incorporation to eLiminate or Limit the personal LiabiLity of certain officers for monetary damages associated with cLaims of breach of the duty of care in certain instances (referred to as "excuLpation"). The Company's Third Restated Certificate of Incorporation (the "Certificate of Incorporation") provides for the excuLpation of directors from personal liability for monetary damages associated with breaches of the duty of care but does not have a similar Limitation of LiabiLity for our officers. The Company is asking its stockhoLders to approve an amendment to the Certificate of Incorporation to Limit the LiabiLity of certain of the Company's officers in specific circumstances, as permitted by DeLaware Law (the "Proposed Amendment"). The Proposed Amendment aLso simplifies the existing excuLpation provision related to directors of the Company set forth in ArticLe Seventh of the Certificate of Incorporation by referring to the DGCL as the same exists or may hereafter be amended instead of specifying each instance where excuLpation for directors is currentLy not avaiLabLe under the DGCL. As such, the current excuLpation protections avaiLabLe to the directors will remain unchanged as a resuLt of the Proposed Amendment. In addition, the Proposed Amendment provides that if the DGCL is further amended to eLiminate or Limit the LiabiLity of officers or directors, the LiabiLity of such officers and directors wiLL be Limited or eliminated to the fullest extent permitted by Law, as so amended. The foLLowing description is a summary onLy and is qualified in its entirety by reference to the text of the Proposed Amendment as shown below in the section titled "Proposed Amendment." Consistent with the updated Section 102(b)(7), the Proposed Amendment wouLd onLy exculpate certain officers of the Company from personaL LiabiLity for monetary damages for direct cLaims brought by stockhoLders for breaches of the officer's fiduciary duty of care, including class actions. In addition, as is the case for our directors under our current Certificate of Incorporation, officers wouLd not be exculpated from personaL LiabiLity (a) for breach of the officer's duty of loyalty to the Company or its stockholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or (c) for any transaction from which the officer derived an improper personaL benefit. In addition, the Proposed Amendment aLso wouLd not eLiminate an officer's monetary LiabiLity for cLaims brought by the Company itself or for derivative cLaims brought by stockhoLders in the name of the Company. The Proposed Amendment wiLL not be retroactive to any act or omission occurring prior to its effective date. Further, the excuLpation would onLy apply to certain officers, namely a person who (during the course of conduct alleged to be wrongful): (a) is or was president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer; (b) is or was identified in the Company's public filings with the SEC as one of the most highly compensated executive officers of the Company; or (c) has, by written agreement with the Company, consented to be identified as an officer for purposes of accepting service of process in DeLaware. Proposed Amendment We are asking that the stockhoLders approve the Proposed Amendment. The Proposed Amendment wouLd resuLt in ArticLe Seventh, which currentLy provides for excuLpation of directors, to be deleted in its entirety and replaced with the foLLowing: "Seventh: A director or officer of the Corporation shall not be liable to the Corporation or its stockhoLders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such exemption from LiabiLity or limitation thereof is not permitted under the GeneraL Corporation Law of DeLaware as the same exists or may hereafter be amended. Any amendment, modification or repeaL of the foregoing sentence shall not adversely affect any right or protection of a director or officer of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeaL." iiint 2024 Proxy Statement I 65 Reasons for Proposed Amendment Prior to the amendment of Section 1 02(b)(7) of the DGCL, Delaware Law permitted Delaware corporations to exculpate directors from personaL LiabiLity for monetary damages associated with breaches of the duty of care, but that protection did not extend to a Delaware corporation's officers. ConsequentLy, stockhoLder pLaintiffs have employed the tactic of bringing certain cLaims that wouLd otherwise be exculpated if brought against directors against officers to avoid dismissal of such cLaims. The amendment to Section 102(b)(7) of the DGCL addressed this inconsistent treatment between officers and directors and the rising Litigation and insurance costs for stockhoLders. In the course of the ongoing evaluation of the Company's corporate governance practices, the Nominating & Governance Committee and the Board of Directors have determined that the Proposed Amendment wouLd reduce the unequal treatment of directors and officers associated with cLaims reLated to aLLeged breach of the duty of care and improve alignment of officers and directors on duty of care responsibilities. The Proposed Amendment would also better position the Company to continue to attract and retain top management talent by providing this additional protection. In the absence of such protection, particuLarLy considering the recent trend of pLaintiffs increasingly naming corporate officers as defendants in stockhoLder Litigation, qualified officers might be deterred from serving as officers or, while officers, from making business decisions that involve risk, due to potential exposure to personaL monetary LiabiLity for business decisions that in hindsight may be questioned. Officers of Large publicly -traded corporations, including our Company, are required to make difficult decisions in response to time -sensitive opportunities and chaLLenges. These decisions can create risk of cLaims or proceedings seeking to impose LiabiLity on the basis of hindsight. The Board of Directors beLieves that it is appropriate to Limit our officers' concern about personaL risk and empower them to exercise their business judgment in furtherance of stockhoLder interests. The Board of Directors beLieves this wiLL help Limit Litigation that names officers as defendants, when directors cannot be named because of their exculpatory protection, as a Litigation strategy to compel settlement offers. Consistent with the recent amendment to the DGCL, the Proposed Amendment only permits exculpation of officers for direct cLaims for breaches of the duty of care brought by stockhoLders (as opposed to cLaims brought by the Company or derivative cLaims made by stockhoLders on behalf of the Company). Further, as with the director excuLpation provision currently contained in our Certificate of Incorporation, the Proposed Amendment does not apply to breach of the duty of LoyaLty, acts or omissions not in good faith or that involve intentional misconduct, a knowing violation of Law, or cLaims reLated to any transaction in which the officer derived an improper personaL benefit. After weighing these considerations, upon the recommendation of the Nominating and Governance Committee, the Board of Directors approved, declared advisable and recommended that our stockhoLders approve and adopt the Proposed Amendment. The Proposed Amendment is not being proposed in response to any specific resignation, threat of resignation, or refusal to serve by any officer or as a result of any pending Litigation. Additional Information If our stockholders approve the Proposed Amendment, it wiLL become effective upon the filing of the Certificate of Amendment setting forth the Proposed Amendment with the DeLaware Secretary of State, which we anticipate doing promptly foLLowing the AnnuaL Meeting. Other than the replacement of the existing Article Seventh through the Proposed Amendment, the remainder of our Certificate of Incorporation wiLL remain unchanged. In addition, we intend to file a new Restated Certificate of Incorporation to integrate the Proposed Amendment (if approved) into a single document. If our stockhoLders do not approve the Proposed Amendment, the Company's current Certificate of Incorporation wiLL remain in place. VOTE REQUIRED FOR APPROVAL ApprovaL of the Proposed Amendment to the Certificate of Incorporation to provide for officer excuLpation requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote on the matter. Abstentions and broker non -votes wiLL have the same effect as a vote against this proposal. Our Board of Directors reserves the right to eLect to abandon the Proposed Amendment at any time before it becomes effective even if it is approved by the stockhoLders. THE BOARD RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR OFFICER EXCULPATION. 66 I WWI.2024 Proxy Statement APPENDIX A Incentive compensation measures presented in this proxy statement are defined differently than corresponding measures reported in the Company's quarterly earnings press release. See below for reconciliations of Operating EBITDA, Income from Operations Margin and Cash Flow Generation to the most comparable GAAP measures. Non-GAAP measures should not be considered a substitute for financial measures presented in accordance with GAAP. RECONCILIATION OF CERTAIN NON-GAAP MEASURES (In Millions) (Unaudited) Twelve Months Ended December 31, 2023 Income from Depreciation and Operating Revenue Operations amortization EBITDA As reported amounts $20,426 $3,575 $2,071 $5,646 Adjustments: LESS: Net impacts of recycling brokerage business 622 1 1 ADD: "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" 247 247 Calculated Performance Amounts $19,804 $3,822 $2,070 $5,892 Income from Operations Margin Performance Measure 19.3% Twelve Months Ended December 31, 2022 Income from Depreciation and Operating Revenue Operations amortization EBITDA As reported amounts $19,698 $3,365 $2,038 $5,403 Adjustments: LESS: Net impacts of recycling brokerage business 779 (9) 2 (7) ADD: "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" 63 63 ADD: Accrual adjustment(a) 2 2 Calculated Performance Amounts $18,919 $3,439 $2,036 $5,475 Twelve Months Ended December 31, 2021 Income from Depreciation and Operating Revenue Operations amortization EBITDA As reported amounts $1 7,931 $2,965 $1,999 $4,964 Adjustments: ADD: "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" (8) (8) ADD: Accrual adjustment(a) 5 5 Calculated Performance Amounts $17,931 $2,962 $1,999 $4,961 (a) Accrual adjustment to true -up recorded accrual amounts against reported financial results. 2024 Proxy Statement I A-1 Twelve Months Ended December 31, 2020 Income from Depreciation and Operating Revenue Operations amortization EBITDA As reported amounts $1 5,218 $2,434 $1,671 $4,105 Adjustments:(b) ADD: "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" 44 44 ADD: ADS acquistion and integration costs 149 149 ADD: COVID-19 related costs 46 46 ADD: Strategic initiative costs 27 27 Calculated Performance Amounts $15,218 $2,700 $1,671 $4,371 Three Years Ended December 31, 2023 Net Cash Provided Capital Proceeds from Normal Cash Flow by Operating Activities Expenditures Course Divestitures Generation As reported amounts $13,593 $ 7,386 $201 $6,408 Adjustments: Restructuring 9 9 Costs associated with labor disruptions and multiemployer plan withdrawal 8 8 Costs incurred in support of strategic acquisitions 39 39 Sustainability growth capital investments in 2022 and 2023 (1,325) 1,325 Calculated Performance Amounts $13,649 $ 6,061 $201 $7,789 (b) Adjustments in 2020 were consistent with reporting of 2020 financial results, excluding $155 million of costs related to the acquisition and integration of Advanced Disposal Services, Inc. ("ADS") (of which $149 million was incurred at the Corporate level); $46 million in costs in connection with COVID-19 and $27 million in costs related to strategic initiatives launched in 2020 after the performance measure had been established. A-2 I IAM% 2024 Proxy Statement 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, 2023 OR 0 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 73-1309529 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 800 Capitol Street Suite 3000 Houston, Texas 77002 (Address ofprincipal executive offices) (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 Name of Each Exchange on Which Registered WM 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 Q 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 2 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 Q 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 2 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 2 Accelerated filer ❑ Non -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) ofthe 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. ❑� If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ❑ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive -based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ❑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ❑ No ❑d The aggregate market value of the voting stock held by non -affiliates of the registrant as of June 30, 2023 was approximately $70.1 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, ofthe registrant outstanding as of February 8, 2024 was 401,598,077 (excluding treasury shares of 228,684,384). DOCUMENTS INCORPORATED BY REFERENCE Document Proxy Statement for the 2024 Annual Meeting of Stockholders Incorporated as to Part III TABLE OF CONTENTS PART I Item 1. Business 3 Item 1A. Risk Factors 20 Item 1B. Unresolved Staff Comments 35 Item 1C. Cybersecurity 35 Item 2. Properties 36 Item 3. Legal Proceedings 36 Item 4. Mine Safety Disclosures 36 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 36 Item 6. [Reserved] 38 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 68 Item 8. Financial Statements and Supplementary Data 70 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 129 Item 9A. Controls and Procedures 129 Item 9B. Other Information 130 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 131 PART III Item 10. Directors, Executive Officers and Corporate Governance 131 Item 11. Executive Compensation 131 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 131 Item 13. Certain Relationships and Related Transactions, and Director Independence 131 Item 14. Principal Accounting Fees and Services 131 PART IV Item 15. Exhibits 131 Item 16. Form 10-K Summary 134 2 PART I Cautionary Statement About Forward -Looking Statements This Annual Report on Form 10-K contains certain forward -looking statements that are made subject to the safe harbor protections provided by the Private Securities Litigation Reform Act of 1995. Forward -looking statements are often identified by the words, "will," "may," "should," "continue," "anticipate," "believe," "expect," "target," "plan," "forecast," "project," "estimate," "intend," "commit," "potential" 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, including anticipated impacts of the Inflation Reduction Act of 2022; projections, estimates or assumptions relating to our capital expenditures; 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, and you should not place undue reliance on any such forward -looking statements. Forward -looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, "Item 1A. Risk Factors" and elsewhere in this report and may also be described from time to time in our future reports filed with the U.S. Securities and Exchange Commission ("SEC"). We do not undertake any obligation to update forward -looking statements to reflect events, circumstances, changes in expectations or other developments after the date of those statements. Item 1. Business. General 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., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term "WMI," we are referring only to Waste Management, Inc., the parent holding company. WMI 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 WMI 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 WMI, WM Holdings is a holding company and all operations are conducted by subsidiaries. Our principal executive offices are located at 800 Capitol Street, Suite 3000, 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 environmental solutions, providing services throughout the United States ("U.S.") and Canada. We partner with our 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, recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy ("WM Renewable Energy") business, we are also a leading developer, operator and owner of landfill gas -to -energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel that we allocate to our natural gas fleet. During 2023, our largest customer represented less than 5% of annual revenues. 3 We own or operate 263 landfill sites, which is the largest network of landfills throughout 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 332 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 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 people -first, technology -led focus to drive our mission to maximize resource value, while minimizing environmental impact, and sustainability and environmental stewardship is embedded in all that we do. Our strategy 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 that investing in automation to improve processes and drive operational efficiency combined with a focus on the cost to serve our customer will yield an attractive profit margin and enhanced service quality. We are furthering our strategy of focused differentiation and continuous improvement beyond our traditional waste operations through our sustainability growth strategy that includes significant planned investments in our WM Renewable Energy and Recycling Processing and Sales businesses, while increasing automation and reducing labor dependency. We are also evaluating and pursuing emerging diversion technologies that may generate additional value. 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. Our brand promise is ALWAYS WORKING FOR A SUSTAINABLE TOMORROW®. We live this promise through our service offerings and sustainable solutions, our investments in innovation, our people, and our commitment to the future. Through our longtime focus on finding sustainable solutions, we continue to evolve beyond being a traditional environmental waste services company. 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 tomorrow as we work together to envision and create a more sustainable future. We believe that execution of our strategy will deliver shareholder value and leadership in a dynamic industry and in any 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 2023, we announced that our Board of Directors expects to increase the quarterly dividend from $0.70 to $0.75 per share for dividends declared in 2024, which is a 7.1% increase from the quarterly dividends we declared in 2023. This is an indication of our ability to generate strong and consistent cash flows and marks the 21st 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 To enhance transparency regarding our financial performance, highlight the strength and consistency of our core solid waste businesses, and underscore our commitment to sustainability through planned and ongoing investments in our Recycling Processing and Sales, and WM Renewable Energy businesses, beginning in the fourth quarter of 2023, our senior management revised its segment reporting to (i) reflect the financial results of our collection, transfer, disposal and resource recovery services businesses independently; (ii) combine the results of all recycling facilities from our East and West Tier segments with our recycling brokerage and sales activities to form a newly created Recycling Processing and 4 Sales reportable segment and (iii) include our WM Renewable Energy business as a reportable segment. Accordingly, our senior management now evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) Collection and Disposal - East Tier ("East Tier"); (ii) Collection and Disposal - West Tier ("West Tier"); (iii) Recycling Processing and Sales and (iv) WM Renewable Energy. Our East and West Tiers, along with certain ancillary services ("Other Ancillary") not managed through our Tier segments, but that support our collection and disposal operations, form our "Collection and Disposal" businesses. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. We also provide additional services not managed through our four reportable segments, which are presented as Corporate and Other. For further discussion refer to Note 19 of our Consolidated Financial Statements. Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation. Collection and Disposal Services provided through our Collection and Disposal businesses are described below: 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, recycling facility 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 and typically mirror maximum terms as allowed by statutes by state. 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 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, 2023, we owned or operated 258 solid waste landfills and five secure hazardous waste landfills, which represents the largest network of landfills throughout the U.S. and Canada. As of December 31, 2023, we owned or controlled the management of 237 sites with remedial activities, that are in closure or that have received a certification of closure from the applicable regulatory agency. 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, 5 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. Included within our Collection and Disposal businesses are landfills having (i) 21 third -party power generating facilities converting our landfill gas to fuel electricity generators; (ii) 14 third -party renewable natural gas ("RNG") facilities processing landfill gas to be sold to natural gas suppliers and (iii) two third -party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, renewable identification numbers ("RINs"), electricity and capacity, Renewable Energy Credits ("RECs") and related environmental attributes from the 83 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our active landfills, which is eliminated in consolidation. Transfer. As of December 31, 2023, we owned or operated 332 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. Other. Other businesses providing collection and disposal services include the following: Strategic Business Solutions ("WMSBS') — Although many waste management services such as collection and disposal are local services, our WMSBS business works with customers whose locations span the U.S. and Canada. Our strategic accounts program provides these customers with streamlined service, enhanced reporting, measurement tools aimed at meeting sustainability objectives and centralized billing and management of accounts. 6 Sustainability and Environmental Solutions ("SES') — Our SES business collaborates with our geographic areas and WMSBS team to offer our customers end -to -end solutions that help businesses achieve their sustainability, recycling and waste diversion goals while meeting industry -specific compliance requirements and rising environmental demands. These solutions include (i) Sustainability Services, where our employees provide full -service waste management solutions and consulting services, working full-time onsite at our customers' facilities or through remote -managed programs (this service is managed through our SES business but reflected principally in our collection line of business); (ii) remediation and construction services; (iii) management and marketing of fly ash, which is residue generated from the combustion of coal to generate electricity; and (iv) industrial waste services, which uses thermal and mechanical separation technologies to minimize waste volumes and recover commodities at the point of generation. The breadth of these service offerings, combined with our large and expanding network of technology -enabled infrastructure in recycling, organics, and renewable energy give us the ability to help customers reduce the amount of waste they generate, identify recycling opportunities, and determine efficient and environmentally friendly means for waste collection and disposal. Through these services, we aim to help customers increase circularity and accelerate their decarbonization goals. Recycling Processing and Sales Recycling involves the separation of reusable materials from the waste stream for processing and resale or other disposition. We are North America's leading recycler of post -consumer materials. We not only collect materials from households and businesses across the U.S. and Canada, we also sell them to manufacturers to be recycled and sold generally within the North American market. Demand for recycled materials is generally growing. Several states have recently passed minimum -recycled -content mandates, and many companies are responding to requirements for recycled content from their own customers and to meet sustainability targets. We are helping expand the availability of recycled materials by investing in infrastructure, increasing access to recycling services and educating customers through our Recycle Right° program. 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 recycling volumes. Single -stream recycling is possible through the use of various mechanized screens and optical sorting technologies. In addition to advancing our single stream recycling programs for commercial applications, we continue to invest in recycling technologies and businesses designed to offer services and solutions to support and grow our current operations. We are investing in enhanced recycling facility technology at new and existing facilities to benefit labor productivity, support increased recycling capacity and allow for dynamic adjustments to respond to evolving end -market demands. In 2023, we opened eight new recycling facilities within the U.S. and Canada equipped with advanced recycling technology. We continue to invest in recycling facility automation and new markets across the U.S. and Canada. Our Recycling Processing and Sales segment includes 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 recycling facilities for processing. As of December 31, 2023, we operated 102 recycling facilities, of which 44 are single stream, 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 continuously analyzing market prices, logistics, market demands and product quality through our dedicated recycling service centers and account managers. Recycling brokerage services — We also provide recycling brokerage services, which involve managing the marketing of recyclable materials for third parties. Our experience in managing recycling commodities for our own operations gives us the expertise needed to effectively manage volumes for third parties. Utilizing the resources and capabilities of our recycling service centers and account managers, we can assist customers in marketing and selling their recycling commodities with minimal capital requirements. 7 The recyclable materials processed in our recycling facilities 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. In our materials processing business, we have been transitioning our customer base over time 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. WM Renewable Energy We develop, operate and promote projects for the beneficial use of landfill gas through our WM Renewable Energy businesses. 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, 2023, we had 92 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 66 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 20 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. For six of these projects, the landfill gas is processed to pipeline -quality RNG and then sold to natural gas suppliers. The revenues from these facilities are primarily generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes. WM Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal, and Corporate and Other businesses, which is eliminated in consolidation. Additionally, WM Renewable Energy operates and maintains 12 third -party landfill beneficial gas use projects in return for service revenue. Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 32 additional third -party landfill beneficial gas use projects in the form of royalties. WM Renewable Energy converts landfill gas into several sources of renewable energy, which include RNG, electricity and capacity, heat and/or steam. WM Renewable Energy also generates RINs under the Renewable Fuel Standard ("RFS") program, other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet, and RECs associated with the production of electricity. The RINs, RECs and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally respond to regulations enacted by the EPA or other regulatory bodies, as well as fluctuations in supply and demand. Corporate and Other We also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other as they do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately reported. This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites. Included within our Corporate and Other businesses are closed sites that include (i) five third -party power generating facilities converting our landfill gas to fuel electricity generators; (ii) one third -party project delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) one third -party RNG processing landfill gas to be sold to natural gas suppliers in return for a royalty. Additionally, Corporate and Other benefits 8 from a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the nine landfill beneficial use renewable energy projects owned by WM Renewable Energy on our closed sites, which is eliminated in consolidation. 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 RNG 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. Operating costs, disposal costs and collection fees vary widely throughout the geographic 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 also compete 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 fmancial and operating results may fluctuate for many reasons, including period -to -period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions. Our operating revenues and volumes typically experience seasonal increases in the summer months that are reflected in second and third quarter revenues and results of operations. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers' businesses, reducing the amount of waste generated by their operations. Conversely, 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 geographic 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, 2023, we had approximately 48,000 full-time employees across the U.S., Canada and India. Approximately 44,600 employees were located within the U.S. and 3,400 employees were located outside of the U.S. 9 Approximately 8,400 employees were employed in administrative and sales positions with the remainder in operations. Approximately 8,200 of our employees are covered by collective bargaining agreements. Additional information about our workforce can be found in our 2023 Sustainability Report at https://sustainability.wm.com. Our 2023 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 People First commitment means 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 and inclusion ("D&I") at all levels of our Company, managing employee turnover, increasing retention, succession planning and development, and supporting employee experience, ongoing cultural integration and knowledge transfer. We regularly focus on these objectives when managing our business. 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. "We Are WM" is our Employer Value Proposition, grounded in our People First commitment and shared through a framework that enables us to display that we are (i) investing in our teams by providing comprehensive benefits; (ii) committed to the growth of our team by providing state-of-the-art trainings and our education benefit, Your Tomorrow, as further discussed under Compensation and Benefits; (iii) performing essential and meaningful work and (iv) working for a sustainable tomorrow by leaving the world a better place than we found it. 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 and experiential 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 to continually improve our culture and performance. As part of those efforts, in 2023 we developed and implemented a new safety vision for WM, which seeks to ensure that our employees make health and safety the foundation of their work, guiding each step they take. Our safety commitment is to value every voice, protect our communities, and work to enable everyone to get home safe, every day. Employees learn safety best practices through new -hire training, onboarding programs 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. In 2022, the Company announced a safety goal focused on reduction of our Total Recordable Incident Rate ("TRIR") by 3% annually, targeting TRIR of 2.0 annually by 2030. TRIR measures the number of injuries occurring per 100 employees per year (number of injuries per 200,000 hours). Our TRIR as of December 31, 2023 and 2022 was 3.08 and 3.02, respectively. While our overall results in 2023 did not demonstrate targeted progress toward the 2030 goal, we were able to determine that a significant driver of the measure in the current year was related to acquisition activity. We often find that the discipline and culture of the Company benefit acquired businesses. Accordingly, while there can be short-term impacts from acquisitions on measures such as TRIR, we are confident that the time and resources dedicated to bolstering our safety commitment have us on track for continued progress in the years ahead. The Company also remains focused on the prevention of serious injuries, and reduced the number of serious injuries that resulted in multiple days away from work or a change in job role by 8% in 2023. Diversity and Inclusion We embrace and cultivate respect, trust, open communications and diversity of thought and people. We are committed to fostering an environment where all team members feel welcomed, valued and seen. We see D&I as core in everything that we do. Our commitment to D&I starts at the top with our senior leadership team being comprised of 20% ethnic minorities and 30% women as of December 31, 2023; and with our overall workforce in the U.S. being comprised of 10 approximately 43% ethnic minorities and approximately 19% women as of the same date. We are proud of what we have been able to achieve so far, and we will continue to strive to further embed D&I within the Company. To solidify this commitment, in 2022 the Company developed two new D&I goals: (i) increase the overall representation of women in our workforce and (ii) increase the representation of racial/ethnic minority employees in our manager roles and above. To enable us to achieve our goals, we have empowered a cross -functional D&I Council to evaluate and enhance our policies, practices and procedures, recruitment and partnerships to ensure that our D&I efforts are sustainable and are tied to our business strategy. Learning and Development We offer expansive learning and development solutions to meet the development needs of our people and support 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. 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, mental health services, legal services, flexible spending accounts, dependent care assistance, adoption assistance, employee discounts and student loan refinancing services. We also recognize the value of learning beyond the workplace. In 2021, we announced a new education benefit, Your Tomorrow. Your Tomorrow was created in partnership with Guild Education to pay 100% of benefits -eligible employees' and dependents' tuition for a broad range of four-year college degree programs, as well as programs such as high-school equivalency and, for employees, other certificate programs and graduate degrees. We also provide plans to help employees save for their future. Refer to Note 9 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 fmancial 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 03.5 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 liability and other coverages we believe are customary to the industry. Our exposure to loss for insurance claims is 11 generally limited to the per -incident deductible under the related insurance policy and any amounts that exceed our insured limits. We use a wholly -owned insurance captive to insure the deductibles for our general liability, automobile liability and workers' compensation claims programs. 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, 2023 are summarized in Note 10 to the Consolidated Financial Statements. Regulation Our business is subject to extensive and evolving federal, state, provincial and local environmental protection, health, safety, land use, zoning, transportation, and other related laws and regulations. These laws and regulations are administered by the EPA, Environment and Climate Change Canada ("ECCC"), 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. Our business primarily involves the collection, processing and management of solid waste and recyclables in an environmentally sound manner, and 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 laws and regulations. There are costs associated with siting, design, permitting, construction, operating, monitoring, site maintenance, corrective actions, financial assurance, and facility closure and post -closure obligations at our facilities. In connection with the acquisition, development or expansion of a waste management or disposal facility, recycling facility, compost facility, transfer station, or landfill gas -to -energy facility, we must often spend considerable time, effort and money to obtain and maintain required permits and approvals. There are no assurances that we will be able to obtain or maintain permits or other required governmental approvals. Once obtained, permits are subject to renewal, modification, suspension or revocation by the issuing authority. 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. For example, divided government and election -year politics likely will impede significant federal legislative action in 2024, leading to an expectation that the White House will continue to prioritize regulatory changes to implement parts of its agenda, including taking steps towards reinstating, and in some cases enhancing, policies and regulations rolled back by the previous administration. While increasing regulation may have a negative impact on our operating costs, extensive environmental regulation applicable to our industry is also a barrier to rapid entry that benefits our Company. Moreover, the risk reduction provided by appropriate regulation is valuable to our customers and the communities we serve. Federal Regulation 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 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 12 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 federally protected 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. The EPA also requires landfills and other waste -handling facilities to obtain storm water discharge permits, and 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 certain "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. Many of our municipal solid waste ("MSW") landfills and landfill gas -to -energy facilities are subject to regulations implemented under the Clean Air Act, including new source performance standards, emission guidelines and national emission standards for hazardous air pollutants. These 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. Our vehicle fleet also must adhere to regulations implemented under the Clean Air Act, which authorizes the EPA to mandate controls on air pollution from mobile sources. • The Occupational Safety and Health Act of 1970, 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 Depaitcnent of Transportation and the Occupational Safety and Health Administration, 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. State, Provincial and Local Regulations There are also various state, 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, and laws governing where recyclable materials can be sold. Some counties, municipalities and other local governments have adopted similar laws and regulations that apply to our facilities and operations. 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 13 materials at landfills, such as recyclable materials (cardboard, bottles and cans), yard waste, food waste and electronics. The number of state and local governments with recycling and diversion requirements and disposal bans continues to grow, while the logistics and economics of recycling or processing many of these items remain challenging. Various states have enacted, or are considering enacting, laws that restrict or discourage 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, which has been upheld by the U.S. Supreme Court for waste directed to facilities owned by the local government. 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. 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 of consumer -packaged goods and other products 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 and marketing infrastructure. During periods of economic difficulty, governmental entities have increased their interest in implementing EPR regulations to reduce municipal spending on recycling programs. 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 significantly impact the waste, recycling and other streams we manage, including with respect to quality and volume, 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 also 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. Recent Developments and Focus Areas in Policy and Regulation Climate and Sustainability Jurisdictions are increasingly taking action to reduce greenhouse gas ("GHG") emissions through a broad range of climate policies. Landfills are one of the focal points for advancing climate -related goals, and we are actively working with policymakers to promote recognition of the significant reductions in GHG emissions that our industry already has achieved and the work being done to further measure and reduce emissions, the challenges associated with quantifying landfill emissions precisely, and the role of our sector in providing an essential, and highly regulated, public service. We are also closely monitoring the evolving capabilities of ground, aerial, and satellite -based methane detection and monitoring systems and conducting our own research at several landfills to assess accuracy and reliability of various methane measurement technologies for applicability to our operations. We continue to expand our work with various private and government entities employing ground, aerial and satellite -based measurements of our sites. As these technologies are expected to advance rapidly in the coming years, we are actively engaged with the ECCC, the EPA, nongovernmental organizations, and environmental stakeholders on the implications of the changing landscape for the waste industry and potential future regulation. Continued dialogue with these regulatory agencies will be important in 14 2024 as both the EPA and the ECCC are expected to evaluate landfill emissions standards that may require the application of various emerging methane measurement technologies. The EPA has indicated that methane emissions from landfills will be a focus of its expanded National Enforcement and Compliance Initiatives for 2024 through 2027. Both the EPA and the ECCC also plan to develop methods and standards for advanced measurement technologies, and we are actively engaged and collaborating with the agencies in these efforts, leveraging our own study results and experiences. In light of regulatory and business developments related to concerns about climate change, we have identified strategic business opportunities to provide our public and private sector customers with sustainable solutions intended to reduce their carbon footprint. As part of our ongoing marketing evaluations, we assess customer demand for and opportunities to develop waste services with potential to avoid lifecycle emissions, such as waste reduction, increased recycling, composting, and conversion of landfill gas and discarded materials into renewable energy. We use carbon life cycle assessment 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 can lower life -cycle 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, state, and provincial level in support of legislation that encourages production and use of renewable, low -carbon fuels and electricity. There is increasing governmental and stakeholder interest in environmental, social and governance ("ESG") matters. In addition, the nature, scope, and complexity of the matters that our Company must assess, quantify and disclose are expanding due to current, proposed, and recently enacted federal and state reporting requirements pertaining to climate related risks and other topics. For example, in October 2023, the California Governor signed into law the Climate Corporate Data Accountability Act and the Climate -Related Financial Risk Act, which among other things, requires the disclosure of Scope 1, 2, and 3 GHG emissions and other climate -related risks consistent with the framework established by the Task Force on Climate -Related Financial Disclosures. We will be required to begin making disclosures in compliance with certain of these requirements in 2026, with additional disclosures required beginning in 2027. The SEC has also issued a proposed rule that would require registrants to include certain climate -related disclosures in their registration statements and periodic reports including, but not limited to, information about our governance and management of climate -related risks and metrics pertaining to emissions data and climate -related targets and goals. Methodology and timelines for mandatory emissions reporting requirements, such as the recently passed California Corporate Data Accountability Act, may be inconsistent with requirements enacted by other governmental entities, including disclosure requirements that are ultimately adopted by the SEC, which could further increase costs and divert management time and attention. Disclosures related to GHG emissions data or potential climate -related impacts could also negatively affect our reputation to the extent we are perceived as not meeting individual stakeholder climate -related expectations. Our industry faces challenges to implement these rapidly developing disclosure requirements, as well as the risk of enforcement actions by governmental and regulatory agencies for noncompliance. Significant expenditures and commitment of time by management, employees and consultants is involved in developing, implementing and overseeing policies, practices, additional disclosures and internal controls related to environmental and sustainability risk and performance. Public statements with respect to ESG matters are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential "greenwashing," i.e., misleading information or false claims overstating potential ESG benefits. We are aware that non -governmental organizations and other private actors have filed lawsuits against certain companies under various securities and consumer protection laws alleging that certain ESG-related statements, goals or standards were misleading, false or otherwise deceptive. Consistent with our Company's long-standing commitment to sustainability and environmental stewardship, we have published our 2023 Sustainability Report, providing details on our sustainability-related performance and outlining progress towards our 2030 sustainability goals. The Sustainability Report conveys the strong linkage between the Company 's sustainability goals and our growth strategy, inclusive of the planned and ongoing expansion of the Company's Recycling Processing and Sales and WM Renewable Energy segments. The information in this 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 also participates in a number of voluntary reporting programs and frameworks that provide further transparency on our commitment to sustainability. 15 PFAS Federal and state governments have increased their focus on efforts to safeguard communities from the potentially harmful effects associated with per- and polyfluoroalkyl substances ("PFAS"). PFAS are a large group of chemicals that have been used in industrial and consumer products since the 1940s, including in products as diverse as carpets, paints and stains, water-resistant clothing and fabrics, nonstick cookware, food packaging, and firefighting chemicals. Possible human health effects of exposure to certain PFAS compounds may include low infant birth weights, immune system impacts, or cancer. In 2021, the EPA released its PFAS Strategic Roadmap, providing a high-level overview of activities that the agency intends to take to safeguard public health, protect the environment, and hold polluters accountable. These actions include establishing drinking water standards, evaluating landfill discharges of PFAS in leachate, finalizing new risk assessments and test procedures, and updating guidance on PFAS disposal and destruction options. During 2022, the EPA proposed the designation of two PFAS compounds (perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS)) as hazardous substances under CERCLA. We are closely monitoring this proposed rulemaking and are actively working with both Congress and the EPA to provide landfills and other essential public services with relief from CERCLA liability and instead hold accountable manufacturers and heavy users of these compounds. Without such relief, we may face increased exposure to remediation and litigation costs associated with properties that the EPA may designate as CERCLA sites due to the presence of PFAS. A final rule is expected in 2024. Additionally, in 2023, the EPA published an advance notice of proposed rulemaking seeking public input and data to assist in the consideration of potential future regulations under CERCLA regarding seven additional PFAS compounds. At the state level, an increasing number of jurisdictions 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. Compliance with new and proposed state and federal 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. Recycling; Foreign Import and Export Regulations and Material Restrictions In recent years, new and updated regulations affecting, and in some cases restricting, the international flow of certain recyclables have led to a reduction in export activity for such recyclables, as well as higher quality requirements, and higher processing costs. As an example, on January 1, 2021, new restrictions on the international 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. At this time, the U.S. is not a party to the Basel Convention, but most countries to which we export commodities are, which may limit our ability to export certain plastics. However, we do not ship plastics collected on our residential recycling routes and processed at our single stream recycling facilities to locations outside of North America. Prices and demand for recyclables fluctuate. We have discussed our sustainability growth strategy that includes planned and ongoing investments in our recycling business to increase automation and reduce labor dependency. Such investments are also targeted at addressing increases in regulatory- and customer -driven quality requirements for commodities. These investments increase our exposure to commodity price fluctuations. We mitigate some of the effects of price fluctuation through the contract terms pursuant to which we sell commodities, such as floor pricing. Additionally, future regulation, tariffs, international trade policies or other initiatives, including regulations addressing climate change or GHG emissions, may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. With a heightened awareness of the global problems caused by plastic waste in the environment, Canada and an increasing number of cities and states across the U.S. have passed ordinances banning certain types of plastics from sale or use. The most common materials banned include plastic bags and straws, polystyrene plastic, and some types of single use packaging. These bans have resulted in increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, with no or limited viable end markets for many of 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. We are also making investments in end markets to support the collection and processing of some of these materials. 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. 16 Tax Legislation The Inflation Reduction Act of 2022 (`IRA") was signed into law by President Biden on August 16, 2022, and contains a number of tax -related provisions, including with respect to (i) alternative fuel tax credits; (ii) tax incentives for investments in renewable energy production, carbon capture, and other climate actions and (iii) the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (recorded as a reduction in our operating expense) for tax credits in 2022, 2023 and 2024. With respect to the investment tax credit, as expanded by the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2024 through 2026. Recently, however, the IRS issued proposed regulations applicable to the investment tax credits that could call into question our ability to realize some, or all, of this tax benefit, which would negatively impact financial expectations in connection with our significant planned and ongoing investments in sustainability growth projects in our WM Renewable Energy segment. The proposed regulations provide a public comment period, culminating in public hearings before the Treasury Department, to allow taxpayers to provide input prior to the issuance of final regulations. In coordination with other members of the RNG industry, we are actively using this public comment period to work with external advisors, the U.S. Congress, the current federal administration, and other biogas sector stakeholders to encourage the Treasury Department to further refine its analysis prior to publication of final regulations that more accurately reflect the express language and legislative intent of the statute with respect to the investment tax credit. However, there is no guarantee that such efforts will be successful. We expect that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, will likely result in an incremental benefit to the Company, although at this time, the anticipated amount of such benefit has not been quantified. Our current expectation is that the IRA's minimum corporate tax will not have an impact on the Company. Finally, in accordance with the IRA, we incurred a nondeductible excise tax of 1% on the net value of certain stock repurchases in 2023, which is reflected in the cost of purchasing the underlying shares as a component of treasury stock in our Consolidated Balance Sheet. Additionally, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development (`OECD") model rules that propose a global minimum tax rate of 15%. The Company operates in countries that have agreed to implement the global minimum tax, and the OECD continues to refine technical guidance for such. At this time, we do not expect the 15% global minimum tax to have a material, if any, impact to our income taxes, and we will continue to monitor and evaluate the potential impact on our business in future periods. 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. There is increasing pressure to reduce the use of fossil fuel in the heavy-duty truck industry, and some regulatory bodies are pursuing requirements for using alternative engine technology, such as electric powered vehicles, rather than natural gas or diesel vehicles. This is resulting in regulatory actions to advance the adoption of zero -emission vehicles and a shift away from tax incentives and grants for natural gas trucks and RNG infrastructure. For example, California is at various stages of regulation that would require heavy-duty vehicle fleets to phase -in zero -emissions vehicles. The extent to which other states adopt California's standards into their own regulatory frameworks could accelerate the industry -wide adoption of electric vehicles. Although current options for heavy-duty electric vehicles lack sufficient range and proven experience for our operations, we are proactively engaging 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. We also are actively working with policymakers to understand the challenges involving the electrification of heavy-duty collection vehicles. Should regulation mandate an accelerated transition to electric powered 17 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. In addition, tax incentives and grants that advance the adoption of zero -emissions vehicles and lead to a shift away from natural gas trucks and RNG infrastructure would likely also negatively impact our investments in landfill gas -to -energy facilities. WM Renewable Energy In recent years, we have discussed our sustainability growth strategy that includes significant planned and ongoing investments in our WM Renewable Energy segment. We have invested, and continue to invest, in facilities to capture methane produced from the Company' s landfills and convert it into RNG and electricity. RNG produced from our landfills, as well as dairy biogas, constitute a significant source of fuel allocated to our natural gas collection vehicles. Following enactment of the IRA, which included expanded tax credits for the construction of new RNG production facilities, we expect to accelerate our investments in this area. The Company's investment in renewable energy production is guided partly by the EPA's implementation of the RFS program, which promotes the production and use of renewable transportation fuels. Many of our facilities are EPA -registered producers 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 RINs, from renewable fuel producers. Prior to 2022, the EPA had promulgated rules on an annual basis establishing refiners' obligations to purchase RNG and other cellulosic biofuels under the RFS program, which introduced a level of uncertainty into the renewable fuels and RINs market. However, in 2023, the EPA issued a highly anticipated rule establishing biofuel blending volumes under the RFS program for compliance years 2023 through 2025. The rule reflected the outsized role of biogas under the program, delivered on many reforms that benefit the solid waste sector, and recognized the continued growth of the market for RNG in vehicle applications. However, we cannot be certain that these changes, or the outcome of litigation challenging various aspects of the rule, will ultimately reduce volatility in the RINs market or that future rulemakings will be similarly favorable to our business. We continue to advocate for the current administration to implement policies that could reduce the potential for volatility in the RINs market and ensure long-term stability for renewable transportation fuels, as changes in the RFS market or the structure of the RFS program can and has impacted the financial performance of the facilities constructed to capture and treat the gas. We are closely working with state policymakers and non -governmental stakeholders to understand the role of RNG as a renewable energy resource and in delivering GHG reductions. The Company 's sustainability growth strategy also is informed by the increased adoption of state and Canadian clean fuel standard programs, utility policies, and voluntary market demand for RNG in transportation and industrial applications. Clean fuel standard programs, originally developed in California and subsequently adopted in Oregon and Washington, establish annual carbon intensity benchmarks for transportation fuels that decrease over time. These programs operate similar to the RFS program in that certain regulated parties purchase credits from fuel producers, including RNG producers, to meet their carbon intensity obligations. Like RINs, clean fuel standard program credit values can fluctuate with policy and market dynamics As such, we are advocating for existing programs to adopt measures to promote stability in credit pricing and for other states to adopt similar programs that incentivize the growth in RNG. We also are working closely with stakeholders to encourage the voluntary market for RNG demand, including utility RNG procurement programs, and sustainability protocols, as companies and other customers increasingly look to reduce their greenhouse gas emissions profiles. Environmental Justice Federal, state, and local governments are 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. To that end, federal and state agencies have developed a number of screening tools, such as the EPA's EJScreen, to aid and support relevant regulatory bodies in implementing various programs, such as permitting. Environmental justice considerations are also being increasingly adopted beyond permitting actions; for example, in rulemaking and enforcement priorities. In August 2023, the EPA announced that it would integrate environmental justice into each of its National Enforcement and Compliance Initiatives, and, in November 2023, the agency published a draft update to its Technical Guidance for Assessing 18 Environmental Justice in Regulatory Analysis which aims to provide agency analysts with the approaches and methods to use in evaluating environmental justice concerns in regulatory actions. Our Company supports policies seeking to advance high standards of environmental performance and the fair treatment of people of all races, cultures, and incomes, and we continue to proactively engage with local communities. We are actively monitoring recent regulatory developments in this area, particularly with respect to permitting, as additional conditions imposed on permitting decisions could increase the time and cost involved to pursue and maintain necessary authorizations. 19 Item 1A. Risk Factors. Our business, financial condition and results of operations are subject to numerous risks and uncertainties. You should carefully consider the following risk factors in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 and our "Financial Statements and Supplementary Data" in Item 8. 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. Strate2v 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 also utilize an energy surcharge and other mandated fees. 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 our technology -led automation and optimization strategy and other improvements to operational efficiency and such efforts may not yield the intended result. • We may not be able to maintain cost savings achieved, including through our automation and optimization efforts, due to inflationary cost pressure or otherwise. • Strategic decisions with respect to our asset portfolio may result in impairments to our assets. • 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 or lines of business may not increase our earnings in the timeframe anticipated, or at all, due to difficulties operating in new markets or providing new service offerings or lines of business, failure of technologies to perform as expected, failure to operate within budget, integration issues, or regulatory issues and compliance costs, among others, and we may experience issues successfully integrating acquisitions into our internal controls, operations, and/or accounting systems. • Integration of acquisitions and/or new services offerings or lines of business could increase our exposure to the risk of inadvertent noncompliance with applicable laws and regulations, and additional expansion into markets outside of North America would result in our business being subject to new laws and regulatory regimes, resulting in greater exposure to risk of inadvertent noncompliance and additional compliance costs. • 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, and businesses or assets we acquire may have undisclosed liabilities, despite our efforts to minimize exposure to such risks through due diligence and other measures. • Execution of our strategy, including growth through acquisitions and our planned expansion of our Recycling Processing and Sales and WM Renewable Energy segments, may cause us to incur substantial additional indebtedness, which may divert capital away from our traditional business operations and other financial plans, and may introduce additional risks and volatility to our financial performance. • Supply chain, regulatory or permitting disruptions or delays could detrimentally impact the execution timeline for our planned expansion of our Recycling Processing and Sales and WM Renewable Energy businesses. 20 • 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, including slower growth or recession, 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. Our operations must comply with extensive existing regulations, and changes in regulations, including with respect to emerging contaminants and extended producer responsibility, 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, bans, taxes or charges on disposal or transportation of out-of-state waste or certain categories of waste; • mandates regarding the management of solid waste and other materials, 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 earlier than expected closure of landfills; 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 per- and polyfluoroalkyl substances ("PFAS") or other emerging contaminates and other reasons. Federal and state governments have increased their focus on efforts to safeguard communities from the potentially harmful effects associated with PFAS. See Item 1. Business Regulation Recent Developments and Focus Areas in Policy and Regulation PFAS for additional background information. The EPA proposed the designation of two PFAS compounds as hazardous substances under CERCLA. We are closely monitoring this proposed rulemaking and are actively working with both Congress and the EPA to provide landfills and other essential public services with relief from CERCLA liability and instead hold accountable manufacturers and heavy users of these compounds. Without such relief, we may face increased exposure to remediation and litigation costs associated with properties that the EPA may designate as CERCLA sites due to the presence of PFAS. 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 of consumer -packaged goods and other products 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 and marketing infrastructure. During periods of economic difficulty, governmental entities have increased their interest in implementing EPR regulations to reduce municipal spending on recycling programs. There is no federal law establishing EPR in the U.S. or Canada; however, federal, state, 21 provincial and local governments could, and in several 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 significantly impact the waste and recycling 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, including with respect to quality and volume, could have a material adverse effect on our financial condition, results of operations and cash flows. 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, recycling facilities and other disposal facilities, and landfill gas -to -energy facilities, involves risks such as truck accidents, equipment defects, malfunctions and failures, and improper use of dangerous equipment. 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, as well as operation of heavy machinery and management of flammable materials at our recycling facilities and transfer stations, 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 at our landfills, due to land scarcity, public opposition or otherwise, which can require us to identify disposal alternatives, resulting in decreased revenue and increased 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 and transfer stations. 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 alleged environmental damage. Such actions could also impact our ability to do business by causing reputational harm. Federal, state and local governments 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, as well as land scarcity, particularly in densely populated areas, may prohibit us from establishing new facilities or expanding existing facilities. Diminishing disposal capacity, typically in proximity to major metropolitan areas, sometimes requires us to transport waste by rail or find alternative disposal solutions in affected areas, increasing our operating costs. Our failure to obtain the required permits and necessary capacity expansion 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, 22 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. (Also see Item 1A. Risk Factors Market disruption, including labor shortages and supply chain constraints, and macroeconomic pressures, including inflation, have adversely impacted our business and results of operations.) Additionally, the market for employees that serve on our digital team is highly competitive. As we have accelerated our investments in our technology -led automation and optimization strategy, it is increasingly important that we are able to attract and retain employees with the skills and expertise necessary to implement and manage these projects. 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 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 WM 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, or challenges to our assertions of social and environmental responsibility, could tarnish our reputation and reduce the value of our brand. (Also see Item 1A. Risk Factors Focus on, and regulation of environmental, social and governance ("ESG') performance and disclosure can result in increased costs, risk of noncompliance, damage to our reputation and related adverse effects.) Damage to our reputation could reduce demand for our services and potentially 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 to power our natural gas fleet. 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. There is increasing pressure to reduce the use of fossil fuel in the heavy-duty truck industry, and some regulatory bodies are pursuing requirements for using alternative engine technology, such as electric powered vehicles, rather than natural gas or diesel vehicles. This is resulting in regulatory actions to advance the adoption of zero -emission vehicles and a shift away from tax incentives and grants for natural gas trucks and RNG infrastructure. For example, California is at various stages of regulation that would require heavy-duty vehicle fleets to phase -in zero -emissions vehicles. The extent to which other states adopt California's standards or something similar into their own regulatory frameworks could accelerate the industry -wide adoption of electric vehicles. Although current options for heavy-duty electric vehicles lack sufficient range and proven experience for our operations, we are proactively engaging 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. In addition, tax incentives and grants that advance the adoption of zero -emissions vehicles and lead to a shift away from natural gas trucks and RNG infrastructure would likely also negatively impact our investments in landfill gas -to -energy facilities. 23 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 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 may not be indicative of our future results. Our financial and operating results may fluctuate for many reasons. Our operating revenues and volumes typically experience seasonal increases in the summer months, that are reflected in second and third quarter revenues and results of operations. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers' businesses, reducing the amount of waste generated by their operations. Conversely, 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 geographic 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 period may not be indicative of operating results for any other period. Our stock price may be negatively impacted by interim variations in our results. We may not be able to achieve our sustainability related goals, including reduction of our greenhouse gas ("GHG") emissions, or execute on our sustainability-related growth strategy and initiatives, within planned timelines or anticipated budget, which could damage our reputation and negatively impact the benefits anticipated from our investments. Consistent with our Company's long-standing commitment to sustainability and environmental stewardship, we have set goals to reduce our GHG emissions and announced other sustainability-related goals and initiatives. We may not be able to meet such goals or implement such initiatives in the manner or on timelines contemplated due to challenges including, but not limited to, unforeseen costs or delays, supply chain disruptions, regulatory impacts, technology limitations or technical difficulties associated with achieving such goals. Also, despite voluntarily announcing such sustainability goals, we may receive pressure from investors or other groups to adopt more aggressive sustainability-related goals that may not be technically, operationally, or financially feasible. In addition, our sustainability growth strategy includes significant planned investments in our Recycling Processing and Sales and WM Renewable Energy segments. Our ability to successfully execute our sustainability growth strategy may be impacted by the numerous risks and uncertainties associated with our business and the environmental services industry, including financial and operating performance, availability of technology and financing, changes in regulation, commodity price fluctuation and general economic conditions. (Also see Item 1A. Risk Factors 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 macroeconomic conditions and regulations that affect our ability to export products and Our sustainability growth strategy includes significant planned and ongoing investments in our WM Renewable Energy segment; changes to federal and state renewable fuel policies could affect our financial performance, and such investments may not yield the results anticipated.) Some or all of the expected benefits of our sustainability-related investments and initiatives may not occur within the anticipated time periods or may cost more to achieve than anticipated. An inability to develop, obtain, or scale necessary technology and innovations, and challenges arising from the availability or cost of materials and infrastructure or 24 regulatory approvals or permitting requirements associated with our sustainability investments and initiatives, could impede our ability to execute on our plans and achieve our goals or realize our expected financial performance from these investments. Actions we take to achieve these goals and implement our sustainability growth strategy and initiatives, including development and implementation of enhanced technology and reporting systems, will require increased capital expenditures and management focus, which may divert investment and management focus away from other aspects of our business operations. Additionally, favorable expectations regarding potential investment tax credits or other benefits stemming from the Inflation Reduction Act of 2022 (`IRA") may not materialize or could fail to meet expectations. Recently, the IRS issued proposed regulations applicable to the investment tax credits, as expanded by the IRA, that could call into question our ability to realize some, or all, of this tax benefit, which would negatively impact financial expectations in connection with our sustainability growth projects in our WM Renewable Energy segment. See Item 1. Business Regulation Recent Developments and Focus Areas in Policy and Regulation Tax Legislation. We have also forecasted or projected certain operational and financial information with respect to our sustainability investments and initiatives, and many of these statements are based on expectations and assumptions that are necessarily uncertain and are subject to risks and uncertainties that could cause actual results to be materially different from our forecasts and projections. Focus on, and regulation of environmental, social and governance ("ESG') performance and disclosure can result in increased costs, risk of noncompliance, damage to our reputation and related adverse effects. There is increasing governmental and stakeholder interest in ESG matters. In addition, the nature, scope, and complexity of the matters that our Company must assess, quantify and disclose are expanding due to current, proposed, and recently enacted federal and state reporting requirements related to climate -related risks and other topics, such as water usage, waste production, labor, human capital, environmental justice, cybersecurity and privacy, and risk oversight. For example, see Item 1. Business Regulation Recent Developments and Focus Areas in Policy and Regulation Climate and Sustainability for information about California's recently -adopted Climate Corporate Data Accountability Act and Climate -Related Financial Risk Act and the SEC's proposed climate -related disclosure rule. Methodology and timelines for mandatory emissions reporting requirements, such as the recently passed California Corporate Data Accountability Act, may be inconsistent with requirements enacted by other governmental entities, including disclosure requirements that are ultimately adopted by the SEC, which could further increase costs and divert management time and attention. Disclosures related to GHG emissions data or potential climate -related impacts could also negatively affect our reputation to the extent we are perceived as not meeting individual stakeholder climate -related expectations. Our industry faces challenges to implement these rapidly developing disclosure requirements, as well as the risk of enforcement actions by governmental and regulatory agencies for noncompliance. Significant expenditures and commitment of time by management, employees and consultants is involved in developing, implementing and overseeing policies, practices, additional disclosures and internal controls related to environmental and sustainability risk and performance. Public statements with respect to ESG matters are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential "greenwashing," i.e., misleading information or false claims overstating potential ESG benefits. We are aware that non -governmental organizations and other private actors have filed lawsuits against certain companies under various securities and consumer protection laws alleging that certain ESG-related statements, goals or standards were misleading, false or otherwise deceptive. An inability to implement such policies, practices, and internal controls and maintain compliance with laws and regulations, or a perception among stakeholders that our ESG disclosures and sustainability goals are insufficient or our goals are unattainable, could harm our reputation and competitive position and negatively impact our stock price and business performance. External Economic and Industry Risks Market disruption, including labor shortages and supply chain constraints, and macroeconomic pressures, including inflation, have adversely impacted our business and results of operations. Macroeconomic pressures, including inflation and rising interest rates, and market disruption resulting in labor market, supply chain and transportation constraints have impacted our results and are continuing. Significant global supply chain disruption has reduced availability of certain assets used in our business, and inflation has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs. Supply chain constraints have caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. Additionally, the downturn in market prices for recycling commodities that started in the second half of 2022 persisted throughout 2023. The decrease continued 25 to be driven by the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. We may also experience margin pressures from commodity -driven business impacts. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires. If we are not able to overcome limitations on labor availability, it could materially impact our ability to service our customers and our financial results. Geopolitical conflicts and the resulting international responses have also exacerbated market disruption, leading to volatility in commodity prices, impacts on the availability and cost of energy, and vendor and supplier disruptions across the global supply chain. Accelerated and pronounced economic pressures, such as rising interest rates and inflationary cost pressure on labor and the goods and services we rely upon to deliver service to our customers, have impacted and continue to impact our cost structure and capital expenditures. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and a heightened pace of inflation, and we may not be able to dynamically manage our cost structure in response to such changes. A significant portion of our revenue is tied to a price escalation index with a lookback provision, resulting in a timing lag in our ability to recover increased costs under those contracts during periods of rapid inflation. Separately, for many of our customers we provide services under multi -year contracts that can restrict our ability to increase prices and the timing of such increases. Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate, but such efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, contractual limitations, and market responses. The inability to adequately increase prices to offset increased costs and inflationary pressures, or otherwise mitigate the impact of these macroeconomic conditions and market disruptions on our business, will increase our costs of doing business and reduce our margins. The extent and duration of the impact of these labor market, supply chain, transportation and commodity -price challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions; recessionary fears and/or an economic recession; size, location, and qualifications of the labor pool; wage and price structures; adoption of new or revised regulations; domestic and international political developments, geopolitical conflicts and responses; and supply and demand for recycled materials. If such impacts are prolonged and substantial, they could have a material negative effect on our results of operations. The environmental services 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 or recycling 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 fluctuate based on changes in commodity prices and may fluctuate substantially without notice in the future. Prices and demand for recyclables fluctuate and are particularly susceptible to volatility based on macroeconomic conditions and regulations. The downturn in market prices for recycling commodities that started in the second half of 2022 continued in 2023. Average market prices for single -stream recycled commodities were down 40% in 2023 when compared to the comparable prior year period. Decreases in the market prices for recycling commodities resulted in a decrease in recycling revenues attributable to yield of $308 million in 2023 as compared to the prior year period. Recycling revenues attributable to yield increased $19 million in 2022 as compared with the prior year period, primarily from higher market prices for recycling commodities in the first half of 2022, before the significant downturn in the second half of 2022. 26 In recent years, new and updated regulations affecting, and in some cases restricting, the international flow of certain recyclables have led to a reduction in export activity for such recyclables, as well as higher quality requirements and higher processing costs. We are making significant planned and ongoing investments in our recycling business to increase automation and reduce labor dependency and address increases in regulatory- and customer -driven quality requirements for commodities. These investments increase our exposure to commodity price fluctuations. Additionally, future regulation, tariffs, international trade policies or other initiatives, including regulations addressing climate change or GHG emissions, may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. If the Company does not effectively manage changes in demand and commodity prices for recycling materials, or if we do not successfully execute our sustainability growth strategy, our investments in recycling infrastructure and technology may not yield the results anticipated. Fluctuation in energy -related prices also affects our business, including recycling of plastics manufactured from petroleum products, and we are currently experiencing commodity -price driven impacts from higher fuel costs. Our sustainability growth strategy also includes increased investment in landfill gas -to -energy facilities and expansion of our WM Renewable Energy segment, which generate and sells credits referred to as RINs. RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand, and have historically been very volatile. Additionally, significant variations in the price of biogas, electricity and other energy -related products that are marketed and sold by our landfill gas recovery operations can result in a corresponding impact to our revenue from yield from such operations. Expansion of our WM Renewable Energy segment may introduce additional risks and volatility to our financial performance. 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 materials at landfills, such as recyclables (cardboard, bottles and cans), yard waste, food waste and electronics. Where organic waste is not banned from disposal in landfills, 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. Reducing landfilled organic waste also reduces the amount of landfill gas produced from our landfills, adversely impacting our landfill gas -to -energy facilities. If we are not successful in expanding our service offerings, growing lines of businesses to service waste streams that do not go to landfills, and providing alternative 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, Canada and an increasing number of cities and states across the U.S. have passed ordinances banning certain types of plastics from sale or use. The most common materials banned include plastic bags and straws, polystyrene plastic and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, there are currently no or limited viable end markets for recycling many of these materials, and inclusion of such materials in our recycling stream increases contamination and operating costs that can negatively affect the results of our recycling operations. General economic conditions, such as a broad -based economic recession, 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, inflation, interest rates and access to capital markets. In recent years, many in the financial industry have debated whether the North American economy is likely to enter into a period of economic recession. A weak economy generally results in 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 27 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 as we have experienced since the second half of 2022, negatively impacting 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; we may not be able to dynamically manage our cost structure in response to shifting volume levels and vendor costs, and our cost structure may not correlate with the Consumer Price Index or the waste industry. An economic recession or other economic weakness is likely to negatively impact our revenues and margins. 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, 2023, we had $1.6 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 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, fmancial 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. However, future changes in tax laws could reverse the impacts of the Tax Act and if ultimately enacted into law, such an increase could materially impact our tax provision, cash tax liability, effective tax rate and net deferred tax liabilities. 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 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. Fuel supply shortages and price increases could substantially increase our operating expenses. Regardless of any offsetting surcharge programs, increased operating costs due to higher diesel fuel prices will decrease our income from operations margins. Large-scale disruption of social and commercial activity and financial markets, such as has occurred in the past due to pandemic conditions, may have a material adverse impact on our business, financial condition, results of operations and cash flows. Major external events, including pandemic conditions that result in large -sale disruption of social and commercial activity, such as business closures and social restrictions, could adversely impact our volumes, costs and operational execution. If such conditions were to be severe, resulting in a broad -based economic slow -down, 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. 28 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 ongoing 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 and/or developing these new 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 is increasingly focusing on new technologies that automate and innovate our operations, improve the customer experience and provide alternatives to traditional disposal and maximize the resource value of waste. We are continuing our multi -year commitment to strategic investments in technology that prioritize reduction of labor dependency for certain high -turnover jobs, further digitalize our customer self-service and implement technologies to further enhance the safety, reliability and efficiency of our collection operations. 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 or acquired, which may negatively impact our operating results and prevent us from recouping or realizing a return on these investments and acquisitions. 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. Significant system failures could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. In 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system. These systems increase our utilization of, and dependance on, third -party "cloud" computing services in connection with our business operations. Employee work -from -home arrangements also increase various technology 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. In 2023, the world experienced an exponential level of growth in the availability of potential applications of artificial intelligence ("Al"). AI could disrupt certain aspects of our business and evolve use of technology in ways that are not yet known. If we are not able to adapt and effectively incorporate potential advantages of AI in our business, it may negatively impact our ability to compete. On the other hand, if we are not able to effectively manage the risks of AI, including the potential for poor or inconsistent quality, privacy concerns, risks related to automated decision -making, and the potential for exposure of confidential and/or propriety information, we may suffer harm to our results of operation and reputation. Significant cybersecurity incidents 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, customers, vendors, as well as other 29 individuals and third parties. These uses give rise to cybersecurity risks, including security breach, ransomware, espionage, system disruption, theft and/or inadvertent, accidental, unlawful, unauthorized access, loss, alteration, destruction and/or release of information. Our business necessitates the processing, collection, use, storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including individuals' personal information, private and sensitive employment -related personal information, and financial and strategic information about the Company and other businesses. In addition to our own safeguarding efforts, we also rely on third parties to process, collect and store sensitive data, including 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 anticipate continuing to be subject to such attempts as cyber intrusions become increasingly sophisticated and more difficult to predict and protect against. Geopolitical conflicts also increase the risk of cyber incidents. As such, we 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. Although we believe that the probability of occurrence of a significant cybersecurity incident is less than likely, if such an incident were to occur, the impact on the Company could be substantial. The Company experienced a cyber intrusion in the first quarter of 2021 that was promptly detected, and the third -party software vulnerability was quickly remediated. There was no impact to the Company's operations, services or financial statements. A subsidiary of WMI was named as a defendant in a class action lawsuit related to this incident. The parties have agreed to a settlement that is currently pending final court approval, and such settlement will not have a material adverse effect on the Company' s business, financial condition, results of operations or cash flows; however, assessing and responding to this intrusion required a significant amount of time and management attention. While the magnitude of future cyber intrusions that result in a theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or material interference with our information technology systems or the technology systems of third parties on which we rely cannot be predicted, such incidents could result in material 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. We maintain insurance for cyber incidents; however, due to policy terms, limits and exclusions, such insurance may not apply in all cases, and it may not be adequate to cover all liabilities incurred. As the Company pursues its strategy to grow through acquisitions 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, utilization of "cloud" computing services, and corresponding exposure to cybersecurity risk. Certain new technologies, such as use of autonomous vehicles, remote -controlled equipment, virtual reality, automation and AI, 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. Increased state, federal and international laws and regulations related to cybersecurity protections and disclosures will require additional resources for compliance, and any inability, or perceived inability, to adequately address new requirements 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. 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, use, share, retain, delete and otherwise process certain personal information and other sensitive information in connection with our operations and providing environmental and other services. We are subject to a variety of laws and regulations, including GDPR and other international data protection laws, and may become subject to additional pending laws and regulations, that govern the collection, use and other processing of information obtained from individuals, businesses and other third parties. 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, transmit and destroy personal data. We must continually monitor the development and adoption of, and commit substantial time and resources to comply with, new and emerging laws and regulations and/ or expanded interpretations of existing laws. These laws and regulations provide disclosure and other obligations for businesses that collect personal information, 30 individual rights relating to personal information, collection, use, storage, transmission and other processing requirements, automated decision -making transparency, and potential liability expansion. Any inability, or perceived inability, to adequately address privacy and data protection concerns, even if unfounded, or comply with 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, business disruption, loss of customers, additional costs and legal liability, reputational damage, and other harm. 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 through 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 fmancial 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 alleged 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. Our sustainability growth strategy includes significant planned and ongoing investments in our WM Renewable Energy segment; changes to federal and state renewable fuel policies could affect our financial performance, and such investments may not yield the results anticipated. The primary drivers of renewable fuel development at our landfills are tax policies, such as the recently expanded federal tax credits for RNG production and renewable electricity generation, and federal and state incentive programs, such as the federal Renewable Fuel Standard ("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 RNG, and also works with facilities that capture and convert dairy digester gas into RNG, so that we can participate in the program, and the Company has stated its intention to grow its asset base to notably increase its RNG production by 2026. RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand. The value of the RINs associated with RNG is set through a market established by the program, which market has historically been very volatile. Prior to 2022, the EPA had promulgated rules on an annual basis establishing refiners' obligations to purchase RNG and other cellulosic biofuels under the RFS program, which introduced a level of uncertainty into the renewable fuels and RINs market. However, in 2023, the EPA issued a highly anticipated rule establishing biofuel blending volumes under the RFS program for compliance years 2023 through 2025. The rule reflected the outsized role of biogas under the program, delivered on many reforms that benefit the solid waste sector, and recognized the continued growth of the market for RNG in vehicle applications. However, we cannot be certain that these changes, or the outcome of litigation challenging various 31 aspects of the rule, will ultimately reduce volatility in the RINs market or that future rulemakings will be similarly favorable to our business. Additionally, the Company's sustainability growth strategy is informed by the increased adoption of state and Canadian clean fuel standard programs, utility policies, and voluntary market demand for RNG in transportation and industrial applications. Clean fuel standard programs operate similar to the RFS program in that certain regulated parties purchase credits from fuel producers, including RNG producers, to meet their carbon intensity obligations. Like RINs, clean fuel standard program credit values can fluctuate with policy and market dynamics Changes and volatility in the RFS market or other markets, or changes in the structure of the RFS program or other clean fuel standard programs, can and has impacted the financial performance of the facilities constructed to capture and treat the gas. Such changes could impact or alter our projected future investments, and such investments may not yield the results anticipated. The impact of climate change, and the adoption of climate change legislation or regulations restricting emissions of GHGs, could increase our costs to operate. We continue to assess the physical risks, such as sea -level rise, catastrophic storms and other extreme weather conditions and long-term shifts in climate patterns, and transition risks, such as regulatory, market, policy, and technology changes, to our operations from the effects of climate change. These risks are expected to be unpredictable and widespread. 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 rolling power blackouts, can result in service disruptions and increase our costs to operate. Our landfill operations emit methane, identified as a GHG. Research efforts have demonstrated that observing landfills utilizing a combination of aerial and surface -based technologies has the potential to advance understanding of methane emissions from our sites. Meanwhile, a number of legislative and regulatory efforts at the state, provincial, regional and federal levels aim to cap and/or curtail the emission of GHGs to ameliorate the effect of climate change, and otherwise to promote adaptation to climate change, support the transition to a low -carbon economy, and require disclosure of climate - related matters. We continue to monitor these efforts and the potential impacts to our operations. Additionally, existing technology presents challenges to our ability to quantify landfill emissions precisely. In 2024, both the EPA and Environment and Climate Change Canada ("ECCC") are expected to evaluate landfill emissions standards that may require the application of various emerging methane measurement technologies. The EPA has indicated that methane emissions from landfills will be a focus of its expanded National Enforcement and Compliance Initiatives for 2024 through 2027. Both the EPA and the ECCC also plan to develop methods and standards for advanced measurement technologies. Should comprehensive federal climate change legislation be enacted, we expect it could impose operational and compliance costs that might not be offset by the revenue increases associated with our lower -carbon service options, the materiality of which we cannot predict. Climate change laws and regulations could also result in increased operational costs or disruption to the business of our customers, potentially impacting our operations and financial condition. We could also experience damage to our reputation and brand, including as a result of a failure or perceived failure to respond responsibly and effectively to changes in legal and regulatory measures adopted to address climate change. 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 32 or if we or our local partners failed to comply with such laws. 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. 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, including governmental proceedings. 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. Macroeconomic pressures, including inflation and rising interest rates, and market disruption are continuing. The U.S. government's decisions regarding its debt ceiling and the possibility that the U.S. could default on its debt obligations may cause further interest rate increases, disrupt access to capital markets and trigger recessionary conditions. Further, our ability to execute our fmancial 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. We have $2.5 billion of debt as of December 31, 2023 that is exposed to changes in market interest rates within the next 12 months, associated with 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 long-term U.S. and Canadian revolving credit facility (" $3.5 billion revolving credit facility") to meet our cash needs, to the extent available, until maturity in May 2027. As of December 31, 2023, we had no outstanding borrowings under this facility. We had $859 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program and $180 million of letters of credit issued, both supported by this facility, leaving unused and available credit capacity of $2.5 billion as of December 31, 2023. In the event of a default under our $3.5 billion revolving 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 operate. 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 also carry a broad range of other insurance coverages that are customary for a company our size. To the extent our obligations for claims are more than we estimated, our insurance coverage is inadequate to cover our obligations, or our 33 insurers are unable to meet their obligations, the requirement that we pay such obligations could have a material adverse effect on our financial results. In addition, to fulfill our financial assurance obligations with respect to variable -rate tax-exempt debt, and 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 WMI financial guarantees. Our financial position, which can be negatively affected by asset impairments, our credit profile and general economic factors, may increase 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. 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 required to deposit cash to collateralize certain obligations, which could negatively impact our liquidity. We may record material charges against our earnings due to impairments to our assets. 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, abandoning a development project, project cost overruns 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 ongoing costs of participation in Multiemployer Pension Plans may increase. See Notes 9 and 10 to the Consolidated Financial Statements for more information related to our participation in Multiemployer Pension Plans. 34 Item 1B. Unresolved Staff Comments. None. Item 1C. Cybersecurity. Strategy, Governance and Risk Management Our Technology Risk Program is designed to proactively identify, monitor, and mitigate technology -related risks across our digital operations and assess cybersecurity risks related to third -party vendors and suppliers. Our Cybersecurity Program and our Technology Risk Program are led by our Chief Information Security Officer ("CISO") a Certified Information Systems Security Professional with two decades of cybersecurity leadership. The CISO and his team are responsible for leading enterprise -wide cybersecurity strategy, policy, standards, architecture, and processes. The Technology Risk Oversight Committee chaired by our CISO, with members representing leadership throughout our Company, provides oversight and guidance to technology risks, including cybersecurity. Our Company's Cybersecurity Program is designed to align with the National Institute of Standards and Technology ("NIST") Cybersecurity Framework and leading industry practices, and our Cybersecurity Program is integrated into our Company's Enterprise Risk Management framework. Internal and external experts regularly evaluate our Cybersecurity Program, and the results of those reviews are reported to senior management and our Company's Board of Directors. Our Incident Response Committee, which is comprised of leaders in the areas of information security, digital, legal, finance, privacy, compliance and ethics, corporate security and communications, is responsible for leading our Company's response to cyber incidents. Our Cybersecurity Incident Response Plan outlines the processes by which management is informed about and monitors detection and mediation of cyber incidents. We actively engage with key vendors, industry participants, and intelligence and law enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures. Risks from cybersecurity threats, including as a result of previous cybersecurity incidents encountered by the Company and known incidents encountered by third parties with a connection to the Company, have not materially affected, and are not currently viewed as reasonably likely to materially affect our Company, including our business strategy, results of operations or financial condition. However, we are regularly the target of attempted cyber intrusions, and we anticipate continuing to be subject to such attempts. 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. Although we believe that the probability of occurrence of a significant cybersecurity incident is less than likely, if such an incident were to occur, the impact on the Company could be substantial. See Item 1A. Risk Factors — Significant cybersecurity incidents negatively impact our business and our relationships with customers, vendors and employees and expose us to increased liability for additional discussion. Board Oversight Management has primary responsibility for risk management within our Company. The Company's Board of Directors, with the support of its committees, 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 Audit Committee of the Company's Board of Directors has responsibility for oversight of information and cybersecurity risks and assessment of cyber threats and defenses. The Audit Committee receives reports on these matters from our most senior executives in the digital organization, including our Chief Information Officer and CISO, and the Company's executive officers, at least twice a year. Topics historically covered in such reports include third -party evaluation of our technology infrastructure and information security against the NIST cybersecurity framework; risk mitigation through the Company's enterprise -wide cybersecurity 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 Cybersecurity Incident Response Plan and consideration of applicable laws and regulations, including those related to privacy. The Company's Cybersecurity Incident Response Plan includes a section on Board escalation that specifies the process for notification of the Chair of the Audit Committee and the Chair of the Board of the Directors upon certain triggering events, and that group then determines the appropriate form and frequency of communication with the full Audit Committee or Board of Directors, depending on the unique characteristics of the incident. 35 Item 2. Properties. Our principal executive offices are in Houston, Texas where we lease approximately 285,000 square feet under a lease expiring in 2035. We also have administrative offices in Arizona, Connecticut, Illinois and India. We own or lease real property in most locations where we have operations or administrative functions. We have operations (i) in all 50 states except Montana; (ii) in the District of Columbia and (iii) 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. In addition, we continue to make progress on our planned investments to expand our Recycling Processing and Sales and WM Renewable Energy segments. As of December 31, 2023, we had 92 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 66 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 20 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. For six of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers. 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: 2023 2022 Landfills owned or operated 263 263 Transfer stations 332 337 Recycling facilities 102 97 Item 3. Legal Proceedings. Information regarding our legal proceedings can be found under the Environmental Matters and Litigation sections of Note 10 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. 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 8, 2024 was 7,489. 36 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. $300 $250 $200 $150 $100 Comparison of Cumulative Five Year Total Retum $50 12-31-18 — 0—Waste Management, Inc. —A— S&P 500 Index — 0— Dow Jones Waste & Disposal Services Index 12-31-19 12-31-20 12-31-21 12-31-22 12-31-23 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Waste Management, Inc. $ 100 $ 130 $ 138 $ 198 $ 189 $ 220 S&P 500 Index $ 100 $ 131 $ 156 $ 200 $ 164 $ 207 Dow Jones Waste & Disposal Services Index$ 100 $ 135 $ 144 $ 201 $ 190 $ 224 The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board of Directors. Share repurchases are a part of our long-term strategy and incorporated into our overall capital allocation plan to enhance our Company's performance, in conjunction with our other uses of capital, and to return value to stockholders in a tax -efficient manner. During 2023, we allocated an aggregate of $1.3 billion to repurchase our common stock under accelerated share repurchase ("ASR") agreements and open market transactions. As of December 31, 2023, we had received 7.8 million shares with a weighted average price per share of $158.47, exclusive of per-share commissions. In February 2024, we completed our ASR agreement executed in October 2023, at which time we received 0.2 million shares. See Note 13 to the Consolidated Financial Statements for additional information. We announced in December 2023 that the Board of Directors has authorized up to $1.5 billion in future share repurchases, excluding the 1% excise tax discussed further below. This new authorization supersedes and replaces remaining authority under the prior Board of Directors' authorization for share repurchases announced in December 2022. 37 The following table summarizes common stock repurchases made during the fourth quarter of 2023 (shares in millions): Period October 1 — 31 (b) November 1 — 30 December 1 — 31 Total Total Number of Average Shares Price Paid Purchased per Share(a) 1.6 $ 161.15 $ — $ — 1.6 $ 161.15 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 1.6 1.6 Approximate Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(a) $ 257 5 million $ 257 5 million $ 1.5 billion (a) The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. We reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased. In the table above and footnotes below, the average price paid per share, total repurchase costs and approximate maximum dollar value of shares that may yet be purchased under the plans or programs exclude the 1% excise tax. (b) In October 2023, we repurchased 70,350 shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for $11 million, inclusive of per share commissions, at a weighted average price of $156.35. Additionally, we repurchased $300 million of our common stock pursuant to an ASR agreement. At the beginning of the repurchase period, we delivered $300 million cash and received 1 5 million shares based on a stock price of $161.38. The ASR agreement completed in February 2024, at which time we received 0.2 million additional shares based on a final weighted average price of $175.29. The amount of future share repurchases executed under our Board of Directors' authorization is determined in management's discretion, based on various factors, including our net earnings, fmancial condition and cash required for future business plans, growth and acquisitions. Item 6. [Reserved] None. 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, 2023. This discussion may contain forward -looking statements. See "Cautionary Statement about Forward -Looking Statements" in Part I of this Annual Report on Form 10-K for more information. Forward -looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, "Item 1A. Risk Factors" and elsewhere in this report and may also be described from time to time in our future reports filed with the U.S. Securities and Exchange Commission ("SEC"). 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 environmental solutions, providing services throughout the United States ("U.S.") and Canada. We partner with our 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 throughout 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. Our solid waste business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy ("WM Renewable Energy") business, we are also a leading developer, operator and owner of landfill gas -to -energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas, which is a significant source 38 of fuel that we allocate to our natural gas fleet. Additionally, we are a leading recycler in the U.S. and Canada, handling materials that include paper, cardboard, glass, plastic and metal. To enhance transparency regarding our financial performance, highlight the strength and consistency of our core solid waste businesses, and underscore our commitment to sustainability through planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy businesses, beginning in the fourth quarter of 2023, our senior management revised its segment reporting to (i) reflect the financial results of our collection, transfer, disposal and resource recovery service businesses independently; (ii) combine the results of all recycling facilities from our East and West Tier segments with our recycling brokerage and sales activities to form a newly created Recycling Processing and Sales reportable segment and (iii) include our WM Renewable Energy business as a reportable segment. Accordingly, our senior management now evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) Collection and Disposal East Tier ("East Tier"); (ii) Collection and Disposal - West Tier ("West Tier"); (iii) Recycling Processing and Sales and (iv) WM Renewable Energy. Our East and West Tiers along with certain ancillary services not managed through our Tier segments, but that support our collection and disposal operations, form our "Collection and Disposal" businesses. Collection and Disposal Our Collection and Disposal businesses provide integrated environmental services, including collection, transfer, disposal and resource recovery services. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Additionally, we provide certain ancillary services ("Other Ancillary") that are not managed through the Tier segments but that support our collection and disposal operations. Other Ancillary includes specialized services performed for customers that have differentiated needs. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions ("SES") business or geographically dispersed customers managed through our Strategic Business Solutions ("WMSBS") business. Also included within Other Ancillary are the results of non -operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity. Our Collection and Disposal businesses' operating revenues are primarily generated from fees charged for our collection, transfer, disposal and resource recovery services. 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 recycling 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, considering our cost of loading, transporting and disposing of the solid waste at a disposal site. Included within our Collection and Disposal businesses are landfills having (i) 21 third -party power generating facilities converting our landfill gas to fuel electricity generators; (ii) 14 third -party renewable natural gas ("RNG") facilities processing landfill gas to be sold to natural gas suppliers and (iii) two third -party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, renewable identification numbers ("RINs"), electricity and capacity, Renewable Energy Credits ("RECs") and related environmental attributes from the 83 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our active landfills, which is eliminated in consolidation. Recycling Processing and Sales Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. The materials are delivered to and processed at one of our many recycling facilities. Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality. 39 Recycling Processing and Sales revenues generally consist of tipping fees and the sale of recycling commodities to and/or on behalf of third parties. Our Recycling Processing and Sales segment excludes the collection of recycled materials from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses. WM Renewable Energy Our WM Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. 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. WM Renewable Energy converts landfill gas into several sources of renewable energy to be sold which include RNG, electricity and capacity, heat and/or steam. WM Renewable Energy also generates and sells (i) RINs under the Renewable Fuel Standard ("RFS") program; (ii) other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet and (iii) RECs associated with the production of electricity. The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally fluctuate in response to regulations enacted by the Environmental Protection Agency ("EPA") or other regulatory bodies, as well as changes in supply and demand. As of December 31, 2023, we had 92 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 66 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 20 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. For six of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers. The revenues from these facilities are primarily generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes. WM Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal, and Corporate and Other businesses, which is eliminated in consolidation. Additionally, WM Renewable Energy operates and maintains 12 third -party landfill beneficial gas use projects in return for service revenue. Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 32 additional third -party landfill beneficial gas use projects in the form of royalties. Corporate and Other We also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other. This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites. Also included within our Corporate and Other businesses are closed sites that include (i) five third -party power generating facilities converting our landfill gas to fuel electricity generators; (ii) one third -party project delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) one third -party RNG processing landfill gas to be sold to natural gas suppliers in return for a royalty. Additionally, Corporate and Other benefits from a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the nine landfill beneficial use renewable energy projects owned by WM Renewable Energy on our closed sites, which is eliminated in consolidation. Included in the fees we charge for our services is our energy surcharge and other charges that are intended to pass through costs to customers. 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 40 of waste at landfills. We monitor these developments to adapt our service 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. This includes expanding traditional recycling services, increasing organics collection and processing, and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As North America's leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change — change that will impact our Company as well as the communities we serve. Consistent with our Company 's long-standing commitment to sustainability and environmental stewardship, we have published our 2023 Sustainability Report, providing details on our sustainability-related performance and outlining progress towards our 2030 sustainability goals. The Sustainability Report conveys the strong linkage between the Company 's sustainability goals and our growth strategy, inclusive of the planned and ongoing expansion of the Company's Recycling Processing and Sales and WM Renewable Energy segments. The information in this 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. For further discussion see Item 1. Business Regulation Recent Developments and Focus Areas in Policy and Regulation. We encounter intense competition from governmental, quasi -governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. 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 and other macroeconomic trends can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business. 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 directly as we experience changes in revenue due to volume and inflation. Volume changes can fluctuate significantly by line of business and volume changes in higher margin businesses can impact key financial metrics. We must dynamically manage our cost structure in response to volume changes and cost inflation. We believe the Company's industry -leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers. Advancements made through these initiatives are intended to seamlessly and digitally connect all enterprise functions required to service customers and provide the best experience. In late 2021, we began to execute this technology enablement strategy to automate and optimize certain elements of our service delivery model. The key benefits are to reduce labor dependency on certain high -turnover jobs, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and efficiency within our collection operations. Additionally, in 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system, which will continue to drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience. Macroeconomic pressures, including inflation and rising interest rates, and market disruption resulting in labor, supply chain and transportation constraints have impacted our results; however, we began to see moderate improvements during the second half of 2023. Significant global supply chain disruption has reduced availability of certain assets used in our business, and inflation has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs. Supply chain constraints have caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. With the significant decline in commodity prices that started in the second half of 2022 and has continued into 2023, we are currently experiencing margin pressures from our commodity -driven businesses, specifically within our Recycling Processing and Sales and WM Renewable Energy segments. While still below prices seen at the beginning of 2022, recycling commodity prices began to improve in the fourth quarter of 2023 and while there may be short-term fluctuations in our commodity -driven businesses as prices change, we continue to focus on adjusting our business models 41 to protect against the down -side risk by spreading the inherent risk of changes in commodity prices across the vertically integrated value chain. The extent and duration of the impact of labor, supply chain, transportation and commodity price challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions; recessionary fears and/or an economic recession; size, location, and qualifications of the labor pool; wage and price structures; adoption of new or revised regulations; geopolitical conflicts and responses and supply and demand for commodities. As we experience inflationary cost pressures, we focus on our pricing efforts, as well as operating efficiencies and cost controls, to maintain our earnings and cash flow and facilitate growth. With these macroeconomic pressures, we remain committed to putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely. We remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers' experience and provide operating efficiencies intended to reduce our cost to serve. Current Year Financial Results During 2023, we continued to focus on our priorities to advance our strategy —enhancing employee engagement, permanently reducing our cost to serve through the use of technology and automation, and investing in growth through our Recycling Processing and Sales and WM Renewable Energy segments. This strategic focus, combined with strong operational execution, resulted in increased revenue, income from operations and income from operations margin. We remain diligent in offering a competitive and differentiated service that meets the needs of our customers, and we are focused on driving operating efficiencies and reducing discretionary spend. We continue to invest in our people through paying a competitive market wage, investments in our digital platform and training for our team members. We also continue to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business. During 2023, the Company allocated $2,895 million of available cash to capital expenditures. We also allocated $2,438 million of available cash to our shareholders during 2023 through dividends and common stock repurchases. Key elements of our 2023 financial results include: • Revenues of $20,426 million for 2023 compared with $19,698 million in 2022, an increase of $728 million, or 3.7%. The increase is primarily attributable to (i) higher yield in our Collection and Disposal businesses; (ii) acquisitions, net of divestitures and (iii) increased volumes. These increases were partially offset by commodity price declines in our Recycling Processing and Sales and WM Renewable Energy segments and decreased revenue from our energy surcharge program as a result of a decline in the price of fuel, particularly diesel; • Operating expenses of $12,606 million in 2023, or 61.7% of revenues, compared with $12,294 million, or 62.4% of revenues, in 2022. The $312 million increase is primarily attributable to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from wage increases. These increases were offset, in part, by commodity driven business impacts from lower recycling rebates reflected in costs of goods sold and lower fuel prices; • Selling, general and administrative expenses of $1,926 million in 2023, or 9.4% of revenues, compared with $1,938 million, or 9.8% of revenues, in 2022. The $12 million decrease was primarily due to (i) reduced professional fees in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities and (ii) lower annual incentive compensation costs; • Income from operations of $3,575 million, or 17.5% of revenues, in 2023 compared with $3,365 million, or 17.1% of revenues, in 2022. The increase in the current year earnings was primarily driven by revenue growth within our Collection and Disposal businesses partially offset by (i) impairments within our Recycling Processing and Sales segment as well as certain investments in our Corporate and Other operations; (ii) lower market values for RINs and (iii) the decline in recycling commodity prices affecting profitability in our Recycling Processing and Sales segment; • Net income attributable to Waste Management, Inc. was $2,304 million, or $5.66 per diluted share, compared with $2,238 million, or $5.39 per diluted share, in 2022. The increase in income from operations discussed above was partially offset by higher interest and income tax expense; 42 • Net cash provided by operating activities was $4,719 million in 2023, compared with $4,536 million in 2022. The increase in net cash provided by operating activities was driven by higher earnings attributable to our Collection and Disposal businesses and lower income tax payments. This increase was partially offset by (i) unfavorable changes in working capital, net of effects of acquisitions and divestitures; (ii) higher interest payments and (iii) higher incentive compensation payments during 2023; and • Free cash flow was $1,902 million in 2023, compared with $1,976 million in 2022. The decrease in free cash flow is primarily attributable to the increase in capital spending, primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments and higher capital asset purchases in the current year to support our Collection and Disposal businesses. The decrease was partially offset by the increase in net cash provided by operating activities discussed above and higher proceeds from divestitures of businesses and other assets. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow below 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. 43 Results of Operations Operating Revenues The mix of operating revenues for the year ended December 31 are as follows (in millions): Year Ended December 31: 2023 Commercial Industrial Residential Other collection Total collection Landfill Transfer Total Collection and Disposal Recycling Processing and Sales WM Renewable Energy Corporate and Other Total 2022 Commercial Industrial Residential Other collection Total collection Landfill Transfer Total Collection and Disposal Recycling Processing and Sales WM Renewable Energy Corporate and Other Total 2021 Commercial Industrial Residential Other collection Total collection Landfill Transfer Total Collection and Disposal Recycling Processing and Sales WM Renewable Energy Corporate and Other Total (a) Gross Operating Revenues $ 5,801 3,836 3,474 3,006 Intercompany Operating Revenues(a) Net Operating Revenues $ (692) $ 5,109 (753) 3,083 (96) 3,378 (220) 2,786 16,117 (1,761) 14,356 4,863 (1,611) 3,252 2,293 (1,036) 1,257 23,273 (4,408) 18,865 1,576 (312) 1,264 276 (3) 273 51 (27) 24 $ 25,176 $ (4,750) $ 20,426 $ 5,450 3,681 3,339 2,683 $ (590) $ 4,860 (656) 3,025 (75) 3,264 (217) 2,466 15,153 (1,538) 13,615 4,597 (1,535) 3,062 2,143 (977) 1,166 21,893 (4,050) 17,843 1,760 (244) 1,516 315 (3) 312 50 (23) 27 $ 24,018 $ (4,320) $ 19,698 $ 4,759 3,210 3,181 2,309 13,459 4,184 2,023 19,666 1,760 220 47 $ (476) $ 4,283 (524) 2,686 (36) 3,145 (179) 2,130 (1,215) 12,244 (1,434) 2,750 (918) 1,105 (3,567) 16,099 (232) 1,528 56 276 (19) 28 $ 21,693 $ (3,762) $ 17,931 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. 44 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): 2023 vs. 2022 2022 vs. 2021 Asa%of Asa%of Asa%of Asa%of Related Total Related Total Amount Business(a) Amount Company(b) Amount Business(a) Amount Company(b) Collection and disposal $ 911 5.4 % $ 1,025 6.7 % Recycling Processing and Sales and WM Renewable Energy (c)(d) (381) (20.2) 67 3.5 Energy surcharge and mandated fees (d)(e) (104) (9.7) 426 65.6 Total average yield (f) $ 426 2.1 % $ 1,518 8.5 % Volume (g) 150 0.8 233 1.3 Internal revenue growth 576 2.9 1,751 9.8 Acquisitions 186 0.9 62 0.4 Divestitures (5) (15) (0.1) Foreign currency translation (29) (0.1) (31) (0.2) Total $ 728 3.7 % $ 1,767 9.9 % (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. Includes combined impact of commodity price variability in both our Recycling Processing and Sales and WM Renewable Energy segments, as well as changes in certain recycling fees charged by our collection and disposal operations. (d) Beginning in 2023, the results include changes in our revenue attributable to our WM Renewable Energy segment. Previously these changes in revenue were included in energy surcharges and mandated fees. We have revised our prior year results to conform with the current year presentation. Our energy surcharge was revised in the second quarter of 2023 to incorporate market prices for both diesel and compressed natural gas ("CNG"). The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company. (c) (e) (f) (g) Includes activities from our Corporate and Other businesses. 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. 45 The details of our revenue growth from Collection and Disposal average yield for the year ended December 31 are as follows (dollars in millions): 2023 vs. 2022 2022 vs. 2021 Asa%of Asa%of Related Related Amount Business Amount Business Commercial $ 321 6.5 % $ 406 9.2 % Industrial 240 7.2 307 10.2 Residential 191 6.1 185 6.1 Total collection 752 6.3 898 8.2 Landfill 76 2.7 79 3.1 Transfer 83 7.5 48 4.5 Total Collection and Disposal $ 911 5.4 % $ 1,025 6.7 % Our overall pricing efforts are focused on keeping pace with the increasing costs and capital intensity of our business. We are continuing to see growth in our landfill business with our municipal solid waste experiencing average yield of 4.9% in 2023. Recycling Processing and Sales and WM Renewable Energy Recycling Processing and Sales revenues attributable to yield decreased $308 million in 2023 and increased $19 million in 2022, respectively, as compared with the prior year periods. With the significant decline in commodity prices that started in the second half of 2022 and has continued into 2023, we are currently experiencing margin pressures from our commodity -driven businesses, specifically within our Recycling Processing and Sales and WM Renewable Energy segments. While still below prices seen at the beginning of 2022, recycling commodity prices began to improve in the fourth quarter of 2023 and while there may be short-term fluctuations in our commodity -driven businesses as prices change, we continue to focus on adjusting our business models to protect against the down -side risk by spreading the inherent risk of changes in commodity prices across the vertically integrated value chain Average market prices for single -stream recycled commodities were down 40% and 10% in 2023 and 2022, respectively, as compared with the prior year periods. During 2023, the revenue decline from lower commodity pricing that started in 2022 was partially offset by higher pricing in our recycling brokerage business as well as our continued focus on a fee -based pricing model. Additionally, revenue in our WM Renewable Energy segment decreased $73 million and increased $48 million in 2023 and 2022, respectively, as compared with the prior year periods, primarily driven by the fluctuations in energy prices and the value of RINs. Energy Surcharge and Mandated Fees These fees decreased $104 million in 2023 and increased $426 million in 2022, as compared with the prior year periods. Beginning in the second quarter of 2023, our energy surcharge was revised to incorporate market prices for both diesel and CNG. The decrease in energy surcharge revenues in 2023 is primarily due to a decline of approximately 15% in market prices for diesel fuel as compared to the prior year period. The increase in energy surcharge revenues in 2022 was driven by a 50% increase in diesel fuel in 2022, as compared with the prior year period. 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) increased $150 million, or 0.8%, and $233 million, or 1.3%, in 2023 and 2022, respectively, as compared with the prior year periods. Our Collection and Disposal businesses volume grew 0.7% and 1.8% in 2023 and 2022, respectively. Our 2023 volume growth has moderated when compared to 2022. Special waste volumes at our landfills continue to be a significant driver, primarily due to an increase in event -driven projects. In addition, we saw an increase in our WMSBS volumes. These increases were partially offset by a decrease in temporary industrial collection volumes and the intentional shedding of low -margin residential collection business. 46 Acquisitions and Divestitures Acquisitions and divestitures, primarily in our Collection and Disposal businesses, resulted in a net increase in revenues of $181 million, or 0.9%, and $47 million, or 0.3%, in 2023 and 2022, respectively, as compared with the prior year periods. 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 Processing and Sales segment, including certain rebates paid to suppliers; (vi) fuel costs, net of tax credits for alternative fuel, which represent the costs of fuel 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, 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): 2023 2022 2021 Labor and related benefits $ 3,669 18.0 % $ 3,452 17.5 % $ 3,223 18.0 % Transfer and disposal costs 1,273 6.2 1,215 6.2 1,161 6.5 Maintenance and repairs 1,978 9.7 1,835 9.3 1,596 8.9 Subcontractor costs 2,185 10.7 2,006 10.2 1,766 9.9 Cost of goods sold 769 3.8 973 4.9 936 5.2 Fuel 501 2.4 592 3.0 393 2.2 Disposal and franchise fees and taxes 736 3.6 720 3.7 698 3.9 Landfill operating costs 453 2.2 421 2.1 412 2.3 Risk management 320 1.6 348 1.8 344 1.9 Other 722 3.5 732 3.7 582 3.2 $ 12,606 61.7 % $ 12,294 62.4 % $ 11,111 62.0 % Our operating expenses increased in 2023, as compared with 2022, primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments. These increases were offset, in part, by commodity -driven business impacts, particularly from lower recycling rebates reflected in costs of goods sold and lower fuel prices. We continue to focus on operating efficiency and efforts to control our costs, which along with revenue growth, enabled us to improve operating costs as a percent of revenues in 2023 as compared with 2022. Our operating expenses increased in 2022, as compared with 2021, primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs; (ii) commodity -driven business impacts from higher fuel and recycling prices and (iii) labor cost pressure from frontline employee wage adjustments. These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs as volumes grow. 47 Significant items affecting the comparison of operating expenses between reported periods include: Labor and Related Benefits - The increase in labor and related benefits costs in 2023, as compared with 2022, was primarily driven by (i) employee market wage adjustments; (ii) increased headcount primarily from acquisitions and (iii) increases in health and welfare costs and in medical care activity. These increases were offset, in part, by lower annual incentive compensation. The increase in labor and related benefits costs in 2022, as compared with 2021, was largely driven by (i) proactive market wage adjustments to hire and retain talent; (ii) annual merit and annual incentive compensation cost increases and (iii) increases in health and welfare costs attributable to our investment in delivering a leading benefits program for our employees and increases in medical care activity. Transfer and Disposal Costs - The increase in transfer and disposal costs in 2023, as compared with 2022, was primarily due to inflationary cost increases, which includes increased disposal fees at third -party sites and higher rates from our third -party haulers, offset, in part, by a decrease in collection volumes. The increase in transfer and disposal costs in 2022, as compared with 2021, was largely driven by inflationary cost increases, which includes increased disposal fees at third -party sites and higher fuel from our third -party haulers, offset, in part, by decreases in residential collection and transfer volume. Maintenance and Repairs - The increase in maintenance and repairs costs in 2023, as compared with 2022, was primarily driven by (i) continued inflationary cost increases for parts, supplies and third -party services, although the impact of such inflationary cost increases moderated throughout the year and (ii) labor cost increases for our technicians, including additional headcount. The increase in maintenance and repairs costs in 2022, as compared with 2021, was largely driven by (i) inflationary cost increases for parts, supplies and third -party services; (ii) additional fleet maintenance driven by supply chain constraints, which have delayed deliveries of new trucks; (iii) labor cost increases for our technicians, including higher overtime; (iv) increased building maintenance costs including improvements to facilities and (v) an increase in container repairs driven by delays in delivery of steel containers due to supply chain constraints. Subcontractor Costs - The increase in subcontractor costs in 2023, as compared with 2022, was primarily due to (i) an increase in volumes in our WMSBS and SES businesses, which rely more extensively on subcontracted hauling and services than other parts of our Collection and Disposal businesses and (ii) continued inflationary cost increases, particularly labor and other costs from third -party haulers. The increase in subcontractor costs in 2022, as compared with 2021, was largely driven by (i) inflationary cost increases, particularly for fuel and labor costs from third -party haulers and (ii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than other parts of our Collection and Disposal businesses. Cost of Goods Sold The decrease in cost of goods sold in 2023, as compared with 2022, was primarily driven by a 40% decrease in average single -stream recycling commodity prices. The increase in cost of goods sold in 2022, as compared with 2021, was primarily driven by all-time high recycling commodity pricing in the first half of the year offset, in part, by the historically low pricing through the second half of the year that persisted into 2023. Fuel The decrease in fuel costs in 2023, as compared with 2022, was primarily due to a decrease of approximately 15% in average market prices for diesel fuel. The approximate 50% increase in fuel costs in 2022, as compared with 2021, was primarily due to increases in market diesel and natural gas fuel prices as compared to the prior year. Disposal and Franchise Fees and Taxes The increase in disposal and franchise fees and taxes in 2023, as compared with 2022, was primarily driven by an overall rate increase in fees and taxes paid to municipalities on our disposal volumes. The increase in disposal and franchise fees and taxes in 2022, as compared with 2021, was primarily driven by higher franchise fees, driven by an increase in landfill volumes, paid to certain municipalities where we operate and overall rate increases in our fees and taxes paid on our disposal volumes. Landfill Operating Costs The increase in landfill operating costs in 2023, as compared with 2022, was primarily due to (i) higher expenses for interest accretion on landfill and environmental remediation liabilities and (ii) an increase in remediation expense due to changes in measurement of certain environmental remediation obligations. Our measurement of these balances includes application of a risk -free discount rate, which is based on the rate for U.S. Treasury bonds. In 2023, the U. S Treasury bond rate remained flat versus a significant increase in 2022, which decreased our remediation 48 expense in 2022. Our landfill operating costs increased in 2022, as compared with 2021, primarily due to increases in methane and leachate management costs. Risk Management — The decrease in risk management in 2023, as compared with 2022, was primarily due to lower levels of large loss claims. Risk management costs increased slightly in 2022, as compared with 2021, primarily due to inflation in premiums and a stable level of large loss claims. Other — Other operating costs decreased in 2023, as compared with 2022, primarily due to (i) supply chain rebates in 2023 and (ii) a favorable litigation settlement, which were offset, in part, by (i) inflationary cost pressures, although the impact of such continued inflationary cost increases moderated throughout the year; (ii) higher utility costs at our facilities; (iii) an increase in business travel and (iv) higher equipment rental costs. Other operating cost increases in 2022, as compared with 2021, were primarily due to (i) inflationary cost pressures; (ii) higher equipment rental costs attributable, in part, to supply chain constraints slowing normal course fleet and equipment orders; (iii) higher utility costs at our facilities and (iv) an increase in business travel in 2022. Additionally, a favorable litigation settlement in 2021 impacted the comparison. Net gains on sales of certain assets during each year also 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): 2023 2022 2021 Labor and related benefits $ 1,205 5.9 % $ 1,195 6.1 % $ 1,215 6.8 % Professional fees 228 1.1 268 1.4 228 1.3 Provision for bad debts 56 0.3 50 0.2 37 0.2 Other 437 2.1 425 2.1 384 2.1 $1,926 9.4%$1,938 9.8%$1,864 10.4 % Selling, general and administrative expenses in 2023, as compared with 2022, decreased primarily due to (i) reduced professional fees in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities, and (ii) lower annual incentive compensation costs. These decreases were partially offset by annual wage increases and increased litigation costs. Selling, general and administrative expenses in 2022, as compared with 2021, increased primarily due to (i) strategic investments in our digital platform, including those that support our ongoing sustainability initiatives; (ii) higher annual incentive compensation costs and merit increases for our employees; (iii) increased business travel and entertainment expense and (iv) an increase in provision for bad debts, partially offset by (i) lower long-term incentive compensation costs; (ii) market adjustments for deferred compensation plans related to investment performance and (iii) lower litigation costs. The effective management of our costs resulted in a significant reduction in our selling, general and administrative expenses as a percentage of revenues when compared with each of the prior year periods. Partially offsetting these reductions are annual merit increases and increased litigation costs. 49 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 2023, as compared with 2022, was primarily related to (i) annual wage increases for our employees; (ii) market adjustments for deferred compensation plans related to investment performance and (iii) higher long-term incentive compensation costs, partially offset by lower annual incentive compensation costs and lower contract labor expenses. The decrease in labor and related benefits costs in 2022, as compared with 2021, was primarily due to (i) lower long-term incentive compensation costs; (ii) reductions in contract labor and (iii) market adjustments for deferred compensation plans related to investment performance, partially offset by higher annual incentive compensation and annual merit increases for our employees. Professional Fees — The decrease in professional fees in 2023, as compared with 2022, was primarily attributable to reduced expenses in connection with investments in our digital platform, as certain digital projects have moved from higher cost development activities to implementation activities. The increase in professional fees in 2022, as compared with 2021, was primarily driven by strategic investments in our digital platform, including those that support our ongoing sustainability initiatives, partially offset by lower acquisition and integration costs. Provision for Bad Debts — The increase in provision for bad debts in 2023, as compared with 2022, was primarily related to an increase in revenue and customer -specific provisions required for bankruptcies of two of our WMSBS customers. The increase in provision for bad debts in 2022, as compared with 2021, was primarily related to (i) increased revenue; (ii) increased collection risk with certain customers and (iii) favorable adjustments to our reserves taken in 2021 as a result of improvement in customer account collections. Other The increase in other expenses in 2023, as compared with 2022, was primarily related to (i) increased litigation costs; (ii) increased bank charges and (iii) higher advertising spend, which were partially offset by lower travel expenses and lower telecommunication costs. The increase in other expenses in 2022, as compared with 2021, was primarily driven by costs associated with technology infrastructure to support our strategic investments in our digital platform and an increase in business travel and entertainment expense, partially offset by lower litigation costs. Depreciation, Depletion and Amortization Expenses The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues): 2023 2022 2021 Depreciation of tangible property and equipment $ 1,197 5.9 % $ 1,155 5.9 % $ 1,125 6.2 % Depletion of landfill airspace 745 3.6 754 3.8 731 4.1 Amortization of intangible assets 129 0.6 129 0.6 143 0.8 $ 2,071 10.1 % $ 2,038 10.3 % $ 1,999 11.1 % The increase in depreciation of tangible property and equipment in 2023, as compared with 2022, was mainly influenced by strategic investments in our digital platform and investments in capital assets to service our customers, such as machinery and containers. The decrease in depletion of landfill airspace in 2023, as compared with 2022, was primarily driven by reductions in volume partially offset by the reopening of a previously closed site in our East Tier. The increase in depreciation of tangible property and equipment in 2022, as compared with 2021, was primarily driven by investments in capital assets, including containers to service our customers and strategic investments in our digital platform. The increase in depletion of landfill airspace in 2022, as compared with 2021, was primarily driven by changes in depletion rates from revisions in landfill cost estimates and increased volumes at our landfills, partially offset by a prior year charge due to management's decision to close a landfill in our West Tier earlier than expected, resulting in the acceleration of the timing of capping, closure, and post -closure activities. The decrease in amortization of intangible assets in 2022, as compared with 2021, was primarily driven by the amortization of acquired intangible assets from the acquisition of Advanced Disposal Services, Inc. 50 (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): 2023 2022 2021 Gain from divestitures, net $ $ (5) $ (44) Asset impairments 275 50 8 Other, net (32) 17 20 $ 243 $ 62 $ (16) During the year ended December 31, 2023, we recognized $243 million of net charges primarily consisting of (i) a $168 million goodwill impairment charge within our Recycling Processing and Sales segment related to a business engaged in accelerating film and plastic wrap recycling capabilities, with $22 million attributable to noncontrolling interests. This charge was partially offset by the recognition of $46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business; (ii) $107 million of impairment charges within Corporate and Other for certain investments in waste diversion technology businesses and (iii) a $17 million charge within Corporate and Other to adjust an indirect wholly -owned subsidiary's estimated potential share of the liability for a proposed environmental remediation plan at a closed site. Refer to Notes 5 and 10 to the Consolidated Financial Statements for further information. During the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management's decision to close two landfills within our East Tier and (ii) a $17 million charge pertaining to reserves for loss contingencies within Corporate and Other to adjust an indirect wholly -owned subsidiary's estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10 to the Consolidated Financial Statements. These losses were partially offset by a $5 million gain from the divestiture of a collection and disposal operation in our West Tier. During the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations in our East Tier and (ii) an $8 million gain from divestitures of certain ancillary operations within our Collection and Disposal businesses. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies within Corporate and Other and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy segment. See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 to the Consolidated Financial Statements for additional information related to the impact of impairments on the results of operations of our reportable segments. 51 Income from Operations The following table summarizes income from operations for the year ended December 31 (dollars in millions): 2023 Period -to - Period Change 2022 Period -to - Period Change Collection and Disposal: East Tier $ 2,446 $ 268 12.3 % $ 2,178 $ 223 11.4 % West Tier 2,383 201 9.2 2,182 243 12.5 Other Ancillary (8) (8) * 18 * Collection and Disposal 4,821 461 10.6 4,360 484 12.5 Recycling Processing and Sales (44) (172) * 128 (89) (41.0) WM Renewable Energy 79 (53) (40.2) 132 24 22.2 Corporate and Other (1,281) (26) 2.1 (1,255) (19) 1.5 Total (a) $ 3,575 $ 210 6.2 % $ 3,365 $ 400 13.5 % Percentage of revenues 17.5 % 17.1 % * Percentage change does not provide a meaningful comparison. (a) From time to time, the operating results of our reportable segments are significantly affected or events that management believes are not indicative or representative of our results. Collection and Disposal The most significant items affecting the results of operations Disposal businesses during the three years ended December 31, 2023 are summarized below: • Income from operations in our Collection and Disposal businesses increased in 2023, as compared with 2022, primarily due to revenue growth in our collection and disposal operations driven by both yield and volume. This increase was partially offset by (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs and (ii) labor cost pressure from frontline employee market wage adjustments. • Income from operations in our Collection and Disposal businesses increased in 2022, as compared with 2021, primarily due to revenue growth in our collection and disposal operations driven by both yield and volume. This increase was partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments and (iii) divestitures, asset impairments and unusual items discussed below in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net, that impacted our East Tier results. 2021 $ 1,955 1,939 (18) 3,876 217 108 (1,236) $ 2,965 16.5 % by certain transactions of our Collection and Recycling Processing and Sales — Income from operations in our Recycling Processing and Sales segment decreased in 2023, as compared with 2022, primarily due to (i) a $168 million goodwill impairment charge, with $22 million attributable to noncontrolling interests, which was partially offset by the recognition of $46 million of income related to the reversal of contingent consideration, as discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net; (ii) a decline in recycling commodity prices; (iii) lower revenue resulting from the temporary shutdown of facilities for technology upgrades combined with increased costs associated with the transportation and third -party tip fees for processing recyclables and (iv) startup costs linked to the establishment of a new processing facility. Income from operations in our Recycling Processing and Sales segment decreased in 2022, as compared with 2021, primarily due to the decline in recycling commodity prices. WM Renewable Energy — Income from operations in our WM Renewable Energy segment decreased in 2023, as compared with 2022, primarily due to (i) lower energy prices and the value of RINs and (ii) increased operating and selling, general and administrative costs associated with the construction of new projects to increase the beneficial use of landfill gas. These decreases were partially offset by an increase in volume of RFS credits, electricity and natural gas. Income from operations in our WM Renewable Energy segment increased in 2022, as compared with 2021, primarily due to higher market values for RINs credits. Corporate and Other — Income from operations in Corporate and Other decreased in 2023, as compared with 2022, primarily due to non -cash impairment charges for certain investments as discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net. Income from operations in Corporate and Other decreased in 2022, as 52 compared with 2021, primarily due to strategic investments in our digital platform and sustainability initiatives, partially offset by lower acquisition and integration related costs. Interest Expense, Net Our interest expense, net was $500 million, $378 million and $365 million in 2023, 2022 and 2021, respectively. The increase in interest expense, net for 2023 is primarily related to an increase in our weighted average borrowing rate of approximately 80 basis points due to increased rates on floating-rate debt and higher fixed rates on refinancing as well as an increase in average debt balances to fund growth. To mitigate the impact of increasing interest rates and to provide certainty in cost, we elected to replace certain floating-rate debt, specifically our $1.0 billion two-year, U.S. term credit agreement ("Term Loan") and commercial paper borrowings, with longer -term, fixed-rate debt through our senior notes issuances as discussed within Liquidity and Capital Resources below. The increase in interest expense, net for 2022 was primarily related to borrowings incurred under our Term Loan and increases in interest rates on our floating-rate debt, including commercial paper and variable -rate tax-exempt bonds. Partially offsetting these increases in 2023 and 2022 were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalent balances as well as higher investment rates. See Note 6 to the Consolidated Financial Statements for more information related to our debt balances. Loss on Early Extinguishment of Debt, Net In May 2021, WMI issued $950 million of senior notes and used the net proceeds of $942 million as well as available cash on hand to retire $1.3 billion of certain high -coupon senior notes. The loss on early extinguishment of debt for 2021 includes $220 million of charges related to this tender offer, including cash paid of $211 million related to premiums and other third -party costs, and $9 million primarily related to unamortized discounts and debt issuance costs. Equity in Net Losses of Unconsolidated Entities We recognized equity in net losses of unconsolidated entities of $60 million, $67 million and $36 million in 2023, 2022 and 2021, respectively. The losses for each period were 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. The losses are more than offset by the tax benefits generated by these investments as further discussed in Notes 8 and 18 to the Consolidated Financial Statements. Income Tax Expense We recorded income tax expense of $745 million, $678 million and $532 million in 2023, 2022 and 2021, respectively, resulting in effective income tax rates of 24.7%, 23.2% and 22.6% for the years ended December 31, 2023, 2022 and 2021, 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 investments reduced our income tax expense by $108 million, $99 million and $74 million, primarily due to tax credits realized from these investments as well as the tax benefits from pre-tax losses for the years ended December 31, 2023, 2022 and 2021, respectively. See Note 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities; • Tax Implications of Impairments — The non -cash impairment charges recognized during 2023 are not expected to be deductible for tax purposes. The impact of these non -deductible charges would have resulted in a decrease to income tax expense of $50 million The non -cash impairment charges recognized during 2022 and 2021 were deductible for tax purposes. See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges; • Permanent Differences — During 2023, 2022 and 2021 we recognized additional income tax expense of $34 million, $14 million and $2 million, respectively, related to permanent differences between taxable income and accounting income. This increase is largely due to an increase in taxable interest income associated with the 53 Company's election to deduct landfill closure and post -closure costs for income tax purposes when incurred and accrued. The increase in taxable interest income is due to the increase in the applicable federal rate published by the IRS; • State Net Operating Losses and Credits — During 2023, 2022 and 2021, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $20 million, $8 million and $15 million, respectively; • Equity -Based Compensation — During 2023, 2022 and 2021, we recognized a reduction in our income tax expense of $14 million, $17 million and $18 million, respectively, for excess tax benefits related to the vesting or exercise of equity -based compensation awards; • 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 $5 million, $6 million and $13 million for the years ended December 31, 2023, 2022 and 2021, respectively; and • Tax Legislation — The Inflation Reduction Act of 2022 (`IRA") was signed into law by President Biden on August 16, 2022 and contains several tax -related provisions, including with respect to (i) alternative fuel tax credits; (ii) tax incentives for investments in renewable energy production, carbon capture, and other climate actions and (iii) the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (recorded as a reduction in our operating expense) for tax credits in 2022, 2023 and 2024. With respect to the investment tax credit, as expanded by the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2024 through 2026. Recently, however, the IRS issued proposed regulations applicable to the investment tax credits that could call into question our ability to realize some, or all, of this tax benefit, which would negatively impact financial expectations in connection with our significant planned and ongoing investments in sustainability growth projects in our WM Renewable Energy segment. The proposed regulations provide a public comment period, culminating in public hearings before the Treasury Department, to allow taxpayers to provide input prior to the issuance of final regulations. In coordination with other members of the RNG industry, we are actively using this public comment period to work with external advisors, the U.S. Congress, the current federal administration, and other biogas sector stakeholders to encourage the Treasury Department to further refine its analysis prior to publication of final regulations that more accurately reflect the express language and legislative intent of the statute with respect to the investment tax credit. However, there is no guarantee that such efforts will be successful. We expect that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, will likely result in an incremental benefit to the Company, although at this time, the anticipated amount of such benefit has not been quantified. Our current expectation is that the IRA's minimum corporate tax will not have an impact on the Company. Finally, in accordance with the IRA, we incurred a nondeductible excise tax of 1% on the net value of certain stock repurchases in 2023, which is reflected in the cost of purchasing the underlying shares as a component of treasury stock in our Consolidated Balance Sheet. Additionally, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development (`OECD") model rules that propose a global minimum tax rate of 15%. The Company operates in countries that have agreed to implement the global minimum tax, and the OECD continues to refine technical guidance for such. At this time, we do not expect the 15% global minimum tax to have a material, if any, impact to our income taxes, and we will continue to monitor and evaluate the potential impact on our business in future periods. See Note 8 to the Consolidated Financial Statements for more information related to income taxes. 54 Landfill and Environmental Remediation Discussion and Analysis We owned or operated 258 solid waste landfills and five secure hazardous waste landfills as of December 31, 2023 and December 31, 2022. 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): 2023 2022 Remaining Remaining Permitted Expansion Total Permitted Expansion Total Capacity Capacity Capacity Capacity Capacity Capacity Balance as of beginning of year (in tons) 5,165 190 5,355 4,889 174 5,063 Acquisitions, divestitures, newly permitted landfills and closures 163 163 Changes in expansions pursued (a) 138 138 62 62 Expansion permits granted (b) 168 (168) — 57 (57) Depletable tons received (123) (123) (125) (125) Changes in engineering estimates and other (c) (d) 1 1 2 181 11 192 Balance as of end of year (in tons) (e) 5,211 161 5,372 5,165 190 5,355 Balance as of end of year (in cubic yards) (e) 5,095 160 5,255 5,079 180 5,259 (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. (b) We received expansion permits at 13 of our landfills during 2023 and 12 of our landfills during 2022, 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 (d) In 2022, a change in accounting estimate resulted in an increase of 190 million tons across certain landfills. (e) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity. The depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands): 2023 2022 # of Depletable Tons per # of Depletable Tons per Sites Tons Day Sites Tons Day Solid waste landfills (a) 258 122,141 450 258 123,462 452 Hazardous waste landfills 5 658 2 5 652 2 Solid waste landfills closed, divested or lease or other contractual agreement expired during related year 263 122,799 452 263 124,114 454 4 633 122,799 124,747 (a) As of December 31, 2023 and 2022, we had 17 landfills which were not accepting waste. 55 As of December 31, 2023, we owned or controlled the management of 237 sites with remedial activities, are in closure or have received a certification of closure or post -closure from the applicable regulatory agency. Based on remaining permitted airspace as of December 31, 2023 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 16 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 39 years when considering remaining permitted airspace, expansion airspace and projected annual disposal volume. The number of landfills owned or operated as of December 31, 2023, 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 31 22 50 66 94 263 (a) (a) Of the 263 landfills, 222 are owned, 29 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. 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 depletion for the year ended December 31, 2023 are reflected in the table below (in millions): December 31, 2022 Capital additions Asset retirement obligations incurred and capitalized Depletion of landfill airspace Foreign currency translation Asset retirements and other adjustments December 31, 2023 Cost Basis of Landfill Assets $ 18,526 722 79 28 118 Accumulated Landfill Airspace Depletion $ (10,896) (745) (12) 10 Net Book Value of Landfill Assets $ 7,630 722 79 (745) 16 128 7,830 $ 19,473 $ (11,643) $ As of December 31, 2023, we estimate that we will spend approximately $795 million in 2024, and approximately $1.7 billion in 2025 and 2026 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. 56 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 2 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 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 cost for the likely remedy can be reasonably estimated. The changes to landfill and environmental remediation liabilities for the year ended December 31, 2023 are reflected in the table below (in millions): Environmental Landfill Remediation December 31, 2022 $ 2,664 $ 204 Obligations incurred and capitalized 79 Obligations settled (147) (27) Interest accretion 124 6 Revisions in estimates and interest rate assumptions 131 26 Acquisitions, divestitures and other adjustments 2 December 31, 2023 $ 2,853 $ 209 Landfill Operating Costs The following table summarizes our landfill operating costs for the year ended December 31 (in millions): 2023 2022 2021 Interest accretion on landfill and environmental remediation liabilities $ 130 $ 112 $ 111 Leachate and methane collection and treatment 196 193 183 Landfill remediation costs and discount rate adjustments to environmental remediation liabilities and recovery assets 7 (2) 1 Other landfill site costs 120 118 117 Total landfill operating costs $ 453 $ 421 $ 412 Depletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following: • the depletion 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 depletion 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. Depletion 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 depletable basis of a landfill (net of accumulated depletion) 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, depleted 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, depleted on a per -ton basis using each discrete final capping event's estimated permitted and expansion airspace. Accordingly, each landfill has multiple per -ton depletion rates. 57 The following table presents our landfill airspace depletion expense on a per -ton basis for the year ended December 31: 2023 2022 2021 Depletion of landfill airspace (in millions) $ 745 $ 754 $ 731 Tons received, net of redirected waste (in millions) 123 125 124 Average landfill airspace depletion expense per ton $ 6.07 $ 6.05 $ 5.90 Different per -ton depletion rates are applied at each of our 263 landfills, and per -ton depletion 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 depletion expense measured on a per -ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year. Liquidity and Capital Resources The Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck -in acquisitions, and funding of strategic sustainability growth investments. 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. The Company believes that its investment grade credit ratings, diverse investor base, large value of unencumbered assets and modest leverage enable it to obtain adequate financing, and refinance upcoming maturities, as necessary to meet its ongoing capital, operating, strategic and other liquidity requirements. We also have the ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans. Summary of Contractual Obligations The following table summarizes our significant contractual obligations as of December 31, 2023 (other than recorded obligations related to liabilities associated with environmental remediation costs and non -cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions): 2024 2025 2026 2027 2028 Thereafter Total Recorded Obligations: Final capping, closure and post -closure liabilities (a) $ 143 $ 254 $ 178 $ 206 $ 154 $ 3,480 $ 4,415 Debt payments (b) 1,192 1,355 713 1,198 892 11,002 16,352 Unrecorded Obligations: Interest on debt (c) 566 544 518 486 448 3,340 5,902 Estimated unconditional purchase obligations (d) 173 164 133 51 44 470 1,035 Anticipated liquidity impact as of December 31, 2023 $ 2,074 $ 2,317 $ 1,542 $ 1,941 $ 1,538 $ 18,292 $ 27,704 (a) Includes liabilities for final capping, closure and post -closure costs recorded in our Consolidated Balance Sheet as of December 31, 2023, without the impact of discounting and inflation. Our recorded liabilities for fmal capping, closure and post -closure costs 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. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations. 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, 2023. As of December 31, 2023, we had $154 million of accrued interest related to our debt obligations. (c) 58 (d) Our obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees. Summary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions): 2023 2022 Cash and cash equivalents $ 458 $ 351 Restricted funds: Insurance reserves $ 376 $ 313 Final capping, closure, post -closure and environmental remediation funds 119 113 Other 17 5 Total restricted funds (a) $ 512 $ 431 Debt: Current portion $ 334 $ 414 Long-term portion 15,895 14,570 Total debt $ 16,229 $ 14,984 (a) As of December 31, 2023 and 2022, $90 million and $83 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets. 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, 2023 are described in Note 6 to the Consolidated Financial Statements. As of December 31, 2023, we had approximately $2.8 billion of debt maturing within the next 12 months, including (i) $1.6 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $859 million of short-term borrowings under our commercial paper program (net of related discount on issuance); (iii) $175 million of other debt with scheduled maturities within the next 12 months, including $60 million of tax exempt bonds, and (iv) $156 million of 3.5% senior notes that mature in May 2024. As of December 31, 2023, we have classified $2.4 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"). The remaining $334 million of debt maturing in the next 12 months is classified as current obligations. In February 2023, WMI issued $750 million and $500 million of 4.625% senior notes due February 2030 and February 2033, respectively, the net proceeds of which were $1.24 billion. We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $500 million of WMI's 2.4% senior notes upon maturity in May 2023, and for general corporate purposes, including our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments. In July 2023, WMI issued $750 million and $1.25 billion of 4.875% senior notes due February 2029 and February 2034, respectively, the net proceeds of which were $1.97 billion. We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $1.0 billion of outstanding borrowings under our Term Loan and for general corporate purposes. 59 We have credit lines in place to support our liquidity and fmancial assurance needs. The following table summarizes our outstanding letters of credit, categorized by type of facility as of December 31 (in millions): 2023 2022 Revolving credit facility (a) $ 180 $ 166 Other letter of credit lines (b) 834 800 $ 1,014 $ 966 (a) As of December 31, 2023 and 2022, we had an unused and available credit capacity of $2.5 billion and $1.6 billion, respectively. (b) As of December 31, 2023, these other letter of credit lines are uncommitted with terms extending through December 2027. Guarantor Financial Information WM Holdings has fully and unconditionally guaranteed all of WMI's senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings' senior indebtedness. None of WMI's other subsidiaries have guaranteed any of WMI's or WM Holdings' debt. In lieu of providing separate fmancial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non -guarantor (in millions): December 31, 2023 Balance Sheet Information: Current assets $ 276 Noncurrent assets 25 Current liabilities 336 Noncurrent liabilities: Advances due to affiliates 21,228 Other noncurrent liabilities 13,798 Year Ended December 31, 2023 Income Statement Information: Revenue $ Operating income Net loss 348 Summary of Cash Flow Activity The following is a summary of our cash flows for the year ended December 31 (in millions): 2023 2022 2021 Net cash provided by operating activities $ 4,719 $ 4,536 $ 4,338 Net cash used in investing activities $ (3,091) $ (3,063) $ (1,894) Net cash used in financing activities $ (1,524) $ (1,216) $ (2,900) Net Cash Provided by Operating Activities Our operating cash flows increased in 2023, as compared with 2022, by $183 million primarily driven by higher earnings attributable to our Collection and Disposal businesses and lower income tax payments as a result of a deposit of approximately $103 million that was made to the IRS in 2022 related to a disputed tax matter discussed within Note 8 to the Consolidated Financial Statements. These increases were partially offset 60 by (i) unfavorable changes in working capital, net of effects of acquisitions and divestitures; (ii) higher interest payments and (iii) higher incentive compensation payments. Our operating cash flows for 2022, as compared with 2021, increased by $198 million The increase was largely driven by increased earnings in our Collection and Disposal businesses and WM Renewable Energy segment. We also experienced lower interest payments due to timing and refinancing activities in 2021 that reduced our overall interest rate. Partially offsetting our increase in cash from operating activities were higher income tax payments as a result of higher earnings in 2022 and a deposit of approximately $103 million that was made to the IRS related to a disputed tax matter. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. See Note 8 to the Consolidated Financial Statements for further details. 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 $173 million, $377 million and $76 million in 2023, 2022 and 2021, respectively, of which $170 million, $377 million and $75 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 Collection and Disposal businesses. Our acquisition spending in 2022 was primarily attributable to the purchase of a controlling interest in a business intended to accelerate our film and plastic wrap recycling capabilities. See Note 17 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 $2,895 million, $2,587 million and $1,904 million for capital expenditures in 2023, 2022 and 2021, respectively. The increase in capital spending is primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments, as well as inflationary increases in many fixed asset categories required to support ongoing operations and investments in the Company's landfills to reduce greenhouse gas emissions. The increase in 2022 is primarily driven by our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments, as well as timing differences in our fixed asset purchases to support our Collection and Disposal businesses. The Company continues to maintain a disciplined focus on capital management to prioritize investments for expansion, the replacement of aging assets and assets that support our strategy of differentiation and continuous improvement through efficiency and innovation. The Company expects to invest $2.8 billion to $2.9 billion in growth investments across the recycling and renewable energy platforms from 2022 to 2026, which includes the $1.325 billion already invested in 2022 and 2023. • Divestitures Proceeds from divestitures of businesses and other assets, net of cash divested, were $78 million, $27 million and $96 million in 2023, 2022 and 2021, respectively. In 2023, our proceeds are primarily the result of the sale of certain non -strategic assets. In 2021, our proceeds are primarily the result of the sale of certain non -strategic Canadian operations. • Other, Net Our spending within other, net was $104 million, $126 million and $11 million in 2023, 2022 and 2021, respectively. During 2023, 2022 and 2021, we used $61 million, $23 million and $32 million, respectively, of cash from restricted cash and cash equivalents to invest in available -for -sale securities. In 2023, we used $20 million to make an initial cash payment associated with a low-income housing investment. In 2022, we used $67 million to fund secured convertible promissory notes associated with an acquisition and $28 million to make an initial cash payment associated with a low-income housing investment. Our 2021 cash spend was partially offset by proceeds received from the sale of an equity method investment. 61 Net Cash Used in Financing Activities The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below: • Debt Borrowings (Repayments) The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions): 2023 2022 2021 Borrowings: Commercial paper program $ 17,799 $ 6,596 $ 6,831 Term loan 1,000 Senior notes 3,207 992 942 Tax-exempt bonds 300 100 175 $ 21,306 $ 8,688 $ 7,948 Repayments: Commercial paper program $ (18,709) $ (6,664) $ (6,872) Senior notes (500) (500) (1,289) Term loan (1,000) Tax-exempt bonds (65) (71) (127) Other debt (120) (93) (116) $ (20,394) $ (7,328) $ (8,404) Net cash borrowings (repayments) $ 912 $ 1,360 $ (456) Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments. • Premiums and Other Paid on Early Extinguishment of Debt During 2021, we paid premiums and other third -party costs of $211 million to retire certain high -coupon notes. See Loss on Early Extinguishment of Debt, Net for further discussion. • 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 allocated $1,302 million, $1,500 million and $1,350 million of available cash to common stock repurchases during 2023, 2022, and 2021, respectively. See Note 13 to the Consolidated Financial Statements for additional information. We announced in December 2023 that the Board of Directors has authorized up to $1.5 billion in future share repurchases, excluding the 1% excise tax. This new authorization supersedes and replaces remaining authority under the prior Board of Directors' authorization for share repurchases announced in December 2022. The amount of future share repurchases executed under our Board of Directors' authorization is determined in management's discretion, based on various factors, including our net earnings, financial condition and cash required for future business plans, growth and acquisitions. • Cash Dividends For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1,136 million in 2023, or $2.80 per common share, $1,077 million in 2022, or $2.60 per common share, and $970 million in 2021, or $2.30 per common share. In December 2023, we announced that our Board of Directors expects to increase the quarterly dividend from $0.70 to $0.75 per share for dividends declared in 2024. 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. • Exercise of Common Stock Options The exercise of common stock options generated financing cash inflows of $44 million, $44 million and $66 million from the exercise of 597,000, 675,000 and 962,000 of employee stock options during 2023, 2022 and 2021, respectively. 62 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: 2023 2022 2021 Net cash provided by operating activities $ 4,719 $ 4,536 $ 4,338 Capital expenditures to support the business (2,131) (2,026) (1,665) Capital expenditures - sustainability growth investments (a) (764) (561) (239) Total capital expenditures (2,895) (2,587) (1,904) Proceeds from divestitures of businesses and other assets, net of cash divested 78 27 96 Free cash flow $ 1,902 $ 1,976 $ 2,530 (a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation and we expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve. 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 fmancial 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, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 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 and (iii) the determination of each landfill's remaining permitted and expansion airspace. 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 landfill buffer property. The projection of these landfill costs is dependent, in part, on future events. The remaining depletable basis of each landfill 63 includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, 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 and the capping costs are depleted 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 landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion. 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 landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion. 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, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, 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, in addition to meeting 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. 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 depletable basis of the landfill. 64 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 consider 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 depletion 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 earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings 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 depletion 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 and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. 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. Refer to Note 10 to the Consolidated Financial Statements for additional information on our environmental liabilities. 65 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 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. 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. 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 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 using Level 3 inputs. We first perform a qualitative assessment to determine if it was more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is 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 66 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. 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. Generally, the valuation of our acquired asset and liabilities rely on complex estimates and assumptions. 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. See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions. 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. Inflation Macroeconomic pressures, including inflation and rising interest rates, and market disruption resulting in labor, supply chain and transportation constraints have impacted our results. Significant global supply chain disruption has reduced availability of certain assets used in our business, and inflation has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs. Supply chain constraints have caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. We continue to take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business. These efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, market responses, and contractual limitations, such as the timing lag in our ability to recover increased costs under certain contracts that are tied to a price escalation index with a lookback provision. Refer to Item 1A. Risk Factors for further discussion. 67 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, 2023. Interest Rate Exposure Our exposure to market risk for changes in interest rates relates primarily to our financing activities. As of December 31, 2023, we had $16.4 billion of long-term debt, excluding the impacts of accounting for debt issuance costs, discounts and fair value adjustments attributable to terminated interest rate derivatives. We have $2.5 billion of debt that is exposed to changes in market interest rates within the next 12 months comprised primarily of (i) $860 million of short-term borrowings under our commercial paper program and (ii) $1.6 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months. We currently estimate that a 100-basis point increase in the interest rates of our outstanding variable -rate debt obligations would increase our 2024 interest expense by $18 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 $900 million as of December 31, 2023. We are also exposed to interest rate market risk from our cash and cash equivalent balances, as well as assets held in restricted trust fund accounts. These assets are generally invested in high -quality, liquid instruments including 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 fund account balances in available -for -sale securities, including U.S. Treasury securities, U.S. agency securities, municipal securities, mortgage- and asset -backed securities, which generally mature over the next ten years, as well as equity securities. 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, electricity (and related renewable energy credits) and recycled materials, including old corrugated cardboard and plastics. We work 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, operating costs and margins may also increase or decrease. Recycling revenues attributable to yield decreased $308 million and increased $19 million in 2023 and 2022, respectively, as compared with the prior year periods. With the significant decline in commodity prices that started in the second half of 2022 from their all-time highs and has continued into 2023, we are currently experiencing margin pressures from our commodity -driven businesses. Average market prices for single -stream recycled commodities were down 40% and 10% in 2023 and 2022, respectively, as compared to the prior year periods. Variability in commodity prices can also impact the margins of our business as certain components of our revenue are structured as a pass through of costs, including recycling brokerage and fuel surcharges. We have invested, and continue to invest, in facilities to capture methane produced from the Company's landfills and convert it into renewable natural gas ("RNG") and electricity. RNG produced from our landfills, as well as dairy biogas, constitute a significant source of fuel allocated to our natural gas collection vehicles. The Company's investment in renewable energy production is guided partly by the EPA's implementation of the Renewable Fuel Standard ("RFS") program, which promotes the production and use of renewable transportation fuels. Many of our facilities are EPA -registered producers of transportation fuel making compressed and 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. 68 RIN prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand. The value of the RINs associated with RNG is set through a market established by the RFS program. Prior to 2022, the EPA had promulgated rules on an annual basis establishing refiners' obligations to purchase RNG and other cellulosic biofuels under the RFS program, which introduced uncertainty and volatility into the renewable fuels and RINs market. However, in 2023, the EPA issued a highly anticipated rule establishing biofuel blending volumes under the RFS program for compliance years 2023 through 2025. The rule reflected the outsized role of biogas under the program, delivered on many reforms that benefit the solid waste sector, and recognized the continued growth of the market for RNG in vehicle applications. However, we cannot be certain that these changes, or the outcome of litigation challenging various aspects of the rule, will ultimately reduce volatility in the RINs market or that future rulemakings will be similarly favorable to our business. We continue to advocate for the current federal administration to implement policies that could reduce the potential for volatility in the RINs market and ensure long-term stability for renewable transportation fuels, as changes in the RFS market or the structure of the RFS program can and has impacted the financial performance of the facilities constructed to capture and treat the gas. Such changes could impact or alter our projected future investments, and such investments may not yield the results anticipated. Revenue in our WM Renewable Energy segment declined $73 million and increased $48 million in 2023 and 2022, respectively, as compared to the prior year periods, primarily driven by the fluctuations in energy and RIN market prices. The Company's sustainability growth strategy also is informed by the increased adoption of state and Canadian clean fuel standard programs, utility policies, and voluntary market demand for RNG in transportation and industrial applications. Clean fuel standard programs, originally developed in California and subsequently adopted in Oregon and Washington, establish annual carbon intensity benchmarks for transportation fuels that decrease over time. These programs operate similar to the RFS program in that certain regulated parties purchase credits from fuel producers, including RNG producers, to meet their carbon intensity obligations. Like RINs, clean fuel standard program credit values can fluctuate with policy and market dynamics As such, we are advocating for existing programs to adopt measures to promote stability in credit pricing and for other states to adopt similar programs that incentivize the growth in RNG. We also are working closely with stakeholders to encourage the voluntary market for RNG demand, including utility RNG procurement programs, and sustainability protocols, as companies and other customers increasingly look to reduce their greenhouse gas emissions profiles. Currency Rate Exposure Our operations are primarily in the U.S. but we also have significant operations in Canada. Additionally, we have 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. 69 Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID 42) 71 Consolidated Balance Sheets as of December 31, 2023 and 2022 75 Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021 76 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and 2021 76 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 77 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2023, 2022 and 2021 78 Notes to Consolidated Financial Statements 79 70 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Waste Management, Inc. Opinion on Internal Control Over Financial Reporting We have audited Waste Management, Inc.'s internal control over fmancial reporting as of December 31, 2023, 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, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2023 consolidated financial statements of the Company, and our report dated February 13, 2024 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. 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 13, 2024 /s/ ERNST & YOUNG LLP 71 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors 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, 2023 and 2022, 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, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated fmancial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2023, 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 13, 2024 expressed an unqualified opinion thereon. 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. 72 Landfill Depletion Description of the At December 31, 2023, the Company's landfill assets, net of accumulated depletion, Matter totaled $7.8 billion and the associated depletion expense for 2023 was $745 million As discussed in Note 2 of the financial statements, the Company updates the estimates used to calculate individual landfill depletion rates at least annually, or more often if significant facts change. Landfill depletion rates are used in the computation of landfill depletion expense. Auditing landfill depletion rates and related depletion 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 and expansion airspace, and airspace utilization factors. How We Addressed We obtained an understanding, evaluated the design, and tested the operating effectiveness the Matter in Our of the Company's controls over determining landfill depletion rates and calculating Audit depletion 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 depletion rates, management's review of those significant assumptions, and the mathematical accuracy of the calculation and recording of depletion expense. To test the landfill asset depletion 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 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 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 depletion rates. 73 Landfill — Final Capping, Closure and Post -Closure Costs Description of the At December 31, 2023, the carrying value of the Company's landfill asset retirement Matter obligations related to fmal capping, closure and post -closure costs totaled $2.9 billion. As discussed in Note 2 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. Significant 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 and expansion airspace and the projected remaining landfill life. How We Addressed We obtained an understanding, evaluated the design, and tested the operating effectiveness the Matter in Our of the Company's controls over the calculation of landfill asset retirement obligations. Our Audit 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 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 also tested the completeness and accuracy of the historical data utilized in preparing the estimate. We have served as the Company's auditor since 2002. Houston, Texas February 13, 2024 /s/ ERNST & YOUNG LLP 74 WASTE MANAGEMENT, INC. CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Par Value Amounts) ASSETS Current assets: Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $30 and $26, respectively . Other receivables, net of allowance for doubtful accounts of $4 and $7, respectively Parts and supplies Other assets Total current assets Property and equipment, net of accumulated depreciation and depletion of $22,826 and $21,627, respectively Goodwill Other intangible assets, net Restricted funds Investments in unconsolidated entities Other assets Total assets LIABILITIES AND EQUITY Current liabilities: 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 Commitments and contingencies (Note 10) Equity: Waste Management, Inc. stockholders' equity: Common stock, $0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued Additional paid -in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock at cost, 228,827,218 and 222,396,166 shares, respectively Total Waste Management, Inc. stockholders' equity Noncontrolling interests Total equity Total liabilities and equity See Notes to Consolidated Financial Statements. 75 December 31, 2023 2022 $ 458 2,633 237 173 303 3,804 16,968 9,254 759 422 606 1,010 $ 32,823 $ 1,709 1,605 578 334 4,226 15,895 1,826 2,888 1,092 $ 351 2,461 291 164 284 3,551 15,719 9,323 827 348 578 1,021 $ 31,367 $ 1,766 1,625 589 414 4,394 14,570 1,733 2,700 1,106 25,927 24,503 6 5,351 14,334 (37) (12,751) 6,903 (7) 6,896 $ 32,823 6 5,314 13,167 (69) (11,569) 6,849 15 6,864 $ 31,367 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) Year Ended December 31, 2023 2022 2021 Operating revenues $ 20,426 $ 19,698 $ 17,931 Costs and expenses: Operating 12,606 12,294 11,111 Selling, general and administrative 1,926 1,938 1,864 Depreciation, depletion and amortization 2,071 2,038 1,999 Restructuring 5 1 8 (Gain) loss from divestitures, asset impairments and unusual items, net 243 62 (16) 16,851 16,333 14,966 Income from operations 3,575 3,365 2,965 Other income (expense): Interest expense, net (500) (378) (365) Loss on early extinguishment of debt, net (220) Equity in net losses of unconsolidated entities (60) (67) (36) Other, net 6 (2) 5 (554) (447) (616) Income before income taxes 3,021 2,918 2,349 Income tax expense 745 678 532 Consolidated net income 2,276 2,240 1,817 Less: Net income (loss) attributable to noncontrolling interests (28) 2 1 Net income attributable to Waste Management, Inc $ 2,304 $ 2,238 $ 1,816 Basic earnings per common share $ 5.69 $ 5.42 $ 4.32 Diluted earnings per common share $ 5.66 $ 5.39 $ 4.29 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions) Year Ended December 31, 2023 2022 2021 Consolidated net income $ 2,276 $ 2,240 $ 1,817 Other comprehensive income (loss), net of tax: Derivative instruments, net 14 3 9 Available -for -sale securities, net (11) (24) (6) Foreign currency translation adjustments 26 (65) (28) Post -retirement benefit obligations, net 3 - 3 Other comprehensive income (loss), net of tax 32 (86) (22) Comprehensive income 2,308 2,154 1,795 Less: Comprehensive income (loss) attributable to noncontrolling interests(28) 2 1 Comprehensive income attributable to Waste Management, Inc $ 2,336 $ 2,152 $ 1,794 See Notes to Consolidated Financial Statements. 76 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Consolidated net income $ 2,276 $ 2,240 $ 1,817 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation, depletion and amortization 2,071 2,038 1,999 Deferred income tax expense (benefit) 83 49 (77) Interest accretion on landfill and environmental remediation liabilities 130 112 111 Provision for bad debts 56 50 37 Equity -based compensation expense 93 84 108 Net gain on disposal of assets (42) (21) (25) Goodwill impairment 168 (Gain) loss from divestitures, asset impairments (other than goodwill) and other, net 75 62 (16) Equity in net losses of unconsolidated entities, net of dividends 60 67 38 Loss on early extinguishment of debt, net 220 Change in operating assets and liabilities, net of effects of acquisitions and divestitures: Receivables (161) (329) 28 Other current assets (2) (35) (39) Other assets 61 42 34 Accounts payable and accrued liabilities 90 393 206 Deferred revenues and other liabilities (239) (216) (103) Net cash provided by operating activities 4,719 4,536 4,338 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired (170) (377) (75) Capital expenditures (2,895) (2,587) (1,904) Proceeds from divestitures of businesses and other assets, net of cash divested 78 27 96 Other, net (104) (126) (11) Net cash used in investing activities (3,091) (3,063) (1,894) Cash flows from financing activities: New borrowings 21,306 8,688 7,948 Debt repayments (20,394) (7,328) (8,404) Premiums and other paid on early extinguishment of debt (211) Common stock repurchase program (1,302) (1,500) (1,350) Cash dividends (1,136) (1,077) (970) Exercise of common stock options 44 44 66 Tax payments associated with equity -based compensation transactions (31) (39) (28) Other, net (11) (4) 49 Net cash used in financing activities (1,524) (1,216) (2,900) Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents 3 (6) 2 Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents 107 251 (454) Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 445 194 648 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 552 $ 445 $ 194 Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period: Cash and cash equivalents $ 458 $ 351 $ 118 Restricted cash and cash equivalents included in other current assets 10 25 7 Restricted cash and cash equivalents included in restricted funds 84 69 69 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 552 $ 445 $ 194 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 Accumulated Additional Other Common Stock Paid -In Retained Comprehensive Treasury Stock Noncontrolling Total Shares Amounts Capital Earnings (Loss) Income Shares Amounts Interests Balance, December3l, 2020 $ 7,454 630,282 $ 6 $ 5,129 $ 11,159 $ 39 (207,481) $ (8,881) $ 2 Consolidated net income 1,817 1,816 1 Other comprehensive income (loss), net of tax (22) (22) Cash dividends declared of $2.30 per common share (970) (970) Equity -based compensation transactions, net 198 110 (1) 2,049 89 Common stock repurchase program(1,350) (70) (8,731) (1,280) Other, net (1) 4 (1) Balance, December 31, 2021 $ 7,126 630,282 $ 6 $ 5,169 $ 12,004 $ 17 (214,159) $ (10,072) $ 2 Consolidated net income 2,240 2,238 2 Other comprehensive income (loss), net of tax (86) (86) Cash dividends declared of $2.60 per common share (1,077) (1,077) Equity -based compensation transactions, net 150 75 2 1,555 73 Common stock repurchase program(1,500) 70 (9,796) (1,570) Acquisitions and other, net 11 4 11 Balance, December 31, 2022 $ 6,864 630,282 $ 6 $ 5,314 $ 13,167 $ (69) (222,396) $ (11,569) $ 15 Consolidated net income 2,276 2,304 (28) Other comprehensive income (loss), net of tax 32 32 Cash dividends declared of $2.80 per common share (1,136) (1,136) Equity -based compensation transactions, net 169 97 (1) 1,406 73 Common stock repurchase program(1,315) (60) (7,840) (1,255) Other, net 6 3 6 Balance, December 31, 2023 $ 6,896 630,282 $ 6 $ 5,351 $ 14,334 $ (37) (228,827) $ (12,751) $ (7) See Notes to Consolidated Financial Statements. 78 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2023, 2022 and 2021 1. Basis of Presentation 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 18. 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., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term "WMI," we are referring only to Waste Management, Inc., the parent holding company. We are North America's leading provider of comprehensive environmental solutions, providing services throughout the United States ("U.S.") and Canada. We partner with our 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, recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy ("WM Renewable Energy") business, we are also a leading developer, operator and owner of landfill gas -to -energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel that we allocate to our natural gas fleet. To enhance transparency regarding our financial performance, highlight the strength and consistency of our core solid waste businesses, and underscore our commitment to sustainability through planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy businesses, beginning in the fourth quarter of 2023, our senior management revised its segment reporting to (i) reflect the financial results of our collection, transfer, disposal and resource recovery services businesses independently; (ii) combine the results of all recycling facilities from our East and West Tier segments with our recycling brokerage and sales activities to form a newly created Recycling Processing and Sales reportable segment and (iii) include our WM Renewable Energy business as a reportable segment. Accordingly, our senior management now evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) Collection and Disposal - East Tier ("East Tier"); (ii) Collection and Disposal - West Tier ("West Tier"); (iii) Recycling Processing and Sales and (iv) WM Renewable Energy. Our East and West Tier, along with certain ancillary services not managed through our tier segments, but that support our collection and disposal operations, form our "Collection and Disposal" businesses. We also provide additional services not managed through our four reportable segments, which are presented as Corporate and Other. Refer to Note 19 for further discussion. 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. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of WMI, 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. 79 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 fmancial 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, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. 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 restricted funds, 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, 2023 and 2022, 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 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. 80 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the year ended December 31 (in millions): 2023 2022 Balance as of January 1 $ 26 $ 25 Additions charged to expense 53 55 Accounts written -off, net of recoveries (58) (49) Acquisitions, divestitures and other, net 9 (5) Balance as of December 31 $ 30 $ 26 To determine the allowance for doubtful accounts for trade receivables, we rely upon, among other factors, historical loss trends, the age of outstanding receivables, and existing as well as expected economic conditions. 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. Based on aging analysis as of both December 31, 2023 and 2022, approximately 90% of our trade receivables were outstanding less than 60 days. To determine the allowance for doubtful accounts for other receivables, as well as loans and other instruments, we rely primarily on credit ratings and associated default rates based on the maturity of the instrument. Other receivables, as of December 31, 2023 and 2022, include receivables related to income tax payments in excess of our current income tax obligations of $120 million and $150 million, respectively. Other receivables as of December 31, 2023 and 2022 also include a receivable of $26 million and $19 million, respectively, related to alternative fuel tax credits. Based on an aging analysis as of December 31, 2023 and 2022, approximately 50% and 55%, respectively, of our other receivables were due within 12 months or less. 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 Generally 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 associated with each fmal 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 81 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 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, 2023, 2022 and 2021, we inflated these costs in current dollars to the expected time of payment using an inflation rate of 2.50%, 2.50% and 2.25%, respectively. 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, 2023 was approximately 4.8%. 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. Sustained 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 landfill depletion policy, which would generally result in depletion 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 a fully 82 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) consumed landfill result in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill airspace depletion expense. Interest accretion on final capping, closure and post -closure liabilities is recorded using the effective interest method and is recorded as landfill operating costs, which is included in operating expenses within our Consolidated Statements of Operations. Depletion of Landfill Assets The depletable 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 (as defined below) and (iv) projected asset retirement costs related to landfill final capping, closure and post -closure activities. Depletion 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 depletable 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, 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, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, 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, in addition to meeting 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. 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 16 landfill sites with expansions included as of December 31, 2023, 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. 83 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 depletable 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 consider 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 depletion 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 earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings 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 depletion 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 and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. 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; 84 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • 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 (where estimable), our aggregate potential liability would be approximately $85 million higher than the $209 million recorded in the Consolidated Balance Sheet as of December 31, 2023. Our ultimate 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 inflate the cost in current dollars 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. 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 generally 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): Useful Lives Vehicles — excluding rail haul cars 3 to 10 Vehicles — rail haul cars 10 to 30 Machinery and equipment (a) 3 to 30 Buildings and improvements 5 to 40 Furniture, fixtures and office equipment 3 to 10 (a) Includes recycling and renewable natural gas ("RNG") facilities as well as containers. 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 85 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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. 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 depreciated 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. 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 depleted on a units -of -consumption basis over the shorter of the lease term or the life of the landfill. For operating and financing leases, including landfill leases, our rent expense for each of the last three years and future minimum lease payments are disclosed in Note 7. 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, subsequent remeasurements and the ultimate settlement of the obligations being recognized as an adjustment to income from operations. Refer to Note 11 for adjustments recognized during the reported periods. 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 readily determined, they are recognized as of the acquisition date if the contingencies are probable and an amount can be reasonably estimated. 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. See Note 17 for additional information related to our acquisitions. 86 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, which are combined with landfill tangible assets and depleted per our landfill depletion 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 Statements 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) 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 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 our indefinite -lived intangible assets, including the goodwill of our reporting units, for impairment. 87 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) We first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the asset's estimated fair value is 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 11 for information related to impairments recognized during the reported periods. Insured and Selflnsured 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. 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 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. WMI pays an annual premium to the insurance captive on behalf of WMI and its insured subsidiaries, typically in the first quarter of the year, for estimated losses based on an external actuarial analysis. These premiums are held in a restricted funds account to be used solely for paying insurance claims, resulting in a transfer of risk from our Company to the insurance captive, and are allocated between current and long-term assets depending on estimated timing of the use of funds. Restricted Funds Our restricted funds accounts primarily consist 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, equity securities and available -for -sale debt 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 and the premiums paid are directly deposited into a restricted funds account to be used solely for paying insurance claims. At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds for purposes of settling final capping, closure, post -closure and environmental remediation obligations. Balances maintained in these restricted funds accounts will fluctuate based on (i) changes in statutory requirements; (ii) future 88 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 funds accounts. See Notes 16 and 18 for additional discussion related to restricted funds 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): 2023 2022 Equity method investments $ 538 $ 460 Investments without readily determinable fair values 68 62 Redeemable preferred stock 56 Investments in unconsolidated entities $ 606 $ 578 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 or pending 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 (gain) loss from divestitures, asset impairments and unusual items, net in our Consolidated Statements of Operations in accordance with appropriate accounting guidance. Refer to Note 11, Note 12 and Note 16 for information related to impairments and other adjustments recognized during the reported periods. Foreign Currency Our operations are primarily in the U.S. but we also have significant operations in Canada. Additionally, we have 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 have primarily been impacted by fluctuations in the U.S. dollar/Canadian dollar exchange rate which was 1.3243 at December 31, 2023, 1.3554 at December 31, 2022 and 1.2639 at December 31, 2021. Refer to Note 12 for information regarding the impacts of foreign currency on our comprehensive income and results of operations. 89 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Revenue Recognition 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 advanced billings are included in deferred revenues and recognized as revenue in the period service is provided. Our Collection and Disposal operating revenues are primarily generated from fees charged for our collection, transfer and disposal. 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 recycling 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, considering our cost of loading, transporting and disposing of the solid waste at a disposal site. The fees we charge for our services generally include applicable fees, such as our energy surcharge, which are intended to pass through to customers direct and indirect costs incurred. Recycling Processing and Sales revenues generally consist of tipping fees and the sale of recycling commodities to and/or on behalf of third parties. Our WM Renewable Energy revenue is primarily generated from (i) the sale of captured and converted landfill methane gas; (ii) the sale of Renewable Identification Numbers ("RINs") under the Renewable Fuel Standard ("RFS") program implemented by the U.S. Environmental Protection Agency ("EPA"); (iii) sale of Low Carbon Fuel credits designed to stimulate the use of low -carbon fuels and (iv) the sale of energy (electricity and capacity) and associated Renewable Energy Credits ("RECs"). See Note 19 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. 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 five 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 Sheets. As of December 31, 2023 and 2022, we had $207 million and $192 million of deferred contract costs, respectively, of which $148 million and $137 million, respectively, were related to deferred sales incentives. During each of the years ended December 31, 2023, 2022 and 2021, we amortized $26 million, $24 million and $23 million, respectively, of sales incentives to selling, general and administrative expense. 90 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Long -Term Contracts Approximately 20% 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 2023, 2022 and 2021, total interest costs were $590 million, $425 million and $388 million, respectively, of which $63 million, $29 million and $13 million was capitalized in 2023, 2022 and 2021, 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 8 for discussion of our income taxes. 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 10 for discussion of our commitments and contingencies. 91 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Supplemental Cash Flow Information The following table shows supplemental cash flow information for the year ended December 31 (in millions): 2023 2022 2021 Interest, net of capitalized interest $ 447 $ 348 $ 387 Income taxes (a) 636 736 370 (a) The increase in income taxes paid in 2022 is primarily due to the increase in pre-tax book income during 2022 and a deposit of approximately $103 million made to the Internal Revenue Service (`IRS") in the fourth quarter of 2022 related to a disputed tax matter for which we expect to seek a refund. See Note 8 for further discussion. During 2023, we had $276 million of non -cash financing activities primarily from our low-income housing investment and new financing leases, which are discussed further in Notes 6 and 8. During 2022, we had $225 million of non -cash financing activities primarily from our low-income housing investment and new financing leases. Additionally, we had approximately $25 million and $135 million of non -cash investing activities related to non -cash consideration transferred as part of our acquisitions in 2023 and 2022, respectively. See Note 17 for further discussion of our 2022 acquisitions. During 2021, we had $30 million of non -cash fmancing activities from new financing leases. Non -cash investing and financing activities are generally excluded from the Consolidated Statements of Cash Flows. 3. Landfill and Environmental Remediation Liabilities Liabilities for landfill and environmental remediation costs as of December 31 are presented in the table below (in millions): 2023 2022 Environmental Environmental Landfill Remediation Total Landfill Remediation Total Current (in accrued liabilities) $ 143 $ 31 $ 174 $ 137 $ 31 $ 168 Long-term 2,710 178 2,888 2,527 173 2,700 $ 2,853 $ 209 $ 3,062 $ 2,664 $ 204 $ 2,868 The changes to landfill and environmental remediation liabilities for the year ended December 31, 2023 are reflected in the table below (in millions): Environmental Landfill Remediation December 31, 2022 $ 2,664 $ 204 Obligations incurred and capitalized 79 Obligations settled (147) (27) Interest accretion 124 6 Revisions in estimates and interest rate assumptions 131 26 Acquisitions, divestitures and other adjustments 2 December 31, 2023 $ 2,853 $ 209 Our recorded liabilities as of December 31, 2023 include the impacts of inflating certain of these costs based on our expectations of the timing of cash settlement. 92 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 4. Property and Equipment Property and equipment as of December 31 consisted of the following (in millions): 2023 2022 Land $ 772 $ 752 Landfills 19,473 18,526 Vehicles 6,581 6,173 Machinery and equipment (a) 4,989 4,401 Containers 3,104 3,021 Buildings and improvements 4,266 3,809 Furniture, fixtures and office equipment 609 664 39,794 37,346 Less: Accumulated depreciation of tangible property and equipment (11,183) (10,731) Less: Accumulated depletion of landfill airspace (11,643) (10,896) Property and equipment, net $ 16,968 $ 15,719 (a) As of December 31, 2023 and 2022, includes $1.5 billion and $1.1 billion, respectively, related to recycling facilities. As of December 31, 2023 and 2022, includes $720 million and $570 million, respectively, related to RNG facilities. See Note 11 for information regarding asset impairments. Depreciation and depletion expense, including for assets recorded as financing leases, consisted of the following for the year ended December 31 (in millions): 2023 2022 2021 Depreciation of tangible property and equipment $ 1,197 $ 1,155 $ 1,125 Depletion of landfill airspace 745 754 731 Depreciation and depletion expense $ 1,942 $ 1,909 $ 1,856 See Note 5 for information regarding amortization of our intangible assets. 5. Goodwill and Other Intangible Assets Goodwill was $9,254 million and $9,323 million as of December 31, 2023 and 2022, respectively. As discussed in Note 2, 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. As a result of a longer -than -anticipated ramp toward full scale and profitability of a business engaged in accelerating film and plastic wrap recycling capabilities, we recorded a goodwill impairment charge of $168 million, with $22 million attributable to noncontrolling interests. This charge was partially offset by the recognition of $46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business. We have a controlling interest in the business, and it is, therefore, consolidated in our financial statements as part of our Recycling Processing and Sales segment. Fair value of the business was estimated using an income approach based on long-term projected discounted future cash flows of the reporting unit. Partially offsetting the decrease in our goodwill balance was a $90 million increase in goodwill associated with acquisitions primarily within our Collection and Disposal businesses. See Notes 11 and 17 for additional information. Goodwill is included within each segment's total assets. For segment reporting purposes, our recycling facilities and recycling brokerage services are included within our Recycling Processing and Sales segment. Prior to 2023, our recycling facilities were reflected as a component of the respective Tier segments and our recycling brokerage services were included as a component of our "Other" operations. Reclassifications have been made to our prior period consolidated financial 93 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) information to conform to the current year presentation. The following table presents changes in goodwill during the reported periods (in millions): Balance, December 31, 2021 Acquired goodwill Divested goodwill Foreign currency translation and other Balance, December 31, 2022 Acquired goodwill Divested goodwill Impairments Foreign currency translation and other Balance, December 31, 2023 Recycling Collection and Disposal Processing East Tier West Tier Other Ancillary and Sales Other Total $ 5,008 $ 3,673 $ 25 $ 321 $ 1 $ 9,028 92 24 2 207 — 325 (28) (1) (1) $ 5,072 $ 3,696 $ 27 $ 527 $ 1 13 70 7 9 (168) $ 5,094 $ 3,766 $ 27 $ 366 Our other intangible assets consisted of the following as of December 31 (in millions): 2023 Intangible assets Less: Accumulated amortization (30) $ 9,323 90 (168) 9 $ 1 $ 9,254 Customer Covenants Licenses, and Supplier Not -to- Permits Relationships Compete and Other Total $ 1,235 $ 46 $ 141 $ 1,422 (551) (19) (93) (663) $ 684 $ 27 $ 48 $ 759 2022 Intangible assets $ 1,288 $ 51 $ 141 $ 1,480 Less: Accumulated amortization (543) (23) (87) (653) $ 745 $ 28 $ 54 $ 827 Amortization expense for other intangible assets was $129 million, $129 million and $143 million for 2023, 2022 and 2021, respectively. Additional information related to other intangible assets acquired through business combinations is included in Note 17. As of December 31, 2023 and 2022, we had $21 million and $19 million, respectively, 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. As of December 31, 2023, we expect annual amortization expense related to other intangible assets to be $119 million in 2024, $109 million in 2025, $86 million in 2026, $80 million in 2027 and $66 million in 2028. 94 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 6. Debt and Derivatives The following table summarizes the major components of debt at principal amounts as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31: 2023 2022 Commercial paper program (weighted average interest rate of 5.6% as of December 31, 2023 and 4.9% as of December 31, 2022) $ 860 $ 1,730 Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.7% as of December 31, 2023 and 3.2% as of December 31, 2022) 11,376 8,626 Term Loan, interest rate of 5.1% as of December 31, 2022 1,000 Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6%378 369 Tax-exempt bonds, maturing through 2053, fixed and variable interest rates ranging from 0.55% to 5.0% (weighted average interest rate of 3.3% as of December 31, 2023 and 2.7% as of December 31, 2022) 2,883 2,648 Financing leases and other, maturing through 2071 (weighted average interest rate of 5.0% as of December 31, 2023 and 4.7% as of December 31, 2022) (a) 855 699 Debt issuance costs, discounts and other (123) (88) Current portion of long-term debt 16,229 14,984 334 414 Long-term debt, less current portion $ 15,895 $ 14,570 (a) Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059. Debt Classification As of December 31, 2023, we had approximately $2.8 billion of debt maturing within the next 12 months, including (i) $1.6 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $859 million of short-term borrowings under our commercial paper program (net of related discount on issuance); (iii) $175 million of other debt with scheduled maturities within the next 12 months, including $60 million of tax-exempt bonds, and (iv) $156 million of 3.5% senior notes that mature in May 2024. As of December 31, 2023, we have classified $2.4 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 03.5 billion revolving credit facility"), as discussed below. The remaining $334 million of debt maturing in the next 12 months is classified as current obligations. Access to and Utilization of Credit Facilities, Commercial Paper Program and Term Loan $3.5 Billion Revolving Credit Facility Our $3.5 billion revolving credit facility, maturing May 2027, 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 includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly -owned subsidiary of WMI, 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 WMI, guarantees all the obligations under the $3.5 billion revolving credit facility. 95 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The interest rates we pay on outstanding U.S. or Canadian loans are based on a secured overnight financing rate administered by the Federal Reserve Bank of New York ("SOFR") or the Canadian Dollar Offered Rate ("CDOR"), respectively, plus a spread depending on WMI's senior public debt rating assigned by Moody's Investors Service, Inc. and Standard and Poor's Global Ratings. The spread above SOFR or CDOR can range from 0.585% to 1.025% per annum, plus a credit adjustment spread of 0.10% per annum on SOFR-based rates (the "SOFR Credit Adjustment Spread") to account for the transition from the use of LIBOR to SOFR in such rate calculations. We also pay certain other fees set forth in the $3.5 billion revolving credit facility agreement, including a facility fee based on the aggregate commitment, regardless of usage. As of December 31, 2023, we had no outstanding borrowings under this facility. We had $859 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program and $180 million of letters of credit issued, both supported by the facility, leaving unused and available credit capacity of $2.5 billion as of December 31, 2023. 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, 2023, we had $859 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program. Term Loan — In May 2022, we entered into a $1.0 billion, two-year, U.S. term credit agreement maturing May 2024 ("Term Loan") to support general corporate purposes. WM Holdings guaranteed all obligations under our Term Loan. The interest rate we paid on our Term Loan was generally based on SOFR, plus a spread depending on WMI's senior public debt rating assigned by Moody's Investors Service, Inc. and Standard and Poor's Global Ratings. Our Term Loan had a contractual maturity of May 2024, but we elected to repay all outstanding borrowings under our Term Loan in August 2023 with proceeds from our July 2023 senior notes issuance, which is discussed further below. Other Letter of Credit Lines As of December 31, 2023, we had utilized $834 million of other uncommitted letter of credit lines with terms extending through December 2027. Debt Borrowings and Repayments Commercial Paper Program — During the year ended December 31, 2023 we made cash repayments of $18.7 billion, which were partially offset by $17.8 billion of cash borrowings (net of related discount on issuance). A portion of these borrowings were repaid with proceeds from our senior note issuances as discussed below. Senior Notes — In February 2023, WMI issued $750 million and $500 million of 4.625% senior notes due February 2030 and February 2033, respectively, the net proceeds of which were $1.24 billion. We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $500 million of WMI's 2.4% senior notes upon maturity in May 2023, and for general corporate purposes, including our planned and ongoing investments in our Recycling Processing and Sales and WM Renewable Energy segments. In July 2023, WMI issued $750 million and $1.25 billion of 4.875% senior notes due February 2029 and February 2034, respectively, the net proceeds of which were $1.97 billion. We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $1.0 billion of outstanding borrowings under our Term Loan and for general corporate purposes. Term Loan — In August 2023, we repaid $1.0 billion of outstanding borrowings under our Term Loan with proceeds from our July 2023 senior notes issuance discussed above and contemporaneously terminated the facility. 96 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Tax -Exempt Bonds We issued $300 million of tax-exempt bonds in 2023. The proceeds from the issuance of these bonds were deposited directly into a restricted trust fund to be used for the specific purpose for which the money was raised, which is generally to fmance expenditures for solid waste disposal facility, recycling facility and renewable natural gas facility construction and development. In 2023, we also repaid $65 million of our tax-exempt bonds with available cash at their scheduled maturities. Financing Leases and Other The increase in our financing leases and other debt obligations in 2023 is primarily related to a note payable associated with our low-income housing investment discussed in Note 8, which increased our debt obligations by $183 million, and $93 million primarily related to non -cash financing leases. The increase in our debt obligations was partially offset by $120 million of cash repayments of debt at maturity. Scheduled Debt Payments Principal payments of our debt for the next five years and thereafter, based on scheduled maturities are as follows: $1,192 million in 2024, $1,355 million in 2025, $713 million in 2026, $1,198 million in 2027, $892 million in 2028 and $11,002 million thereafter. Our recorded debt and financing lease obligations include non -cash adjustments associated with debt issuance costs, discounts 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. As discussed above, we have the intent and ability to refinance certain 2024 scheduled maturities on a long-term basis, including portions of our commercial paper borrowings and our $156 million of 3.5% senior notes that mature in May 2024. See Note 7 below for further discussion of our financing lease arrangements. Secured Debt Our debt balances are generally unsecured, except for financing lease obligations and the notes payable associated with our investments in low-income housing properties. See Notes 8 and 18 for additional information related to these investments. 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, depletion 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"). 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. As of December 31, 2023 and 2022, we were in compliance with our Leverage Ratio covenant. 97 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 December 31, 2023 and 2022, we were in compliance with all covenants and restrictions under our financing arrangements, in addition to our Leverage Ratio covenant, that may have a material effect on our Consolidated Financial Statements. Interest Rate Derivatives During 2023, we entered into treasury rate locks with a total notional value of $800 million to secure underlying interest rates associated with our senior notes issuances discussed above. We designated our treasury rate locks as cash flow hedges. These treasury rate locks were terminated contemporaneously with the related issuances of senior notes in 2023, and we received cash of $19 million to settle the related assets. The deferred gams are being amortized as a decrease to interest expense over the ten-year life of the related senior notes issuances using the effective interest method. 7. Leases Our operating lease activities primarily consist of leases for real estate, landfills (as discussed further in Note 2) 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 generally 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. 98 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Supplemental balance sheet information for our leases as of December 31 is as follows (in millions): Leases Classification 2023 2022 Assets Long-term: Operating Other assets $ 453 $ 456 Financing Property and equipment, net of accumulated depreciation and depletion 393 328 Total lease assets $ 846 $ 784 Liabilities Current: Operating Accrued liabilities $ 66 $ 64 Financing Current portion of long-term debt 53 44 Long-term: Operating Other liabilities 452 460 Financing Long-term debt, less current portion 321 258 Total lease liabilities $ 892 $ 826 Operating lease expense was $189 million, $183 million and $155 million during 2023, 2022 and 2021, respectively, and is included in operating and selling, general and administrative expenses in our Consolidated Statements of Operations. Financing lease expense was $58 million, $55 million and $58 million during 2023, 2022 and 2021, respectively, and is included in depreciation, depletion and amortization expense and interest expense, net in our Consolidated Statements of Operations. Minimum contractual obligations for our leases (undiscounted) as of December 31, 2023 are as follows (in millions): Operating Financing 2024 $ 79 $ 65 2025 69 72 2026 61 52 2027 52 44 2028 45 33 Thereafter 399 215 Total undiscounted lease payments $ 705 $ 481 Less: interest (187) (107) Discounted lease liabilities $ 518 $ 374 As of December 31, 2023, we entered into operating leases, primarily for real estate that have not yet commenced and therefore are not reflected in the table above, with future lease payments of $57 million These leases commence through 2024 and have lease terms up to 16 years. Cash paid during 2023 for our operating and fmancing leases was $77 million and $60 million, respectively. Cash paid during 2022 for our operating and financing leases was $76 million and $56 million, respectively. During 2023, right -of -use assets obtained in exchange for lease obligations for our operating and financing leases were $62 million and 99 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) $121 million, respectively. During 2022, right -of -use assets obtained in exchange for lease obligations for our operating and financing leases were $69 million and $33 million, respectively. As of December 31, 2023, the weighted average remaining lease terms of our operating and financing leases were approximately 19 years and 10 years, respectively. The weighted average discount rates used to determine the lease liabilities as of December 31, 2023 for our operating and financing leases were approximately 3.4% and 4.2%, respectively. 8. Income Taxes Income Tax Expense Our income tax expense consisted of the following for the year ended December 31 (in millions): 2023 2022 2021 Current: Federal $ 477 $ 456 $ 436 State 151 130 132 Foreign 34 43 41 662 629 609 Deferred: Federal 73 20 (55) State 2 30 (22) Foreign 8 (1) 83 49 (77) Income tax expense $ 745 $ 678 $ 532 The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows: 2023 2022 2021 Income tax expense at U.S. federal statutory rate 21.00 % 21.00 % 21.00 % State and local income taxes, net of federal income tax benefit 4.15 4.16 4.14 Federal tax credits (3.23) (2.81) (2.69) Taxing authority audit settlements and other tax adjustments (0.02) 0.54 0.53 Tax impact of equity -based compensation transactions (0.35) (0.45) (0.60) Tax impact of impairments 1.87 0.02 (0.29) Tax rate differential on foreign income 0.21 0.27 0.37 Other 1.03 0.51 0.16 Effective income tax rate 24.66 % 23.24 % 22.62 The comparability of our income tax expense for the reported periods has been primarily affected by (i) federal tax credits; (ii) the tax implications of impairments; (iii) an unfavorable increase in permanent differences between taxable income and accounting income associated with our treatment of landfill closure and post -closure costs; (iv) variations in our income before income taxes; (v) the realization of state net operating losses and credits; (vi) excess tax benefits associated with equity -based compensation transactions and (vii) tax audit settlements. 100 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions): 2023 2022 2021 Domestic $ 2,878 $ 2,779 $ 2,211 Foreign 143 139 138 Income before income taxes $ 3,021 $ 2,918 $ 2,349 Investments Qualing for Federal Tax Credits We have significant financial interests in entities established to invest in and manage low-income housing properties. In October 2023, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Total consideration for this investment is expected to be $260 million, comprised of a $183 million note payable, an initial cash payment of $20 million and $57 million of interest payments expected to be paid over the life of the investment. At the time of the investment, we increased our investments in unconsolidated entities in our Consolidated Balance Sheet by $203 million, representing the principal balance of the note and the initial cash payment. 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 2035 under Section 42 or Section 45D of the Internal Revenue Code. 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, 2023, 2022 and 2021, we recognized net losses of $66 million, $65 million and $51 million, respectively, and a reduction in our income tax expense of $108 million, $99 million and $74 million, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the years ended December 31, 2023, 2022 and 2021, we recognized interest expense of $15 million, $14 million and $9 million, respectively, associated with our investments in low-income housing properties. See Note 18 for additional information related to these unconsolidated variable interest entities. Tax Implications of Impairments — The non -cash impairment charges recognized during 2023 are not expected to be deductible for tax purposes. The impact of these non -deductible charges and the resulting difference between book and taxable income is an increase in income tax expense of $50 million The non -cash impairment charges recognized during 2022 and 2021 were deductible for tax purposes. See Note 11 for more information related to our impairment charges. Permanent Derences —During 2023, 2022 and 2021 we recognized additional income tax expense of $34 million, $14 million and $2 million, respectively, related to permanent differences between taxable income and accounting income. This increase is largely due to an increase in taxable interest income associated with the Company's election to deduct landfill closure and post -closure costs for income tax purposes when incurred and accrued. The increase in taxable interest income is due to the increase in the applicable federal rate published by the IRS. State Net Operating Losses and Credits — During 2023, 2022 and 2021, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $20 million, $8 million and $15 million, respectively. Equity -Based Compensation — During 2023, 2022 and 2021, we recognized a reduction in our income tax expense of $14 million, $17 million and $18 million, respectively, for excess tax benefits related to the vesting or exercise of equity -based compensation awards. 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 101 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) tax expense of $5 million, $6 million and $13 million for the years ended December 31, 2023, 2022 and 2021, 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. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of December 31, 2023 and 2022, the IRS deposit, net of reserve for uncertain tax positions, was classified as a component of other long-term assets in the Company's Consolidated Balance Sheets. In addition, we are in the examination phase of IRS audits for the 2022 and 2023 tax years and expect the audits to be completed within the next 18 months. We are also currently undergoing audits by various state and local jurisdictions for tax years that date back to 2014. 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: Property and equipment Goodwill and other intangibles Operating lease right -of -use assets Net deferred tax liabilities 2023 2022 $ 137 195 128 143 603 (181) $ 155 216 131 117 619 (143) (1,091) (1,061) (1,046) (1,034) (111) (114) $ (1,826) $ (1,733) As of December 31, 2023, we had $2 million of federal net operating loss carry -forwards with expiration dates through 2026 and $2.3 billion of state net operating loss carry -forwards with expiration dates through 2043. We also had $8 million of federal capital loss carry -forwards with expiration dates through 2025, $39 million of foreign tax credit carry -forwards with expiration dates through 2033 and $9 million of state tax credit carry -forwards with expiration dates through 2039. 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. 102 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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): 2023 2022 2021 Balance as of January 1 $ 64 $ 64 $ 37 Additions based on tax positions related to the current year 6 5 22 Additions based on tax positions of prior years 18 Accrued interest 2 1 3 Settlements (12) Lapse of statute of limitations (6) (6) (4) Balance as of December 31 $ 66 $ 64 $ 64 These liabilities are included as a component of other long-term liabilities or as an offset to other long-term assets 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, 2023, we had $54 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 material accrued liabilities or expense for penalties related to unrecognized tax benefits for the reported periods. 9. 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 401(k) 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 $118 million, $112 million and $104 million for the years ended December 31, 2023, 2022 and 2021, 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, 2023, the combined benefit obligation of these pension plans was $119 million supported by $118 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of $1 million As of December 31, 2022, the combined benefit obligation of these pension plans was $117 million supported by $113 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of $4 million 103 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 $7 million and $8 million as of December 31, 2023 and 2022, respectively. Our assets and accrued benefit liabilities for our defined benefit pension and other post -retirement plans are included as components of long-term other assets, 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 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 Midwest Operating Engineers Pension Trust Fund Suburban Teamsters of Northern Illinois Pension Plan (d) Western Conference of Teamsters Pension Plan. . Contributions to other Multiemployer Pension Plans Total contributions to Multiemployer Pension Plans (e) $ 66 $ 61 $ 61 Pension Protection Act EIN/Pension Plan Reported Status(a) FIP/RP Number 2023 2022 Status(b)(c) EIN: 94-1133245; Critical and Critical and Implemented Plan Number: 001 Declining Declining EIN: 36-6140097; Not Not Implemented Plan Number: 001 Endangered Endangered or Critical or Critical as of as of 3/31/2023 3/31/2022 EIN: 36-6155778; Not Not Implemented Plan Number: 001 Endangered Endangered or Critical or Critical EIN: 91-6145047; Not Not Not Plan Number: 001 Endangered Endangered Applicable or Critical or Critical Company Contributions 2023 2022 2021 $ 1 $ 1 $ 1 2 2 Expiration Date of Collective Bargaining Agreement(s) 6/30/2025 2 Various dates through 9/30/2026 4 4 4 41 37 35 $ 48 $ 44 $ 42 18 17 19 Various dates through 3/31/2028 Various dates through 7/13/2028 (a) Unless otherwise noted in the table above, the most recent Pension Protection Act zone status available in 2023 and 2022 is for the plan's year-end as of December 31, 2022 and 2021, 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. 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. (c) 104 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (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, 2023 and 2022. Total contributions to Multiemployer Pension Plans exclude contributions related to withdrawal liabilities, if any. (e) 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 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. Refer to Note 10 for additional information related to our obligations to Multiemployer Pension Plans. Multiemployer Plan Benefits Other Than Pensions During the years ended December 31, 2023, 2022 and 2021, the Company made contributions of $56 million, $49 million and $51 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. 10. 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 6. 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 fmancial 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 and any amounts that exceed our insured limits. 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 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 105 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Our receivable balance associated with insurance claims was $127 million and $142 million as of December 31, 2023 and 2022 respectively. The changes to our insurance reserves for the year ended December 31 are summarized below (in millions): 2023(a) 2022 Balance as of January 1 $ 729 $ 734 Self-insurance expense 201 242 Cash paid and other (218) (247) Balance as of December 31 $ 712 $ 729 Current portion as of December 31 $ 175 $ 189 Long-term portion as of December 31 $ 537 $ 540 (a) Based on current estimates, we anticipate that most of our insurance reserves will be settled in cash over the next six years. 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. Unconditional Purchase Obligations — 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 and consist primarily of the following: • 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. • Other We are party to certain multi -year service agreements, including various contracts to support our WM Renewable Energy segment, such as interconnection agreements, expiring at various dates through 2044 requiring minimum annual payments. As of December 31, 2023, our estimated minimum obligations associated with unconditional purchase obligations were $173 million in 2024, $164 million in 2025, $133 million in 2026, $51 million in 2027, $44 million in 2028 and $470 million thereafter. We may also establish unconditional purchase obligations in conjunction with acquisitions or divestitures. Our 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, 2023. 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 meet the needs of our ongoing operations. Therefore, we do not expect these established arrangements to materially impact our future financial condition, results of operations or cash flows. Other Commitments • 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 6. Additionally, our Collection and Disposal and Corporate and Other businesses earn royalties from our WM Renewable Energy segment related to the 106 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) transfer of landfill gas to our WM Renewable Energy segment from our active and closed landfills. All royalties between our WM Renewable Energy segment and Collection and Disposal and Corporate and Other businesses are eliminated in consolidation. Guarantees We have entered into the following guarantee agreements associated with our operations: • As of December 31, 2023, WM Holdings has fully and unconditionally guaranteed all of WMI's senior indebtedness, including its senior notes which mature through 2050, $3.5 billion revolving credit facility and certain letter of credit lines. WMI 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. • WMI 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, WMI 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 6 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, 2023, we have agreements guaranteeing certain market value losses for certain properties adjacent to or near 19 of our landfills. Any liability associated with the triggering of the home value guarantee has been reflected in our Consolidated Balance Sheets. We do not believe that the remaining contingent obligations will have a material adverse effect on the Company's business, financial condition, 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, fmancial condition, results of operations or cash flows. • WMI 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 107 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) required by state or local authorities, such liabilities include 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. As of December 31, 2023, we have been notified by the government that we are a PRP in connection with 73 locations listed on EPA Superfund National Priorities List ("NPL"). Of the 73 sites at which claims have been made against us, 14 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 characterize 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 59 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. In 2018, both of McGinnes Industrial Maintenance Corporation ("MIMC"), a subsidiary of Waste Management of Texas, Inc., and International Paper Company (" IPC") entered into an Administrative Order on Consent with the EPA as PRPs to develop a remedial design for the San Jacinto River Waste Pits Superfund Site in Harris County, Texas. We recorded a liability for MIMC's estimated potential share of the EPA's proposed remedy and related costs, although allocation of responsibility among the PRPs for the proposed remedy has not been established. MIMC and IPC have continued to work on a remedial design to support the EPA's proposed remedy; however, in the first quarter of 2024, the EPA publicly issued a letter alleging that the remedial design has serious deficiencies and providing MIMC and IPC time to submit a remedy plan. Due to increases in the estimated costs of the remedy, we recorded an additional $17 million liability for MIMC's estimated potential share of such costs in 2023. The total recorded liability as of December 31, 2023 and 2022 was $85 million and $68 million, respectively. MIMC's ultimate liability could be materially different from current estimates, including potential increases resulting from MIMC's continued engagement with the EPA regarding a final remedial design for the site. Refer to Notes 2 and 11 for additional information regarding the measurement of certain environmental liabilities. Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings, or such proceedings are known to be contemplated, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, below a stated threshold. In accordance with this SEC regulation, the Company uses a threshold of $1 million for purposes of determining whether disclosure of any such environmental proceedings is required. As of the date of this filing, we are not aware of any matters that are required to be disclosed pursuant to this standard. 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 108 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 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 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. In June 2022, we and certain of our officers were named as defendants in a complaint alleging violation of the federal securities laws and seeking certification as a class action in the U.S. District Court for the Southern District of New York. A lead plaintiff has been appointed and an amended complaint was filed in January 2023. The amended complaint seeks damages on behalf of a putative class of secondary market purchasers of our senior notes with a special mandatory redemption feature issued in May 2019, asserting claims under the Securities Exchange Act based on alleged misrepresentations and omissions concerning the time for completion of our acquisition of Advanced Disposal. Our motion to dismiss is pending and we will vigorously defend against this pending suit. We believe any potential recovery by the plaintiffs, in excess of applicable deductibles, will be covered by insurance, and we do not believe that the eventual outcome of this suit will have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. WMI's charter and bylaws provide that WMI 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 WMI's Board of Directors and each of WMI'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 9 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 109 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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. 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. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of December 31, 2023 and 2022, the IRS deposit, net of reserve for uncertain tax positions, was classified as a component of other long-term assets in the Company's Consolidated Balance Sheets. 11. 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): 2023 2022 2021 Gain from divestitures, net $ — $ (5) $ (44) Asset impairments 275 50 8 Other, net (32) 17 20 $ 243 $ 62 $ (16) During the year ended December 31, 2023, we recognized $243 million of net charges primarily consisting of (i) a $168 million goodwill impairment charge within our Recycling Processing and Sales segment related to a business engaged in accelerating film and plastic wrap recycling capabilities, with $22 million attributable to noncontrolling interests. This charge was partially offset by the recognition of $46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business; (ii) $107 million of impairment charges within Corporate and Other for certain investments in waste diversion technology businesses and (iii) a $17 million charge within Corporate and Other to adjust an indirect wholly -owned subsidiary's estimated potential share of the liability for a proposed environmental remediation plan at a closed site. Refer to Notes 5 and 10 for further information. During the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management's decision to close two landfills within our East Tier and (ii) a $17 million charge pertaining to reserves for loss contingencies within Corporate and Other to adjust an indirect wholly -owned subsidiary's estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10. These losses were partially offset by a $5 million gain from the divestiture of a collection and disposal business in our West Tier. 110 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations in our East Tier and (ii) an $8 million gain from divestitures of certain ancillary operations within our Collection and Disposal businesses. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies within Corporate and Other and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy segment. See Note 2 for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 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 The losses for the reported years were 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. The losses are more than offset by the tax benefits generated by these investments as further discussed in Note 8. Refer to Notes 8 and 18 for additional information related to these investments. Refer to (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net above for more information on the impairment of an equity method investment. 111 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 12. 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 WMI stockholders' equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income): Balance, December 31, 2020 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $(2), $0 and $2, 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, 2021 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $(8), $0 and $0, respectively Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $1, $0, $0 and $0, respectively Net current period other comprehensive income (loss) ... Balance, December 31, 2022 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $5, $(4), $0 and $2, respectively Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $(1), $0, $0 and $0, respectively Net current period other comprehensive income (loss) ... Balance, December 31, 2023 Foreign Post- Available- Currency Retirement Derivative for -Sale Translation Benefit Instruments Securities(a) Adjustments(b) Obligations Total $ (9) $ 49 $ (1) $ — $ 39 (6) 7 5 6 9 (35) (2) (28) 9 (6) (28) 3 (22) $ $ 43 $ (29) $ 3 $ 17 (24) (65) 1 (88) 3 (1) 2 3 (24) (65) — (86) $ 3 $ 19 $ (94) $ 3 $ (69) 16 (11) 26 4 35 (2) (1) (3) 14 (11) 26 3 32 $ 17 $ 8 $ (68) $ 6 $ (37) (a) In 2023, we recognized a $23 million unrealized loss, net of a deferred tax benefit of $8 million, associated with our investment in redeemable preferred stock due to the estimated fair value being less than the remaining carrying value. (b) As a result of the divestiture of certain non -strategic Canadian operations in 2021, we reclassified $35 million of cumulative foreign currency translation adjustments from accumulated other comprehensive income to (gain) loss from divestitures, asset impairments and unusual items, net within our Consolidated Statement of Operations. 13. 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, 2023, we had 401.5 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 112 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) limitations. We have 10 million shares of authorized preferred stock, $0.01 par value, none of which is currently outstanding. Dividends Our quarterly dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1,136 million in 2023, or $2.80 per common share, $1,077 million in 2022, or $2.60 per common share, and $970 million in 2021, or $2.30 per common share. In December 2023, we announced that our Board of Directors expects to increase the quarterly dividend from $0.70 to $0.75 per share for dividends declared in 2024. However, all future dividend declarations are 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. 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 are a part of our long-term strategy and incorporated into our overall capital allocation plan to enhance our Company's performance, in conjunction with our other uses of capital, and to return value to stockholders in a tax -efficient manner 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. In the table below, shares repurchased are measured and reported based on the period shares are delivered to us, which can differ from the period cash is delivered to a repurchase agent for the value of such shares. The following is a summary of our share repurchases under our common stock repurchase program for the year ended December 31: 2023(a) 2022(b) 2021(c) Shares repurchased (in thousands) 7,840 9,796 8,731 Weighted average price per share $ 158.47 $ 160.26 $ 146.61 Total repurchases (in millions) $ 1,242 $ 1,570 $ 1,280 (a) We executed and completed three ASR agreements during 2023 to repurchase $950 million of our common stock and received 6.0 million shares in connection with these ASR agreements. Additionally, in October 2023, we executed an ASR agreement to repurchase $300 million of our common stock. At the beginning of the repurchase period, we delivered $300 million in cash and received 1.5 million shares based on a stock price of $161.38. The ASR agreement completed in February 2024, at which time we received 0 2 million additional shares based on a final weighted average price of $175.29. We also repurchased an additional 0 3 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 $52 million, inclusive of per-share commissions. The IRA, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. We reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased. The above discussion of our common stock repurchases in 2023 is excluding the 1% excise tax. (b) We executed and completed four ASR agreements during 2022 to repurchase $1.417 billion of our common stock and received 8.8 million shares in connection with these ASR agreements. We also repurchased an additional 0 6 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the 113 (c) WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Exchange Act for $83 million, inclusive of per-share commissions. Shares repurchased in 2022 include 0 4 million shares of our common stock for $70 million pursuant to our December 2021 ASR agreement that completed in January 2022. We executed and completed three ASR agreements during 2021 to repurchase $1.0 billion of our common stock and received 7.0 million shares in connection with these ASR agreements. Additionally, in December 2021, we executed an ASR agreement to repurchase $350 million of our common stock. At the beginning of the repurchase period, we delivered $350 million in cash and received 1.7 million shares based on a stock price of $160.67. The ASR agreement completed in January 2022, at which time we received 0 4 million additional shares based on a final weighted average price of $160.33. We announced in December 2023 that the Board of Directors has authorized up to $1.5 billion in future share repurchases, excluding the 1% excise tax. This new authorization supersedes and replaces remaining authority under the prior Board of Directors' authorization for share repurchases announced in December 2022. The amount of future share repurchases executed under our Board of Directors' authorization is determined in management's discretion, based on various factors, including our net earnings, financial condition and cash required for future business plans, growth and acquisitions. 14. 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 have purchased 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 the applicable offering period. The ESPP was recently amended, and beginning in 2024, enrolled employees will purchase shares of our common stock at a price equal to 85% of the market value on the last day of the applicable 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 2023, 2022 and 2021 was approximately 473,000, 455,000 and 513,000, respectively. After the January 2024 issuance of shares associated with the July to December 2023 offering period, 1 8 million shares remain available for issuance under the ESPP. As a result of our ESPP, annual compensation expense increased by $14 million, or $11 million net of tax expense, for 2023, $13 million, or $10 million net of tax expense, for 2022 and $12 million, or $9 million net of tax expense, for 2021. Employee Stock Incentive Plans In May 2023, our stockholders approved our 2023 Stock Incentive Plan (the "2023 Plan") to replace our 2014 Stock Incentive Plan (the "2014 Plan"). Upon approval of the 2023 Plan, no further awards could be granted under the 2014 Plan. Pursuant to the terms of the 2023 Plan, approximately 15 2 million shares of our common stock that were previously available for issuance pursuant to future grants of awards under the 2014 Plan are now available for issuance under the 2023 Plan, in addition to any shares of our common stock that were subject to outstanding awards under the 2014 Plan that subsequently cease to be subject to such awards as a result of the forfeiture, cancellation or termination. We did not request that our stockholders approve any shares in addition to the shares that roll over from the 2014 Plan for issuance pursuant to the 2023 Plan. As of December 31, 2023, approximately 14 3 million shares were available for future grants under the 2023 Plan. Our equity -based compensation awards described herein have been made pursuant to our 2023 Plan or our 2014 Plan, and certain employees hold vested unexercised stock options granted under our 2009 Stock Incentive 114 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Plan (together with the 2023 Plan and the 2014 Plan, the "Incentive Plans"). We currently utilize treasury shares to meet the needs of our equity -based compensation programs. Pursuant to the 2023 Plan, we can issue cash awards, stock options, stock appreciation rights, phantom stock 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 2023 annual stock 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. Awards granted to other eligible employees under the Incentive Plans included a combination of PSUs, RSUs and stock options in 2023. The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field and corporate managers. Restricted Stock Units A summary of our RSUs is presented in the table below (units in thousands): Weighted Average Per Share Units Fair Value Unvested as of January 1, 2023 365 $ 131.26 Granted 120 $ 151.70 Vested (97) $ 123.85 Forfeited (17) $ 141.17 Unvested as of December 31, 2023 371 $ 139.37 The total fair market value of RSUs that vested during the years ended December 31, 2023, 2022 and 2021 was $15 million, $15 million and $12 million, respectively. During the year ended December 31, 2023, we issued approximately 69,000 shares of common stock for these vested RSUs, net of approximately 27,000 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 generally subject to pro-rata vesting upon an employee's 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. RSUs generally continue to vest following a qualifying retirement as if the employee had remained employed until the end of the vesting period, and compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement -eligible or (ii) the defined service requirement of the award. 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 Index ("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 the first half of the first quarter of the succeeding year. At the end of the performance period, the number of shares awarded can range from 0% to 200% of the 115 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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): Units Weighted Average Per Share Fair Value Unvested as of January 1, 2023 864 $ 147.00 Granted 316 $ 163.80 Vested (279) $ 153.34 Forfeited (20) $ 157.83 Unvested as of December 31, 2023 881 $ 150.77 The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2023 was performed by the Management Development and Compensation Committee of our Board of Directors in February 2024. Accordingly, vesting information for such awards is not included in the table above as of December 31, 2023. The "vested" PSUs are for the three-year performance period ended December 31, 2022, as achievement of performance results and corresponding vesting was determined in January 2023. The performance of the Company's common stock for purposes of the TSR PSUs exceeded maximum performance criteria, and the Company's financial results, as measured for purposes of the Cash Flow PSUs, exceeded target performance criteria. Accordingly, recipients of the PSU awards received a payout of 200% of the vested TSR PSUs and 150.21% of the vested Cash Flow PSUs. In February 2023, approximately 489,000 PSUs vested and we issued approximately 322,000 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, 2023, 2022 and 2021 for prior PSU award grants had a fair market value of $74 million, $91 million and $74 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. PSUs generally continue to vest following a qualifying 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 for payout six months after the employee leaves the Company. 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, 2023, we had approximately 182,000 vested deferred units outstanding. Stock Options Stock option awards vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The exercise price of the options is the average of the high and low market value of our common stock 116 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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): Outstanding as of January 1, 2023 Granted Exercised (a) Forfeited or expired Outstanding as of December 31, 2023 (b) Exercisable as of December 31, 2023 (c) Options Weighted Average Per Share Exercise Price 2,923 $ 101.22 437 $ 150.12 (597) $ 89.32 (34) $ 136.56 2,729 $ 111.22 1,819 $ 96.67 (a) Includes approximately 83,000 stock options exercised pursuant to a written trading plan that provided for net share settlement, resulting in the Company withholding approximately 70,000 shares of our common stock to cover the associated stock option exercise price and taxes. (b) Stock options outstanding as of December 31, 2023 have a weighted average remaining contractual term of 6.0 years and an aggregate intrinsic value of $185 million based on the market value of our common stock on December 31, 2023. Stock options exercisable as of December 31, 2023 have an aggregate intrinsic value of $150 million based on the market value of our common stock on December 31, 2023. (c) During 2023, 2022 and 2021, we received cash proceeds of $44 million, $44 million and $66 million, respectively, from the exercise of 597,000, 675,000 and 962,000 of employee stock options. The aggregate intrinsic value of stock options exercised during 2023, 2022 and 2021 was $44 million, $51 million and $66 million, respectively. Stock options exercisable as of December 31, 2023 were as follows (options in thousands): Weighted Average Per Share Weighted Average Range of Exercise Prices Options Exercise Price Remaining Years $41.37-$80.00 570 $ 61.39 2.2 $80.01-$120.00 727 $ 99.55 5.6 $120.01-$150.12 522 $ 131.14 6.7 $41.37-$150.12 1,819 $ 96.67 4.8 All unvested stock options shall become exercisable upon the award recipient's death or disability. In the event of a recipient's qualifying 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, 2023, 2022 and 2021 was $32.82, $26.44 and $17.25, 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 117 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 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: 2023 2022 2021 Expected option life 4.6 years 4.7 years 4.7 years Expected volatility 22.3 % 23.4 % 23.2 Expected dividend yield 1.9 % 1.8 % 2.1 % Risk -free interest rate 4.4 % 1.6 % 0.6 % 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 expected 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, 2023, 2022 and 2021, we recognized $78 million, $71 million and $94 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 ended December 31, 2023, 2022 and 2021 includes related income tax benefits of $15 million, $14 million and $18 million, respectively. We have not capitalized any equity -based compensation costs during the reported periods. As of December 31, 2023, we estimate that $44 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 receive annual grants of shares of our common stock, generally payable in two equal installments, under the Incentive Plans described above. Each non -employee director is required to hold all shares issued pursuant to a Company stock award, after the sale of shares necessary to cover applicable taxes, until retirement or other termination of service as a director of the Company. 15. 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): 2023 2022 2021 Number of common shares outstanding at end of period 401.5 407.9 416.1 Effect of using weighted average common shares outstanding 3.4 4.9 4.3 Weighted average basic common shares outstanding 404.9 412.8 420.4 Dilutive effect of equity -based compensation awards and other contingently issuable shares 2.0 2.2 2.5 Weighted average diluted common shares outstanding 406.9 415.0 422.9 Potentially issuable shares 5.0 5.2 5.7 Number of anti -dilutive potentially issuable shares excluded from diluted common shares outstanding 1.0 1.1 0.6 Refer to the Consolidated Statements of Operations for net income attributable to Waste Management, Inc. 118 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 16. 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 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): 2023 2022 Quoted prices in active markets (Level 1): Cash equivalents and money market funds $ 327 $ 240 Equity securities 61 37 Significant other observable inputs (Level 2): Available -for -sale securities 431 360 Significant unobservable inputs (Level 3): Redeemable preferred stock 56 Total Assets $ 819 $ 693 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 funds 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. Equity Securities We invest portions of our restricted trust funds in equity securities and we measure the fair value of these securities using quoted prices in active markets for identical assets. Any changes in fair value of these securities related to unrealized gains and losses have been appropriately reflected as a component of other income (expense). 119 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Available -for -Sale Securities Our available -for -sale securities include restricted trust funds and an investment in an unconsolidated entity, as discussed in Note 18. 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 ten years. 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 related to a noncontrolling investment in an unconsolidated entity and was included in investments in unconsolidated entities in our Consolidated Balance Sheets. The fair value of our investment was measured based on third -party investors' recent or pending transactions in these securities, which were considered the best evidence of fair value. When this evidence was not available, we used other valuation techniques as appropriate and available. These valuation methodologies may have included transactions in similar instruments, discounted cash flow techniques, third -party appraisals or industry multiples and public company comparable transactions. While we continue to hold this investment, in 2023, we determined that the carrying value of the investment was fully impaired. This write-off resulted in (i) a $25 million impairment charge to the income statement and (ii) the recognition of an additional $23 million unrealized loss, net of a deferred tax benefit of $8 million, within Accumulated Other Comprehensive Income (Loss). Refer to Notes 11 and 12 for additional information. Fair Value of Debt As of December 31, 2023 and 2022, the carrying value of our debt was $16.2 billion and $15.0 billion, respectively. The estimated fair value of our debt was approximately $15.6 billion and $13.8 billion as of December 31, 2023 and 2022, respectively. 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, 2023 and 2022. These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented. 17. Acquisitions and Divestitures Acquisitions 2023 Acquisitions During the year ended December 31, 2023, we acquired 12 businesses, primarily related to our Collection and Disposal businesses. Total consideration, net of cash acquired, for all acquisitions was $182 million, which included $157 million in net cash paid and $25 million in non -cash consideration, primarily related to purchase price holdbacks. In addition, we paid $13 million of holdbacks, of which $6 million related to prior year acquisitions. Total consideration for our 2023 acquisitions was primarily allocated to $49 million of property and equipment, $44 million of other intangible assets and $88 million of goodwill. Other intangible assets included $34 million of customer relationships and $10 million of covenants not -to -compete. 120 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The goodwill related to our 2023 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations and substantially all was tax deductible. 2022 Acquisitions During the year ended December 31, 2022, we acquired 13 businesses, including the acquisition of a controlling interest in a business intended to allow us to deliver new recycling capabilities for our customers and provide circular solutions for film and clear plastic wrap used commercially, such as plastic stretch wrap for pallets, furniture film, grocery bags and potentially shrink wrap around food and beverage containers. Our other acquisitions in 2022 primarily related to our Collection and Disposal businesses. Total consideration, net of cash acquired, for all acquisitions was $507 million, which included $372 million in net cash paid and $135 million in non -cash consideration, primarily related to purchase price holdbacks and the conversion of $67 million in secured convertible promissory notes receivable into equity of the acquired business. In addition, we paid $5 million of holdbacks related to prior year acquisitions. Total consideration for our 2022 acquisitions was primarily allocated to $138 million of property and equipment, $64 million of other intangible assets, $325 million of goodwill and $14 million of noncontrolling interests. Other intangible assets included $45 million of customer relationships and $19 million of covenants not -to -compete. 2021 Acquisitions During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Collection and Disposal businesses. Total consideration, net of cash acquired, for all acquisitions was $94 million, which included $73 million in net cash paid and $21 million of other consideration, primarily purchase price holdbacks and the settlement of a preexisting promissory note with one of the acquired businesses. In addition, we paid $3 million of holdbacks, primarily related to current year acquisitions. Our 2021 acquisitions discussed above include our acquisition of the remaining ownership interest in a waste diversion technology company. Concurrent with our acquisition, the acquired entity issued shares to an unrelated third -party, diluting our ownership interest. We determined the entity constituted a variable interest entity and concluded that we did not have the power to direct its significant activities. As a result, we subsequently deconsolidated the entity and account for our remaining ownership interest as an equity method investment. Divestitures Proceeds from divestitures of businesses and other assets, net of cash divested, were $78 million, $27 million and $96 million in 2023, 2022 and 2021, respectively. In 2023, our proceeds are primarily the result of the sale of certain non -strategic assets. In 2021, our proceeds are primarily the result of the sale of certain non -strategic Canadian operations, as discussed in Note 11. 18. Variable Interest Entities The following is a description of our financial interests in unconsolidated and consolidated variable interest entities that we consider significant: Low -Income Housing Properties We do not consolidate our investments in entities established to manage low-income housing properties 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 $458 million and $321 million as of December 31, 2023 and 2022, respectively. The debt 121 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) balance related to our investments in low-income housing properties was $408 million and $295 million as of December 31, 2023 and 2022, respectively. Additional information related to these investments is discussed in Note 8. 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 $104 million and $93 million as of December 31, 2023 and 2022, 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 funds in our Consolidated 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 $119 million and $113 million as of December 31, 2023 and 2022, respectively. 19. Segment and Related Information To enhance transparency regarding our financial performance, highlight the strength and consistency of our core solid waste businesses, and underscore our commitment to sustainability through planned and ongoing investments in our Recycling Processing and Sales, as well as our WM Renewable Energy segment, beginning in the fourth quarter of 2023, our senior management revised its segment reporting to (i) reflect the financial results of our collection, transfer, disposal and resource recovery services businesses independently; (ii) combine the results of all recycling facilities from our East and West Tier segments with our recycling brokerage and sales activities to form a newly created Recycling Processing and Sales reportable segment and (iii) include our WM Renewable Energy business as a reportable segment. Accordingly, our senior management now evaluates, oversees and manages the financial performance of our business through four reportable segments, referred to as (i) East Tier; (ii) West Tier; (iii) Recycling Processing and Sales and (iv) WM Renewable Energy. Our East Tier and West Tier, combined with certain "Other Ancillary" services that are not managed through the Tier segments, but that support our collection and disposal operations, form our Collection and Disposal businesses. We also provide additional services not managed through our four reportable segments, which are presented as Corporate and Other. From time to time, our operating results are significantly affected by certain transactions or events that management believes are not indicative or representative of our results. Refer to Note 11 for an explanation of certain transactions and events affecting our operating results. Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation. Collection and Disposal Our Collection and Disposal businesses provide integrated environmental services, including collection, transfer, disposal and resource recovery services. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Additionally, we provide certain ancillary services that are not managed through the Tier segments but that support our collection and disposal operations. 122 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Other Ancillary includes specialized services performed for customers that have differentiated needs. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions ("SES") business or geographically dispersed customers managed through our Strategic Business Solutions ("WMSBS") business. Also included within Other Ancillary are the results of non -operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity. Included within our Collection and Disposal businesses are landfills having (i) 21 third -party power generating facilities converting our landfill gas to fuel electricity generators; (ii) 14 third -party RNG facilities processing landfill gas to be sold to natural gas suppliers and (iii) two third -party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the 83 landfill beneficial use renewable energy projects owned by WM Renewable Energy on our active landfills, which is eliminated in consolidation. Recycling Processing and Sales Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. The materials are delivered to and processed at one of our many recycling facilities. Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality. Our Recycling Processing and Sales segment excludes the collection of recycled materials from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses. WM Renewable Energy Our WM Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. 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. WM Renewable Energy converts landfill gas into several sources of renewable energy which include RNG, electricity and capacity, heat and/or steam. WM Renewable Energy also generates RINs under the RFS program, other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet, and RECs associated with the production of electricity. The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally fluctuate in response to regulations enacted by the EPA or other regulatory bodies, as well as changes in supply and demand. As of December 31, 2023, we had 92 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 66 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 20 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. For six of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers. The revenues from these facilities are primarily generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes. WM Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal, and Corporate and Other businesses, which is eliminated in consolidation. Additionally, WM Renewable Energy operates and maintains 12 third -party landfill beneficial gas use projects in return for service revenue. Our Collection and Disposal and Corporate and Other businesses benefit from these projects as well as 32 additional third -party landfill beneficial gas use projects in the form of royalties. 123 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Corporate and Other We also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other as they do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately reported. This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites. Also, included within our Corporate and Other businesses are closed sites that include (i) five third -party power generating facilities converting our landfill gas to fuel electricity generators; (ii) one third -party project delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) one third -party RNG processing landfill gas to be sold to natural gas suppliers in return for a royalty. Additionally, Corporate and Other benefits from a 15% royalty from our WM Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the nine landfill beneficial use renewable energy projects owned by WM Renewable Energy on our closed sites, which is eliminated in consolidation. Our chief operating decision maker ("CODM") regularly reviews fmancial results, operating performance, and capital expenditures of our Collection and Disposal businesses, Corporate and Other businesses, Recycling Processing and Sales segment, and our WM Renewable Energy segment to assess performance and allocate resources. 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): 124 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Gross Operating Revenues Intercompany Operating Revenues(b) Net Operating Revenues Income Depreciation, from Depletion and Operations(c) Amortization Capital Expenditures (d) Year Ended December 31: 2023 Collection and Disposal: East Tier $ 10,575 $ (2,163) $ 8,412 $ 2,446 $ 986 $ 926 West Tier 9,987 (2,052) 7,935 2,383 800 899 Other Ancillary 2,711 (193) 2,518 (8) 26 28 Collection and Disposal 23,273 (4,408) 18,865 4,821 1,812 1,853 Recycling Processing and Sales (a) 1,576 (312) 1,264 (44) 110 450 WM Renewable Energy 276 (3) 273 79 33 420 Corporate and Other 51 (27) 24 (1,281) 116 115 Total $ 25,176 $ (4,750) $ 20,426 $ 3,575 $ 2,071 $ 2,838 2022 Collection and Disposal: East Tier $ 9,940 West Tier 9,540 Other Ancillary 2,413 Collection and Disposal 21,893 Recycling Processing and Sales 1,760 WM Renewable Energy 315 Corporate and Other 50 Total $ 24,018 $ (1,929) $ 8,011 $ 2,178 $ 977 $ 948 (1,926) 7,614 2,182 814 774 (195) 2,218 25 40 (4,050) 17,843 4,360 1,816 1,762 (244) 1,516 128 92 453 (3) 312 132 33 290 (23) 27 (1,255) 97 304 $ (4,320) $ 19,698 $ 3,365 $ 2,038 $ 2,809 2021 Collection and Disposal: East Tier $ 8,922 $ (1,700) $ 7,222 West Tier 8,703 (1,716) 6,987 Other Ancillary 2,041 (151) 1,890 Collection and Disposal 19,666 (3,567) 16,099 Recycling Processing and Sales 1,760 (232) 1,528 WM Renewable Energy 220 56 276 Corporate and Other 47 (19) 28 Total $ 21,693 $ (3,762) $ 17,931 $ 1,955 $ 945 $ 598 1,939 821 469 (18) 27 50 3,876 1,793 1,117 217 93 221 108 35 116 (1,236) 78 585 $ 2,965 $ 1,999 $ 2,039 (a) Included within income from operations for our Recycling Processing and Sales segment is a $168 million goodwill impairment charge related to a business engaged in accelerating film and plastic wrap recycling capabilities, which was partially offset by the recognition of $46 million of income related to the reversal of a liability for contingent consideration associated with our investment in such business. (b) 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. (c) 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 2. 125 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (d) Includes non -cash items. Capital expenditures and are reported in our reportable segments at the time they are recorded within the segments' property and equipment balances and, therefore, include timing differences for amounts accrued but not yet paid. Total assets by reportable segment as of December 31 are as follows (in millions): Collection and Disposal: East Tier West Tier Other Ancillary Collection and Disposal Recycling Processing and Sales WM Renewable Energy Corporate and Other Elimination of intercompany investments and advances Total assets, per Consolidated Balance Sheet 126 2023 $ 14,328 11,322 783 26,433 2,282 1,077 3,392 (361) 2022 $ 14,194 11,134 686 26,014 1,918 693 3,052 (310) $ 32,823 $ 31,367 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions): Gross Intercompany Net Operating Operating Operating Revenues Revenues Revenues Years Ended December 31: 2023 Commercial $ 5,801 $ (692) $ 5,109 Industrial 3,836 (753) 3,083 Residential 3,474 (96) 3,378 Other collection 3,006 (220) 2,786 Total collection 16,117 (1,761) 14,356 Landfill 4,863 (1,611) 3,252 Transfer 2,293 (1,036) 1,257 Total Collection and Disposal 23,273 (4,408) 18,865 Recycling Processing and Sales 1,576 (312) 1,264 WM Renewable Energy 276 (3) 273 Corporate and Other 51 (27) 24 Total $ 25,176 $ (4,750) $ 20,426 2022 Commercial $ 5,450 $ (590) $ 4,860 Industrial 3,681 (656) 3,025 Residential 3,339 (75) 3,264 Other collection 2,683 (217) 2,466 Total collection 15,153 (1,538) 13,615 Landfill 4,597 (1,535) 3,062 Transfer 2,143 (977) 1,166 Total Collection and Disposal 21,893 (4,050) 17,843 Recycling Processing and Sales 1,760 (244) 1,516 WM Renewable Energy 315 (3) 312 Corporate and Other 50 (23) 27 Total $ 24,018 $ (4,320) $ 19,698 2021 Commercial $ 4,759 $ (476) $ 4,283 Industrial 3,210 (524) 2,686 Residential 3,181 (36) 3,145 Other collection 2,309 (179) 2,130 Total collection 13,459 (1,215) 12,244 Landfill 4,184 (1,434) 2,750 Transfer 2,023 (918) 1,105 Total Collection and Disposal 19,666 (3,567) 16,099 Recycling Processing and Sales 1,760 (232) 1,528 WM Renewable Energy 220 56 276 Corporate and Other 47 (19) 28 Total $ 21,693 $ (3,762) $ 17,931 127 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Our fmancial and operating results may fluctuate for many reasons, including period -to -period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions. Our operating revenues and volumes typically experience seasonal increases in the summer months that are reflected in second and third quarter revenues and results of operations. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers' businesses, reducing the amount of waste generated by their operations. Conversely, 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 geographic 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. Net operating revenues relating to operations for the year ended December 31 are as follows (in millions): 2023 2022 2021 U.S. $ 19,595 $ 18,860 $ 17,136 Canada 813 838 795 Other (a) 18 Total $ 20,426 $ 19,698 $ 17,931 (a) Primarily related to recently acquired smaller recycling -related operations in the Netherlands. Property and equipment, net of accumulated depreciation and depletion, relating to operations as of December 31 are as follows (in millions): 2023 2022 U.S. $ 15,903 $ 14,721 Canada 1,060 994 Other 5 4 Total $ 16,968 $ 15,719 128 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. Effectiveness of Disclosure 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 (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) 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 fmancial officers have concluded that such disclosure controls and procedures were effective as of December 31, 2023 (the end of the period covered by this Annual Report on Form 10-K) at a reasonable assurance level. 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 management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). 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. 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 fmancial reporting as of December 31, 2023 based on the 2013 framework in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2023. 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 in Item 8 of this Annual Report on Form 10-K. 129 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, 2023. We determined that there were no changes in our internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over fmancial reporting. Item 9B. Other Information. Securities Trading Plans of Directors and Executive Officers On October 30, 2023, James C. Fish, Jr., President, Chief Executive Officer and member of our Board of Directors, adopted a stock trading plan (the "Fish Trading Plan"). The Fish Trading Plan went into effect on the date of adoption and was not intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Fish Trading Plan provided for the potential exercise of 83,419 vested stock options and instructed that, upon our common stock reaching a specified market price on or before December 7, 2023, the options would automatically be exercised and the Company would withhold shares of common stock necessary to cover tax requirements and the exercise price of such options. The Fish Trading Plan provided that Mr. Fish would continue to hold all remaining shares of common stock resulting from the option exercise after the net share settlement process. On November 21, 2023, Mr. Rafael Carrasco, Senior Vice President, Enterprise Strategy, adopted a stock trading plan (the "Carrasco Trading Plan") intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Carrasco Trading Plan will commence on February 20, 2024 and will automatically terminate on the earlier of February 20, 2025 and the completion of all of the contemplated transactions set forth therein. The Carrasco Trading Plan provides for the potential cashless exercise of two stock option awards totaling 4,207 stock options, upon our common stock reaching a specified market price, pursuant to which shares of common stock will be sold to cover option costs, tax obligations, commissions and fees; Mr. Carrasco will then continue to hold all remaining shares of common stock resulting from the option exercise after the settlement. On November 21, 2023, Ms. Devina Rankin, Executive Vice President and Chief Financial Officer, adopted a stock trading plan (the "Rankin Trading Plan") intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Rankin Trading Plan will commence on February 20, 2024 and will automatically terminate on the earlier of February 20, 2025 and the completion of all of the contemplated transactions set forth therein. The Rankin Trading Plan provides for the potential sale of 50% of net after-tax shares of our common stock received from the payout of performance share unit ("PSU") equity compensation awards, for the performance period ended December 31, 2023, upon our common stock reaching a specified market price. Ms Rankin received a target grant of 14,736 PSU awards with a performance period ended December 31, 2023; the number of shares to be paid out to Ms Rankin on account of these PSU awards can range from zero to 200% of the initial target grant. As a result, the number of shares of common stock to potentially be sold pursuant to the Rankin Trading Plan will be determined in the first quarter of 2024 based on certification by the Management Development and Compensation Committee of the Board of Directors of the Company's achievement relative to applicable performance measures for the underlying PSU awards. On December 1, 2023, Mr. Fish adopted a stock trading plan (the "Second Fish Trading Plan") intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Second Fish Trading Plan will commence on March 1, 2024 and will automatically terminate on the earlier of February 20, 2025 and the completion of all of the contemplated transactions set forth therein. The Second Fish Trading Plan provides for (a) the potential sale of up to 19,100 shares of our common stock upon our common stock reaching specified market prices and (b) the potential sale of 50% of net after-tax shares of our common stock received from the payout of PSU equity compensation awards for the performance period ended December 31, 2023, upon our common stock reaching a specified market price. Mr. Fish received a target grant of 59,650 PSU awards with a performance period ended December 31, 2023; the number of shares to be paid out to Mr. Fish on account of these PSU awards can range from zero to 200% of the initial target grant. As a result, as described above in connection with the Rankin Trading Plan, the number of shares of common stock to potentially be sold pursuant to the Second Fish Trading Plan will be determined in the first quarter of 2024. 130 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance. 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 available on-line at investors.wm.com in the tab "ESG — Corporate Governance" (https://investors.wm.com/esg-practices/governance). We intend to post any amendments to the Code of Conduct that apply to our officers and directors, and any required disclosure of waivers from the Code of Conduct, to the "ESG — Corporate Governance" tab at investors.wm.com. All other information required by this Item will be included in the Company's definitive proxy statement for its 2024 Annual Meeting of Stockholders (the "2024 Proxy Statement") to be filed with SEC within 120 days of the end of our fiscal year and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference. PART IV Item 15. Exhibits, Financial Statement Schedules. (a) (1) Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2023 and 2022 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Changes in Equity for the years ended December 31, 2023, 2022 and 2021 Notes to Consolidated Financial Statements (a) (2) Consolidated Financial Statement Schedules: 131 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. Description 3.1 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]. 3.2 Amended and Restated By-laws of Waste Management, Inc. [incorporated by reference to Exhibit 3.2 to Form 8-K dated November 6, 2023]. 4.1 Specimen Stock Certificate [incorporated by reference to Exhibit 4.1 to Form 10-K for the year ended December 31, 1998]. 4.2 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]. 4.3 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]. 4.4 Indenture for Subordinated Debt Securities dated February 1, 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]. 4.5 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 Officers' Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997 establishing the terms and form of the 4.875% Senior Notes due 2029 [incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarter ended September 30, 20231. 4.9 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 4.875% Senior Notes due 2029 [incorporated by reference to Exhibit 4.3 to Form 10-Q for the quarter ended September 30, 2023]. 10.1-[ 2023 Stock Incentive Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated May 9, 2023]. 10.2-[ 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated May 13, 2014]. 10.3-[ First Amendment to 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.2 to Form 8-K dated May 12, 2020]. 10.4-[ Second Amendment to 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended June 30, 2022]. 10.5-[ 2009 Stock Incentive Plan [incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed March 25, 2009]. 10.6-[ 2005 Annual Incentive Plan [incorporated by reference to Appendix D to the Proxy Statement on Schedule 14A filed April 8, 2004]. 10.7-[ 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]. 10.8t* First Amendment to the Waste Management, Inc. Employee Stock Purchase Plan. 10.9-[ 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]. 132 10.10 $3.5 Billion Sixth Amended and Restated Revolving Credit Agreement dated as of May 27, 2022 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 May 27, 2022]. 10.11 Commercial Paper Dealer Agreement, substantially in the form as executed with each of Mizuho Securities USA LLC, BofA Securities, Inc., J.P. Morgan Securities LLC, MUFG Securities Americas Inc., Wells Fargo Securities, LLC, RBC Capital Markets, LLC, Siebert Williams Shank & Co., LLC, and Barclays Capital Inc. as Dealer [incorporated by reference to Exhibit 10.11 to Form 10-K for the year ended December 31, 2016]. 10.12 Commercial Paper Issuing and Paying Agent Agreement between Waste Management, Inc. and U.S. Bank Trust Company, National Association dated October 28, 2022. [incorporated by reference to Exhibit 10.11 to Form 10-K for the year ended December 31, 2022]. 10.13T 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]. 10.14t* Compensation Relinquishment Agreement between USA Waste -Management Resources, LLC and James C. Fish, Jr. 10.15-[* First Amendment to Compensation Relinquishment Agreement between USA Waste -Management Resources, LLC and James C. Fish, Jr. 10.16T 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] 10.17T 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] 10.18-[ 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]. 10.19-[ 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]. 10.20-[ Waste Management Holdings, Inc. Executive Severance Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated December 22, 2017]. 10.21-[ Form of 2021 Long Term Incentive Compensation Award Agreement for Senior Leadership Team [incorporated by reference to Exhibit 10.1 to Form 8-K dated February 23, 2021]. 10.22-[ Form of 2021 Long Term Incentive Compensation RSU Award Agreement [incorporated by reference to Exhibit 10.19 to Form 10-K for the year ended December 31, 2021]. 10.23-[ Form of 2022 Long Term Incentive Compensation Award Agreement for Senior Leadership Team [incorporated by reference to Exhibit 10.1 to Form 8-K dated March 1, 2022]. 10.24-[ Form of 2022 Long Term Incentive Compensation RSU Award Agreement [incorporated by reference to Exhibit 10.2 to Form 8-K dated March 1, 2022]. 10.25-[ Form of 2023 Long Term Incentive Compensation Award Agreement for Senior Leadership Team [incorporated by reference to Exhibit 10.1 to Form 8-K dated March 7, 2023]. 21.1* Subsidiaries of the Registrant. 22.1* Guarantor Subsidiary. 23.1* Consent of Independent Registered Public Accounting Firm. 31.1* Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 of James C. Fish, Jr., President and Chief Executive Officer. 31.2* Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 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. 95* Mine Safety Disclosures. 97* Waste Management, Inc. Clawback Policy. 101.INS* Inline XBRL Instance. 133 101.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. 134 SIGNATURES 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. WASTE MANAGEMENT, INC. By: /s/ JAMES C. FISH, JR. James C. Fish, Jr. President, Chief Executive Officer and Director Date: February 13, 2024 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 /s/ JAMES C. FISH, JR. James C. Fish, Jr. /s/ DEVINA A. RANKIN Devina A Rankin /s/ JOHN CARROLL John Carroll /s/ BRUCE E. CHINN Bruce E. Chinn /s/ ANDRES R. GLUSKI Andres R. Gluski /s/ VICTORIA M. HOLT Victoria M. Holt /s/ KATHLEEN M. MAZZARELLA Kathleen M. Mazzarella /s/ SEAN E. MENKE Sean E. Menke /s/ WILLIAM B. PLUMMER William B Plummer /s/ JOHN C. POPE John C. Pope /s/ MARYROSE T. SYLVESTER Maryrose T. Sylvester Title Date President, Chief Executive Officer and Director February 13, 2024 (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President and Chief Accounting Officer (Principal Accounting Officer) Director Director Director Chairman of the Board and Director Director Director Director Director 135 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 February 13, 2024 Corporate Information BOARD OF DIRECTORS THOMAS L. BENE (C) President and Chief Executive Officer Breakthru Beverage Group, LLC BRUCE E. CHINN (A) Former President and Chief Executive Officer Chevron Phillips Chemical Company LLC JAMES C. FISH, JR. President and Chief Executive Officer Waste Management, Inc. ANDRES 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 (A, C, N) Non -Executive Chair of the Board Chairman, President and Chief Executive Officer Graybar Electric Company, Inc. SEAN E. MENKE (A, N) Executive Chairman Sabre Corporation WILLIAM B. PLUMMIER (A, C) Former Executive Vice President and Chief Financial Officer United Rentals, Inc. JOHN C. POPE (C, N) Chief Executive Officer and Chairman PFI Group MARYROSE T. SYLVESTER (C, N) Former U.S. Managing Director and U.S. Head of Electrification ABB Ltd. (A) Audit Committee (C) Management Development and Compensation Committee (N) Nominating and Governance Committee OFFICERS JAMES C. FISH, JR. President and Chief Executive Officer CHARLES C. BOETTCHER Executive Vice President, Corporate Development and Chief Legal Officer RAFAEL E. CARRASCO Senior Vice President, Enterprise Strategy CHRISTOPHER P. DESANTIS Senior Vice President, Operations TARA J. HEMMER Senior Vice President and Chief Sustainability Officer JOHN J. MORRIS, JR, Executive Vice President and Chief Operating Officer DEVINA A. RANKIN Executive Vice President and Chief Financial Officer KELLY C. ROONEY Senior Vice President, Chief Human Resources and Diversity & Inclusion Officer DONALD J. SMITH Senior Vice President, Operations JOHNSON VARKEY Senior Vice President and Chief Information Officer MICHAEL J. WATSON Senior Vice President and Chief Customer Officer JEFF R. BENNETT Assistant Treasurer JOHN A. CARROLL Vice President and Chief Accounting Officer MARK A. LOCKETT Vice President, Tax LESLIE K. NAGY 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 The annual meeting of the stockholders of the Company is scheduled to be held at 10:30 a.m. CT May 14, 2024 at the offices of: Waste Management, Inc. 800 Capitol Street, Suite 3000 Houston, Texas 77002 INDEPENDENT AUDITORS Ernst & Young LLP 5 Houston Center 1401 McKinney Street, Suite 2400 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, 2024 was 7,469. Based on security position listings, the Company believes that, as of March 12, 2024, it had approximately 1,459,343 beneficial owners. TRANSFER AGENT AND REGISTRAR Computershare Shareholder Services: (800) 969-1190 Shareholder Services - International: +1 (201) 680-6578 P.O.Box 43006 Providence, Rhode Island 02940 Overnight Delivery: 150 Royall Street, Suite 101 Canton, Massachusetts 02021 800 Capitol Street - Suite 3000 - Houston, Texas 77002 www.wm.com 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 10, 2022 Virtual Meeting Time: 1 1:00 a.m. Central Time Virtual Meeting Location: www.virtualshareholdermeeting.com/WM2022 Record Date: March 15, 2022 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, 2022; • To vote on a non -binding, advisory proposal to approve our executive compensation; • To vote on a stockholder proposal regarding a civil rights audit, if properly presented at the Annual Meeting; 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, 2021 are available on the "Investors" website at www.wm.com. 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. If you received printed copies of the materials in accordance with 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 9, 2022. If you received printed copies of the proxy materials in accordance with 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. 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. 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. d)cale Courtney A. Tippy Corporate Secretary 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. March 29, 2022 TABLE OF CONTENTS Page GENERAL INFORMATION 1 BOARD OF DIRECTORS 4 Nominees for Director 4 Leadership Structure 4 Independence of Board Members 5 Meetings and Board Committees 5 Role in Risk Oversight 5 Oversight of ESG Risk and Performance 6 Audit Committee 8 Audit Committee Report 9 Management Development and Compensation Committee 10 Compensation Committee Report 10 Compensation Committee Interlocks and Insider Participation 11 Nominating and Governance Committee 11 Related Party Transactions 12 Board of Directors Governing Documents 13 Non -Employee Director Compensation 13 ELECTION OF DIRECTORS (Item 1 on the Proxy Card) 15 DIRECTOR AND OFFICER STOCK OWNERSHIP . 20 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 21 DELINQUENT SECTION 16(A) REPORTS 21 EXECUTIVE OFFICERS 22 EXECUTIVE COMPENSATION 23 Compensation Discussion and Analysis 23 Introduction 23 Executive Summary 23 2021 Pay -For Performance 24 Consideration of Stockholder Advisory Vote 26 2022 Compensation Program Preview 26 Page Our Compensation Philosophy for Named Executive Officers 26 Overview of Elements of Our 2021 Compensation Program 27 How Named Executive Officer Compensation Decisions are Made 28 Named Executives' 2021 Compensation Program and Results 32 Post -Employment and Change in Control Compensation; Clawback Policies 36 Other Compensation Policies and Practices 37 Executive Compensation Tables 39 Summary Compensation Table 39 Grant of Plan -Based Awards in 2021 41 Outstanding Equity Awards as of December 31, 2021 42 Option Exercises and Stock Vested 43 Nonqualified Deferred Compensation in 2021 44 Potential Payments Upon Termination or Change in Control 45 Potential Consideration Upon Termination of Employment 47 Chief Executive Officer Pay Ratio 48 Equity Compensation Plan Table 48 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Item 2 on the Proxy Card) 49 ADVISORY VOTE ON EXECUTIVE COMPENSATION (Item 3 on the Proxy Card) 50 STOCKHOLDER PROPOSAL (Item 4 on the Proxy Card) 51 OTHER MATTERS 52 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. 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 Board of Directors is soliciting your proxy for the 2022 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 29, 2022, 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 29, 2022, 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 Lower 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 15, 2022. 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 415,159,816 shares of our Common Stock outstanding and entitled to vote as of March 15, 2022. 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 10, 2022. 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/WM2022 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" website 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. iiNt 2022 Proxy Statement I 1 PROXY STATEMENT 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 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, the advisory vote on executive compensation and the stockholder proposal, 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, the advisory vote on executive compensation or the stockholder proposal. 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 Board Vote Matter Recommendation 1 Election of Director Nominees set forth in this Proxy Statement FOR each director nominee 2 Ratification of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm for fiscal year 2022 FOR 3 Approve the Company's Executive Compensation FOR 4 Stockholder Proposal Regarding a Civil Rights Audit AGAINST Stockholder Proposals and Nominees for the 2023 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. 2 It 2022 Proxy Statement PROXY STATEMENT 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 2023 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, 2022. 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 2023 AnnuaL Meeting. 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 2023 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 11, 2022 and no Later than January 10, 2023 and must contain the information specified in the Company's By -Laws. In addition to satisfying the foregoing advance notice requirements under our By -Laws, to comply with the universal proxy rules under the Exchange Act (once effective), stockhoLders who intend to solicit proxies in support of director nominees other than Company's nominees must provide notice that sets forth the information required by RuLe 14a-19 under the Exchange Act no Later than March 11, 2023. 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, 2022, and no Later than November 29, 2022, 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 2022 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, 2021, which includes our financial statements for fiscal year 2021, 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. iiNt 2022 Proxy Statement I 3 BOARD OF DIRECTORS Our Board of Directors has nine members. Each member of our Board is elected annually. Nominees for Director Name Committee Management Development & Nominating & Age Tenure Independent Audit Compensation Governance James C. Fish, Jr. 59 2016 — Present Andres R. Gluski 64 2015 — Present ✓ 8 111 Victoria M. Holt 64 2013 — Present ✓ 8 8 Kathleen M. Mazzarelta 62 2015 — Present ✓ 8 Sean E. Menke 53 2021 — Present ✓ 8 William B. Plummer 63 2019 — Present ✓ © 8 John C. Pope 72 1997 — Present ✓ 8 8 Maryrose T. Sylvester 56 2021 — Present ✓ 8 Thomas H. Weidemeyer 74 2005 — Present ✓ 8 8 8 Chair © Member 8 Leadership Structure 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. 4 It 2022 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: Andres 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 one special meeting, 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 2021 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 iiNt 2022 Proxy Statement I 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 regularly provides an in depth update 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, Chief Legal Officer, Chief People Officer and Chief Sustainability 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 and Controls, 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; physical infrastructure; brand management; environmental, health & safety; human capital; information security and privacy; 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. Additionally, following the appointment of Ms. Tara Hemmer as the Company's first Senior Vice President and Chief Sustainability Officer, the Board of Directors now receives a quarterly ESG dashboard to highlight critical focus areas and track progress toward ESG goals. 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 our people, sustainable operations, waste diversion, recycling business improvements, potentially disruptive technologies and environmental impacts, risks and opportunities. In 2021, the Board received several dedicated strategy updates regarding ESG topics, including our sustainability growth strategy, progress and trends, goal setting, our people -first strategy, and employee retention. Additionally, reflective of the importance of inclusion, equity 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 and a detailed annual healthy and safety report. Through these reports and our ESG dashboard, our Board directly oversees our progress toward ESG goals. Our Audit Committee also plays a significant role in oversight of ESG risk and performance. As discussed above, our Audit Committee receives regular ERM updates with in depth discussion on specific risk topics. At least annually, one of 6 It 2022 Proxy Statement BOARD OF DIRECTORS the in depth dsicussions 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 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; review of the Company's incident response plan 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, equity and diversity are fundamental Company 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. Please see the discussion of the Nominating and Governance Committee below for more information on this robust process. For additional information about the topics discussed above, including ESG goals, metrics and progress, we encourage stockholders to review our 2021 SustainabiLity Report at https://sustainability.wm.com. Our 2021 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. iiNt 2022 Proxy Statement I 7 BOARD OF DIRECTORS THE AUDIT COMMITTEE Members: Number of Meetings Held in 2021: 8 William B. Plummer, Chairman Sean E. Menke Andres R. Gluski Thomas H. Weidemeyer Victoria M. Holt Mr. Plummer has been the Chairman of our Audit Committee since May 2020. 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. Gluski, Ms. Holt and Mr. Menke 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 10-0 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 I IMVIL 2022 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, 2021 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 2021, 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, 2021, 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, 2021, and consolidated statements of operations, comprehensive income, cash flows and changes in equity for the fiscal year ended December 31, 2021, 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, 2021. The Committee has also approved the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal year 2022. The Audit Committee of the Board of Directors William B. Plummer, Chairman Andres R. Gluski Victoria M. Holt Sean E. Menke Thomas H. Weidemeyer imNA 2022 Proxy Statement I 9 BOARD OF DIRECTORS THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE Members: Andres R. Gluski, Chairman Kathleen M. Mazzarella William B. Plummer John C. Pope Maryrose T. Sylvester Thomas H. Weidemeyer Number of Meetings Held in 2021: 5 Mr. Gluski has served as the Chairman of our MD&C Committee since May 2021. Each member of our MD&C Committee is independent in accordance with the rules and regulations of the New York Stock Exchange. 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 evacuation 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 Andres R. Gluski, Chairman Kathleen M. Mozzarella William B. Plummer John C. Pope Maryrose T. Sylvester Thomas H. Weidemeyer 10 I IAMA 2022 Proxy Statement BOARD OF DIRECTORS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2021, Ms. Mazzarella, Ms. Sylvester and Messrs. Gluski, Plummer, Pope and Weidemeyer served on the MD&C Committee, as well as retired Director Mr. Frank M. Clark, Jr. No member of the MD&C Committee was an officer or employee of the Company during 2021; no member of the MD&C Committee is a former officer of the Company; and during 2021, 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: Number of Meetings Held in 2021: b Kathleen M. Mazzarella, Chairman Victoria M. Holt John C. Pope Thomas H. Weidemeyer 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. 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 skies, 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. The Nominating and Governance Committee considers current and future needs of the Board as a whole and reviews a matrix of experience, skills and expertise to inform nominee criteria. The Committee recommends individuals as nominees based on an evaluation of all factors deemed 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 of background, thoughts and opinions on the Board obtained through, among other factors, 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. 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. lAfilUt 2022 Proxy Statement I 11 BOARD OF DIRECTORS When nominating or re -nominating individuals to serve as directors of the Company, the Nominating and Governance Committee also consider prior contributions to the Board, evaluation feedback, tenure and age of the Board as a whole and tenure and age of the individual. The Nominating and Governance Committee also takes into account the nature and extent of the directors' other commitments when determining whether to re -nominate that individual for election to the Board. In addition to complying with the Limitations on public company board memberships set forth in the Corporate Governance Guidelines, the Committee expects each director to ensure that his or her other commitments do not interfere with his or her duties as a director of the Company. 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, having considered the foregoing factors, recommends 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, 2022 and November 29, 2022. 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 of related party transactions. Our policy generally defines related party transactions as current or proposed transactions since the beginning of the Last fiscal year in excess of $120,000 in which (a) the Company is a participant and (b) any director; executive officer; immediate family member of any director or executive officer; or party known to be the owner of more than five percent of the Company's Common Stock 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; a beneficial owner of the Company's Common Stock that reports such ownership on a Schedule 13G due to Lack of control or intent to influence control; 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 as soon as practicable of any potential related party transaction that involves the Company. The Chief Legal Officer will determine whether such transaction or relationship constitutes a related party transaction that must be referred to the Nominating and Governance Committee. In the event that the Chief Legal Officer is a participant in a potential related party transaction, the determination whether the transaction must be referred to the Nominating and Governance Committee shall be made by the Chief Executive Officer, with consultation from the Corporate Secretary and the Chief Compliance and Ethics Officer. 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 I IAN1a 2022 Proxy Statement BOARD OF DIRECTORS In determining whether to approve a related party transaction, the Nominating and Governance Committee will consider, among other things, the following factors: • whether the terms of the related party transaction are fair to the Company and such terms would be reasonable in an arms -Length transaction; • whether there are business reasons for the Company to enter into the related party transaction; • whether the related party transaction would impair the independence of any non -employee director; • whether the related party transaction would present an improper conflict of interest for any director or executive officer of the Company; and • whether 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 2021 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. The 2021 non -employee director compensation levels were established in February 2020. 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 $82,500 in January 2021 and July 2021. Mr. Weidemeyer received an additional grant of Common Stock valued at approximately $50,000 in each of January 2021 and July 2021 for his service as Non -Executive Chairman of the Board in 2021. iiint 2022 Proxy Statement I 13 BOARD OF DIRECTORS 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 2021: Annual Retainer: $115,000 Annual Chair Retainers: $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 throughout their tenure as a director. The ownership guideline for non -employee directors is equal to approximately five times the non -employee directors' annualized cash retainer. As of December 31, 2021, this amount was $575,000. There is no deadline for non -employee directors to reach their ownership guideline; however, the MD&C Committee performs regular reviews to confirm that all non -employee directors are in compliance or are showing sustained progress toward achievement of their ownership guideline. Based on the closing price of our Common Stock on March 15, 2022, all of our non -employee directors have reached the ownership guideline, except our newest directors, Mr. Menke and Ms. Sylvester, are making appropriate progress toward the ownership guideline. Additionally, our Insider Trading Policy provides that directors are not permitted to hedge their ownership of Company securities, including trading in options, warrants, puts and calls or similar derivative instruments on any security of the Company or selling any security of the Company "short." Director Compensation Table The table below shows the aggregate cash paid, and stock awards issued, to the non -employee directors in 2021 in accordance with the descriptions set forth above: Name Frank M. Clark, Jr.(2) Andres R. Gluski(3) Victoria M. Holt Kathleen M. Mazzarella Sean E. Menke(``) William B. Plummer John C. Pope Maryrose T. Sylvester(``) Thomas H. Weidemeyer Fees Earned or Paid in Cash ($) 67,500 128,600 115,000 135,000 95,833 140,000 115,000 95,833 215,000 Stock Awards ($)m 82,541 165,039 165,039 165,039 137,542 165,039 165,039 137,542 264,967 Total ($) 150,041 293,639 280,039 300,039 233,375 305,039 280,039 233,375 479,967 (1) Amounts in this column represent the grant date fair value of stock awards granted in 2021, 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 2021 Annual Meeting, Mr. Clark 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 11, 2021. (3) Mr. Gluski received prorated cash compensation for service as MD&C Committee Chairman from May 11, 2021 until the next regular installment of compensation payments in July 2021. (4) Mr. Menke and Ms. Sylvester were elected to our Board on March 15, 2021 and each received prorated equity compensation and cash compensation for service as a director from the date of election until the next regular installments in July 2021. 14 I WWI. 2022 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 2023 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 Age: 59 Director since: 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. iiint 2022 Proxy Statement I 15 ELECTION OF DIRECTORS Age: 64 Director since: 2015 Board Committees: Audit and Management Development & Compensation POSITION AND BUSINESS EXPERIENCE 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. 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. In 2021, AES was the Largest seller of renewabLe energy to corporate customers in the world, according to Bloomberg New Energy Finance. 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 and operations. He is currently on the Executive Committee of the Edison Electric Institute's Board of Directors and serves as Chairman of the CounciL of the Americas. Mr. GLuski has been voted one of the "Most InfLuentiaL Leaders" by Latino Leaders magazine and served on The President's Advisory CounciL for Trade from 2013 to 2016. VICTORIA M. HOLT Age: 64 Director since: 2013 Board Committees: Audit and Nominating & Governance POSITION AND BUSINESS EXPERIENCE Retired President and Chief Executive Officer —Proto Labs, Inc. (online and technoLogy- enabLed quick -turn manufacturer), served from 2014 to March 2021; aLso served as Director from 2014 — May 2021. Director of Piper SandLer Companies since September 2019. Director of A. 0. Smith Corp. since ApriL 2021. QUALIFICATIONS 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, and she brings particular focus to execution of the Company's technology -Led growth strategy and use of data anaLytics. She aLso has many years of experience serving on the board of directors for pubLic companies. 16 I WWI.2022 Proxy Statement ELECTION OF DIRECTORS Age: 62 Director since: 2015 Board Committees: Management DeveLopment & Compensation and Nominating & Governance (Chair) Age: 53 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 since January 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 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 Corporation from 2016 to December 2021. 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. iiint 2022 Proxy Statement I 17 ELECTION OF DIRECTORS Age: 63 Director since: August 2019 Board Committees: Audit (Chair) and Management Development & Compensation Director since: 1997 Board Committees: Management DeveLopment & Compensation and Nominating & Governance POSITION AND BUSINESS EXPERIENCE Retired Executive Vice President and Chief FinanciaL Officer —United RentaLs, Inc. (worLd's Largest equipment rental company), served from 2008 to October 2018; aLso served as Senior Adviser from October 2018 to January 2019. Director of GLobaL Payments Inc. since May 2017. Director of Mason IndustriaL TechnoLogy, Inc. since February 2021. Director of Nesco HoLdings, Inc. from July 2019 to March 2021. Director of John WiLey & Sons, Inc. from 2003 to September 2019. 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. 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. Chairman of the Board — R.R. DonneLLey & Sons Company from 2014 to February 2022; Director of R.R. DonneLLey & Sons Company, or predecessor companies, from 1996 to February 2022. 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. 18 I WWI. 2022 Proxy Statement ELECTION OF DIRECTORS MARYROSE T. SYLVESTER Age: 56 Director since: March 2021 Board Committee: Management DeveLopment & Co r 1pertsotion POSITION AND BUSINESS EXPERIENCE Retired U.S. Managing Director and U.S. Head of Electrification — ABB Ltd. (gLobaL technology company focused on electrification, robotics, power and automation), served from August 2019 to August 2020. Former President and Chief Executive Officer — Current, powered by GE (energy services and information technoLogy subsidiary of GeneraL Electric subsequently acquired by private equity investors), served 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. Director of Vontier Corporation since March 2021. 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 vaLuabLe governance experience from her service on public company boards. THOMAS H. WEIDEMEYER Age: 74 Director since: 2005 Chairman of the Board since: May 2018 Board Committees: Audit, Management DeveLopment & Compensation and Nominating & Governance FOR POSITION AND BUSINESS EXPERIENCE Retired Chief Operating Officer — United ParceL Service, Inc. (package delivery and suppLy chain services company), served from 2001 to 2003; also served as Director from 1997 to 2003 and Senior Vice President from 1994 to 2003. Former President, UPS AirLines (UPS owned airline) from 1994 to 2003. Director of NRG Energy, Inc. since 2003. 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 20 years of experience serving on the board of directors for pubLic companies. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NINE DIRECTOR NOMINEES. 2022 Proxy Statement I 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 beneficiary owned as of March 15, 2022, 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 Shares of Common Stock Covered by Name Stock Ownedm Exercisable Options(`) Andres R. GLuski 13,759 Victoria M. Holt 19,257 KathLeen M. MazzareLLa(3) 11,671 Sean E. Menke 1,551 WiLLiam B. PLummer 3,776 John C. Pope 55,065 Maryrose T. SyLvester 1,551 Thomas H. Weidemeyer(``) 35,324 James C. Fish, Jr.(5) 245,226 140,703 Devina A. Rankin 49,428 37,125 John J. Morris, Jr. 107,552 49,801 CharLes C. Boettcher 31,680 34,518 Tara J. Hemmer 37,517 44,005 ALL directors and executive officers as a group (19 persons)(6 738,854 468,586 (1) The tabLe reports beneficiaL ownership in accordance with RuLe 13d-3 under the Exchange Act. The amounts reported above incLude 4,081 stock equivaLents attributed to Mr. Fish and 2,295 stock equivaLents attributed to Mr. Morris, 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 has 2,491 phantom stock equivaLents under the 409A DeferraL PLan. (2) IncLudes the number of options currentLy exercisabLe and options that wilt become exercisabLe within 60 days of our record date. (3) Shares are heLd by the MazzareLLa Living Trust, for which Ms. MazzareLLa and her husband serve as trustees. (4) Shares are heLd by the Thomas H. Weidemeyer and Mary R. Weidemeyer Trust, for which Mr. Weidemeyer and his wife serve as trustees. (5) IncLudes 95,577 shares heLd in trusts for the benefit of Mr. Fish's minor chiLdren. (6) IncLuded in the "ALL directors and executive officers as a group" are 10,949 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 8,729 phantom stock equivaLents under the 409A DeferraL PLan that are not incLuded in the tabLe. 20 I IAN1a 2022 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 15, 2022. Name and Address Shares Beneficially Owned Number Percent" William H. Gates III 500 Fifth Avenue North Seattle, WA 98109 35,234,344(2) 8.5% The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 34,980,666(3) 8.4% BtackRock, Inc. 55 East 52nd Street New York, NY 10055 29,941,759(4) 7.2% (1) Percentage is calculated using the number of shares of Common Stock outstanding and entitled to vote as of March 15, 2022. (2) This information is based on a Schedule 13G/A filed with the SEC on February 14, 2022. Mr. Gates reports that he has sate 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, as co -trustees. (3) This information is based on a Schedule 13G/A filed with the SEC on February 9, 2022. The Vanguard Group reports that it has shared voting power over 641,208 shares of Common Stock, shared dispositive power over 1,612,971 shares of Common Stock and sole dispositive power over 33,367,695 shares of Common Stock beneficially owned. (4) This information is based on a Schedule 13G/A filed with the SEC on February 1, 2022. BtackRock, Inc. reports that it has sate voting power over 25,700,248 shares of Common Stock and sate dispositive power over 29,941,759 shares of Common Stock beneficially owned. DELINQUENT SECTION 16(A) REPORTS The federal securities laws require our executive officers and directors to file reports of their holdings and transactions in our Common Stock with the SEC. Based on a review of the forms and written representations from our executive officers and directors, we are aware of one delinquent report for 2021. On December 14, 2021, Ms. Nagy received a grant of restricted stock units that will vest in full on the third anniversary of the date of grant. Due to an administrative error, this grant was not reported on a Form 4 at the time, but upon discovery was reported on a Form 5 in January 2022. iiint 2022 Proxy Statement I 21 EXECUTIVE OFFICERS The following is a Listing of our current executive officers, their ages and their business experience for 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 Age Positions Held and Business Experience for Past Five Years Steven R. Batchelor 64 • Senior Vice President — Operations since January 2019. • Vice President, Collections and Fleet Operations from 2013 to December 2018. Charles C. Boettcher 48 • 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. Rafael E. Carrasco 50 • Senior Vice President — Operations since JuLy 2021. • Area Vice President — Greater Mid -Atlantic Area from April 2017 to June 2021. • Area Vice President — Eastern Canada Area from 2016 to March 2017. Tara J. Hemmer 49 • Senior Vice President and Chief SustainabiLity Officer since JuLy 2021. • Senior Vice President — Operations from January 2019 to June 2021. • Senior Vice President —Operations, Safety and Environmental CompLiance 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. John J. Morris, Jr. 52 • Executive Vice President and Chief Operating Officer since January 2019. • Senior Vice President — Operations from 2012 to December 2018. Leslie K. Nagy 47 • 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. TamLa D. Oates -Forney 50 • 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. Devina A. Rankin 46 • 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. NikoLaj H. Sjoqvist 49 • Senior Vice President and Chief Digital Officer since October 2017. • Vice President — Revenue Management from 2012 to October 2017. Michael J. Watson 52 • Senior Vice President and Chief Customer Officer since October 2018. • Area Vice President — Illinois / Missouri Valley Area from 2013 to September 2018. 22 I WWI. 2022 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, 2021 aligned with the Company's 2021 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 2021, 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. • Mr. John J. Morris, Jr. — Executive Vice President and Chief Operating Officer since January 2019. • Mr. Charles C. Boettcher — Executive Vice President, Corporate Development and Chief Legal Officer since February 2020. • Ms. Tara J. Hemmer —Senior Vice President and Chief Sustainability Officer since July 2021; Senior Vice President — Operations from January 2019 to June 2021. 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 to drive our mission, that we are always working for a sustainable tomorrow. Our strategy 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 majority 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 equity awards with a three-year performance period ended 2021 and the 2021 annual cash incentive award; • at target, 72% of total compensation of our President and Chief Executive Officer was tied to Long-term equity awards, and approximately 60% of total compensation of our other named executives, on average, was tied to Long-term equity awards, which aligns executives' interests with those of stockholders; Vint 2022 Proxy Statement I 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- year period, Link executives' interests with Long-term performance and reduce incentives to maximize 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 (the "Severance Limitation Policy"); and • the Company has adopted a poLicy that prohibits it from entering into agreements with executive officers that provide for certain death benefits or tax gross -up payments. 2021 Pay -For -Performance During 2021, we deLivered strong revenue and income from operations as we continued to recover from COVID-19 pandemic impacts. We experienced improved yieLd and voLume in our LandfiLL, commerciaL and industriaL coLLection businesses and benefited from our October 2020 acquisition and successfuL integration of Advanced DisposaL Services, Inc. ("ADS"). However, our income from operations was impacted by constraints on Labor avaiLabiLity, infLationary cost pressures and commodity -driven business impacts, particuLarLy from recycLing brokerage rebates and higher fueL prices. We continue to invest in our peopLe through market wage adjustments, investments in our digitaL pLatform and training for new team members. In addition, we were focused on executing on our discipLined pricing programs to drive margin growth in the face of these additionaL Labor cost and infLationary pressures. FoLLowing is a summary of the 2021 compensation program resuLts: Total Shareholder Return With respect to the half of the performance share units ("PSUs") granted in 2019 with a three-year performance period ended December 31, 2021 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 66.95%, resuLting in a 167.78% payout on these PSUs in shares of Common Stock. This performance directLy benefited our stockhoLders, deLivering total sharehoLder return of 91.96% 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 2019, of $7.49 biLLion, exceeding the maximum performance Level of $6.875 biLLion for the three-year performance period ended December 31, 2021. This performance resulted in a maximum 200% payout on these PSUs in shares of Common Stock. The robust cash fLow generation of our business over the three-year performance period has aLLowed the Company to fuLfiLL its priorities of investing in the business, funding acquisitions with strong returns, and returning avaiLabLe cash to sharehoLders through dividend growth and Common Stock repurchases. Annual Cash 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 2021 equaL to 136.8% of target. 24 I WWI. 2022 Proxy Statement EXECUTIVE COMPENSATION Income from Operations, excluding Depreciation and Amortization — $4.961 billion, yielding a payout of 173.5% Income from Operations, excluding Depreciation and Amortization Margin ("Margin performance measure") — 27.7%, yielding a payout of 0% Total Revenue — $17.931 billion, yielding a payout of 200%. In 2021, the long-term equity compensation awards continued to demonstrate strong alignment between executive pay and Company performance. The payouts on the PSUs granted in 2019 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. The blended results of the annual incentive performance measures, and the above target results on the income from operations, excluding depreciation and amortization and total revenue performance measures, evidence the strength and resilience of our business. The Company's results on each of the performance measures reflect that our executives took the right actions to deliver operating and financial performance in the face of broader macroeconomic pressures and market disruption that intensified during the second half of 2021. Unfortunately, due in Large part to the distorting effect of our recycling brokerage business on the Margin performance measure, the Company's results on this measure fell below the threshold, yielding a 0% payout. The Company's recycling brokerage business is a relatively small and traditionally Lower -margin offering; however, the recycling brokerage business is additive to the Company's overall value proposition and helps the Company attract and retain Large accounts. As a result of the sharp increase in recycling commodity prices in 2021, the recycling brokerage business made out -sized contributions to the Company's revenue in 2021, but such revenue also had a more significant negative impact on the Company's Margin performance measure. The MD&C Committee recognized that the results on the Margin performance measure were not reflective of the underlying performance and overall financial results of the Company in 2021, particularly the diligent efforts of management to pursue operational efficiencies and manage costs in the face of Labor, supply chain, transportation and other market challenges. However, the overall above -target payout is reflective of the Company's outstanding 2021 income from operations, excluding depreciation and amortization and total revenue performance that allowed the Company to deliver on key strategic priorities, including successfully integrating the acquisition of ADS, driving disciplined organic revenue growth, advancing technology investments focused on customer retention and growth, and cultivating our people -first culture. Maximum Target Threshold 2021 Actual Performance and Compensation Payouts Annual Incentive Plan Long -Term Performance Share Units $4.961 B Actual $4.787 Target (50% weight) 173.5% 27.70% Actual 28.30% Target (25% weight) 0% r17.931B Actual 16.917B Target (25% weight 200% Combined Results 67th Percentile Actual 50th Percentile Target (50% weight) 167.78% $7.49B Actual $6,375B Target (50% weight) 200% Combined Results 183.89% Income from Income from Operations, Operations, excluding excluding Depreciation & Depreciation & Amortization Amortization Margin Total Revenue Annual Incentive Award Payout Relative TSR Cash Flow PSU Award (S&P 500) Generation Payout iiMit 2022 Proxy Statement I 25 EXECUTIVE COMPENSATION Consideration of Stockholder Advisory Vote When establishing 2021 compensation for the named executives, the MD&C Committee noted the results of the advisory stockholder votes on executive compensation, with more than 92.5% 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. 2022 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 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'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 MD&C Committee has approved keeping the 2022 Long-term incentive program design for stock options and PSUs consistent with prior years. Additionally, in February 2022, the MD&C Committee approved grants of restricted stock units ("RSUs") to Ms. Rankin, Mr. Morris and Ms. Hemmer in special recognition of Leadership and contributions critical to the acquisition of ADS and the subsequent integration and synergy generation (the "ADS Integration Awards"). Mr. Boettcher received a grant of RSUs in connection with the ADS transaction in February 2021, as the MD&C Committee desired to recognize his Leadership and contributions critical to the negotiation and consummation of the acquisition in October 2020 (the "ADS Closing Award"), discussed further below. With respect to the annual incentive program, the design has been largely consistent over recent years. However, in 2021, two of the specific performance measures were modified, primarily in response to accounting and other impacts from our acquisition of ADS. As such impacts have now normalized, the MD&C Committee has approved reverting to the prior annual incentive program design by replacing the 2021 income from operations, excluding depreciation and amortization margin performance measure with an income from operations margin performance measure, maintaining its 25% weighting. Additionally, the 2021 total revenue performance measure has been replaced with the previous internal revenue growth performance measure, also maintaining its 25% weighting. 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 I WWI. 2022 Proxy Statement EXECUTIVE COMPENSATION Overview of Elements of Our 2021 Executive Compensation Program Timing Current Short -Term Performance Incentive Long -Term Performance Incentives Component Base Salary Annual Cash Incentive Performance Share Units Stock Options Restricted Stock Units Purpose To attract and retain executives with a competitive level of regular income To encourage and reward contributions to our annual financial objectives through performance -based compensation subject to challenging, yet attainable, objective and transparent metrics 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 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, new hire, special recognition) to make awards that encourage and reward long-term performance and increase alignment with stockholders Key Features Adjustments to base salary primarily consider competitive market data and the executive's individual performance and responsibilities. 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, excluding Depreciation and Amortization Margin —designed to motivate pursuit of high margin revenue growth while also controlling costs and operating efficiently (weighted 25%); and Total Revenue —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 2021 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 2021 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 granted in 2021 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 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. RSUs are not routinely an element of executive compensation, but one-off grants are made in certain circumstances, including in recognition of significant promotions and contributions. 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. Vint 2022 Proxy Statement I 27 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 2021 table and accompanying disclosure. Perquisites. The Company provides very Limited perquisites or personal benefits to executive officers. 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 2021, our President and Chief Executive Officer had Less than 18 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, although this does not occur frequently. 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 Chairman 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 non -employee 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 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, 28 I WWI. 2022 Proxy Statement EXECUTIVE COMPENSATION 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 2021 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 2020, using information from: • Size -adjusted median compensation data from two general industry surveys in which management annually participates; the Aon Hewitt 2020 Total Compensation Measurement Survey and the Willis Towers Watson 2020 Executive Compensation Database Survey. The 2020 Aon Hewitt Total Compensation Measurement Survey included 412 organizations ranging in size from approximately $30 million to $525 billion in annual revenue, and the 2020 Willis Towers Watson Executive Compensation Database Survey included 841 organizations ranging in size from approximately $50 million to $265 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. iiint 2022 Proxy Statement I 29 EXECUTIVE COMPENSATION 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 2021 compensation during 2020. ALL financial and market data are taken from Standard & Poor's Capital IQ, with financial data as of each company's 2019 fiscal year end and market capitalization as of December 31, 2019. Peer Company Comparison Group Net Revenue Operating Income Total Assets Total Equity Total Employees Market Capitalization WM Composite Percentile Rank 0% 10% 20% 30% 40% 50% 60% 18 Company Comparison Group American Electric Power Avis Budget C.H. Robison WW CSX Entergy FedEx Grainger WW Halliburton Hertz Global Holdings NextEra Energy Norfolk Southern Republic Services Ryder System Southern Southwest Airlines Sysco Union Pacific UPS 70% 80% 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 tong -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. 30 I WWI.2022 Proxy Statement EXECUTIVE COMPENSATION The following charts display the allocation of total 2021 target compensation among base salary, annual cash incentive and Long-term equity awards for (a) our President and Chief Executive Officer and (b) our other named executives, on average. These charts reflect the MD&C Committee's 2021 desired total mix of target compensation for named executives, other than our President and CEO, which includes approximately 60% of total compensation derived from Long-term equity awards, while Long-term equity awards comprised 72% of our President and Chief Executive Officer's total target compensation. These charts also reflect that approximately 89% of our President and Chief Executive Officer's total target compensation opportunities awarded in 2021 were performance -based. Approximately 80% of the total target compensation established in February 2021 for the other named executives, on average, was comprised of annual cash incentive and Long-term equity awards, all of which are performance -based with the exception of Mr. Boettcher's ADS Closing Award discussed below. 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 11% Base Salary 17% Annual Cash Incentive Other Named Executives, on Average 72% 61 Long -Term Long -Term Equity Awards Equity Awards 20% Base Salary 19% Annual Cash Incentive 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. 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 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' 2021 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 and reported in the Summary Compensation Table. 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 2021, 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. iiint 2022 Proxy Statement I 31 EXECUTIVE COMPENSATION 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, the MD&C Committee has agreed that it will 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. Named Executives' 2021 Compensation Program and Results Base Salary The MD&C Committee approved increases to the 2021 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 2021 annual base salary established by the MD&C Committee for each of our named executive officers. Named Executive Officer 2021 Base Salary Mr. Fish $1,300,000 Ms. Rankin $ 704,247 Mr. Morris $ 731,854 Mr. Boettcher $ 650,003 Ms. Hemmer $ 588,858 Annual Cash Incentive • Annual cash incentives were dependent on the following performance measures: Income from Operations, excluding Depreciation and Amortization; Income from Operations, excluding Depreciation and Amortization Margin and Total Revenue. • Blended results on the performance measures resulted in each of the named executives receiving an annual cash incentive payment for 2021 equal to 136.8% 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. Our income from operations, excluding depreciation and amortization, as a percentage of revenue performance measure, referred to as our Margin performance measure, encourages responsible, high margin revenue growth and cost management and reduction. The total revenue performance measure was implemented to encourage top Line growth. The MD&C Committee believes these financial performance measures, collectively, supported and aligned with the strategy of the Company in 2021. With the exception of the results on the Margin performance measure, the MD&C Committee believes these performance measures are reflective of the Company's overall performance and are appropriate indicators of our progress toward the Company's goals. See "2021 Pay -for -Performance" in the Executive Summary above for further discussion. 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 well as 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 2021. 32 I WM. 2022 Proxy Statement EXECUTIVE COMPENSATION Threshold Target Maximum Performance Performance Performance (60% Payment) (100% Payment) (200% Payment) Income from Operations, excluding Depreciation and Amortization $ 4.550 billion $ 4.787 billion $ 5.024 billion Margin 28.0% 28.3% 28.8% Total Revenue $16.068 billion $16.917 billion $17.766 billion 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 Margin Total Revenue (weighted 50%) (weighted 25%) (weighted 25%) Actual Payout Payout Earned Actual Earned Actual Total Payout Earned Payout (as a percentage Earned of Target) $4.961 billion 173.5% 27.7% 0% $17.931 billion 200% 136.8% As discussed above, the MD&C Committee has discretion to adjust the performance calculations in line with its policy on calculation adjustments. The MD&C Committee did not make any adjustments to the calculation of 2021 annual cash incentive performance measures. For purposes of our annual cash incentive awards, the income from operations, excluding depreciation and amortization performance measure and the Margin performance measure are generally defined to be calculated based on the Company's reported income from operations, excluding depreciation and amortization, "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" reported in our Annual Report on Form 10-K. 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 2021 and annual cash incentive for 2021 paid in March 2022. Target Percentage Annual Cash Incentive Named Executive Officer of Base Salary For 2021(1) Mr. Fish 150 $2,656,497 Ms. Rankin 100 $ 958,821 Mr. Morris 100 $ 996,408 Mr. Boettcher 75 $ 663,727 Ms. Hemmer 90 $ 721,549 (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 2021. Such amounts are lower than if calculated using the 2021 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' 2021 annual long-term incentive award, the MD&C Committee decided to 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 2021 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 2021, 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. iiint 2022 Proxy Statement I 33 EXECUTIVE COMPENSATION Named Executive Officer Dollar Values of 2021 Long -Term Equity Incentives Set by the Committee (at Target) Mr. Fish $8,500,000 Ms. Rankin $2,100,000 Mr. Morris $2,300,000 Mr. Boettcher" $1,300,000 Ms. Hemmer $1,700,000 (1) Amount does not include Mr. Boettcher's ADS CLosing Award discussed beLow under "Restricted Stock Units". Overview of Performance Share Units. • Named executives were granted new PSUs with a three-year performance period ending December 31, 2023. Half of each named executive's PSUs granted in 2021 are Cash Flow PSUs and the remaining half are TSR PSUs. • Named executives received a payout of 183.89% of the PSUs granted in 2019 with a three-year performance period ended December 31, 2021. The Company exceeded the maximum level of performance for the Cash Flow PSUs, and the Company exceeded the target level of performance for the TSR PSUs. PSUs Granted in 2021. 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 2021 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 grant date to determine the number of PSUs granted. The number of PSUs granted in 2021 are shown in the table beLow. Named Executive Officer Number of PSUs Mr. Fish 59,650 Ms. Rankin 14,736 Mr. Morris 16,140 Mr. Boettcher 9,122 Ms. Hemmer 11,930 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 economic conditions and business climate; (b) strategic acquisition, restructuring, and transformation and reorganization costs are excLuded; (c) cash proceeds from strategic divestitures of assets and businesses are excLuded; and (d) cash proceeds from divestitures of any other businesses and assets are incLuded (the "2021 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 2021. Threshold Target Maximum Performance Payout Performance Payout Performance Payout Cash Flow $6.60 biLLion 50% $7.032 biLLion 100% $7.50 biLLion 200% 34 I IAMA 2022 Proxy Statement EXECUTIVE COMPENSATION 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 2021. Total Shareholder Return Relative to the S&P 500 Performance Payout 75th percentiLe (Maximum) 200% 50th percentiLe (Target) 100% 25th percentiLe (Threshold) 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 2021 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, 2021. Half of the PSUs granted in 2019 with the performance period ended December 31, 2021 were TSR PSUs, and the remaining half of the PSUs granted in 2019 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, 2021, the performance of the Company's Common Stock on this measure translated into a percentiLe rank relative to the S&P 500 of 66.95%, resulting in a 167.78% payout in shares of Common Stock that were issued in February 2022. For purposes of the Cash Flow PSUs with a three-year performance period ended December 31, 2021, the Company generated net cash fLow from operating activities, Less capitaL expenditures, of $7.49 biLLion, exceeding the maximum criteria of $6.875 biLLion by $615 million; this performance level yielded a 200% payout in shares of Common Stock that were issued in February 2022. With respect to these Cash Flow PSUs, the underlying award agreements provide for performance to be measured using the same methodology as the 2021 Cash Flow PSU Definition set forth above, except that these 2019 awards did not provide for exclusion of cash proceeds from strategic divestitures of assets and businesses. In 2020, the Company received approximateLy $691 miLLion of after-tax proceeds on account of government - required divestitures in connection with our acquisition of ADS. As the Company exceeded maximum performance criteria by $615 million, only approximateLy $75 miLLion of the total $691 million divestiture proceeds discussed above benefited the award payout for the 2019 Cash Flow PSUs. The remainder of such proceeds were in excess of maximum performance criteria and did not yieLd any additional award payout. 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 2021 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 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. Named Executive Officer Number of Options Mr. Fish 98,551 Ms. Rankin 24,348 Mr. Morris 26,667 Mr. Boettcher 15,072 Ms. Hemmer 19,710 iiint 2022 Proxy Statement I 35 EXECUTIVE COMPENSATION The stock options granted in 2021 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The exercise price of the options granted in 2021 is $110.81, 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. Mr. Boettcher was the only named executive with unvested RSUs as of December 31, 2021. Mr. Boettcher received a grant of 4,386 RSUs in connection with the ADS transaction in February 2021, as the MD&C Committee desired to recognize his Leadership and contributions critical to the negotiation and consummation of the acquisition in October 2020. These ADS Closing Award RSUs will vest in full on the third anniversary of the date of grant. Dividends on the RSUs will accrue and be paid in cash upon vesting. The RSUs may not be voted or sold until vested. Unvested RSUs are subject to forfeiture in the event of voluntary or for -cause termination. RSUs will be prorated upon involuntary termination other than for cause, and RSUs immediately vest in the event of an employee's death or disability. 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, increased responsibilities, special recognition and to attract new hires, and that RSUs will not be a routine component of named executive compensation. See "2022 Compensation Program Preview" in the Executive Summary above regarding the ADS Integration Awards of RSUs granted to Ms. Rankin, Mr. Morris and Ms. Hemmer in 2022. Post -Employment and Change in Control Compensation; Clawback Policies Severance Protection Plan. In December 2017, we adopted an Executive Severance Protection Plan (the "Severance Protection Plan") and each of Messrs. Fish, Morris, Boettcher 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 Ms. Hemmer is not 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. 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. 36 I WWI. 2022 Proxy Statement EXECUTIVE COMPENSATION 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 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 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 senior 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 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. 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 multiple of base salary. Each named executive's multiple of base salary and attainment as of March 15, 2022, using the closing price of our Common Stock on such date and base salaries in effect on December 31, 2021, are set forth below. 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. Ownership Guideline Multiple of Base Salary Attainment as of March 15, 2022 Mr. Fish 6x 488% Ms. Rankin 3x 363% Mr. Morris 3x 778% Mr. Boettcher 3x 252% Ms. Hemmer 3x 330% As discussed under "Director and Officer Stock Ownership," the MD&C Committee also establishes ownership guidelines for the non -employee directors and performs regular reviews to ensure all non -employee directors are in compliance or are showing sustained progress toward achievement of their ownership guideline. Vint 2022 Proxy Statement I 37 EXECUTIVE COMPENSATION 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 I WWI. 2022 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 Non -Equity Stock Option Incentive Plan All Other Salary Awards Awards Compensation Compensation Total (5) (5)11) ($))2) ($))3) (5)(4) ($) James C. Fish, Jr. President and Chief Executive Officer 2021 1,294,231(5) 7,312,195 1,700,005 2,656,497 94,435 13,057,363 2020 2019 1,269,231(5) 8,110,592 1,600,003 1,277,922 116,177 12,373,925 1,232,788(5) 6,853,530 1,399,997 1,704,132 107,654 11,298,101 Devina A. Rankin Executive Vice President and Chief Financial Officer 2021 2020 2019 700,671 1,806,413 420,003 958,821 56,094 3,942,002 677,061 2,027,801 399,993 456,597 60,493 3,621,945 618,208 1,958,118 399,997 578,516 68,575 3,623,414 John J. Morris, Jr. Executive Vice President and Chief Operating Officer 2021 728,138 1,978,522 460,006 996,408 67,420 4,230,494 2020 2019 712,115 2,230,520 440,002 479,777 99,517 3,961,930 699,807 2,153,907 440,006 661,476 86,046 4,041,242 Charles C. Boettcher Executive Vice President - Corporate Development and Chief Legal Officer 2021 646,702 1,604,233 259,992 663,727 46,927 3,221,581 Tara J. Hemmer Senior Vice President and Chief Sustainability Officer 2021 585,868 1,462,439 339,998 721,549 45,601 3,155,455 2020 567,062 1,672,967 330,005 347,774 57,125 2,974,933 2019 535,670 1,615,372 330,001 479,828 38,502 2,999,373 (1) Amounts in this column represent the grant date fair value of PSUs granted to all named executives annually and 4,386 ADS Closing Award RSUs granted to Mr. Boettcher in 2021. The grant date fair values were calculated in accordance with ASC Topic 718, as further described in Note 14 in the Notes to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K. The grant date fair value of a TSR PSU granted in 2021, based on a Monte Carlo valuation, is $134.36, 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 2021, and an ADS Closing Award RSU, is $110.81, which is the average of the high and low market price of our Common Stock on the date of the grant, in accordance with our 2014 Stock Incentive Plan. The table below shows (a) the aggregate grant date fair value of Cash Flow PSUs assuming target level of performance is achieved (this is the amount included in the Stock Awards column in the Summary Compensation Table) and (b) the aggregate grant date fair value of the same PSUs assuming the Company will reach the highest level of achievement for this performance measure and maximum payouts will be earned. Vint 2022 Proxy Statement I 39 EXECUTIVE COMPENSATION Year Aggregate Grant Date Fair Value of Cash Flow PSUs Assuming Target Level of Performance Achieved ($) Aggregate Grant Date Fair Value of Cash Flow PSUs Assuming Highest Level of Performance Achieved ($) Mr. Fish 2021 3,304,908 6,609,817 2020 3,332,328 6,664,656 2019 2,914,920 5,829,840 Ms. Rankin 2021 816,448 1,632,896 2020 833,145 1,666,290 2019 832,820 1,665,640 Mr. Morris 2021 894,237 1,788,473 2020 916,434 1,832,869 2019 916,092 1,832,184 Mr. Boettcher 2021 505,404 1,010,808 Ms. Hemmer 2021 660,982 1,321,963 2020 687,357 1,374,715 2019 687,044 1,374,088 (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 2021, estimated using the Black-Scholes option pricing model, is $17.25 per option. See Note 14 in the Notes to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for additional information. (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 2021 Compensation Program and Results —Annual Cash Incentive" for additional information. (4) The amounts included in "ALL Other Compensation" for 2021 are shown below (in dollars): 409A Deferral Perquisites 401(k) Plan and Other Plan Matching Matching Life Insurance Personal Contributions Contributions Premiums Benefits(a) Mr. Fish 13,050 38,731 2,145 40,509 Ms. Rankin 13,050 41,788 1,256 Mr. Morris 13,050 26,572 1,313 26,485 Mr. Boettcher 13,050 32,709 1,168 Ms. Hemmer 13,050 31,492 1,059 (a) This column consists of 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. When a deviation is made from business travel to pick up or drop off the executive in another Location for a personal purpose, 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 in the rare event that a deadhead flight is 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 our aircraft in the direct operating cost. (5) Includes $100,000 in each of 2021 and 2020 and $75,000 in 2019 of base salary to which Mr. Fish was entitled but voluntarily relinquished to fund a scholarship program for children of Company employees. 40 I IAMA 2022 Proxy Statement EXECUTIVE COMPENSATION GRANT OF PLAN -BASED AWARDS IN 2021 Estimated Possible Payouts Under Non -Equity Incentive Plan Awards') Estimated Future Payouts Under Equity Incentive Plan Awards(2) Threshold Grant Date ($) James C. Fish, Jr. All other Stock Awards: Number of Shares of Target Maximum Threshold Target Maximum Stock or ($) ($) (#) All other Option Exercise Awards: or Base Number of Price of Securities Option Underlying Awards (#) (#) Units (#)(3) Options(#)1 Closing Market Price on Date of Grant ($/sh)15 ($/sh) Grant Date Fair Value of Stock and Option Awards ($)(6) Cash Incentive 1,165,130 1,941,883 3,883,767 2/23/21 29,825 59,650 119,300 7,312,195 2/23/21 98,551 110.81 109.92 1,700,005 Devina A. Rankin Cash Incentive 420,536 700,893 1,401,787 2/23/21 2/23/21 John J. Morris, Jr. 7,368 14,736 29,472 1,806,413 24,348 110.81 109.92 420,003 Cash Incentive 437,021 728,368 1,456,737 2/23/21 2/23/21 Charles C. Boettcher Cash Incentive 291,108 485,180 970,360 8,070 16,140 32,280 1,978,522 26,667 110.81 109.92 460,006 2/23/21 2/23/21 2/23/21 Tara J. Hemmer 4,561 9,122 18,244 1,1 18,220 15,072 110.81 109.92 259,992 4,386 486,013 Cash Incentive 316,469 527,448 1,054,897 2/23/21 5,965 11,930 23,860 1,462,439 2/23/21 19,710 110.81 109.92 339,998 (1) Actual payouts of cash incentive awards for 2021 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 2021 Compensation Program and Results - Annual Cash Incentive" for additional information about these awards. (2) Consists of 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 Executive's 2021 Compensation Program and Results - Long -Term Equity Incentives - Performance Share Units" for additional information about these awards. The performance period for these awards ends December 31, 2023. PSUs earn dividend equivalents, which are paid out based on the number of shares earned at the end of the performance period. (3) Consists of the number of shares of Common Stock issuable upon the vesting of the ADS Closing Award RSUs granted under our 2014 Stock Incentive Plan. These RSUs vest in full on the third anniversary of the date of grant. See "Compensation Discussion and Analysis - Named Executive's 2021 Compensation Program and Results - Long -Term Equity Incentives - Restricted Stock Units" for additional information about this award. (4) Consists of 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 2021 Compensation Program and Results - Long -Term Equity Incentives - Stock Options" for additional information about these awards. Stock options vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 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. (5) 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. (6) 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. iiint 2022 Proxy Statement I 41 EXECUTIVE COMPENSATION OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2021 Option Awards Stock Awards") Name Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Number of Value of Market Unearned Unearned Number of Number of Number of Value of Shares, Shares, Securities Securities Shares or Shares or Units or Units or Underlying Underlying Units of Units of Other Other Unexercised Unexercised Option Stock Stock Rights Rights Options Options Exercise Option That Have That Have That Have That Have Exercisable Unexercisable Price Expiration Not Vested Not Vested Not Vested Not Vested (#)'z' (#) ($) Date (#►(6) ($N6) (#)"' ($)"' James C. Fish, Jr. 98,551(3) 110.81 2/23/2031 — 112,542 37,566,520 25,284 75,854(4) 126.005 2/19/2030 57,283(5) 98.898 2/19/2029 Devina A. Rankin 24,348(3) 110.81 2/23/2031 27,960 9,333,048 6,321 18,963(4) 126.005 2/19/2030 16,367(5) 98.898 2/19/2029 John J. Morris, Jr. 26,667(3) 110.81 2/23/2031 30,686 10,242,987 6,953 20,860(4) 126.005 2/19/2030 9,002 18,004(5) 98.898 2/19/2029 Charles C. Boettcher 15,072(3) 110.81 2/23/2031 4,386 732,023 17,718 5,914,268 4,108 12,327(4) 126.005 2/19/2030 10,638 10,639(5) 98.898 2/19/2029 Tara J. Hemmer 19,710(3) 110.81 2/23/2031 22,840 7,623,992 5,215 15,645(4) 126.005 2/19/2030 13,502 13,503(5) 98.898 2/19/2029 (1) Values are based on the closing price of our Common Stock on December 31, 2021 of $166.90. (2) Includes vested stock options granted on February 19, 2019 and February 19, 2020 pursuant to our 2014 Stock Incentive Plan. (3) IncLudes stock options granted on February 23, 2021 that vest ratably in three annual increments, beginning on the first anniversary of the date of grant. (4) Includes stock options granted on February 19, 2020 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. (5) Includes stock options granted on February 19, 2019 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. 42 I iiN1a 2022 Proxy Statement EXECUTIVE COMPENSATION (6) Includes the ADS Closing Award RSUs granted to Mr. Boettcher on February 23, 2021 under our 2014 Stock Incentive Plan. The RSUs vest in full on the third anniversary of the date of grant. (7) Includes PSUs with three-year performance periods ending December 31, 2022 and December 31, 2023. 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 February of the succeeding year. The PSUs for the performance period ended December 31, 2021 are not included in the table as they are considered earned as of December 31, 2021 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, 2021 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, 2022: Mr. Fish — 52,892; Ms. Rankin — 13,224; Mr. Morris — 14,546; Mr. Boettcher — 8,596; and Ms. Hemmer — 10,910. The following number of PSUs have a performance period ending December 31, 2023: Mr. Fish — 59,650; Ms. Rankin — 14,736; Mr. Morris-16,140; Mr. Boettcher-9,122; and Ms. Hemmer-11,930. OPTION EXERCISES AND STOCK VESTED Name Option Awards Stock Awards Number of Shares Value Realized on Number of Shares Value Realized on Acquired on Exercise(#r Exercise ($) Acquired on Vesting (#)(2) Vesting ($)(2) James C. Fish, Jr. 106,625 5,105,012 108,399 15,459,399 Devina A. Rankin 44,327 2,873,915 30,971 4,416,951 John J. Morris, Jr. 14,803 379,054 34,067 4,858,489 Charles C. Boettcher 46,918 3,335,416 20,096 2,866,005 Tara J. Hemmer 16,447 1,048,127 25,550 3,643,831 (1) The following number of net shares were received, after withholdings and the sale of shares to cover option costs and taxes: Mr. Fish — 22,037; Ms. Rankin — 11,212; Mr. Morris — 2,072; Mr. Boettcher — 13,561; and Ms. Hemmer-4,261. (2) Includes shares of the Company's Common Stock issued on account of PSUs granted in 2019 with a performance period ended December 31, 2021. The determination of achievement of performance results and corresponding vesting of such PSUs was performed by the MD&C Committee in February 2022. Following such determination, shares of the Company's Common Stock earned under this award were issued on February 15, 2022, based on the average of the high and Low market price of our Common Stock on that date. lAnt 2022 Proxy Statement I 43 EXECUTIVE COMPENSATION Nonquatified Deferred Compensation in 2021 Amounts that Can be Deferred. Under our 409A Deferral PLan, each of our named executive officers may eLect to defer receipt of portions of their base saLary and annuaL cash incentives for the appLicabLe fiscal year in excess of the annual compensation threshold (the "Threshold") estabLished under Section 401(a)(17) of IRC. For 2021, the Threshold was $290,000. Such deferraLs wiLL result in a deferraL of taxation on the amounts deferred. The 409A Deferral Plan provides that a plan participant may defer, for payment at a future date (a) up to 25% of the participant's base saLary, and up to 100% of the participant's annuaL cash incentives, payable after the aggregate of such base saLary and annuaL cash incentives reaches the Threshold; (b) any RSUs that would otherwise be received by the pLan participant; and (c) any PSUs that would otherwise be received by the pLan participant. Matching Contributions. 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. Timing of Distributions. 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 Executive Registrant Aggregate Contributions Contributions Earnings in Last in Last in Last Aggregate Aggregate Balance Fiscal Fiscal Fiscal Withdrawals/ at Last Fiscal Year ($)(1) Year ($)(2) Year ($)(3) Distributions ($)(3) Year End ($)(4) James C. Fish, Jr. 48,413 38,731 5,140,175 218,141 18,382,929 Devina A. Rankin 52,036 41,788 91,852 641,920 John J. Morris, Jr. 35,430 26,572 527,655 2,696,489 Charles C. Boettcher 40,575 32,709 66,311 515,684 Tara J. Hemmer 57,623 31,492 77,883 613,737 (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 the case of Mr. Fish, who has deferred receipt of a totaL of 94,844 shares of Common Stock in prior years, earnings also incLude the change in the closing price per share of the Company's Common Stock from December 31, 2020 to December 31, 2021, plus $2.30 of dividend equivaLents paid per share of Common Stock in 2021, muLtipLied by the number of shares deferred. The dividend equivaLents on the deferred shares were paid in cash to Mr. Fish during 2021 and are reflected in the Aggregate WithdrawaLs/ Distributions coLumn above. The value of Mr. Fish's deferred shares was incLuded in the Option Exercises and Stock Vested table in the years such awards vested. (4) Amounts shown in this column incLude the foLLowing amounts that were reported as compensation to the named executive in the Summary Compensation TabLe for 2019-2021: Mr. Fish — $592,656; Ms. Rankin — $271,326; 44 I iiN1a 2022 Proxy Statement EXECUTIVE COMPENSATION Mr. Morris — $204,817; and Ms. Hemmer — $261,526. With respect to Mr. Boettcher, who became a named executive in 2021, $73,284 of his total amount shown in this column was reported as compensation in the Summary Compensation Table for 2021. 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 Exhibit List to the Company's Annual Report on Form 10-K, for the full 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. Vint 2022 Proxy Statement I 45 EXECUTIVE COMPENSATION 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, 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, 2021, when the closing price of our Common Stock was $166.90 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 2019, 2020 and 2021, based on the difference between the closing price of our Common Stock on December 31, 2021 and the exercise price of those options. • For purposes of calculating the payout of performance share unit awards outstanding as of December 31, 2021, we have assumed that target performance was achieved; 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, 2021. • 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 2021 table above for aggregate balances payable to the named executives under our 409A Deferral Plan pursuant to the named executive's distribution elections. 46 I IAMA 2022 Proxy Statement EXECUTIVE COMPENSATION Potential Consideration Upon Termination of Employment Mr. Fish Ms. Rankin Mr. Morris Mr. Boettcher Ms. Hemmer 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 performance at end of performance period) • AcceLerated vesting of RSUs • 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 12,525,134 3,254,160 3,573,130 2,072,974 2,663,567 18,783,260 4,666,524 5,121,493 2,957,134 3,811,996 — 732,023 1,175,000 32,483,394 689,000 716,000 636,000 576,000 8,609,684 9,410,623 6,398,131 7,051,563 • 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 benefit plans for two years • Prorated payment of PSUs (contingent on actuaL performance at end of performance period) • Prorated vesting of RSUs 6,500,000 2,816,988 2,927,416 2,275,011 2,237,660 28,416 28,416 28,416 28,416 28,416 9,203,645 2,291,203 2,516,407 1,463,936 1,877,625 — 204,967 Total 15,732,061 5,136,607 5,472,239 3,972,330 4,143,701 In Event of Termination Without Cause by the Company or For Good Reason 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) • 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 RSUs 6,500,000 2,816,988 2,927,416 2,275,011 2,237,660 28,416 12,525,134 9,203,645 9,579,615 28,416 3,254,160 2,291,203 2,375,321 28,416 3,573,130 2,516,407 2,605,086 28,416 2,072,974 1,463,936 1,493,199 732,023 28,416 2,663,567 1,877,625 1,934,371 • Prorated annual cash bonus') Total 3,900,000 1,408,494 1,463,708 975,005 529,972 41,736,810 12,174,582 13,114,163 9,040,564 9,271,611 (1) Pursuant to the Severance Protection Plan, Ms. Hemmer receives a prorated target annuaL cash bonus under this scenario. Mr. Fish, Ms. Rankin, Mr. Morris and Mr. Boettcher 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. iiint 2022 Proxy Statement I 47 EXECUTIVE COMPENSATION Chief Executive Officer Pay Ratio In 2022, we reconducted our analysis to identify 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 2021, 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. The Median Employee, a Senior Technician in the U.S., was identified from a List of Company employees as of December 31, 2021. Out of a total worldwide employee population of 48,687 on that date, the List included 47,617 employees and excluded the Chief Executive Officer and our 1,069 employees based in India. Approximately 95.7% of these total employees work in the U.S. and approximately 4.3% 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. For 2021, total annual compensation for the Median Employee was $80,744. The annual compensation of our Chief Executive Officer was $13,057,363, for a ratio of 1:162. 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, 2021 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 Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights Equity compensation plans approved by security holders") 4,717,856(2) Weighted -Average Exercise Price of Outstanding Options and Rights $92.53(3) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans 19,587,918(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 3,206,076 shares of Common Stock; 201,098 shares of Common Stock to be issued in connection with deferred compensation obligations; 342,860 shares underlying unvested RSUs and 967,822 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 967,822 shares. The total number of shares subject to outstanding awards in the table above includes 346,402 shares on account of PSUs, at target, with the performance period ended December 31, 2021. The determination of achievement of performance results on such PSUs was performed by the MD&C Committee in February 2022, and the Company achieved (a) maximum performance criteria on the Cash Flow PSUs, yielding a 200% payout and (b) above target performance criteria on the TSR PSUs, yielding a 167.78% payout. A total of 420,888 shares of Common Stock were issued on account of such PSUs in February 2022, net of units deferred, of which 228,582 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 note (2) above. (4) The shares remaining available include 2,724,119 shares under our ESPP and 16,863,799 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 17,831,621. 48 I iiN1a 2022 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 2022, 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: 2021 2020 Audit Fees Audit -Related Fees Tax Fees (In millions) $5.9 $6.2 0.3 — All Other Fees Total $6.2 $6.2 Audit fees include 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 also include services relating to the implementation of the Company's new enterprise resource planning system. 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 2021 and 2020, 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 2022. w 2022 Proxy Statement I 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 majority 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- year period, Link executives' interests with long-term performance and reduce incentives to maximize 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 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. THE BOARD RECOMMENDS THAT YOU VOTE TO APPROVE THE COMPANY'S EXECUTIVE COMPENSATION. 50 I WWI.2022 Proxy Statement STOCKHOLDER PROPOSAL (ITEM 4 ON THE PROXY CARD) The following proposal was submitted by the International Brotherhood of Teamsters General Fund, 25 Louisiana Avenue, NW, Washington, DC 20001, which owns 143 shares of Waste Management, Inc. Common Stock. The proposal has been included verbatim as we received it. Waste Management is not responsible for the content of this stockholder proposal or supporting statement. STOCKHOLDER PROPOSAL RESOLVED that shareholders of Waste Management, Inc. ("Waste Management"), urge the Board of Directors to oversee a third -party audit analyzing the adverse impact of Waste Management's policies and practices on the civil rights of company stakeholders, above and beyond legal and regulatory matters, and to provide recommendations for improving the company's civil rights impact. Input from civil rights organizations, employees, customers, and other stakeholders should be considered in determining the specific matters to be analyzed. A report on the audit, prepared at reasonable cost and omitting confidential or proprietary information, should be publicly disclosed on Waste Management's website. SUPPORTING STATEMENT: Recently, the racial justice movement together with the disproportionate impacts of the COVID- 19 pandemic have focused the public's and policy makers' attention on civil rights and gender and racial equity issues. In response to the racial justice protests in June 2020, Waste Management's CEO stated that "Waste Management's family stand united against racism." Inclusion, equity, and diversity (IE&D) is also a fundamental value and part of the company's code of conduct. While the company states IE&D is a fundamental value, its policies and practices fail to reflect this statement. Waste Management's workforce is 22% Hispanic, 19% Black, and 18% women according to its latest diversity report (2020 data). Yet only 11 % of executives are considered ethnically diverse. Further, based on 2019 data (the latest year for which Waste Management broke out the category), nearly half of the jobs held by women are in "administrative support," while 79% of executive and management level positions are held by men. Though the company has a goal of increasing representation of women overall and minorities in all segments of the business by 2025, it is unclear how Waste Management is evaluating the effectiveness of these programs given there does not appear to be concrete metrics attached. Lending urgency to an audit is the recent suggestion by company management that immigrants are good candidates for alleviating the industry's perceived driver shortage.' Targeting immigrants to fill high -paying, stable jobs could help ameliorate inequalities. However, immigrants, especially those of color, are among the most vulnerable and easily exploitable populations. A PBS NewsHour report noted, "Immigrants perform some of America's lowest -paying, arduous jobs, and are among those most victimized by employers failing to pay them fairly."2 The civil rights impact of Waste Management's facilities and services also warrant further evaluation. The company disclosed that the majority of people living within one kilometer of its facilities are non -white. While the company is providing greater transparency on its environmental justice footprint, it does not appear to have objectively evaluated how this data could be used to address the disproportionate impact of its facilities on the public health and economic equality of communities of color. We urge shareholders to vote FOR this proposal. 1 https://www.wastedive.com/news/waste-expo-labor-shortage-incarcerated-worker-opportunities/602638/ 2 https://www.pbs.org/newshour/economy/wage-theft-hits-immigrants-hard WASTE MANAGEMENT RESPONSE TO STOCKHOLDER PROPOSAL The Board recommends that stockholders vote AGAINST this proposal. Waste Management appreciates the proponent's investment in our Company and the direct engagement with the proponent via video calls and emails in response to their stockholder proposal. We respect the request for a civil rights audit and understand the critical importance of racial and gender equity and environmental justice. Inclusion, equity & iiint 2022 Proxy Statement I 51 diversity are fundamental values at Waste Management, and we are committed to our work in these areas. We encourage stockholders to review our 2021 SustainabiLity Report at https://sustainabiLity.wm.com to Learn more about our peopLe- first culture and progress embedding inclusion, equity and diversity across our Company. (Neither our 2021 SustainabiLity Report, nor any information avaiLabLe at https://sustainabiLity.wm.com, constitutes a part of, or is incorporated by reference into, this Proxy Statement or any report filed with the SEC.) We are proud of the work done so far, and we know that future progress will require on -going efforts, Long-term focus and dedication. In particular, Waste Management has two substantial initiatives currently in -progress that we expect to yield notable results to be publicly -disclosed in 2022; those initiatives include: • In 2021, our Company engaged the consulting services arm of one of the big four accounting firms to conduct a substantial assessment of Waste Management's ESG goals and progress against them and assist in setting new goals. This effort includes review of our Company's prior and current practices, goals and materiality assessments; benchmarking against competitors and Leaders; review of customer and investor expectations; consideration of opportunities, risks, barriers and future developments; development of a ESG goal -setting framework and new ESG goals (including a Science -Based Target for greenhouse gas emissions, as well as social/ workforce goals); preparation of a roadmap for each goal, including programs/policies, communication strategies and delivery costs; and documentation of a process to analyze results. Waste Management's new ESG goals resulting from this process will be announced in 2022. • Waste Management has Long been focused on environmental justice and the relationship between our facilities and their communities. In 2021, we undertook efforts to further this understanding with the development of a new environmental justice mapping tool in response to specific investor inquiries to be able to see aLL Waste Management facilities on a map, Linking to the EPA's publicly avaiLabLe EJ mapping tool. The results of these efforts are being updated in our ESG Hub on our sustainabiLity website as they are completed. After doing the extensive data gathering and input necessary in 2021 to develop the new EJ mapping tool, we are evaluating additional ways the tool might be used to provide information regarding Waste Management's footprint and community impact. The completion of these two projects in 2022, as well as other on -going activities discussed in our SustainabiLity Report, will provide substantial advancement, and a more clear and measurable understanding, of our Company's social and environmental justice commitments. For this reason, we believe the best course of action for 2022 is to continue our work -in -progress to which our people and resources are already dedicated, and to allow this work to inform our next steps. We believe that undertaking a civil rights audit in 2022 could disrupt, delay and divert attention and important resources from the goal -setting work that is already underway, as well as hinder the execution of the audit. Additionally, with racial equity audits and civil rights audits being reLativeLy new initiatives, we also believe that it would be beneficial to our future consideration of such an undertaking to allow additional companies, and auditors, to gain experience about the best methodology, process and scope for such an audit. Accordingly, our Board recommends a vote against this stockholder proposal. Additionally, through the course of direct engagement with the proponent, we gathered internal ESG Leaders to discuss other specific inquiries raised. In response to a particular follow-up inquiry from the proponent about the use of prison - Labor, we were pleased to report, and update our internal policies to reflect, that Waste Management does not use forced Labor or prison -Labor in the performance of any work. VOTE REQUIRED FOR APPROVAL If this proposal is properly presented at the meeting, approval 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. AGAINST x THE BOARD RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL. 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. 52 I WWI. 2022 Proxy Statement 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, 2021 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 73-1309529 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 800 Capitol Street Suite 3000 Houston, Texas 77002 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (713) 512-6200 Title of Each Class Common Stock, $0.01 par value Securities registered pursuant to Section 12(b) of the Act: Trading Symbol Name of Each Exchange on Which Registered WM 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 0 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 0 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 0 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. 0 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ❑ No 0 The aggregate market value of the voting stock held by non -affiliates of the registrant as of June 30, 2021 was approximately $58.9 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 9, 2022 was 414,586,718 (excluding treasury shares of 215,695,743). DOCUMENTS INCORPORATED BY REFERENCE Document Proxy Statement for the 2022 Annual Meeting of Stockholders Incorporated as to Part III TABLE OF CONTENTS PART I Item 1. Business 3 Item 1A. Risk Factors 17 Item 1B. Unresolved Staff Comments 31 Item 2. Properties 31 Item 3. Legal Proceedings 32 Item 4. Mine Safety Disclosures 32 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6. [Reserved] 34 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 66 Item 8. Financial Statements and Supplementary Data 67 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 127 Item 9A. Controls and Procedures 127 Item 9B. Other Information 128 PART III Item 10. Directors, Executive Officers and Corporate Governance 128 Item 11. Executive Compensation 128 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 128 Item 13. Certain Relationships and Related Transactions, and Director Independence 128 Item 14. Principal Accounting Fees and Services 128 PART IV Item 15. Exhibits 129 Item 16. Form 10-K Summary 131 2 PART I Item 1. Business. General 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 "WMI," we are referring only to Waste Management, Inc., the parent holding company. WMI 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 WMI 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 WMI, WM Holdings is a holding company and all operations are conducted by subsidiaries. Our principal executive offices are located at 800 Capitol Street, Suite 3000, 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 2021, our largest customer represented less than 5% of annual revenues. We employed approximately 48,500 people as of December 31, 2021. We own or operate 260 landfill sites, which is the largest network of landfills throughout 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 340 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. As North America's 3 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. Our strategy 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, enhancements to our digital platform, 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 continue to improve existing diversion technologies, such as through investments in our recycling operations, we are also evaluating and pursuing emerging diversion technologies that may generate additional value. 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 2021, we announced that our Board of Directors expects to increase the quarterly dividend from $0.575 to $0.65 per share for dividends declared in 2022, which is a 13.0% increase from the quarterly dividends we declared in 2021. This is an indication of our ability to generate strong and consistent cash flows and marks the 19th 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 In 2021, our senior management began evaluating, overseeing and managing the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The Company finalized the assessment of our segments during the fourth quarter of 2021. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. 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. Additional information related to our acquisition of Advanced Disposal and segments is included in Notes 17 and 19 to the Consolidated Financial Statements, respectively. 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 provide are described below. 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. 4 • 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 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, 2021, we owned or operated 255 solid waste landfills and five secure hazardous waste landfills, which represents the largest network of landfills throughout 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, 2021, we owned or operated 340 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. 5 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. 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. In 2021, we made significant investments in technology to automate our equipment, which benefits our labor productivity, produce higher quality commodities for our customers, and increase our capacity in geographies where we currently have a MRF, as well as expanding our footprint into new geographies. In addition to advancing our single stream recycling programs for commercial applications, we will continue to invest in recycling technologies designed to offer services and solutions to support and grow our current operations. 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, 2021, we operated 96 MRFs, of which 49 are single stream, 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. In our materials processing business, we have been transitioning our customer base over time 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 6 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, which is 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 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, 2021, we had 144 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 102 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. WM Renewable Energy also produces renewable natural gas ("RNG") from landfill gas and generates renewable identification numbers (RINs") under the Renewable Fuel Standard ("RFS") program and other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet. The RINs and credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs and credits proportionate to their fossil fuel production and imports. RINs prices generally respond to regulations enacted by the EPA or other regulatory bodies, as well as fluctuations in supply and demand. WM Renewable Energy currently has four owned facilities producing 3 2 million MMBtu of RNG annually and most of the revenue from these facilities is generated through the sale of RINs. We expect to grow the number of plants from four to 21 by 2026 and project that we will generate approximately 24 million MMBtu of RNG annually with the expanded asset base. While developing these facilities and expanding our renewable energy generation, we intend to evaluate various offtake arrangements, including the sale of RINs and the direct sale of RNG to large industrial users such as utilities and colleges and universities. 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. 7 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. Operating costs, disposal costs and collection fees vary widely throughout the geographic 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 also compete 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 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 geographic 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 geographic 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, 2021, we had approximately 48,500 full-time employees across the U.S., Canada and India. Approximately 45,400 employees were located within the U.S. and 3,100 employees were located outside of the U.S. Approximately 9,200 employees were employed in administrative and sales positions with the remainder in operations. Approximately 8,500 of our employees are covered by collective bargaining agreements. Additional information about our workforce can be found in our 2021 Sustainability Report at https://sustainability.wm.com. Our 2021 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 8 retention and supporting ongoing cultural integration and knowledge transfer. We regularly focus on these objectives when managing our business. 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. "We Are WM" is our Employer Value Proposition, grounded in our People First commitment and shared through a framework that enables us to display that we are (i) investing in our teams by providing comprehensive benefits; (ii) committed to the growth of our team by providing state-of-the-art trainings and our new education benefit, Your Tomorrow, as further discussed under Compensation and Benefits; (iii) performing essential and meaningful work and (iv) working for a sustainable tomorrow by leaving the world a better place than we found it. 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. 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, Equity and Diversity We embrace and cultivate respect, trust, open communications and diversity of thought and people. We are committed to equality for all, and foster an environment where all teammates feel welcomed, valued and seen. We are laser -focused on strengthening our current business strategy to see that inclusion, equity and diversity (" IE&D") are not an initiative, but core in everything that we do. Our commitment to IE&D starts at the top with our senior leadership team being comprised of 30% ethnic minorities and 30% women as of December 31, 2021; and with our overall workforce in the U.S. being comprised of approximately 45% ethnic minorities and approximately 19% women as of the same date. We are proud of what we have been able to achieve. To enable us to achieve our goals, we have established a cross -functional IE&D Council aimed at evaluating policies, practices and procedures, recruitment and partnerships to ensure that our IE&D efforts are sustainable and are tied to our business strategy. 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 recognize the value of learning beyond the workplace. In 2021, we announced a new education benefit, Your Tomorrow. Your Tomorrow was created in partnership with Guild Education 9 to pay 100% of benefits -eligible employees' and dependents' tuition for a broad range of four-year college degree programs, as well as programs such as high-school equivalency and, for employees, other certificate programs and graduate degrees. We also provide plans to help employees save for their future; refer to Note 9 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 fmancial 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 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, 2021, 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, 2021, 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, 2021 are summarized in Note 10 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, process and manage solid waste and recyclables 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, construction, 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, materials recovery facility, compost 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 10 will be able to obtain or maintain required governmental approvals. Once obtained, permits are subject to renewal, modification, suspension or revocation by the issuing authority. 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 current U S administration, for example, has been taking steps towards reinstating, and in some cases enhancing, policies and regulations rolled back by the previous administration. While increasing regulation may have a negative impact on our operating costs, extensive environmental regulation applicable to the waste sector is also 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. Federal Regulation 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. We continue to monitor certain developments under RCRA, including relief from increased user fees accompanying the system that the EPA uses to track hazardous waste shipments electronically, potential changes to the rules governing the disposal and beneficial use of coal combustion residuals, and clarity on the U.S. Department of Energy's progress in establishing a government facility and corresponding fee structure for the long-term storage and disposal of elemental mercury. We cannot predict what costs we will incur in connection with these regulations, but we do not anticipate a material impact to our operations. We also are working closely with both agencies to minimize risks to our industry on these regulatory matters. • 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 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 federally protected 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. 11 The EPA also requires landfills and other waste -handling facilities to obtain storm water discharge permits, and 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 certain "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. Many of our municipal solid waste ("MSW") landfills and landfill gas -to -energy facilities are subject to regulations implemented under the Clean Air Act, including new source performance standards, emission guidelines and national emission standards for hazardous air pollutants. These 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 EPA fmalized a rule in May 2021 implementing landfill gas control and monitoring requirements for older landfills; however, the regulatory changes contemplated therein are not expected to have a material adverse impact on our business as a whole. We also are closely monitoring the evolving capabilities of ground, aerial, and satellite -based methane detection and monitoring systems, and investing in pilot programs to further explore these innovations. As these technologies are expected to advance rapidly in the coming years, we are continuing to engage with the EPA on the implications of the changing landscape for the waste industry and potential future regulation. • 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. OSHA has recently indicated that it will pursue COVID-19 vaccine and testing requirements through a traditional rulemaking process, and additional vaccine mandates may be announced in jurisdictions in which our businesses operate. We cannot currently predict the impact of any such vaccine requirements on our workforce. 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, and laws governing where recyclable materials can be sold. 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 materials at landfills, such as recyclable materials (cardboard, bottles and cans), yard waste, food waste and electronics. The number of state and local governments with recycling and diversion requirements and disposal bans continues to grow, while the logistics and economics of recycling or processing many of these 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. 12 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, which has been upheld by the U.S. Supreme Court for waste directed to facilities owned by the local government. 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. 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. Emerging Trends in Policy and Regulation Climate and Sustainability Jurisdictions are increasingly taking action to reduce greenhouse gas ("GHG") emissions through a broad range of climate policies. As landfills are emerging as one of the focal points for advancing climate -related goals, we are actively working with policymakers to ensure they recognize the significant reductions in GHG emissions that the waste sector already has achieved and the work being done to further reduce emissions, the challenges associated with quantifying landfill emissions precisely, and the role of our sector in providing an essential, and highly regulated, public service. In light of regulatory and business developments related to concerns about climate change, we have identified strategic business opportunities 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, composting, and conversion of landfill gas and discarded materials into electricity and fuel. We use carbon life cycle assessment 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. 13 We continue to assess the physical risks to our Company's 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 sustainability and environmental stewardship, we have published our 2021 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 2021 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 being listed on the 2021 Dow Jones Sustainability Index World and North America Indices. PFAS Efforts to address sites contaminated with per- and polyfluoroalkyl substances ("PFAS") have drawn increased attention by the federal government and in the states. PFAS are a large group of chemicals that have been used in industrial and consumer products since the 1940s, including in products as diverse as carpets, paints and stains, water-resistant clothing and fabrics, nonstick cookware, food packaging, and firefighting chemicals. Possible human health effects of exposure to certain PFAS compounds may include low infant birth weights, immune system impacts, or cancer. In October 2021, the EPA released its PFAS Strategic Roadmap, providing a high-level overview of activities that the agency intends to take through 2024 to address PFAS contamination. These actions include establishing drinking water standards, expanded authority for PFAS remediation, research and data collection on landfill discharges of PFAS in leachate, new risk assessments and test procedures, and updated guidance on PFAS disposal and destruction options. 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. 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. Recycling; Foreign Import and Export Regulations and Material Restrictions Enforcement or implementation of foreign and domestic regulations can affect our ability to export recyclables. Attention on waste in the environment has led to new international laws restricting the flow of certain recyclables. As an example, on January 1, 2021, new restrictions on the international 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. At this time, the U.S. is not a party to the Basel Convention, but most countries to which we export commodities are, which may limit our ability to export certain plastics. In recent years, changes in regulations affecting the international flow of recyclables have led to a reduction in export activity for recyclables, higher quality requirements, and higher processing costs. COVID-19 placed additional financial stress on recyclers and municipalities, resulting in some recycling programs being paused or eliminated. These changes have led to a number of states considering EPR regulations. Prices and demand for recyclables fluctuate. Recycling revenue increased $537 million and $75 million in 2021 and 2020, respectively, as compared with the prior year periods primarily from higher market prices for recycling commodities. To support recent increases in both quality requirements and demand for commodities, we have increased our investment in recycling infrastructure and the size of our recycling operations. This, in turn, increases our exposure to commodity price fluctuations. Additionally, future regulation, tariffs, international trade policies or other initiatives may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. For the past several years, we have been working with stakeholders to educate the public on the need to recycle properly. We continue to invest time and effort in working closely with customers to improve the quality of materials received at our facilities. We have continued our focus on developing a sustainable recycling business model that meets 14 customers' environmental needs by passing through the increasing cost of processing and higher contamination rates, and these efforts continued to have a positive impact on the operating results for our recycling business in 2021. 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 bags and straws, polystyrene plastic, and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, with no viable end markets for many of 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 are proactively engaging 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. 15 Renewable Fuel Production We have invested, and continue to invest, in facilities to capture methane produced from the Company's landfills and convert it into RNG. RNG produced from our landfills, as well as dairy biogas, constitute 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 authorized the RFS program that promotes the production and use of renewable transportation fuels. Many of our facilities are the EPA -registered producers 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 RINs, from renewable fuel producers. Market uncertainty related to the EPA's implementation of the RFS program led to volatility and declines 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. The market's expectations were realized in December 2021, when the EPA proposed robust volumetric standards under the RFS program while proposing to deny all pending applications for small refinery exemptions. The EPA is expected to propose a rule later in 2022 setting forth the direction of the RFS program for 2023 and years after, which rule is expected to afford additional opportunities for the biogas sector to participate in the RFS program. We will continue to advocate for the current 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 impacted the financial performance of the facilities constructed to capture and treat the gas. Environmental Justice Federal, state, and local governments 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. 16 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 fmancial 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. 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 2022 and beyond and could cause actual results to be materially different from those 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. The Company continues to be optimistic about volume recovery and overall economic recovery from the impacts of the COVID-19 pandemic. However, uncertainty remains with respect to various factors that influence the pace of economic recovery, including the risks discussed below and the potential for future resurgence in transmission of COVID-19 and related business closures due to virus variants or otherwise. Such conditions could have an unanticipated adverse impact on our business. We assume no obligation to update any forward -looking statement, whether as a result of future events, circumstances or developments or otherwise. Strate2v 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, due to inflationary cost pressure or otherwise. 17 • 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. • 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 fmancial plans. • As we complete the integration of our prior acquisition of Advanced Disposal Services, Inc. ("Advanced Disposal"), we may not continue to realize the strategic benefits and cost synergies anticipated. • 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. 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 18 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. 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. 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 alleged environmental damage. Federal, state and local governments 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 19 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, 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. (Also see Item 1A. Risk Factors Market disruption, including labor shortages and supply chain constraints, and macroeconomic pressures, including the heightened pace of inflation, have adversely impacted our business and results of operations.) 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 WM 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, or challenges to our assertions of social and environmental responsibility, could tarnish our reputation and reduce the value of our brand. Damage to our reputation could reduce demand for our services and potentially have an adverse effect on our fmancial 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, 20 we are proactively engaging 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 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 may not be 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 geographic 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 geographic 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 period may not be indicative of operating results for any other 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 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 initial business closures and negative impact on general economic conditions resulted in volume declines and reductions in customers' waste service needs, which negatively impacted our results of operations and cash flows. In particular, COVID-19 caused decreases in volumes in higher margin businesses, impacting key financial metrics. 21 Throughout 2021, our volumes recovered from the sharp decline experienced in April 2020, with minimal impact from the resurgence in transmission of COVID-19 associated with recent virus variants, as communities and businesses remained open. However, uncertainty remains with respect to various factors that influence the pace of economic recovery, including factors discussed in the two risk factors immediately below. The potential for future resurgence in transmission of COVID-19 and related business closures, due to COVID-19 variants or other pandemic conditions, could adversely impact our volumes and costs in the future. If such conditions were to deepen and extend the broad -based economic slow -down, 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. Additionally, if a large portion of our employee base were to become ill, it could impact our ability to provide timely and reliable service. Governmental regulations requiring mandatory COVID-19 vaccination of employees could adversely impact our ability to perform or compete for certain contracts and negatively affect our results of operations. In September 2021, President Biden issued an executive order requiring all employers with U.S. government contracts to ensure that their U.S.-based employees, contractors and subcontractors that work on or in support of U.S. government contracts, with some exceptions, to be fully vaccinated against COVID-19. We are currently party to certain service agreements with the U.S. government. The vaccine mandate is facing legal challenges and currently is enjoined nationwide. In November 2021, OSHA announced an Emergency Temporary Standard ("ETS") mandating either full vaccination against COVID-19 or weekly testing of employees for employers with 100 or more employees; however, the agency withdrew the ETS in January 2022 following an unfavorable decision by the U.S. Supreme Court. OSHA has indicated that it will continue to pursue the vaccine and testing requirements of the ETS through the traditional rulemaking process, and additional vaccine mandates may be announced in jurisdictions in which our businesses operate. We cannot currently predict the impact of any such vaccine requirements on our workforce, although implementation may result in our inability to perform or compete for certain contracts, as well as significant cost, operational disruption, attrition and difficulty securing future labor needs in the already -constrained labor market. Market disruption, including labor shortages and supply chain constraints, and macroeconomic pressures, including the heightened pace of inflation, have adversely impacted our business and results of operations. Certain macroeconomic pressures and market disruption, driven in part by the COVID-19 pandemic, intensified during the second half of 2021 and are continuing. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires to address operational challenges servicing customers. The COVID-19 pandemic and the constrained labor market have also contributed to significant global supply chain disruption and inflationary pressure for the goods and services we purchase, with a particular impact on our repair and maintenance costs. Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. Additionally, we are currently experiencing margin pressures from commodity -driven business impacts, particularly from recycling brokerage rebates and higher fuel prices. The extent and duration of the impact of these labor market, supply chain and transportation challenges are subject to numerous factors, including the continuing impact of the COVID-19 pandemic; size, location and qualifications of the labor pool; behavioral changes; wage and price structures; adoption of new or revised regulations; and broader macroeconomic conditions. If we are not able to overcome limitations on labor availability, it could materially impact our ability to service our customers and our financial results. Accelerated and pronounced economic pressures, such as the recent inflationary cost pressures on labor and the goods and services we rely upon to deliver service to our customers, have had and continue to have a significant impact on our cost structure and capital expenditures. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and a heightened pace of inflation, and we may not be able to dynamically manage our cost structure in response to such changes. A significant portion of our revenue is tied to a price escalation index with a lookback provision, resulting in a timing lag in our ability to recover increased costs under those contracts during this period of rapid inflation. Separately, for many of our customers we provide services under multi -year contracts that can restrict our ability to increase prices and the timing of such increases. Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate, but such efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, contractual limitations, and market responses. The inability to adequately increase prices to offset increased 22 costs and inflationary pressures, or otherwise mitigate the impact of these macroeconomic conditions and market disruptions on our business, will increase our costs of doing business and reduce our margins. If such impacts are prolonged and substantial, they could have a material negative effect on our results of operations. 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. Attention on waste in the environment has led to new international laws restricting the flow of certain recyclables. As an example, on January 1, 2021, new restrictions on the international 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. At this time, the U.S. is not a party to the Basel Convention, but most countries to which we export commodities are, which may limit our ability to export certain plastics. In recent years, changes in regulations affecting the international flow of recyclables, have led to a reduction in export activity for recyclables, higher quality requirements and higher processing costs. COVID-19 placed additional financial stress on recyclers and municipalities, resulting in some recycling programs being paused or eliminated. These changes have led to a number of states considering EPR regulations. Prices and demand for recyclables fluctuate. Recycling revenue increased $537 million and $75 million in 2021 and 2020, respectively, as compared with the prior year periods primarily from higher market prices for recycling commodities. To support recent increases in both quality requirements and demand for commodities, we have increased our investment in recycling infrastructure and the size of our recycling operations. This, in turn, increases our exposure to commodity price fluctuations. Additionally, future regulation, tariffs, international trade policies or other initiatives may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. Fluctuation in energy prices also affects our business, including recycling of plastics manufactured from petroleum products. Significant variations in the price of biogas, 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. 23 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 materials at landfills, such as recyclables (cardboard, bottles and cans), yard waste, food waste and electronics. Where 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, and providing alternative 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 bags and straws, polystyrene plastic and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, there are currently no viable end markets for recycling many of these materials, and inclusion of such materials in our recycling stream increases contamination and operating costs that 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 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. 24 Purchasers of our recycling commodities can be particularly vulnerable to fmancial 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, 2021, we had $645 million 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 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, fmancial 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. However, future changes in tax laws could reverse the impacts of the Tax Act, and the current presidential administration has previously indicated support for increasing the U.S. corporate statutory tax rate. If ultimately enacted into law, such an increase could materially impact our tax provision, cash tax liability, effective tax rate and net deferred tax liabilities. 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. Fuel supply shortages and price increases could substantially increase our operating expenses. 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, 25 improve the customer experience and provide alternatives to traditional disposal and maximize the resource value of waste. 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. Significant system failures could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. Employee work -from -home arrangements prompted by the COVID-19 pandemic increase various technology 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. We are implementing a new enterprise resource planning and human capital management 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 and human capital management ("ERP/HCM") system. The ERP/HCM system implementation requires the integration of the new 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 undertaking from a financial, management, and personnel perspective, and we have made interim adjustments to our implementation timeline to accommodate aspects that have proven more difficult, or time consuming than initially predicted. Any material disruptions, delays, deficiencies or cost increases associated with the design and implementation of our new ERP/HCM 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/HCM 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. Significant cybersecurity incidents 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, customers, and vendors. 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. 26 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 Company experienced a cyber intrusion in the first quarter of 2021 that was promptly detected, and the third -party software vulnerability was quickly remediated. There was no impact to the Company's operations, services or financial statements. A subsidiary of WMI provided notice to potentially affected individuals, U.S. state and federal regulators, and Canadian regulators. As a result of the cyber intrusion, regulatory investigations may result in costs, fines, penalties, or other obligations. Additionally, a subsidiary of WMI is party to a class action case related to this incident. The Company intends to vigorously defend itself against any such proceedings and does not expect that the outcome of any proceedings related to the 2021 incident will have a material adverse effect on the Company 's business, fmancial condition, results of operations or cash flows; however, assessing and responding to this intrusion required a significant amount of time and management attention. An incident that results in a material theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or material 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. As the Company pursues its strategy to grow through acquisitions 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. Increased regulation by state and federal governments related to cybersecurity protections and disclosures may require additional resources for compliance, and any inability, or perceived inability, to adequately address new requirements 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. 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 and commit substantial time and resources towards compliance with new laws and regulations. These laws provide disclosure obligations for businesses that collect personal information, individual rights relating to personal information, collection and storage requirements, automated decision -making transparency, and potential liability expansion. 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. 27 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 through 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 alleged 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 to federal and state renewable fuel policies could affect our financial performance in that sector as a renewable fuel producer and impact our projected future investments. 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 and dairy digester gas into renewable natural gas so that we can participate in the program, and the Company has stated its intention to grow its asset base to notably increase its RNG production by 2026. RINs prices generally respond to regulations enacted by the EPA or other regulatory bodies, as well as fluctuations in supply and demand. The value of the RINs associated with renewable natural gas is set through a market established by the program. Each year, the EPA is required to fmalize 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 current administration to implement policies that ensure long-term stability for renewable transportation fuels. Changes in the RFS market, the structure of the RFS program or RINs prices and demand can and has impacted the financial performance of the facilities constructed to capture and treat the gas and could impact or alter our projected future investments. 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 28 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. 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 or if we or our local partners failed to comply with such laws. 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. 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, including governmental proceedings. 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 29 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 $2.5 billion of debt as of December 31, 2021 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, 2021, we had no outstanding borrowings under this facility. We had $167 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 $1.5 billion as of December 31, 2021. 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. 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 also carry a broad range of other insurance coverages that are customary for a company our size. To the extent our obligations for claims are more than we estimated, our insurance coverage is inadequate to cover our obligations, or our insurers are unable to meet their obligations, the requirement that we pay such obligations could have a material adverse effect on our financial results. In addition, to fulfill our financial assurance obligations with respect to variable -rate tax-exempt debt, and 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 WMI financial guarantees. Our financial position, which can be negatively affected by asset impairments, our credit profile and general economic factors, may increase 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. 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 required to deposit cash to collateralize certain obligations, which could negatively impact our liquidity. 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 30 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 9 and 10 to the Consolidated Financial Statements for more information related to our participation in Multiemployer Pension Plans. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. Our principal executive offices are in Houston, Texas where we lease approximately 297,000 square feet under a lease expiring in 2035. We also have administrative offices in Arizona, Connecticut, Illinois 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: 2021 2020 Landfills owned or operated (a) 260 268 Transfer stations 340 348 Material recovery facilities 96 103 (a) As of December 31, 2021 and 2020, our landfills owned or operated consisted of total acreage of 173,071 and 172,217; permitted acreage of 45,897 and 45,642; and expansion acreage of 674 and 716, 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. 31 Item 3. Legal Proceedings. Information regarding our legal proceedings can be found under the Environmental Matters and Litigation sections of Note 10 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. 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 9, 2022 was 8,099. 32 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. $300 $250 $200 $150 $100 $50 Comparison of Cumulative Five Year Total Return - Waste Management, Inc. A S&P 500 Index — 0— Dow Jones Waste & Disposal Services Index $0 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 Waste Management, Inc. $ 100 $ 124 $ 131 $ 171 $ 180 $ 259 S&P 500 Index $ 100 $ 122 $ 116 $ 153 $ 181 $ 233 Dow Jones Waste & Disposal Services Index$ 100 $ 117 $ 117 $ 158 $ 169 $ 236 The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board of Directors. During 2021, we allocated an aggregate of $1.35 billion in cash under our accelerated share repurchase ("ASR") agreements. As of December 31, 2021, we had received 8 7 million shares with a weighted average price per share of $146.61. In January 2022, we completed our ASR agreement executed in December 2021, at which time we received an additional 0.4 million shares. See Note 13 to the Consolidated Financial Statements for additional information. 33 The following table summarizes common stock repurchases made during the fourth quarter of 2021 (shares in millions): Period October 1 31 November 1 30 December 1 31 Total Issuer Purchases of Equity Securities Total Number of Shares Purchased 2.2 2.2 Average Price Paid per Share $ $ 159.32 (a) $ 159.32 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2.2 2.2 Approximate Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs $ 350 million 350 million 1.5 billion (b) (a) In August 2021, we entered into an ASR agreement to repurchase $500 million of our common stock. At the beginning of the repurchase period, we delivered $500 million in cash and received 2 7 million shares based on a stock price of $147.27. The ASR agreement completed in the fourth quarter of 2021, at which time we received 0 5 million additional shares based on a final weighted average price of $154.72. In December 2021, we executed an ASR agreement to repurchase $350 million of our common stock. At the beginning of the repurchase period, we delivered $350 million in cash and received 1 7 million shares based on a stock price of $160.67. The ASR agreement completed in January 2022, at which time we received 0 4 million additional shares based on a final weighted average price of $160.33. The "Average Price Paid per Share" in the table represents the final weighted average price per share paid for the ASR agreement executed in August 2021 and the initial price per share paid for the ASR agreement executed in December 2021. (b) We announced in December 2021 that the Board of Directors has authorized up to $1.5 billion in future share repurchases. 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. Item 6. [Reserved] None. 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, 2021. 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 throughout 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 34 decomposes in landfills and using the gas in generators to make electricity or natural gas. 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 provide collection, transfer, disposal, and recycling and resource recovery services. Consistent with our Company's long-standing commitment to sustainability and environmental stewardship, we published our 2021 Sustainability Report, which details our people -first 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 it 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 "Regulation Emerging Trends in Policy and Regulation Climate and Sustainability" in Item 1. In 2021, our senior management began evaluating, overseeing and managing the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The Company finalized the assessment of our segments during the fourth quarter of 2021. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. 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, described under Results of Operations below. 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 grew 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 a $3.0 billion, 364-day, U.S. revolving credit facility ("364-day revolving credit facility") and our commercial paper program. In November 2020, we issued $2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the 364-day revolving credit facility at which time it was terminated. As a result of the acquisition we recorded $4.1 billion of net assets including $2.5 billion of goodwill as of December 31, 2020. Post -closing adjustments to our purchase price allocation were not material. In connection with our acquisition of Advanced Disposal, 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 acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million See Note 11 and 17 to the Consolidated Financial Statements for more information. 35 For the year ended December 31, 2021, we incurred $51 million of integration related costs, and for the year ended December 31, 2020, we incurred $156 million of acquisition and integration related costs, which were 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. Post -closing through December 31, 2020, Advanced Disposal 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. During 2021, we made significant progress on our integration of Advanced Disposal. The focus of these efforts has been to ensure that we continue to provide uninterrupted service to our customers through the integration of certain customer facing and back office digital platforms. COVID-19 Update 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 services safely and efficiently. We continue to operate with a focus on protecting the health and safety of our employees and maintaining business continuity for our customers. These efforts, combined with our disciplined execution in our daily operations, have positioned the Company to prudently manage the challenges presented by COVID-19. The impacts of COVID-19 on the global economy increased rapidly during the second quarter of 2020, affecting our business in most geographies and across a variety of our customer types. Over the last year, our volumes have been recovering from the sharp decline experienced in April 2020 as a result of COVID-19. The pace of recovery in our volumes accelerated in the second quarter of 2021, and continued in the back -half of 2021 with minimal impact from the resurgence in transmission of recent COVID-19 virus variants as communities and businesses remained open. The portions of our business that had the most pronounced decreases in volume due to the pandemic were our industrial and commercial collection businesses and construction and demolition and special waste volumes at our landfills. As we completed 2021, volumes in each of these lines of business were either on par with pre -pandemic levels or have now surpassed 2019 volumes. We continue to be optimistic about our volume recovery and overall economic recovery from the impacts of the COVID-19 pandemic. However, uncertainty remains with respect to various factors that influence the pace of economic recovery and the potential for future resurgence in transmission of COVID-19 and related business closures due to virus variants or otherwise. Such conditions could adversely impact our volumes and costs in the future. 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 service 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. This includes expanding traditional recycling services, increasing organics collection and processing, and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As the leading waste management environmental services provider in North America, we are taking big, bold steps in an effort to catalyze positive change — change that will impact our Company as well as the communities we serve. Our sustainability agenda includes expanding recycling and focuses on meeting or exceeding specific 2025 and 2038 sustainability goals around people, customers, the environment, and community, which align with eight of the United Nations Sustainable Development Goals. We encounter intense competition from governmental, quasi -governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. 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 36 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 directly as we experience changes in revenue due to volume and a heightened pace of inflation. Volume changes can fluctuate dramatically by line of business and volume changes in higher margin businesses, such as what we saw with COVID-19, can impact key financial metrics. We must dynamically manage our cost structure in response to volume changes and cost inflation. We believe the Company's industry -leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our customer service digitalization initiative to change the way we interact with our customers. Enhancements made through this initiative are intended to seamlessly and digitally connect all the Company's functions required to service our customers in order to provide the best experience and service. Additionally, in early 2022, we substantially implemented our new enterprise resource planning system which will drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience. Certain macroeconomic pressures and market disruption, driven in part by the COVID-19 pandemic, intensified during the second half of 2021 and are continuing. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires to address frontline employee turnover, increased volume, and operational challenges servicing customers. The COVID-19 pandemic and the constrained labor market have also contributed to significant global supply chain disruption and inflationary pressure for the goods and services we purchase, with a particular impact on our repair and maintenance costs. Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. Additionally, we are currently experiencing margin pressures from commodity -driven business impacts, particularly from recycling brokerage rebates and higher fuel prices. The extent and duration of the impact of these labor market, supply chain and transportation challenges are subject to numerous factors, including the continuing impact of the COVID-19 pandemic; size, location and qualifications of the labor pool; behavioral changes; wage and price structures; adoption of new or revised regulations, including vaccine mandates; and broader macroeconomic conditions. As costs increase, we focus on our strategic pricing efforts, as well as operating efficiencies and cost controls, to maintain and grow our earnings and cash flow. With increased pressure from the strong economic recovery, particularly on labor, we remain focused on putting our people first to ensure that they are well positioned to diligently and safely execute our daily operations. We are encouraged by our results in 2021 and remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers' experience and reduce our cost to serve. 37 Current Year Financial Results During 2021, we delivered strong revenue and income from operations as we continued to experience higher yield and volume recovery in our landfill, commercial and industrial collection businesses and benefited from the acquisition of Advanced Disposal. However, our income from operations was impacted by constraints on labor availability and inflationary cost pressures, primarily in the second half of 2021. We continue to invest in our people through market wage adjustments, investments in our digital platform and training for new team members. In addition, we are focused on executing on our disciplined pricing programs to drive margin growth in the face of these additional labor cost and inflationary pressures. We also made significant investments in recycling automation technology and customer service digitalization to further support our continued focus on optimizing operational efficiency as well as achieving improved labor productivity for all lines of business. During 2021, the Company allocated $1,904 million of available cash to capital expenditures. We also allocated $2,320 million of available cash to our shareholders during 2021 through dividends and common stock repurchases. Key elements of our 2021 financial results include: • Revenues of $17,931 million for 2021 compared with $15,218 million in 2020, an increase of $2,713 million, or 17.8%. The increase is primarily attributable to (i) the acquisition of Advanced Disposal; (ii) record -high increases in the market prices for recycling commodities we sell; (iii) higher yield in our collection and disposal lines of business and (iv) strong volume growth; • Operating expenses of $11,111 million in 2021, or 62.0% of revenues, compared with $9,341 million, or 61.4% of revenues, in 2020. The $1,770 million increase is primarily attributable to (i) increased volumes from the acquisition of Advanced Disposal; (ii) commodity -driven business impacts, particularly from recycling brokerage rebates and higher fuel prices, which also meaningfully impacted our operating expense as a percentage of revenue; (iii) volume recovery from earlier pandemic lows; (iv) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth and (v) inflationary cost pressures, primarily in the second half of 2021; • Selling, general and administrative expenses of $1,864 million in 2021, or 10.4% of revenues, compared with $1,728 million, or 11.4% of revenues, in 2020. The $136 million increase is primarily attributable to (i) higher incentive compensation costs; (ii) strategic investments in our digital platform and (iii) increased labor, support and integration costs following our acquisition of Advanced Disposal. These cost increases are partially offset by (i) lower consulting, advisory and legal fees associated with our completion of the Advanced Disposal acquisition in 2020 and (ii) a decrease in our provision for bad debts as collections returned to pre -pandemic levels; • Income from operations of $2,965 million, or 16.5% of revenues, in 2021 compared with $2,434 million, or 16.0% of revenues, in 2020. The improved earnings in the current year are driven by (i) strong operating results in our collection and disposal business; (ii) improved profitability in our recycling business; (iii) lower transaction -related costs following our 2020 acquisition of Advanced Disposal and (iv) improved profitability in our WM Renewable Energy business. The increase in income from operations was partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth; (ii) inflationary cost pressures and (iii) increased depreciation and amortization from our acquisition of Advanced Disposal and increased landfill amortization from higher volumes and revisions in landfill estimates. During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation and amortization of acquired assets; • Net income attributable to Waste Management, Inc. was $1,816 million, or $4.29 per diluted share, compared with $1,496 million, or $3.52 per diluted share, in the prior year period. The increase in income from operations discussed above, in addition to lower interest expense, drove an increase in net income which was partially offset by a loss on early extinguishment of debt; • Net cash provided by operating activities was $4,338 million in 2021, compared with $3,403 million in 2020 with the improvement driven by (i) an increase in earnings; (ii) our acquisition of Advanced Disposal; (iii) lower interest payments; (iv) lower income taxes paid in the current year and (v) favorable changes in our working capital, net of effects of acquisitions and divestitures; and 38 • Free cash flow was $2,530 million in 2021, compared with $2,656 million in 2020. The decrease in free cash flow is primarily attributable to higher proceeds from divestitures in 2020 primarily related to assets required to be sold by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, partially offset by an increase in net cash provided by operating activities discussed above. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow below 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 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. We also provide additional services that are not managed through our Solid Waste business, including 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. The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions): 2021 2020 2019 Commercial $ 4,760 $ 4,102 $ 4,229 Residential 3,172 2,716 2,613 Industrial 3,210 2,770 2,916 Other collection 533 465 482 Total collection 11,675 10,053 10,240 Landfill 4,153 3,667 3,846 Transfer 2,072 1,855 1,820 Recycling 1,681 1,127 1,040 Other (a) 2,112 1,776 1,758 Intercompany (b) (3,762) (3,260) (3,249) Total $ 17,931 $ 15,218 $ 15,455 (a) The "Other" line of business includes (i) certain services provided by our WMSBS business; (ii) our landfill gas -to -energy operations managed by our WM Renewable Energy business; (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. Revenue attributable to collection, landfill, transfer and recycling services provided by our "Other" businesses has been reflected as a component of the relevant 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): 2021 vs. 2020 2020 vs. 2019 Asa%of Asa%of Asa%of Asa%of Related Total Related Total Amount Business(a) Amount Company(b) Amount Business(a) Amount Company(b) Collection and disposal$ 468 3.5 % $ 299 2.2 % Recycling (c) 537 51.5 75 7.6 Fuel surcharges and other (d) 240 36.9 (151) (24.7) Total average yield (e) $ 1,245 8.2 % $ 223 1.5 % Volume (d) 435 2.8 (692) (4.5) Internal revenue growth1,680 11.0 (469) (3.0) Acquisitions 1,032 6.8 248 1.7 Divestitures (49) (0.3) (8) (0.1) Foreign currency translation 50 0.3 (8) (0.1) Total $ 2,713 17.8 % $ (237) (1.5)% (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. 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. Includes combined impact of commodity price variability and changes in fees. (b) (c) (d) Beginning in 2021, includes changes in our revenue attributable to our WM Renewable Energy business from yield, which is included in Fuel Surcharges and Other, and Volume. 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 (e) 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. 40 The details of our revenue growth from collection and disposal average yield for the year ended December 31 are as follows (dollars in millions): 2021 vs. 2020 2020 vs. 2019 Asa%of Asa%of Related Related Amount Business Amount Business Commercial $ 152 3.9 % $ 91 2.4 % Industrial 126 4.8 74 2.7 Residential 119 4.5 73 2.9 Total collection 397 4.2 238 2.5 Landfill 42 1.8 32 1.3 Transfer 29 2.9 29 3.0 Total collection and disposal $ 468 3.5 % $ 299 2.2 % Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate. We experienced strong average yield growth in our collection line of business of 4.2% in 2021, up from 2.5% in 2020, showing our focus on our pricing efforts in this inflationary environment. We are driving improvements in our residential line of business, aligning the price charged for services we provide to our customers with the costs to provide the services, resulting in increased average yield in 2021 of 4.5%, up from 2.9% in 2020. We are also continuing to see growth in our landfill and transfer businesses with our municipal solid waste business experiencing 3.2% average yield growth for 2021 compared to 2.3% in 2020. A significant portion of our revenue is tied to a price escalation index with a lookback provision, which has resulted in a timing lag in our ability to recover increased costs under those contracts during this period of rapid inflation. Separately, for many of our customers we provide services under multi -year contracts that can restrict our ability to increase prices and the timing of such increases. As we enter 2022, many of these contract lookback provisions will begin to capture the recent inflationary cost increases. Recycling Recycling revenue increased $537 million and $75 million in 2021 and 2020, respectively, as compared with the prior year periods primarily from higher market prices for recycling commodities. Average market prices for recycling commodities at the Company's facilities were approximately 115% and 19% higher in 2021 and 2020, respectively, when compared with the prior year periods. Market prices began to increase in 2020 from the unprecedented lows experienced in 2019, largely due to COVID-19 related decreases in the supply of recycled materials. Demand for recycled materials strengthened in the back -half of 2020 and continued in 2021, outpacing supply, driven by the growth in e-commerce, businesses re -opening, and manufacturers committing to use more recycled content in their packaging. We have also maintained our focus on converting to a fee -based pricing model that ensures fees paid by customers address the cost of processing materials and the impact on our cost structure of managing contamination in the recycling stream. Fuel Surcharges and Other These fees, which include our fuel surcharge program, yield from our WM Renewable Energy business and other mandated fees, increased $240 million in 2021, as compared with 2020, and decreased $151 million in 2020 as compared with 2019. Fuel surcharge revenues are based on and fluctuate in response to changes in the national average prices for diesel fuel, and also vary with changes in our volume -based revenue activity. Market prices for diesel fuel were almost 30% higher in 2021, when compared with 2020, as diesel fuel prices began to increase towards the end of 2020 and continued to increase throughout 2021. Consistent with the general downturn in oil and gas markets in 2020, market prices for diesel fuel were approximately 16% lower in 2020, as compared to 2019. Additionally, we transitioned certain customers' pricing away from a fuel surcharge in 2020, reflecting the cost of fuel in the base rates we charge for our services, which further contributed to the decline in 2020 as compared with 2019. Revenue from our WM Renewable Energy business increased in 2021, as compared to 2020, primarily driven by the increase in value for renewable fuel standard credits. The other 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. 41 Volume Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $435 million, or 2.8%, in 2021, as compared with 2020, and decreased $692 million, or 4.5%, in 2020, as compared with 2019. Over the last year, our volumes have been recovering from the sharp decline experienced in April 2020 as a result of COVID-19. The pace of recovery in our volumes accelerated in the second quarter of 2021 and continued in the back -half of 2021 with minimal impact from the resurgence in transmission of recent COVID-19 virus variants as communities and businesses remained open. The portions of our business that had the most pronounced decreases in volume due to the pandemic were our industrial and commercial collection businesses and our landfill volumes. As we completed 2021, volumes in each of these lines of business were either on par with pre -pandemic levels or have now surpassed 2019 volumes. We continue to be optimistic about volume recovery and overall economic recovery from the impacts of the COVID-19 pandemic. However, uncertainty remains with respect to various factors that influence the pace of economic recovery and the potential for future resurgence in transmission of COVID-19 and related business closures due to virus variants or otherwise. Such conditions could adversely impact our volumes in the future. In addition, our WMSBS business volume grew from our continued focus on a differentiated service model for national accounts customers. Acquisitions and Divestitures Acquisitions and divestitures resulted in a net increase in revenues of $983 million, or 6.5%, and $240 million, or 1.6%, in 2021 and 2020, respectively, as compared with the prior year periods, primarily due to our acquisition of Advanced Disposal. 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 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 gams 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. 42 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): 2021 2020 2019 Labor and related benefits $ 3,223 18.0 % $ 2,746 18.1 % $ 2,791 18.0 Transfer and disposal costs 1,161 6.5 1,135 7.5 1,160 7.5 Maintenance and repairs 1,596 8.9 1,331 8.7 1,355 8.8 Subcontractor costs 1,766 9.9 1,523 10.0 1,532 9.9 Cost of goods sold 936 5.2 553 3.6 553 3.6 Fuel 393 2.2 265 1.7 336 2.2 Disposal and franchise fees and taxes 698 3.9 606 4.0 627 4.1 Landfill operating costs 412 2.3 394 2.6 379 2.4 Risk management 344 1.9 269 1.8 267 1.7 Other 582 3.2 519 3.4 496 3.2 $11,111 62.0% $9,341 61.4% $9,496 61.4% Our operating expenses for 2021 increased, as compared with 2020, primarily due to (i) increased volumes from the acquisition of Advanced Disposal; (ii) commodity -driven business impacts, particularly from recycling brokerage rebates and higher fuel prices; (iii) volume recovery from earlier pandemic lows; (iv) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth and (v) inflationary cost pressures, primarily in the second half of 2021. These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs as volumes grow. Our operating expenses for 2020 decreased, as compared with 2019, primarily due to decreases in our landfill and industrial and commercial collection volumes and our proactive steps to manage our variable costs in response to the volume declines resulting from COVID-19 impacts. The revenue declines due to the COVID-19 pandemic had a greater impact on our higher margin lines of business and 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 was higher than ours and we incurred certain one-time, upfront costs. Significant items affecting the comparison of operating expenses between reported periods include: Labor and Related Benefits - The increase in labor and related benefits costs in 2021, as compared with 2020, was largely driven by (i) increased labor and related benefits costs related to our acquisition of Advanced Disposal; (ii) merit and proactive market wage adjustments to hire and retain talent; (iii) volume increases, particularly in our commercial and industrial collection businesses, which when combined with driver shortages and turnover in certain markets, increased overtime and training hours; (iv) higher annual incentive compensation and (v) increases in health and welfare costs attributable to medical care activity generally returning to pre -pandemic levels. 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. Transfer and Disposal Costs - The increase in transfer and disposal costs in 2021, as compared with 2020, was largely driven by increased volume, which includes the volumes from our acquisition of Advanced Disposal and inflationary cost increases from our third -party haulers. 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. Maintenance and Repairs - The increase in maintenance and repairs costs in 2021, as compared with 2020, was largely driven by (i) our acquisition of Advanced Disposal, including intentional investments to bring the acquired fleet to 43 our standards; (ii) inflationary cost increases for parts, supplies and third -party services; (iii) additional fleet maintenance driven by commercial and industrial collection volume increases; (iv) labor cost pressure from our technicians, including higher overtime from labor shortages; (v) an increase in container repairs driven by volume increases and delays in normal course capital expenditures for steel containers due to both steel costs and supply chain constraints and (vi) increased building maintenance costs including improvements to facilities. 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. Additionally, the 2019 period was also impacted by a $16 million non -cash charge to write-off certain equipment costs related to our Other segment. This decline in costs was partially offset by intentional investments in the acquired Advanced Disposal fleet and inflationary cost pressures for both our Company and third -party services due to demand for skilled technician labor as well as for parts and supplies. Subcontractor Costs — The increase in subcontractor costs in 2021, as compared with 2020, was largely driven by (i) inflationary cost increases from third -party haulers and higher volumes; (ii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than our collection and disposal business and (iii) the acquisition of Advanced Disposal. The decrease in subcontractor costs in 2020, as compared with 2019, was largely due to COVID-19 driven 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. Cost of Goods Sold The increase in cost of goods sold in 2021, as compared with 2020, was primarily driven by increases in market prices for recycling commodities of approximately 115% and to a lesser extent, higher recycling volumes. Costs in 2020 were flat when compared with 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 in 2020 were targeted at domestic markets, resulting in lower freight costs. Fuel The increase in fuel costs in 2021, as compared with 2020, was primarily due to (i) increases of almost 30% in market prices for diesel fuel; (ii) the acquisition of Advanced Disposal and (iii) volume increases in our commercial and industrial collection businesses. The decrease in fuel costs in 2020, as compared with 2019, was primarily due to (i) a decline of approximately 15% 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. Disposal and Franchise Fees and Taxes The increase in disposal and franchise fees and taxes in 2021, as compared with 2020, was primarily driven by (i) landfill volume increases; (ii) disposal rate increases at certain landfills and (iii) additional costs attributable to our acquisition of Advanced Disposal. The decrease in disposal and franchise fees and taxes in 2020, as compared with 2019, was primarily related to lower landfill volumes, largely driven by the impact of COVID-19. The decreases were offset, in part, by additional costs attributable to our acquisition of Advanced Disposal. Landfill Operating Costs The increase in landfill operating costs in 2021, as compared with 2020, was primarily due to volume increases, which includes our acquisition of Advanced Disposal and increased testing and monitoring costs. These increases were partially offset by (i) lower leachate management costs, primarily due to the cessation of certain transportation costs in our East Tier segment and (ii) changes in the measurement of our environmental remediation obligations and recovery assets in 2021 and 2020. Our measurement of these balances includes application of a risk -free discount rate, which is based on the rate for U.S. Treasury bonds. In 2021, there was an increase in the discount rate, which resulted in a reduction in the net liability balance and a credit to expense. Conversely, in 2020, there was a decrease in the discount rate, which resulted in an increase in the net liability balance and a charge to expense. 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. Risk Management — The increase in risk management costs in 2021, as compared with 2020, was primarily due to our acquisition of Advanced Disposal and overall economic recovery, increasing business activity and claim volumes and related costs. Risk management costs were relatively flat in 2020, as compared with 2019. 44 Other — Other operating cost increases in 2021, as compared with 2020, were due to our acquisition of Advanced Disposal and increased equipment rental costs attributable, in part, to increased volumes and supply chain constraints slowing normal course fleet and equipment orders. Additionally, during the second half of 2021, additional volumes and inflationary cost pressures drove an increase in various costs. Partially offsetting these was a favorable litigation settlement in 2021. Additionally, 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): 2021 2020 2019 Labor and related benefits $ 1,215 6.8 % $ 1,057 6.9 % $ 1,020 6.6 % Professional fees 228 1.3 256 1.7 183 1.2 Provision for bad debts 37 0.2 54 0.4 38 0.3 Other 384 2.1 361 2.4 390 2.5 $1,864 10.4% $1,728 11.4% $1,631 10.6% Selling, general and administrative expenses for 2021, as compared with 2020, increased primarily due to (i) higher incentive compensation costs; (ii) strategic investments in our digital platform, including planned investments in a new enterprise resource planning system and investments in customer service digitalization and (iii) increased labor, support and integration costs following our acquisition of Advanced Disposal. Partially offsetting these increases are lower consulting, advisory and legal fees from the 2020 acquisition of Advanced Disposal and improvements in our provision for bad debts as collections returned to pre -pandemic levels. Although our costs increased, the significant revenue increase positioned us to reduce our overall selling, general and administrative expenses as a percentage of revenues when compared with the prior year periods. Selling, general and administrative expenses for 2020, as compared with 2019, 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 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 increased in 2020 due to the decline in volume -related revenues. 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 for 2021, as compared with 2020, was primarily due to (i) higher incentive compensation costs; (ii) additional headcount, including from our acquisition of Advanced Disposal; (iii) annual merit increases for our employees; (iv) costs associated with our strategic investments in our digital platform and (v) increases in health and welfare costs attributable to medical care activities generally returning to pre -pandemic levels from the lower level experienced during 2020. The increase in labor and related benefits costs in 2020, as 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 45 our strategic investments in our digital platform. These cost increases were offset, in part, by (i) lower annual incentive compensation costs and (ii) proactive steps undertaken to defer hiring and reduce labor related costs. Professional Fees — Professional fees decreased for 2021, as compared with 2020, primarily due to lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020, partially offset by increased strategic investments in our digital platform and integration costs related to our acquisition of Advanced Disposal. The increases in professional fees in 2020, as compared with 2019, were primarily driven by consulting, advisory and legal fees incurred in connection with our acquisition and integration of Advanced Disposal and strategic investments in our digital platform. Provision for Bad Debts — The decrease in provision for bad debts for 2021, as compared with 2020, was primarily due to an overall improvement in customer account collections and decreased collection risk with certain customers. The increase in the provision for bad debts in 2020, as compared with 2019, was primarily due to increased collection risk associated with certain customers as a result of the COVID-19 pandemic. Other The increase in other expenses for 2021, as compared with 2020, was primarily driven by costs associated with our acquisition of Advanced Disposal and increased technology infrastructure costs to support our strategic investments in our digital platform. The decrease in other expenses in 2020, as 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 to support strategic investments in our digital platform. We also incurred one-time technology costs in 2020 to transition employees to work -from -home in response to the COVID-19 pandemic. Depreciation and Amortization Expenses The following table summarizes the components of our depreciation and amortization expenses December 31 (dollars in millions and as a percentage of revenues): Depreciation of tangible property and equipment Amortization of landfill airspace Amortization of intangible assets for the year ended 2021 2020 2019 $ 1,125 6.2 % $ 996 6.6 % $ 893 5.8 % 731 4.1 568 3.7 575 3.7 143 0.8 107 0.7 106 0.7 $ 1,999 11.1 % $ 1,671 11.0 % $ 1,574 10.2 % The increase in depreciation of tangible property and equipment in 2021, as compared with 2020, was related to our acquisition of Advanced Disposal and investments in capital assets, including our fleet, heavy equipment at our landfills and containers to service our customers. The increase in amortization of landfill airspace in 2021, as compared with 2020, was driven by (i) changes in amortization rates driven by revisions in landfill estimates, which includes changes in the anticipated timing of capping, closure and post -closure activities; (ii) our acquisition of Advanced Disposal and (iii) landfill volume increases from the economic recovery. Additionally, 2020 benefited from a decrease in the inflation rate used to estimate capping, closure, and post -closure asset retirement obligations. The increase in amortization of intangible assets in 2021, as compared with 2020, was primarily driven by the amortization of acquired intangible assets related to the acquisition of Advanced Disposal. The increase in depreciation of tangible property and equipment in 2020, as compared with 2019, was primarily related to (i) investments in capital assets, including our fleet and facilities and (ii) additional depreciation attributable to our acquisition of Advanced Disposal. The decrease in amortization of landfill airspace in 2020, as 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 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. 46 Our amortization of intangible assets was flat in 2020, as 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. Restructuring During the year ended December 31, 2021, we recognized $8 million of restructuring charges primarily related to our acquisition of Advanced Disposal. 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): 2021 2020 2019 Gain from divestitures, net $ (44) $ (33) $ Asset impairments 8 68 42 Other 20 $ (16) $ 35 $ 42 During the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations in our East Tier segment and (ii) an $8 million gain from divestitures of certain ancillary operations in our Other segment. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment. During the year ended December 31, 2020, we recognized $35 million of net charges primarily related to (i) a $33 million net gain associated with net asset divestitures executed to address requirements of the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment; (ii) $41 million of non -cash impairment charges primarily related to two landfills and an oil field waste injection facility in our West Tier segment; (iii) a $20 million non -cash impairment charge in our East Tier segment due to management's decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $7 million of net charges primarily related to non -cash impairments of certain assets within our WM Renewable Energy business in our Other segment. During the year ended December 31, 2019, we recognized asset impairments of $42 million, related to (i) $27 million of goodwill impairment charges within our Other segment, 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 in our West Tier segment. See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. 47 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 19 to the Consolidated Financial Statements (dollars in millions): Solid Waste: East Tier West Tier Solid Waste Other (a) Corporate and Other (b) Total Percentage of revenues 2021 Period -to - Period Change Period -to - Period 2020(c) Change 2019(c) $ 2,037 $ 365 21.8 % $ 1,672 $ (175) (9.5)% $ 1,847 2,103 303 16.8 1,800 (134) (6.9) 1,934 4,140 668 19.2 3,472 (309) (8.2) 3,781 34 76 * (42) 116 * (158) (1,209) (213) 21.4 (996) (79) 8.6 (917) $ 2,965 $ 531 21.8 % $ 2,434 $ (272) (10.1)% $ 2,706 16.5 % 16.0 % 17.5 % * Percentage change does not provide a meaningful comparison. (a) "Other" includes (i) elements of our WMSBS business; (ii) elements of our landfill gas -to -energy operations managed by our WM Renewable Energy business and not included in the operations of our reportable segments; (iii) elements of our third -party subcontract and administration revenues managed by our EES business and not included in the operations of our reportable segments; (iv) our recycling brokerage services and (v) 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 and Other" 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. In the fourth quarter of 2021, we discontinued certain allocations from our Corporate and Other segment to our Solid Waste operating segments and Other segment. Reclassifications have been made to our prior period information for comparability purposes. (c) Solid Waste The most significant items affecting the results of operations of our Solid Waste business during the three years ended December 31, 2021 are summarized below: • Income from operations in our Solid Waste business increased for 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal; (ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment and (iii) changes from divestitures, asset impairments and unusual items discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net. These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth; (ii) increased landfill amortization from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post - closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post -closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures. During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation and amortization of acquired assets. • Income from operations for 2020 decreased, as compared with 2019, for the Solid Waste business due to the overall negative impact of the COVID-19 pandemic resulting in revenue declines from lower volumes and higher 48 depreciation expense which was primarily related to investments in capital assets, including our fleet 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 gam of $33 million associated with the sale of net assets to GFL Environmental, primarily within our West Tier segment. Additionally, income from operations for our West Tier 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 East Tier 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 West Tier segment benefited from the clean-up efforts of natural disasters primarily in California and similar efforts did not recur in 2020. Other The increase in income from operations for 2021, as compared with 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business. Income from operations for the Other segment for 2020, as compared with 2019, was favorably impacted primarily by (i) volume increases in our WM Renewable Energy business as a result of a new renewable energy facility coming online; (ii) our WMSBS business as a result of newly executed national account contracts and (iii) our recycling brokerage business. Corporate and Other The most significant items affecting the results of operations for Corporate and Other during the three years ended December 31, 2021 are summarized below: • These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs; (ii) increased labor, support and integration costs following our acquisition of Advanced Disposal; (iii) strategic investments in our digital platform; (iv) increased health and welfare costs attributable to medical care activity generally returning to pre -pandemic levels from the lower levels experienced during 2020 and (v) charges pertaining to reserves for certain loss contingencies during 2021. These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in the fourth quarter of 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021. • The costs increased in 2020, as compared with 2019, due to (i) higher consulting, advisory and legal fees associated with our acquisition and integration of Advanced Disposal; (ii) strategic investments in our digital platform; (iii) incremental costs associated with the COVID-19 pandemic and (iv) higher long-term incentive compensation costs. These increased expenses were offset, in part, by (i) lower annual incentive compensation costs and (ii) lower litigation reserves. Interest Expense, Net Our interest expense, net was $365 million, $425 million and $411 million in 2021, 2020 and 2019, respectively. The decrease in interest expense, net for 2021 was primarily due to certain refmancing activities, as discussed further below, including (i) the redemption of $3.0 billion of senior notes in July 2020 and the issuance of $2.5 billion of senior notes in November 2020 at lower rates and (ii) the retirement of $1.3 billion of certain high -coupon senior notes and concurrent issuance of $950 million of lower coupon senior notes in May 2021. The decreases were partially offset by decreases in interest income as a result of lower cash and cash equivalents balances in 2021. 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. 49 Loss on Early Extinguishment of Debt, Net In May 2021, WMI issued $950 million of senior notes, which are discussed further below in Summary of Cash and Cash Equivalents, Restricted Trust and Escrow Accounts and Debt Obligations. Concurrently, we used the net proceeds from the newly issued senior notes of $942 million and available cash on hand to retire $1.3 billion of certain high -coupon senior notes. The loss on early extinguishment of debt for 2021 includes $220 million of charges related to this tender offer, including cash paid of $211 million related to premiums and other third -party costs, and $9 million primarily related to unamortized discounts and debt issuance costs. See Note 6 to the Consolidated Financial Statements for more information related to these transactions. 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, 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. In May 2019, WMI 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. Equity in Net Losses of Unconsolidated Entities We recognized equity in net losses of unconsolidated entities of $36 million, $68 million and $55 million in 2021, 2020 and 2019, respectively. The losses for each period were 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 Notes 8 and 18 to the Consolidated Financial Statements. In 2020, the entity that held and managed 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. Additionally, the 2019 period includes losses associated with our investment in a refined coal facility. Other, Net We recognized other, net income of $5 million in 2021 and 2020, 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). 50 Income Tax Expense We recorded income tax expense of $532 million, $397 million and $434 million in 2021, 2020 and 2019, respectively, resulting in effective income tax rates of 22.6%, 20.9% and 20.6% for the years ended December 31, 2021, 2020 and 2019, respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the following: • Investments Qualing for Federal Tax Credits — Our low-income housing properties and refined coal facility investments reduced our income tax expense by $74 million, $87 million and $96 million, primarily due to tax credits realized from these investments for the years ended December 31, 2021, 2020 and 2019, respectively. See Note 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities; • Other Federal Tax Credits — During 2021, 2020 and 2019, 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 $5 million, $7 million and $11 million, respectively; • Equity -Based Compensation — During 2021, 2020 and 2019, 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 $18 million, $27 million and $25 million, respectively; • State Net Operating Losses and Credits — During 2021, 2020 and 2019, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $15 million, $12 million and $14 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 $13 million, $10 million and $2 million for the years ended December 31, 2021, 2020 and 2019, respectively; • Adjustments to Accruals and Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $17 million for the year ended December 31, 2021, and a reduction in our income tax expense of $3 million and $22 million for the years ended December 31, 2020 and 2019, respectively; • Tax Implications of Divestitures — During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations. This gain was not taxable, which resulted in a reduction in our income tax expense of $8 million; • 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; and • Tax Implications of Impairments — Portions of the impairment charges recognized during 2019 were not deductible for tax purposes resulting in an increase in income tax expense of $15 million The non -cash impairment charges recognized during 2021 and 2020 were deductible for tax purposes. See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges. See Note 8 to the Consolidated Financial Statements for more information related to income taxes. 51 Landfill and Environmental Remediation Discussion and Analysis We owned or operated 255 solid waste landfills and five secure hazardous waste landfills as of December 31, 2021 and 263 solid waste landfills and five secure hazardous waste landfills as of December 31, 2020. 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): 2021 2020 Remaining Permitted Expansion Capacity Capacity Remaining Total Permitted Capacity Capacity Expansion Total Capacity Capacity Balance as of beginning of year (in tons) 4,891 191 5,082 4,754 200 4,954 Acquisitions, divestitures, newly permitted landfills and closures (4) (4) 259 14 273 Changes in expansions pursued (a) 105 105 21 21 Expansion permits granted (b) 126 (126) — 44 (44) Amortizable tons received (124) — (124) (112) — (112) Changes in engineering estimates and other (c) 4 4 (54) (54) Balance as of end of year (in tons) 4,889 174 5,063 4,891 191 5,082 Balance as of end of year (in cubic yards) 4,808 163 4,971 4,828 163 4,991 (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. (b) We received expansion permits at seven of our landfills during 2021 and four of our landfills during 2020, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills. 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 (c) The tons received at our landfills for the year ended December 31 are shown below (tons in thousands): Solid waste landfills (a) Hazardous waste landfills Solid waste landfills closed, divested or lease or other contractual agreement expired during related year 2021 # of Total Sites Tons 255 (b) 124,773 2020 Tons per # of Total Tons per Day Sites Tons Day 457 263 112,729 413 5 610 2 5 676 2 260 125,383 459 268 113,405 415 9 114 125,497 (c) 5 318 113,723 (c) (a) As of December 31, 2021 and 2020, we had 14 landfills and 17 landfills, respectively, which were not accepting waste. 52 (b) (c) In 2021, we (i) executed one new contractual agreement; (ii) divested one landfill; (iii) divested one service agreement; (iv) closed six landfills and (v) closed one landfill operated under contractual agreement. These amounts include 1.6 million tons and 1.7 million tons as of December 31, 2021 and 2020, 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. As of December 31, 2021, we owned or controlled the management of 230 sites with remedial activities, are in closure or have received a certification of closure from the applicable regulatory agency. Based on remaining permitted airspace as of December 31, 2021 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 39 years when considering remaining permitted airspace, expansion airspace and projected annual disposal volume. The number of landfills owned or operated as of December 31, 2021, segregated by their estimated operating lives based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows: # of Landfills 0 to 5 years 28 6 to 10 years 21 11 to 20 years 50 21 to 40 years 61 41+ years 100 Total 260 (a) (a) Of the 260 landfills, 219 are owned, 29 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. 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. 53 The changes to the cost basis of our landfill assets and accumulated landfill airspace amortization for the year ended December 31, 2021 are reflected in the table below (in millions): December 31, 2020 Capital additions Asset retirement obligations incurred and capitalized Amortization of landfill airspace Foreign currency translation Asset retirements and other adjustments December 31, 2021 Accumulated Net Book Cost Basis of Landfill Airspace Value of Landfill Assets Amortization Landfill Assets $ 16,842 791 117 $ (9,692) $ 7,150 791 117 (731) (731) 8 (3) 5 (24) 36 12 $ 17,734 $ (10,390) $ 7,344 As of December 31, 2021, we estimate that we will spend approximately $639 million in 2022, and approximately $1.4 billion in 2023 and 2024 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. As of December 31, 2021, we had 14 landfills which were not accepting waste. During the year ended December 31, 2021, we performed tests of recoverability for five of these landfills with an aggregate net recorded capitalized landfill asset cost of $297 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 nine landfills as the net recorded capitalized landfill asset cost was not material. 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 2 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 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, 2021 are reflected in the table below (in millions): Environmental Landfill Remediation December 31, 2020 $ 2,156 $ 230 Obligations incurred and capitalized 117 Obligations settled (101) (22) Interest accretion 108 3 Revisions in estimates and interest rate assumptions (a) 33 2 Acquisitions, divestitures and other adjustments (b) 13 December 31, 2021 $ 2,326 $ 213 (a) The amount reported for our landfill liabilities includes an increase of $15 million due to a business decision to accelerate the closure timing of a landfill in our West Tier segment, which resulted in the acceleration of the expected timing of capping, closure and post -closure activities. The remaining increase relates to revisions in estimated costs and timing of capping, closure and post -closure liabilities. The amount reported for our landfill liabilities includes an increase of $13 million related to changes in the fair values assigned to certain acquired Advanced Disposal sites. (b) 54 Landfill Operating Costs The following table summarizes our landfill operating costs for the year ended December 31 (in millions): 2021 2020 2019 Interest accretion on landfill liabilities $ 108 $ 103 $ 98 Interest accretion on and discount rate adjustments to environmental remediation liabilities and recovery assets (2) 9 13 Leachate and methane collection and treatment 183 189 173 Landfill remediation costs 6 1 4 Other landfill site costs 117 92 91 Total landfill operating costs $ 412 $ 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. 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: 2021 2020 2019 Amortization of landfill airspace (in millions) $ 731 $ 568 $ 575 Tons received, net of redirected waste (in millions) 124 112 121 Average landfill airspace amortization expense per ton $ 5.90 $ 5.07 $ 4.75 Different per -ton amortization rates are applied at each of our 260 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. 55 Liquidity and Capital Resources The Company consistently generates cash flow from operations that meets and exceeds our working capital needs, payment of our dividends, investment in the business through capital expenditures and tuck -in acquisitions, and funding of strategic growth and sustainability investments. 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. 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. Summary of Contractual Obligations The following table summarizes our significant contractual obligations as of December 31, 2021 and the anticipated effect of these obligations on our liquidity in future years (in millions): 2022 2023 2024 2025 2026 Thereafter Total Recorded Obligations: Final capping, closure and post -closure liabilities (a) $ 137 $ 171 $ 165 $ 188 $ 133 $ 2,477 $ 3,271 Debt payments (b) 2,449 651 249 1,278 677 8,275 13,579 Unrecorded Obligations: Interest on debt (c) 323 290 278 266 247 2,293 3,697 Estimated unconditional purchase obligations (d) 197 182 130 105 95 368 1,077 Anticipated liquidity impact as of December 31, 2021 $ 3,106 $ 1,294 $ 822 $ 1,837 $ 1,152 $ 13,413 $ 21,624 (a) Includes liabilities for final capping, closure and post -closure costs recorded in our Consolidated Balance Sheet as of December 31, 2021, without the impact of discounting and inflation. Our recorded liabilities for final capping, closure and post -closure costs 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. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations. 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, 2021. As of December 31, 2021, we had $58 million of accrued interest related to our debt obligations. (d) Our unrecorded obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees. (c) In addition to the above, we also have recorded obligations related to liabilities associated with environmental remediation costs and non -cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively. 56 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): 2021 2020 Cash and cash equivalents $ 118 $ 553 Restricted trust and escrow accounts: Insurance reserves $ 305 $ 306 Final capping, closure, post -closure and environmental remediation funds 118 114 Other 5 2 Total restricted trust and escrow accounts (a) $ 428 $ 422 Debt: Current portion $ 708 $ 551 Long-term portion 12,697 13,259 Total debt $ 13,405 $ 13,810 (a) As of December 31, 2021 and 2020, $80 million and $75 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets. Cash and cash equivalents — The decrease in cash and cash equivalents during 2021 is primarily due to the use of available cash to retire certain high -coupon senior notes in May 2021, which is discussed above in Loss on Early Extinguishment of Debt, Net. 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, 2021 are described in Note 6 to the Consolidated Financial Statements. As of December 31, 2021, we had $3.1 billion of debt maturing within the next 12 months, including (i) $1.8 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) $645 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) $500 million of 2.90% senior notes that mature in September 2022 and (iv) $170 million of other debt with scheduled maturities within the next 12 months, including $71 million of tax-exempt bonds. As of December 31, 2021, we have classified $2.4 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"). The remaining $708 million of debt maturing in the next 12 months is classified as current obligations. As of December 31, 2021, 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 reset on a 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, 2021. 57 In May 2021, WMI issued $950 million of senior notes consisting of $475 million of 2.00% senior notes due June 1, 2029 and $475 million of 2.95% senior notes due June 15, 2041. The net proceeds from these debt issuances were $942 million, all of which were used along with available cash on hand, to retire $1.3 billion of certain high -coupon senior notes. The cash paid included the principal amount of the debt retired, $211 million of related premiums and other third -party costs, which are classified as loss on early extinguishment of debt in our Consolidated Statement of Operations, and $15 million of accrued interest. See Note 6 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): 2021 2020 Revolving credit facility (a) $ 167 $ 270 Other letter of credit lines (b) 764 566 $ 931 $ 836 (a) As of December 31, 2021, we had an unused and available credit capacity of $1.5 billion. (b) As of December 31, 2021, these other letter of credit lines are uncommitted with terms extending through April 2023. Guarantor Financial Information WM Holdings has fully and unconditionally guaranteed all of WMI's senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings' senior indebtedness. None of WMI's other subsidiaries have guaranteed any of WMI's or WM Holdings' debt. In lieu of providing separate fmancial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non -guarantor (in millions): December 31, 2021 Balance Sheet Information: Current assets $ 6 Noncurrent assets 13 Current liabilities 590 Noncurrent liabilities: Advances due to affiliates 18,033 Other noncurrent liabilities 10,778 Year Ended December 31, 2021 Income Statement Information: Revenue $ Operating income Net loss 343 58 Summary of Cash Flow Activity The following is a summary of our cash flows for the year ended December 31 (in millions): 2021 2020 2019 Net cash provided by operating activities $ 4,338 $ 3,403 $ 3,874 Net cash used in investing activities $ (1,894) $ (4,847) $ (2,376) Net cash (used in) provided by financing activities $ (2,900) $ (1,559) $ 1,964 Net Cash Provided by Operating Activities Our operating cash flows for 2021, as compared with 2020, increased by $935 million primarily as a result of (i) an increase in earnings primarily attributable to our collection, disposal and recycling lines of business; (ii) our acquisition of Advanced Disposal; (iii) lower interest payments in 2021 primarily due to certain refinancing activities and the retirement of high -coupon debt during 2020 reducing our overall interest rates; (iv) lower income taxes paid in 2021 and (v) favorable changes in our working capital, net of effects of acquisitions and divestitures. Our working capital was favorably impacted by process improvements that contributed to a significant improvement in our days -to -collect metrics. These favorable impacts were partially offset by the timing of cash tax benefits received in 2020 associated with federal alternative fuel tax credits. Our operating cash flows for 2020, as compared with 2019, decreased by $471 million 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 made 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 2020 associated with the 2019 federal alternative fuel credits. 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 $76 million, $4,088 million and $527 million in 2021, 2020 and 2019, respectively, of which $75 million, $4,085 million and $521 million, respectively, are considered cash used in investing activities. The remaining spend is fmancing 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 17 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 $1,904 million, $1,632 million and $1,818 million for capital expenditures in 2021, 2020 and 2019, respectively. The increase in 2021 is due in part to intentional steps the Company took to accelerate growth capital spending on recycling and renewable energy projects. Additionally, 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. 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. • Proceeds from Divestitures Proceeds from divestitures of businesses and other assets, net of cash divested, were $96 million, $885 million and $49 million in 2021, 2020 and 2019, respectively. In 2021, our proceeds are primarily the result of the sale of certain non -strategic Canadian operations. In 2020, our proceeds included $856 million related to the sale of assets required to be sold by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal. The remaining amounts in 2021, 2020 and 2019 generally related to the sale of fixed assets. • Other, Net Our spending within other, net was $11 million, $15 million, and $86 million in 2021, 2020 and 2019, respectively. During 2021, 2020 and 2019, we used $32 million, $14 million and $44 million, respectively, of cash from restricted cash and cash equivalents to invest in available -for -sale securities. Our 2021 cash spend was partially offset by proceeds received from the sale of an equity method investment. We also used $20 million in 2019 to make an initial cash payment associated with a low-income housing investment. In 2019, these items 59 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. 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 for the year ended December 31 (in millions): Borrowings: Revolving credit facility Commercial paper program (a) 364-day revolving credit facility (b) Senior notes Canadian senior notes Tax-exempt bonds Other debt Repayments: Revolving credit facility Commercial paper program (a) 364-day revolving credit facility (b) Senior notes Advanced Disposal senior notes (c) Tax-exempt bonds Other debt Net cash (repayments) borrowings 2021 2020 2019 $ — $ 50 $ 6,831 3,630 8,554 3,000 942 2,479 3,971 373 175 261 339 $ 7,948 $ 9,420 $ 13,237 (127) (116) $ (8,404) $ (9,629) $ (10,088) $ (456) $ (209) $ 3,149 (50) $ (11) (1,822) (9,555) (3,000) (4,000) (257) (437) (212) (204) (108) (61) Beginning in 2021, we elected to report these cash flows on a gross basis. Reclassifications have been made to our prior period information for comparability purposes. 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 2021 and 2019 were primarily to support acquisitions and for general corporate purposes. In November 2020, we terminated this facility contemporaneously with repayment of all outstanding borrowings with proceeds from our November 2020 senior notes issuance. At the time of acquisition, Advanced Disposal had certain outstanding senior notes which were redeemed in 2020 pursuant to an optional redemption feature as further discussed in Note 17 to the Consolidated Financial Statements. Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments. • Premiums and Other Paid on Early Extinguishment of Debt During 2021, we paid premiums and other third -party costs of $211 million to retire certain high -coupon notes as discussed further in Note 6 to the Consolidated Financial Statements. During 2020, we paid premiums of $30 million to redeem $3.0 billion of senior notes that contained a special mandatory redemption feature tied to the timing of the Advanced Disposal acquisition closing. During 2019, we paid premiums of $84 million to retire certain high -coupon senior notes. See Loss on Early Extinguishment of Debt, Net for further discussion. • 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 allocated $1,350 million, $402 million and $244 million of available cash to common stock repurchases during 2021, 2020, and 2019, respectively. See Note 13 to the Consolidated Financial Statements for additional information. 60 We announced in December 2021 that the Board of Directors has authorized up to $1.5 billion in future share repurchases. Any future share repurchases will be made at the discretion of management and will depend on factors similar to those considered by the Board of Directors in making dividend declarations and listed below, as well as market conditions. • Cash Dividends For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $970 million in 2021, or $2.30 per common share, $927 million in 2020, or $2.18 per common share, and $876 million in 2019, or $2.05 per common share. In December 2021, we announced that our Board of Directors expects to increase the quarterly dividend from $0.575 to $0.65 per share for dividends declared in 2022. 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. • Exercise of Common Stock Options The exercise of common stock options generated financing cash inflows of $66 million, $63 million and $67 million during 2021, 2020 and 2019, respectively. 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: 2021 2020 2019 Net cash provided by operating activities $ 4,338 $ 3,403 $ 3,874 Capital expenditures (1,904) (1,632) (1,818) Proceeds from divestitures of businesses and other assets, net of cash divested 96 885 49 Free cash flow $ 2,530 $ 2,656 $ 2,105 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 fmancial 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 assets and intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 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. 61 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 and (iii) the determination of each landfill's remaining permitted and expansion airspace. 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 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 and the capping costs are amortized 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 landfill, the adjustment to the asset must be amortized immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, 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 landfill, the adjustment to the asset must be amortized immediately through expense. When the change in estimate relates to a landfill with remaining airspace, 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 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; 62 • 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 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 63 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 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. 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. 64 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 perform 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 indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is 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. Off -Balance Sheet Arrangements We have fmancial interests in unconsolidated variable interest entities as discussed in Note 18 to the Consolidated Financial Statements. Additionally, we are party to guarantee arrangements with unconsolidated entities as discussed in the Guarantees section of Note 10 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, 2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity. Inflation Accelerated and pronounced economic pressures, particularly related to inflationary cost pressures on labor and the goods and services we rely upon to deliver service to our customers, had a more significant impact on our cost structure and capital expenditures in 2021. Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate. A significant portion of our revenue is tied to a price escalation index with a lookback provision, which has resulted in a timing lag in our ability to recover increased costs under these contracts during this period of rapid inflation. Separately, for many of our customers we provide services under multi -year contracts that can restrict our ability to increase prices and the timing of such increases. As we enter 2022, many of these contract lookback provisions will begin to capture the recent inflationary cost increases in the price escalation calculation. We are taking proactive steps to recover inflationary cost pressures through the price of our service and by managing our costs through efficiency, labor productivity and investments in technology 65 to automate certain aspects of our business in order to mitigate the inflationary cost pressures we have seen in our business. Refer to Item 1A. Risk Factors for further discussion. 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, 2021. Interest Rate Exposure Our exposure to market risk for changes in interest rates relates primarily to our financing activities. As of December 31, 2021, we had $13.5 billion of long-term debt, excluding the impacts of accounting for debt issuance costs, discounts and fair value adjustments attributable to terminated interest rate derivatives. We have $2.5 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) $645 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 a 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 2022 interest expense by $7 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 $900 million as of December 31, 2021. 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 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, which generally mature over the next nine years, as well as equity securities. 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, electricity and recycled materials, including old corrugated cardboard and plastics. We work 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, operating costs and margins may also increase or decrease. As discussed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, we saw significant increases in commodity prices and demand for recycled materials in 2021, resulting in increased annual revenue for our recycling business of $537 million Variability in commodity prices can also impact the margins of our business as certain components of our revenue are structured as a pass through of costs, including recycling brokerage and fuel surcharges. 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. 66 Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID 42) 68 Consolidated Balance Sheets as of December 31, 2021 and 2020 72 Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019 73 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019 73 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019 74 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020 and 2019 75 Notes to Consolidated Financial Statements 76 67 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, 2021, 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, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements of the Company, and our report dated February 15, 2022 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 fmancial 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 fmancial 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. 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 15, 2022 /s/ ERNST & YOUNG LLP 68 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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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, 2021, 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 15, 2022 expressed an unqualified opinion thereon. 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 fmancial 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 fmancial 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. 69 Landfill Amortization Description of the At December 31, 2021, the Company 's landfill assets, net of accumulated amortization, Matter totaled $7.3 billion and the associated amortization expense for 2021 was $731 million As discussed in Note 2 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. How We Addressed the We obtained an understanding, evaluated the design, and tested the operating effectiveness of Matter in Our Audit 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. 70 Landfill — Final Capping, Closure and Post -Closure Costs Description of the At December 31, 2021, the carrying value of the Company's landfill asset retirement Matter obligations related to final capping, closure and post -closure costs totaled $2.3 billion. As discussed in Note 2 of the financial statements, the Company updates the estimates used to measure the asset retirement obligations annually, or more often if significant facts change. How We Addressed the Matter in Our Audit 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. 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 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 also tested the completeness and accuracy of the historical data utilized in preparing the estimate. We have served as the Company's auditor since 2002. Houston, Texas February 15, 2022 /s/ ERNST & YOUNG LLP 71 WASTE MANAGEMENT, INC. CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Par Value Amounts) December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 118 $ 553 Accounts receivable, net of allowance for doubtful accounts of $25 and $33, respectively 2,278 2,097 Other receivables, net of allowance for doubtful accounts of $8 and $7, respectively 268 527 Parts and supplies 135 124 Other assets 270 239 Total current assets 3,069 3,540 Property and equipment, net of accumulated depreciation and amortization of $20,537 and $19,337, respectively 14,419 14,148 Goodwill 9,028 8,994 Other intangible assets, net 898 1,024 Restricted trust and escrow accounts 348 347 Investments in unconsolidated entities 432 426 Other assets 903 866 Total assets $ 29,097 $ 29,345 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 1,375 $ 1,121 Accrued liabilities 1,428 1,342 Deferred revenues 571 539 Current portion of long-term debt 708 551 Total current liabilities 4,082 3,553 Long-term debt, less current portion 12,697 13,259 Deferred income taxes 1,694 1,806 Landfill and environmental remediation liabilities 2,373 2,222 Other liabilities 1,125 1,051 Total liabilities 21,971 21,891 Commitments and contingencies (Note 10) Equity: Waste Management, Inc. stockholders' equity: Common stock, $0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued 6 6 Additional paid -in capital 5,169 5,129 Retained earnings 12,004 11,159 Accumulated other comprehensive income (loss) 17 39 Treasury stock at cost, 214,158,636 and 207,480,827 shares, respectively (10,072) (8,881) Total Waste Management, Inc. stockholders' equity 7,124 7,452 Noncontrolling interests 2 2 Total equity 7,126 7,454 Total liabilities and equity $ 29,097 $ 29,345 See Notes to Consolidated Financial Statements. 72 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) Year Ended December 31, 2021 2020 2019 Operating revenues $ 17,931 $ 15,218 $ 15,455 Costs and expenses: Operating 11,111 9,341 9,496 Selling, general and administrative 1,864 1,728 1,631 Depreciation and amortization 1,999 1,671 1,574 Restructuring 8 9 6 (Gain) loss from divestitures, asset impairments and unusual items, net. (16) 35 42 14,966 12,784 12,749 Income from operations 2,965 2,434 2,706 Other income (expense): Interest expense, net (365) (425) (411) Loss on early extinguishment of debt, net (220) (53) (85) Equity in net losses of unconsolidated entities (36) (68) (55) Other, net 5 5 (50) (616) (541) (601) Income before income taxes 2,349 1,893 2,105 Income tax expense 532 397 434 Consolidated net income 1,817 1,496 1,671 Less: Net income (loss) attributable to noncontrolling interests 1 1 Net income attributable to Waste Management, Inc $ 1,816 $ 1,496 $ 1,670 Basic earnings per common share $ 4.32 $ 3.54 $ 3.93 Diluted earnings per common share $ 4.29 $ 3.52 $ 3.91 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions) Year Ended December 31, 2021 2020 2019 Consolidated net income $ 1,817 $ 1,496 $ 1,671 Other comprehensive income (loss), net of tax: Derivative instruments, net 9 15 8 Available -for -sale securities, net (6) 11 15 Foreign currency translation adjustments (28) 20 55 Post -retirement benefit obligation, net 3 1 1 Other comprehensive income (loss), net of tax (22) 47 79 Comprehensive income 1,795 1,543 1,750 Less: Comprehensive income (loss) attributable to noncontrolling interests1 1 Comprehensive income attributable to Waste Management, Inc $ 1,794 $ 1,543 $ 1,749 See Notes to Consolidated Financial Statements. 73 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) Year Ended December 31, 2021 2020 2019 Cash flows from operating activities: Consolidated net income $ 1,817 $ 1,496 $ 1,671 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation and amortization 1,999 1,671 1,574 Deferred income tax expense (benefit) (77) 165 100 Interest accretion on landfill and environmental remediation liabilities 111 103 98 Provision for bad debts 37 54 39 Equity -based compensation expense 108 94 86 Net gain on disposal of assets (25) (9) (27) (Gain) loss from divestitures, asset impairments and other, net (16) 43 113 Equity in net losses of unconsolidated entities, net of dividends 38 60 55 Loss on early extinguishment of debt, net 220 53 85 Change in operating assets and liabilities, net of effects of acquisitions and divestitures: Receivables 28 (179) (53) Other current assets (39) 10 (23) Other assets 34 53 10 Accounts payable and accrued liabilities 206 (37) 243 Deferred revenues and other liabilities (103) (174) (97) Net cash provided by operating activities 4,338 3,403 3,874 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired (75) (4,085) (521) Capital expenditures (1,904) (1,632) (1,818) Proceeds from divestitures of businesses and other assets, net of cash divested 96 885 49 Other, net (11) (15) (86) Net cash used in investing activities (1,894) (4,847) (2,376) Cash flows from financing activities: New borrowings 7,948 9,420 13,237 Debt repayments (8,404) (9,629) (10,088) Premiums and other paid on early extinguishment of debt (211) (30) (84) Common stock repurchase program (1,350) (402) (248) Cash dividends (970) (927) (876) Exercise of common stock options 66 63 67 Tax payments associated with equity -based compensation transactions (28) (34) (33) Other, net 49 (20) (11) Net cash (used in) provided by financing activities (2,900) (1,559) 1,964 Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents 2 4 2 (Decrease) increase in cash, cash equivalents and restricted cash and cash equivalents (454) (2,999) 3,464 Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 648 3,647 183 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 194 $ 648 $ 3,647 Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period: Cash and cash equivalents $ 118 $ 553 $ 3,561 Restricted cash and cash equivalents included in other current assets 7 28 15 Restricted cash and cash equivalents included in restricted trust and escrow accounts 69 67 71 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 194 $ 648 $ 3,647 See Notes to Consolidated Financial Statements. 74 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Millions, Except Shares in Thousands) Waste Management, Inc. Stockholders' Equity Accumulated Additional Other Common Stock Paid -In Retained Comprehensive Treasury Stock Noncontrolling Total Shares Amounts Capital Earnings Income (Loss) Shares Amounts Interests Balance, December 31, 2018 . $ 6,276 630,282 $ 6 $ 4,993 $ 9,797 $ (87) (206,299) $ (8,434) $ 1 Consolidated net income 1,671 1,670 1 Other comprehensive income (loss), net of tax 79 79 Cash dividends declared of $2.05 per common share(876) (876) Equity -based compensation transactions, net of tax 164 56 1 2,585 107 Common stock repurchase program (244) (2,247) (244) Other, net 5 Balance, December 31, 2019 . $ 7,070 630,282 $ 6 $ 5,049 $ 10,592 $ (8) (205,956) $ (8,571) $ 2 Adoption of new accounting standards (2) (2) Consolidated net income 1,496 1,496 Other comprehensive income (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 (402) (3,687) (402) Other, net (1) 4 1 Balance, December31, 2020 .. $ 7,454 630,282 $ 6 $ 5,129 $ 11,159 $ 39 (207,481) $ (8,881) $ 2 Consolidated net income 1,817 1,816 1 Other comprehensive income (loss), net of tax (22) (22) Cash dividends declared of $2.30 per common share(970) (970) Equity -based compensation transactions, net 198 110 (1) 2,049 89 Common stock repurchase program (1,350) (70) (8,731) (1,280) Other, net (1) 4 (1) Balance, December 31, 2021 . $ 7,126 630,282 $ 6 $ 5,169 $ 12,004 $ 17 (214,159) $ (10,072) $ 2 See Notes to Consolidated Financial Statements. 75 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2021, 2020 and 2019 1. Basis of Presentation 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 18. 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 "WMI," 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. In 2021, our senior management began evaluating, overseeing and managing the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The Company finalized the assessment of our segments during the fourth quarter of 2021. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. 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 17 and 19. 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. In our Annual Report on Form 10-K for the year ended December 31, 2020, our accumulated depreciation and gross property and equipment balances as of December 31, 2020 were overstated. We subsequently corrected the balances in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and have provided the corrected balances in all filings thereafter. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of WMI, 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. 76 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 assets and intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. 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, 2021 and 2020, 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 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. 77 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the year ended December 31 (in millions): 2021 2020 Balance as of January 1, $ 33 $ 28 Adoption of new accounting standard (1) Additions charged to expense 35 51 Accounts written -off, net of recoveries (36) (44) Acquisitions, divestitures and other, net (7) (1) Balance as of December 31, $ 25 $ 33 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. 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. As of December 31, 2021, we had $2,278 million of trade receivables, net of allowance for doubtful accounts of $25 million As of December 31, 2020, we had $2,097 million of trade receivables, net of allowance for doubtful accounts of $33 million In January 2020, COVID-19 was declared a Public Health Emergency of International Concern and subsequently declared a global pandemic in March 2020. With this in mind, during 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 during the year and resulted in a related increase in our allowance for doubtful accounts. Improved economic conditions during 2021 have allowed us to return to more regular business practices, in accordance with our contractual terms. Based on aging analyses as of both December 31, 2021 and 2020, 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. As of December 31, 2021, we had $451 million of notes and other receivables, net of allowance of $10 million As of December 31, 2020, we had $703 million of notes and other receivables, net of allowance of $8 million Based on an aging analysis as of December 31, 2021 and 2020, approximately 60% and 75%, respectively, of our other receivables were due within 12 months or less. Other receivables, as of December 31, 2021 and 2020, include receivables related to income tax payments in excess of our current income tax obligations of $166 million and $414 million, respectively. Other receivables as of December 31, 2021 and 2020 also include a receivable of $14 million and $20 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 78 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 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, 2021, 2020 and 2019, we inflated these costs in current dollars to the expected time of payment using an inflation rate of 2.25%, 2.25% and 2.5%, respectively. 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, 2021 was approximately 4.6%. 79 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Sustained 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, 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; 80 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • 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, 2021, 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. 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. 81 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 $135 million higher than the $213 million recorded in the Consolidated Balance Sheet as of December 31, 2021. Our ultimate 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. 82 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 inflate the cost in current dollars 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. As of December 31, 2021 and 2020, we inflated the costs by 2.25%. 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: 2021 2020 2019 Increase (decrease) in operating expenses $ (4) $ 8 $ 9 Risk -free discount rate applied to environmental remediation liabilities and recovery assets 1.50 % 1.00 % 1.75 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 $31 million and $34 million as of December 31, 2021 and 2020, respectively. Had we not inflated and discounted any portion of our environmental remediation liability, the amount recorded would have decreased by $6 million and $12 million as of December 31, 2021 and 2020, 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 generally 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): Useful Lives Vehicles excluding rail haul cars 3 to 10 Vehicles rail haul cars 10 to 30 Machinery and equipment — including containers 3 to 30 Buildings and improvements 5 to 40 Furniture, fixtures and office equipment 3 to 10 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. 83 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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. 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. For operating and financing leases, including landfill leases, our rent expense for each of the last three years and future minimum lease payments are disclosed in Note 7. 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, subsequent remeasurements 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. 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. See Note 17 for additional information related to our acquisitions, including our 2020 acquisition of Advanced Disposal. 84 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 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. 85 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Indefinite -Lived Intangible Assets, Including Goodwill At least annually using a measurement date of October 1, and more frequently if warranted, we assess our indefinite -lived intangible assets, including the goodwill of our reporting units, for impairment. We first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the asset's estimated fair value is 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 11 for information related to impairments recognized during the reported periods. Insured and Selflnsured 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. 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 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. WMI pays an annual premium to the insurance captive on behalf of WMI and its insured subsidiaries, typically in the first quarter of the year, for estimated losses based on an external actuarial analysis. These premiums are held in a restricted funds account to be used solely for paying insurance claims, resulting in a transfer of risk from our Company to the insurance captive, and are allocated between current and long-term assets depending on estimated timing of 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 fmal capping, closure, post -closure and environmental remediation obligations. These funds are generally allocated between cash, money market funds, equity securities and available -for -sale debt securities 86 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 and the premiums paid are directly deposited into a restricted escrow account to be used solely for paying insurance claims. At several of our landfills, we provide fmancial 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 fmancial instruments held in the restricted trust or escrow accounts. See Notes 16 and 18 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): 2021 2020 Equity method investments $ 335 $ 314 Investments without readily determinable fair values 48 63 Redeemable preferred stock 49 49 Investments in unconsolidated entities $ 432 $ 426 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 our Consolidated Statements of Operations in accordance with appropriate accounting guidance. Refer to Note 11 for information related to impairments and other adjustments recognized during the reported periods. 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 have been impacted by decreases in the U.S. dollar/Canadian dollar exchange rate from 1.2990 at December 31, 2019, to 1.2734 at 87 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 31, 2020 and to 1.2639 at December 31, 2021. Refer to Note 12 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 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. 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 19 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. 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 five 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 Sheets. As of December 31, 2021 and 2020, we had $175 million and $159 million of deferred contract costs, respectively, of which $126 million and $118 million, respectively, were related to deferred sales incentives. During each of the years ended December 31, 2021, 2020 and 2019, we amortized $23 million of sales incentives to selling, general and administrative expense. 88 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 2021, 2020 and 2019, total interest costs were $388 million, $473 million and $485 million, respectively, of which $13 million, $16 million and $21 million was capitalized in 2021, 2020 and 2019, 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 fmancial 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 8 for discussion of our income taxes. 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 10 for discussion of our commitments and contingencies. 89 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Supplemental Cash Flow Information The following table shows supplemental cash flow information for the year ended December 31 (in millions): 2021 2020 2019 Interest, net of capitalized interest $ 387 $ 461 $ 397 Income taxes 370 422 292 During 2021, we had $30 million of non -cash financing activities from new financing leases. During 2020, we had $50 million of non -cash fmancing activities primarily related to new financing leases, a portion of which were attributed to our acquisition of Advanced Disposal. During 2019, we had $299 million of non -cash financing activities from federal low-income housing investments and new financing leases. Non -cash investing and fmancing activities are generally excluded from the Consolidated Statements of Cash Flows. 3. Landfill and Environmental Remediation Liabilities Liabilities for landfill and environmental remediation costs as of December 31 are presented in the table below (in millions): 2021 2020 Landfill Environmental Environmental Remediation Total Landfill Remediation Total Current (in accrued liabilities) . $ 137 $ 29 $ 166 $ 138 $ 26 $ 164 Long-term 2,189 184 2,373 2,018 204 2,222 $ 2,326 $ 213 $ 2,539 $ 2,156 $ 230 $ 2,386 The changes to landfill and environmental remediation liabilities for the year ended December 31, 2021 are reflected in the table below (in millions): Environmental Landfill Remediation December 31, 2020 $ 2,156 $ 230 Obligations incurred and capitalized 117 Obligations settled (101) (22) Interest accretion 108 3 Revisions in estimates and interest rate assumptions (a) 33 2 Acquisitions, divestitures and other adjustments (b) 13 December 31, 2021 $ 2,326 $ 213 (a) The amount reported for our landfill liabilities includes an increase of $15 million due to a business decision to accelerate the closure timing of a landfill in our West Tier segment, which resulted in the acceleration of the expected timing of capping, closure and post -closure activities. The remaining increase relates to revisions in estimated costs and timing of capping, closure and post -closure liabilities. The amount reported for our landfill liabilities includes an increase of $13 million related to changes in the fair values assigned to certain acquired Advanced Disposal sites. (b) Our recorded liabilities as of December 31, 2021 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 90 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) payments of currently identified environmental remediation liabilities, as measured in current dollars, are $29 million in 2022, $47 million in 2023, $35 million in 2024, $31 million in 2025, $11 million in 2026 and $54 million thereafter. 4. Property and Equipment Property and equipment as of December 31 consisted of the following (in millions): Land Landfills Vehicles (a) Machinery and equipment (a) Containers (a) Buildings and improvements (a) Furniture, fixtures and office equipment (a) Less: Accumulated depreciation of tangible property and equipment (a) Less: Accumulated amortization of landfill airspace Property and equipment, net 2021 $ 732 17,734 5,893 3,571 2,807 3,542 677 34,956 (10,147) (10,390) 2020 $ 740 16,842 5,800 3,217 2,694 3,463 729 33,485 (9,645) (9,692) $ 14,419 $ 14,148 (a) In our Annual Report on Form 10-K for the year ended December 31, 2020, our accumulated depreciation and gross property and equipment balances as of December 31, 2020 were overstated. We subsequently corrected the balances in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and have provided the corrected balances in all filings thereafter, as discussed in Note 1. 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 See Note 5 for information regarding amortization of our intangible assets. 5. Goodwill and Other Intangible Assets 2021 2020 2019 $ 1,125 $ 996 $ 893 731 568 575 $ 1,856 $ 1,564 $ 1,468 Goodwill was $9,028 million and $8,994 million as of December 31, 2021 and 2020, respectively. The $34 million increase in goodwill during 2021 is primarily related to acquisitions, partially offset by divestitures. As discussed in Note 2, 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 Notes 11, 17 and 19 for additional information related to goodwill. 91 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Our other intangible assets consisted of the following as of December 31 (in millions): Customer Covenants Licenses, and Supplier Not -to- Permits Relationships Compete and Other Total 2021 Intangible assets $ 1,355 $ 43 $ 142 $ 1,540 Less: Accumulated amortization (538) (26) (78) (642) $ 817 $ 17 $ 64 $ 898 2020 Intangible assets $ 1,436 $ 68 $ 142 $ 1,646 Less: Accumulated amortization (497) (46) (79) (622) $ 939 $ 22 $ 63 $ 1,024 Amortization expense for other intangible assets was $143 million, $107 million and $106 million for 2021, 2020 and 2019, respectively. Amortization expense for other intangible assets for 2021 increased, as compared with 2020 and 2019, due to the amortization of acquired intangible assets related to our acquisition of Advanced Disposal. Additional information related to other intangible assets acquired through business combinations is included in Note 17. As of December 31, 2021, 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. As of December 31, 2021, we expect annual amortization expense related to other intangible assets to be $130 million in 2022, $115 million in 2023, $105 million in 2024, $97 million in 2025 and $77 million in 2026. 6. 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: 2021 2020 Commercial paper program (weighted average interest rate of 0.4% as of December 31, 2021 and December 31, 2020) $ 1,778 $ 1,814 Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.1% as of December 31, 2021 and 3.3% as of December 31, 2020) . 8,126 8,465 Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6% 395 393 Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.1% to 4.3% (weighted average interest rate of 1.4% as of December 31, 2021 and 1.7% as of December 31, 2020) 2,619 2,571 Financing leases and other, maturing through 2085, weighted average interest rate of 4.5% as of December 31, 2021 and 4.6% as of December 31, 2020) (a) 567 652 Debt issuance costs, discounts and other (80) (85) 13,405 13,810 Current portion of long-term debt 708 551 $ 12,697 $ 13,259 (a) Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059. 92 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Debt Classification As of December 31, 2021, we had $3.1 billion of debt maturing within the next 12 months, including (i) $1.8 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) $645 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) $500 million of 2.90% senior notes that mature in September 2022 and (iv) $170 million of other debt with scheduled maturities within the next 12 months, including $71 million of tax-exempt bonds. As of December 31, 2021, we have classified $2.4 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refmance 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 $708 million of debt maturing in the next 12 months is classified as current obligations. As of December 31, 2021, 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 reset on a 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, 2021. Access to and Utilization of Credit Facilities and Commercial Paper Program $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 WMI, 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 WMI, 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 a LIBOR successor rate, if applicable, as provided for in the underlying credit agreement) 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, 2021, we had no outstanding borrowings under this facility. We had $167 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 $1.5 billion as of December 31, 2021. 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, 2021, we had $1.8 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program. Other Letter of Credit Lines As of December 31, 2021, we had utilized $764 million of other uncommitted letter of credit lines with terms maturing through April 2023. 93 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Debt Borrowings and Repayments Commercial Paper Program — During the year ended December 31, 2021 we made cash repayments of $6.9 billion, which were partially offset by $6.8 billion of cash borrowings (net of related discount on issuance). Senior Notes — In May 2021, WMI issued $950 million of senior notes consisting of $475 million of 2.00% senior notes due June 1, 2029 and $475 million of 2.95% senior notes due June 1, 2041. The net proceeds from these debt issuances were $942 million, all of which were used, along with available cash on hand, to retire $1.3 billion of certain high -coupon senior notes. The cash paid included the principal amount of the debt retired, $211 million of related premiums and other third -party costs, and $15 million of accrued interest. During the second quarter of 2021, we recognized a $220 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to the tender offer, including $211 million of premiums and other third -party costs and $9 million primarily related to unamortized discounts and debt issuance costs. We also recognized $6 million of charges to interest expense for the write-off of cash flow hedges associated with the tendered notes, which was previously being amortized to interest expense through the notes' stated maturities. The following table summarizes the principal amount of senior notes redeemed within each series in order of acceptance priority level (in millions): Description Principal Outstanding Notes Tendered Prior to Tender and Redeemed 6.125% WMI senior notes due 2039 $ 252 $ 6 7.75% WMI senior notes due 2032 153 9 7.375% WMI senior notes due 2029 81 4.15% WMI senior notes due 2049 1,000 316 4.10% WMI senior notes due 2045 750 334 3.90% WMI senior notes due 2035 450 153 7.00% WMI senior notes due 2028 330 73 7.10% WM Holdings senior notes due 2026 249 26 3.50% WMI senior notes due 2024 350 194 3.125% WMI senior notes due 2025 600 178 3.15% WMI senior notes due 2027 750 2.90% WMI senior notes due 2022 500 2.40% WMI senior notes due 2023 500 Total $ 5,965 1,289 Tax -Exempt Bonds We issued $175 million of new tax-exempt bonds in 2021. 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 solid waste disposal facility and material recovery facility construction and development. In 2021, we also elected to refund and reissue $50 million of tax-exempt bonds and we repaid $127 million of our tax-exempt bonds with available cash at their scheduled maturities. Financing Leases and Other The decrease during 2021 is due to $115 million of cash repayments of debt at maturity, partially offset by an increase of $30 million primarily associated with non -cash financing leases. Scheduled Debt Payments Principal payments of our debt for the next five years and thereafter, based on scheduled maturities are as follows: $2,449 million in 2022, $651 million in 2023, $249 million in 2024, $1,278 million in 2025, $677 million in 2026 and $8,275 million thereafter. Our recorded debt and financing lease obligations include non -cash adjustments associated with 94 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) debt issuance costs, discounts 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 7 below for further discussion of our fmancing 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. See Notes 8 and 18 for additional information related to these investments. 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"). 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 Company did not elect to increase the Leverage Ratio for an Elevated Leverage Ratio Period following the acquisition of Advanced Disposal. 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 December 31, 2021 and 2020, we were in compliance with all covenants and restrictions under our fmancing arrangements that may have a material effect on our Consolidated Financial Statements. 7. 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 generally 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 95 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 Assets Long-term: Operating Financing Total lease assets Liabilities Current: Operating Financing Long-term: Operating Financing Total lease liabilities Other assets Property and equipment, net of accumulated depreciation and amortization Accrued liabilities Current portion of long-term debt Other liabilities Long-term debt, less current portion 2021 2020 $ 451 $ 466 364 386 $ 815 $ 852 $ 64 $ 63 47 50 459 291 $ 861 $ 453 314 880 Operating lease expense was $155 million, $140 million and $132 million during 2021, 2020 and 2019, respectively, and is included in operating and selling, general and administrative expenses in our Consolidated Statements of Operations. Financing lease expense was $58 million, $51 million and $48 million during 2021, 2020 and 2019, respectively, and is included in depreciation and amortization expense and interest expense, net in our Consolidated Statements of Operations. Minimum contractual obligations for our leases (undiscounted) as of December 31, 2021 are as follows (in millions): Operating Financing 2022 $ 75 $ 55 2023 68 50 2024 61 44 2025 51 40 2026 42 36 Thereafter 410 209 Total undiscounted lease payments $ 707 $ 434 Less: interest (184) (96) Discounted lease liabilities $ 523 $ 338 96 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Cash paid during 2021 for our operating and financing leases was $70 million and $64 million, respectively. During 2021, right -of -use assets obtained in exchange for lease obligations for our operating and financing leases were $69 million and $36 million, respectively. 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. As of December 31, 2021, the weighted average remaining lease terms of our operating and fmancing leases were approximately 20 years and 15 years, respectively. The weighted average discount rates used to determine the lease liabilities as of December 31, 2021 for our operating and fmancing leases were approximately 2.8% and 3.5%, respectively. 8. Income Taxes Income Tax Expense Our income tax expense consisted of the following for the year ended December 31 (in millions): 2021 2020 2019 Current: Federal $ 436 $ 114 $ 204 State 132 91 94 Foreign 41 27 36 609 232 334 Deferred: Federal (55) 149 94 State (22) 10 8 Foreign 6 (2) (77) 165 100 Income tax expense $ 532 $ 397 $ 434 The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows: 2021 2020 2019 Income tax expense at U.S. federal statutory rate 21.00 % 21.00 % 21.00 % State and local income taxes, net of federal income tax benefit 4.14 4.46 4.39 Federal tax credits (2.69) (3.78) (4.38) Taxing authority audit settlements and other tax adjustments 0.53 (0.17) (0.74) Tax impact of equity -based compensation transactions (0.60) (1.12) (0.91) Tax impact of impairments (0.29) (0.35) 0.72 Tax rate differential on foreign income 0.37 0.33 0.40 Other 0.16 0.57 0.13 Effective income tax rate 22.62 % 20.94 % 20.61 % 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) excess tax benefits associated with equity -based compensation transactions; (iv) the realization of state net operating losses and credits; (v) tax audit settlements; (vi) adjustments to our accruals and deferred taxes; (vii) the tax implications of divestitures; (viii) non -deductible transaction costs and (ix) the tax implications of impairments. 97 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions): 2021 2020 2019 Domestic $ 2,211 $ 1,780 $ 2,025 Foreign 138 113 80 Income before income taxes $ 2,349 $ 1,893 $ 2,105 Investments Qualing 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 owned 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, 2021, 2020 and 2019, we recognized net losses of $51 million, $73 million (including the $7 million impairment of the refined coal facility noted above) and $46 million, respectively, and a reduction in our income tax expense of $74 million, $87 million and $96 million, respectively, primarily due to tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. See Note 18 for additional information related to these unconsolidated variable interest entities. Other Federal Tax Credits During 2021, 2020 and 2019, 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 $5 million, $7 million and $11 million, respectively. Equity -Based Compensation — During 2021, 2020 and 2019, 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 $18 million, $27 million and $25 million, respectively. State Net Operating Losses and Credits During 2021, 2020 and 2019, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $15 million, $12 million and $14 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 $13 million, $10 million and $2 million for the years ended December 31, 2021, 2020 and 2019, 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, 2020 and 2021 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 Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and 98 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) changes in state and foreign laws resulted in an increase in our income tax expense of $17 million for the year ended December 31, 2021, and a reduction in our income tax expense of $3 million and $22 million for the years ended December 31, 2020 and 2019, respectively. Tax Implications of Divestitures — During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations. This gain was not taxable, which resulted in a reduction in our income tax expense of $8 million 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 were not deductible for tax purposes resulting in an increase in income tax expense of $15 million The non -cash impairment charges recognized during 2021 and 2020 were deductible for tax purposes. See Note 11 for more information related to our impairment charges. 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. Deferred Tax Assets (Liabilities) The components of net deferred tax liabilities as of December 31 are as follows (in millions): 2021 2020(a) Deferred tax assets: Net operating loss, capital loss and tax credit carry -forwards $ 189 $ 186 Landfill and environmental remediation liabilities 238 202 Operating lease liabilities 135 141 Miscellaneous and other reserves, net 113 103 Subtotal 675 632 Valuation allowance (158) (150) Deferred tax liabilities: Property and equipment (1,064) (1,137) Goodwill and other intangibles (1,027) (1,027) Operating lease right -of -use assets (120) (124) Net deferred tax liabilities $ (1,694) $ (1,806) (a) We have revised the classification between components of the net deferred tax liability as of December 31, 2020 in order to present the balances on a comparative basis with the classification as of December 31, 2021. These classification revisions were made as we fmalized the integration of the Advanced Disposal tax processes. As of December 31, 2021, we had $11 million of federal net operating loss carry -forwards with expiration dates through 2026 and $2.7 billion of state net operating loss carry -forwards with expiration dates through 2041. We also had $47 million of federal capital loss carry -forwards with expiration dates through 2025, $38 million of foreign tax credit 99 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) carry -forwards with expiration dates through 2031 and $12 million of state tax credit carry -forwards with expiration dates through 2037. 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): 2021 2020 2019 Balance as of January 1 $ 37 $ 40 $ 36 Additions based on tax positions related to the current year 22 5 5 Additions based on tax positions of prior years 18 Accrued interest 3 2 2 Settlements (12) Lapse of statute of limitations (4) (10) (3) Balance as of December 31 $ 64 $ 37 $ 40 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, 2021, we had $53 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 material accrued liabilities or expense for penalties related to unrecognized tax benefits for the reported periods. 9. 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 $104 million, $92 million and $88 million for the years ended December 31, 2021, 2020 and 2019, respectively. 100 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, 2021, the combined benefit obligation of these pension plans was $150 million supported by $150 million of combined plan assets. 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 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 $12 million and $14 million as of December 31, 2021 and 2020, respectively. Our accrued benefit liabilities for our defined benefit pension and other post -retirement plans 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 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): Expiration Date Pension Protection Act Company of Collective EIN/Pension Plan Reported Status(a) FIP/RP Contributions(d) Bargaining Pension Fund Number 2021 2020 Status(b)(c) 2021 2020 2019 Agreement(s) Automotive Industries Pension Plan EIN: 94-1133245; Critical and Critical and Implemented $ 1 $ 1 $ 1 9/30/2021 Plan Number: 001 Declining Declining Midwest Operating Engineers Pension Trust EIN: 36-6140097; Not Not Implemented 2 2 2 Various dates Fund Plan Number: 001 Endangered Endangered through or Critical or Critical 4/30/2026 as of as of 3/31/2021 3/31/2020 Suburban Teamsters of Northern Illinois EIN: 36-6155778; Not Not Implemented 4 3 3 Various dates Pension Plan Plan Number: 001 Endangered Endangered through or Critical or Critical 11/28/2025 Western Conference of Teamsters Pension EIN: 91-6145047; Not Not Not 35 33 32 Various dates Plan Plan Number: 001 Endangered Endangered Applicable through or Critical or Critical 5/31/2026 $ 42 $ 39 $ 38 Contributions to other Multiemployer Pension Plans 19 15 14 Total contributions to Multiemployer Pension Plans (e) $ 61 $ 54 $ 52 (a) Unless otherwise noted in the table above, the most recent Pension Protection Act zone status available in 2021 and 2020 is for the plan's year-end as of December 31, 2020 and 2019, 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. 101 (e) (b) (c) WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The "FIP/RP Status" column indicates plans for which a Funding Improvement Plan (" FIP") or a Rehabilitation Plan ("RP") has been implemented. 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, 2020 and 2019. 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 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. Refer to Note 10 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, 2021, 2020 and 2019, the Company made contributions of $51 million, $48 million and $45 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. 10. 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 letter of credit lines established for that purpose. These facilities are discussed further in Note 6. 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 fmancial assurance. 102 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, 2021, 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, 2021, our automobile liability insurance program included a per -incident deductible of up to $10 million Our receivable balance associated with insurance claims was $155 million and $139 million as of December 31, 2021 and 2020 respectively. The changes to our insurance reserves for the year ended December 31 are summarized below (in millions): 2021(a) 2020 Balance as of January 1 $ 664 $ 575 Self-insurance expense 240 172 Cash paid and other (170) (151) Other (b) — 68 Balance as of December 31 $ 734 $ 664 Current portion as of December 31 $ 191 $ 175 Long-term portion as of December 31 $ 543 $ 489 (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 as of December 31, 2020 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. Unconditional Purchase Obligations — 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 and consist primarily of the following: • 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. • Other We are party to certain multi -year service agreements expiring at various dates through 2030 requiring minimum annual payments. As of December 31, 2021, our estimated minimum obligations associated with unconditional purchase obligations, which are not recognized in our Consolidated Balance Sheets, were $197 million in 2022, $182 million in 2023, 103 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) $130 million in 2024, $105 million in 2025, $95 million in 2026 and $368 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 fmancial obligations are not fixed as of December 31, 2021. 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 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. Other Commitments • 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 6. Guarantees We have entered into the following guarantee agreements associated with our operations: • As of December 31, 2021, WM Holdings has fully and unconditionally guaranteed all of WMI's senior indebtedness, including its senior notes, $3.5 billion revolving credit facility and certain letter of credit lines, which mature through 2050. WMI 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. • WMI 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, WMI 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 6 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, 2021, we have agreements guaranteeing certain market value losses for certain properties adjacent to or near 18 of our landfills. Any liability associated with the triggering of the home value has been reflected in our Consolidated Balance Sheets. We do not believe that the remaining contingent obligations will have a material adverse effect on the Company's fmancial 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, fmancial condition, results of operations or cash flows. 104 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • WMI 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 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, 2021, we have been notified by the government that we are a PRP in connection with 73 locations listed on the Environmental Protection Agency's ("EPA's") Superfund National Priorities List ("NPL"). Of the 73 sites at which claims have been made against us, 14 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 59 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 WMI, operated some of the waste pits from 1965 to 1966 and has been named as a site PRP. In 1998, WMI 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, 2021 and 2020, the recorded liability for MIMC's estimated potential share of the EPA's proposed remedy and related costs was $53 million and $55 million, respectively. MIMC's ultimate liability could be materially different from current estimates. 105 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings, or such proceedings are known to be contemplated, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, below a stated threshold. In accordance with this SEC regulation, the Company uses a threshold of $1 million for purposes of determining whether disclosure of any such environmental proceedings is required. As of the date of this filing, we are not aware of any matters that are required to be disclosed pursuant to this standard. 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 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. WMI's charter and bylaws provide that WMI 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 WMI's Board of Directors and each of WMI'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 9 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 106 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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 fmancial 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 8 for additional discussion regarding income taxes. 11. 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): 2021 2020 2019 Gain from divestitures, net $ (44) $ (33) $ Asset impairments 8 68 42 Other 20 $ (16) $ 35 $ 42 During the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations in our East Tier segment and (ii) an $8 million gain from divestitures of certain ancillary operations in our Other segment. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment. During the year ended December 31, 2020, we recognized $35 million of net charges primarily related to (i) a $33 million net gain associated with net asset divestitures executed to address requirements of the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment; (ii) $41 million of non -cash impairment charges primarily related to two landfills and an oil field waste injection facility in our West Tier segment; (iii) a $20 million non -cash impairment charge in our East Tier segment due to management's decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $7 million of net charges primarily related to non -cash impairments of certain assets within our WM Renewable Energy business in our Other segment. During the year ended December 31, 2019, we recognized asset impairments of $42 million, related to (i) $27 million of goodwill impairment charges within our Other segment, 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 in our West Tier segment. 107 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) See Note 2 for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 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 an investment in a refined coal facility which is discussed further in Note 8. 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). The remaining losses during the years ended December 31, 2021, 2020 and 2019 were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties. Refer to Notes 8 and 18 for additional information related to these investments. Other, Net 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). 108 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 12. 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 WMI stockholders' equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income): Available - Derivative for -Sale Instruments Securities Balance, December 31, 2018 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $5, $0 and $1, respectively 15 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 7 12 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) 15 11 Balance, December 31, 2020 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $(2), $0 and $2 respectively Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $3, $0, $0 and $0, respectively 9 Net current period other comprehensive income (loss) Balance, December 31, 2021 $ (32) $ 23 Foreign Currency Translation Adjustments(a) $ (76) 8 8 15 $ (24) $ 38 $ 55 55 Post - Retirement Benefit Obligations Total $ (2) $ (87) 2 72 (1) 7 1 79 (21) $ (1) $ (8) 20 2 41 8 (1) (1) 6 20 1 47 $ (9) $ 49 $ (1) $ — $ 39 (6) 7 5 6 (35) (2) (28) 9 (6) (28) 3 (22) $ $ 43 $ (29) $ 3 $ 17 (a) As a result of the divestiture of certain non -strategic Canadian operations in the third quarter of 2021, we reclassified $35 million of cumulative foreign currency translation adjustments from accumulated other comprehensive income to gain from divestitures, asset impairments and unusual items within our Consolidated Statement of Operations. 13. 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, 2021, we had 416.1 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. 109 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 $970 million in 2021, or $2.30 per common share, $927 million in 2020, or $2.18 per common share, and $876 million in 2019, or $2.05 per common share. In December 2021, we announced that our Board of Directors expects to increase the quarterly dividend from $0.575 to $0.65 per share for dividends declared in 2022. 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. In the table below, shares repurchased are measured and reported based on the period shares are delivered to us, which can differ from the period cash is delivered to a repurchase agent for the value of such shares. During 2021, we allocated an aggregate of $1.35 billion in cash under ASR agreements to repurchase shares. As of December 31, 2021, we had received 8 7 million shares with a weighted average price per share of $146.61. In January 2022, we completed our ASR agreement executed in December 2021, at which time we received an additional 0.4 million shares. The following is a summary of our share repurchases under our common stock repurchase program for the year ended December 31: 2021(a) 2020(b) 2019(c) Shares repurchased (in thousands) 8,731 3,687 2,247 Weighted average price per share $ 146.61 $ 108.92 $ 108.60 Total repurchases (in millions) $ 1,280 $ 402 $ 244 (a) We executed and completed three ASR agreements during 2021 to repurchase $1.0 billion of our common stock and received 7.0 million shares in connection with these ASR agreements. In addition, in December 2021, we executed an ASR agreement to repurchase $350 million of our common stock. At the beginning of the repurchase period, we delivered $350 million in cash and received 1 7 million shares based on a stock price of $160.67. The ASR agreement completed in January 2022, at which time we received 0.4 million additional shares based on a final weighted average price of $160.33. 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. 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. We announced in December 2021 that the Board of Directors has authorized up to $1.5 billion in future share repurchases. Any future share repurchases will be made at the discretion of management and will depend on factors similar (b) (c) 110 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 14. 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 2021, 2020 and 2019 was approximately 513,000, 570,000 and 537,000, respectively. After the January 2022 issuance of shares associated with the July to December 2021 offering period, 2.7 million shares remain available for issuance under the ESPP. As a result of our ESPP, annual compensation expense increased by $12 million, or $9 million net of tax expense, for 2021, $13 million, or $10 million net of tax expense, for 2020 and $10 million, or $7 million net of tax expense, for 2019. 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 the number of future shares surrendered in payment of the exercise or purchase price of an award, and the number of future shares used to satisfy the withholding obligations, shall no longer be credited back to the total number of shares available for issuance under the 2014 Plan. As of December 31, 2021, approximately 16 9 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 2021 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. Additionally, one member of the Company's senior leadership team received a grant of RSUs in 2021 in special recognition of 2020 contributions. The Incentive Plans awards granted to other eligible employees included a combination of PSUs, RSUs and stock options in 2021. The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field -based managers. 111 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): Weighted Average Per Share Units Fair Value Unvested as of January 1, 2021 331 $ 103.84 Granted 140 $ 118.11 Vested (101) $ 85.59 Forfeited (27) $ 114.18 Unvested as of December 31, 2021 343 $ 114.28 The total fair market value of RSUs that vested during the years ended December 31, 2021, 2020 and 2019 was $12 million, $14 million and $15 million, respectively. During the year ended December 31, 2021, we issued approximately 72,000 shares of common stock for these vested RSUs, net of approximately 29,000 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 generally subject to pro-rata vesting upon an employee's 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. Beginning in 2021, the terms of the award agreements for new grants of RSUs were updated to provide for accelerated vesting following retirement as if the employee had remained employed until the end of the vesting period. Accordingly, compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement -eligible or (ii) the defined service requirement of the award. 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 Index ("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, 2021 Granted Vested Forfeited Unvested as of December 31, 2021 Units Weighted Average Per Share Fair Value 999 $ 120.95 336 $ 122.59 (353) $ 98.45 (14) $ 130.49 968 $ 129.60 The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2021 was performed by the Management Development and Compensation 112 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Committee of our Board of Directors in February 2022. Accordingly, vesting information for such awards is not included in the table above as of December 31, 2021. The "vested" PSUs are for the three-year performance period ended December 31, 2020, as achievement of performance results and corresponding vesting was determined in February 2021. The performance of the Company's common stock for purposes of the TSR PSUs exceeded target 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 172.84% of the vested TSR PSUs and 200% of the vested Cash Flow PSUs. In February 2021, approximately 659,000 PSUs vested and we issued approximately 435,000 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, 2021, 2020 and 2019 for prior PSU award grants had a fair market value of $74 million, $89 million and $84 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, 2021, we had approximately 201,000 vested deferred units outstanding. Stock Options Stock options granted prior to 2021 vest in 25% increments on the first two anniversaries of the date of grant with the remaining 50% vesting on the third anniversary. Stock options granted in 2021 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The exercise price of the options is the average of the 113 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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): Outstanding as of January 1, 2021 Granted Exercised Forfeited or expired Outstanding as of December 31, 2021 (a) Exercisable as of December 31, 2021 (b) Options Weighted Average Per Share Exercise Price 3,543 $ 82.86 661 $ 110.81 (962) $ 68.89 (36) $ 109.50 3,206 $ 92.53 1,672 $ 74.08 (a) Stock options outstanding as of December 31, 2021 have a weighted average remaining contractual term of 6.6 years and an aggregate intrinsic value of $238 million based on the market value of our common stock on December 31, 2021. (b) Stock options exercisable as of December 31, 2021 have an aggregate intrinsic value of $155 million based on the market value of our common stock on December 31, 2021. We received cash proceeds of $66 million, $63 million and $67 million during the years ended December 31, 2021, 2020 and 2019, respectively, from employee stock option exercises. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $66 million, $58 million and $71 million, respectively. Stock options exercisable as of December 31, 2021 were as follows (options in thousands): Weighted Average Per Share Weighted Average Range of Exercise Prices Options Exercise Price Remaining Years $34.94-$50.00 281 $ 39.29 1.7 $50.01-$70.00 405 $ 55.52 3.7 $70.01-$100.00 831 $ 85.15 6.1 $100.01-$126.01 155 $ 126.01 8.1 $34.94-$126.01 1,672 $ 74.08 5.0 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, 2021, 2020 and 2019 was $17.25, $15.82 and $12.22, 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 114 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 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: 2021 2020 2019 Expected option life 4.7 years 4.6 years 4.2 years Expected volatility 23.2 % 16.6 % 15.5 % Expected dividend yield 2.1 % 1.7 % 2.1 % Risk -free interest rate 0.6 % 1.4 % 2.5 % 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 expected 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, 2021, 2020 and 2019, we recognized $94 million, $79 million and $75 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 ended December 31, 2021, 2020 and 2019 includes related income tax benefits of $18 million, $15 million and $17 million, respectively. We have not capitalized any equity -based compensation costs during the reported periods. As of December 31, 2021, we estimate that $49 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. 15. 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): 2021 2020 2019 Number of common shares outstanding at end of period 416.1 422.8 424.3 Effect of using weighted average common shares outstanding 4.3 0.2 0.3 Weighted average basic common shares outstanding 420.4 423.0 424.6 Dilutive effect of equity -based compensation awards and other contingently issuable shares 2.5 2.1 2.9 Weighted average diluted common shares outstanding 422.9 425.1 427.5 Potentially issuable shares 5.7 6.1 6.7 Number of anti -dilutive potentially issuable shares excluded from diluted common shares outstanding 0.6 1.6 0.7 Refer to the Consolidated Statements of Operations for net income attributable to Waste Management, Inc. 115 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 16. 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 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): 2021 2020 Quoted prices in active markets (Level 1): Cash equivalents and money market funds $ 38 $ 530 Equity securities 25 Significant other observable inputs (Level 2): Available -for -sale securities 395 390 Significant unobservable inputs (Level 3): Redeemable preferred stock 49 49 Total Assets $ 507 $ 969 See Note 11 for information related to our nonrecurring fair value measurements and the impact of impairments. See Note 17 for information related to the nonrecurring fair value measurement of assets and liabilities acquired in connection with our acquisitions. 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 2021 is primarily due to the use of available cash to retire certain high -coupon senior notes in May 2021, which is discussed further in Note 6. Equity Securities We invest portions of our restricted trust and escrow account balances in equity securities and we measure the fair value of these securities using quoted prices in active markets for identical assets. Any changes in fair value of these 116 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) securities related to unrealized gams and losses have been appropriately reflected as a component of other income (expense). 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 18. 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. 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 gams and losses have been appropriately reflected as a component of accumulated other comprehensive income (loss). Redeemable Preferred Stock Redeemable preferred stock is related to a noncontrolling investment in an unconsolidated entity and is included in investments in unconsolidated entities in our Consolidated Balance Sheets. The fair value of our investment has 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, 2021 and 2020, the carrying value of our debt was $13.4 billion and $13.8 billion, respectively. The estimated fair value of our debt was approximately $14.1 billion and $15.2 billion as of December 31, 2021 and 2020, respectively. The decrease in the fair value of debt is primarily related to (i) net repayments of $456 million during 2021; (ii) the replacement of debt balances with a relatively high fair value to carrying value ratio with new debt with a fair value that approximates carrying value (refer to Note 6 for additional information) and (iii) increases in current market rates of our senior notes. 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, 2021 and 2020. These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented. 17. 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. Our acquisitions for the reported periods are discussed below: 2021 Acquisitions During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $94 million, which included $73 million in net cash paid 117 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) and $21 million of other consideration, primarily purchase price holdbacks and the settlement of a preexisting promissory note with one of the acquired businesses. In addition, we paid $3 million of holdbacks, primarily related to current year acquisitions. Our 2021 acquisitions discussed above include our acquisition of the remaining ownership interest in a waste diversion technology company. Concurrent with our acquisition, the acquired entity issued shares to an unrelated third -party, diluting our ownership interest. We determined the entity constituted a variable interest entity and concluded that we did not have the power to direct its significant activities. As a result, we subsequently deconsolidated the entity and account for our remaining ownership interest as an equity method investment. 2020 Acquisitions 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 fmancial metrics. 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 grew 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 a $3.0 billion, 364-day, U.S. revolving credit facility and our commercial paper program. In November 2020, we issued $2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the $3.0 billion, 364-day, U.S. revolver and terminated the facility. For the year ended December 31, 2021, we incurred $51 million of integration related costs, and for the year ended December 31, 2020, we incurred $156 million of acquisition and integration related costs, which were 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. Post -closing through December 31, 2020, Advanced Disposal 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 was 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. The allocation of the purchase price was finalized in October 2021. 118 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 reporting units that have integrated these operations as they are benefitting from the synergies of the combination. Goodwill related to this acquisition is not deductible for income tax purposes. The following table shows the purchase price allocation as of the date acquired, and adjustments to October 30, 2021 (in millions): October 30, 2020 Adjustments October 30, 2021 Accounts and other receivables $ 159 $ 1 $ 160 Parts and supplies 8 (1) 7 Other current assets 17 (1) 16 Assets held for sale (a) 1,022 1,022 Property and equipment 1,278 (12) 1,266 Goodwill 2,470 26 2,496 Other intangible assets 604 (3) 601 Investments in unconsolidated entities 9 9 Other assets 27 (2) 25 Accounts payable (107) 1 (106) Accrued liabilities (155) (3) (158) Deferred revenues (19) (19) Current portion of long-term debt (12) (12) Liabilities held for sale (a) (234) (234) Long-term debt, less current portion (b) (441) (441) Landfill and environmental remediation liabilities (242) (13) (255) Deferred income taxes (223) 9 (214) Other liabilities (79) (2) (81) Total purchase price $ 4,082 $ — $ 4,082 (a) In connection with our acquisition of Advanced Disposal, 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. 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 final allocation of purchase price Immediately following the acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million (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. The final allocation of $601 million for other intangibles includes $572 million for customer relationships with an amortization period of 15 years and $29 million of other intangibles with a weighted average amortization period of seven years. 119 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 the Company 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): 2020 2019 Operating revenues $ 16,192 $ 16,660 Net income attributable to Waste Management, Inc 1,685 1,472 Basic earnings per common share 3.99 3.47 Diluted earnings per common share 3.96 3.44 Weighted average common shares outstanding: Basic 423 425 Diluted 425 428 2019 Acquisitions 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 2019 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 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 WMI, 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 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 subsequent to the acquisition, we saw a decline in the fair value of certain of these assets and recognized an impairment during 2020, as discussed further in Note 11. 120 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Divestitures In 2021, 2020 and 2019, the aggregate sales price for divestitures of certain landfill assets, as well as hauling and ancillary operations, was $48 million, $856 million and $8 million, and we recognized net gains of $44 million, net gains of $33 million and net losses of less than $1 million, respectively. In 2021, divestitures primarily related to the sale of certain non -strategic Canadian operations, as discussed in Note 11. In 2020, divestitures 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, divestitures were 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. 18. 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 We do not consolidate our investments in entities established to manage low-income housing properties 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 $178 million and $228 million as of December 31, 2021 and 2020, respectively. The debt balance related to our investments in low-income housing properties was $156 million and $210 million as of December 31, 2021 and 2020, respectively. 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 $110 million and $106 million as of December 31, 2021 and 2020, 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 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 $117 million and $114 million as of December 31, 2021 and 2020, respectively. 19. Segment and Related Information In 2021, our senior management began evaluating, overseeing and managing the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste 121 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The Company finalized the assessment of our segments during the fourth quarter of 2021. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. This did not result in a change in our reporting units for purposes of evaluating our goodwill. Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation. The operating segments not evaluated and overseen through our East and West Tiers 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. 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 Net Income Depreciation Capital Total Operating Operating Operating from and Expenditures Assets Revenues Revenues(d) Revenues Operations(e) Amortization (f) (g)(h) Years Ended December 31: 2021 Solid Waste: East Tier $ 9,278 $ (1,738) $ 7,540 $ 2,037 $ 970 $ 708 $ 14,269 West Tier 9,369 (1,908) 7,461 2,103 883 579 11,476 Solid Waste (a) 18,647 (3,646) 15,001 4,140 1,853 1,287 25,745 Other (b) 3,046 (116) 2,930 34 70 181 1,275 21,693 (3,762) 17,931 4,174 1,923 1,468 27,020 Corporate and Other (c) (1,209) 76 571 2,372 Total $ 21,693 $ (3,762) $ 17,931 $ 2,965 $ 1,999 $ 2,039 $ 29,392 2020 Solid Waste: East Tier $ 7,873 $ (1,503) $ 6,370 $ 1,672 $ 801 $ 537 $ 14,274 West Tier 8,241 (1,657) 6,584 1,800 738 465 11,501 Solid Waste (a) 16,114 (3,160) 12,954 3,472 1,539 1,002 25,775 Other (b) 2,364 (100) 2,264 (42) 87 75 2,064 18,478 (3,260) 15,218 3,430 1,626 1,077 27,839 Corporate and Other (c) - (996) 45 508 1,810 Total $ 18,478 $ (3,260) $ 15,218 $ 2,434 $ 1,671 $ 1,585 $ 29,649 2019 Solid Waste: East Tier $ 8,098 $ (1,519) $ 6,579 $ 1,847 $ 776 $ 670 $ 11,600 West Tier 8,289 (1,608) 6,681 1,934 687 620 9,720 Solid Waste (a) 16,387 (3,127) 13,260 3,781 1,463 1,290 21,320 Other (b) 2,317 (122) 2,195 (158) 75 118 1,648 18,704 (3,249) 15,455 3,623 1,538 1,408 22,968 Corporate and Other (c) (917) 36 407 5,042 Total $ 18,704 $ (3,249) $ 15,455 $ 2,706 $ 1,574 $ 1,815 $ 28,010 (a) 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 122 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) segments are significantly affected by certain transactions or events that management believes are not indicative or representative of our results. Income from operations in our Solid Waste business increased for 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal; (ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment and (iii) changes from divestitures, asset impairments and unusual items as discussed further in Note 11. These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth; (ii) increased landfill amortization from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post -closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post -closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures. During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation and amortization of acquired assets. Income from operations for 2020 decreased, as compared with 2019, for the Solid Waste business due to the overall negative impact of the COVID-19 pandemic resulting in revenue declines from lower volumes and higher depreciation expense which was primarily related to investments in capital assets, including our fleet 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 West Tier segment. Additionally, income from operations for our West Tier 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 East Tier 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 West Tier segment benefited from the clean-up efforts of natural disasters primarily in California and similar efforts did not recur in 2020. "Other" includes (i) elements of our WMSBS business; (ii) elements of our landfill gas -to -energy operations managed by our WM Renewable Energy business and not included in the operations of our reportable segments; (iii) elements of our third -party subcontract and administration revenues managed by our EES business and not included in the operations of our reportable segments; (iv) our recycling brokerage services and (v) 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. The increase in income from operations for 2021, as compared with 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business. Income from operations for the Other segment for 2020, as compared with 2019, was favorably impacted primarily by (i) volume increases in our WM Renewable Energy business as a result of a new renewable energy facility coming online; (ii) our WMSBS business as a result of newly executed national account contracts and (iii) our recycling brokerage business. "Corporate and other" 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. 123 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs; (ii) increased labor, support and integration costs following our acquisition of Advanced Disposal; (iii) strategic investments in our digital platform; (iv) increased health and welfare costs attributable to medical care activity generally returning to pre -pandemic levels from the lower levels experienced during 2020 and (v) charges pertaining to reserves for certain loss contingencies during 2021. These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021. The costs increased in 2020, as compared with 2019, due to (i) higher consulting, advisory and legal fees associated with our acquisition and integration of Advanced Disposal; (ii) strategic investments in our digital platform; (iii) incremental costs associated with the COVID-19 pandemic and (iv) higher long-term incentive compensation costs. These increased expenses were offset, in part, by (i) lower annual incentive compensation costs and (ii) lower litigation reserves. (d) 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. (e) (f) (g) 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 2. In the fourth quarter of 2021, we discontinued certain allocations from our Corporate and Other segment to our Solid Waste operating segments and Other segment. Reclassifications have been made to our prior period information for comparability purposes. 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. The reconciliation of total assets reported above to total assets in the Consolidated Balance Sheets as of December 31 is as follows (in millions): 2021 2020 2019 Total assets, as reported above $ 29,392 $ 29,649 $ 28,010 Elimination of intercompany investments and advances (295) (304) (267) Total assets, per Consolidated Balance Sheet $ 29,097 $ 29,345 $ 27,743 (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 Tiers 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): Balance, December 31, 2019 Acquired goodwill Divested goodwill Foreign currency translation and other Balance, December 31, 2020 Acquired goodwill (a) Divested goodwill Foreign currency translation and other Balance, December 31, 2021 Solid Waste East Tier West Tier Other Total $ 3,616 $ 2,846 $ 70 $ 6,532 1,479 991 2,470 (3) (12) (15) 9 (2) 7 $ 5,101 $ 3,823 $ 70 $ 8,994 27 15 34 76 (11) (7) (29) (47) 3 2 — 5 $ 5,120 $ 3,833 $ 75 $ 9,028 (a) Includes $26 million of post -closing acquisition adjustments related to our acquisition of Advanced Disposal. 124 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions): 2021 2020 2019 Commercial $ 4,760 $ 4,102 $ 4,229 Residential 3,172 2,716 2,613 Industrial 3,210 2,770 2,916 Other collection 533 465 482 Total collection 11,675 10,053 10,240 Landfill 4,153 3,667 3,846 Transfer 2,072 1,855 1,820 Recycling 1,681 1,127 1,040 Other (a) 2,112 1,776 1,758 Intercompany (b) (3,762) (3,260) (3,249) Total $ 17,931 $ 15,218 $ 15,455 (a) The "Other" line of business includes (i) certain services provided by our WMSBS business; (ii) our landfill gas -to -energy operations managed by our WM Renewable Energy business; (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. Revenue attributable to collection, landfill, transfer and recycling services provided by our "Other" businesses has been reflected as a component of the relevant 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. Our revenues and income from operations typically reflect seasonal patterns. 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. Our 2020 operating results were negatively impacted by COVID-19, as volume declines began in March 2020 in our landfill, industrial and commercial collection businesses due to 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, shelter -in -place orders and recommendations to practice social distancing. Throughout 2021, our volumes recovered from the sharp decline experienced in 2020, with minimal impact from the resurgence in transmission of COVID-19 associated with recent virus variants, as communities and businesses remained open. However, the potential for future resurgence in transmission of COVID-19 and related business closures, due to virus variants or other pandemic conditions, could adversely impact our volumes and costs in the future. Service disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic 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 geographic areas affected as a result of the waste volumes generated by these events. While weather -related and other event driven special projects can boost 125 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Net operating revenues relating to operations in the U.S. and Canada for the year ended December 31 are as follows (in millions): 2021 2020 2019 U.S. $ 17,136 $ 14,505 $ 14,701 Canada 795 713 754 Total $ 17,931 $ 15,218 $ 15,455 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): 2021 2020 2019 U.S. $ 13,428 $ 13,168 $ 11,941 Canada 991 980 952 Total $ 14,419 $ 14,148 $ 12,893 126 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 (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) 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 fmancial officers have concluded that such disclosure controls and procedures were effective as of December 31, 2021 (the end of the period covered by this Annual Report on Form 10-K) at a reasonable assurance level. 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 management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). 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. 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. 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 in Item 8 of this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 127 Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. 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 2022 Annual Meeting of Stockholders (the "Proxy Statement"), to be held May 10, 2022. 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. 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. 128 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) (1) Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2021 and 2020 Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019 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. Description 3.1 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]. 3.2 Amended and Restated By-laws of Waste Management, Inc. [incorporated by reference to Exhibit 3.2 to Form 8-K dated November 17, 2020]. 4.1 Specimen Stock Certificate [incorporated by reference to Exhibit 4.1 to Form 10-K for the year ended December 31, 1998]. 4.2 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]. 4.3 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]. 4.4 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]. 4.5 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 Officers' Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997 establishing the terms and form of the 2.00% Senior Notes due 2029 [incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarter ended June 30, 2021]. 4.9 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 2.00% Senior Notes due 2029 [incorporated by reference to Exhibit 4.3 to Form 10-Q for the quarter ended June 30, 2021]. 129 10.1-[ 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated May 13, 2014]. 10.2-[ 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]. 10.5t 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-[ 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]. 10.7 $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, 20161. 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]. 10.10T 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 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]. 10.17-[ 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]. 10.18-[ Form of 2021 Long Term Incentive Compensation Award Agreement for Senior Leadership Team [incorporated by reference to Exhibit 10.1 to Form 8-K dated February 23, 2021]. 10.19t* Form of 2021 Long Term Incentive Compensation RSU Award Agreement. 21.1* Subsidiaries of the Registrant. 22.1* Guarantor Subsidiary. 23.1* Consent of Independent Registered Public Accounting Firm. 31.1* 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. 130 32.2** Certification Pursuant to 18 U.S.C. § 1350 of Devina A Rankin, Executive Vice President and Chief Financial Officer. 95* Mine Safety Disclosures. 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-KSummary. None. 131 SIGNATURES 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. WASTE MANAGEMENT, INC. By: /s/ JAMES C. FISH, JR. James C. Fish, Jr. President, Chief Executive Officer and Director Date: February 15, 2022 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 /s/ JAMES C. FISH, JR. James C. Fish, Jr. /s/ DEVINA A. RANKIN Devina A Rankin /s/ LESLIE K. NAGY Leslie K. Nagy /s/ ANDRES R. GLUSKI Andres R. Gluski /s/ VICTORIA M. HOLT Victoria M. Holt /s/ KATHLEEN M. MAZZARELLA Kathleen M. Mazzarella /s/ SEAN E. MENKE Sean E. Menke /s/ WILLIAM B. PLUMMER William B Plummer /s/ JOHN C. POPE John C. Pope /s/ MARYROSE T. SYLVESTER Maryrose T. Sylvester /s/ THOMAS H. WEIDEMEYER Thomas H. Weidemeyer Title Date President, Chief Executive Officer and Director February 15, 2022 (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President and Chief Accounting Officer (Principal Accounting Officer) Director Director Director Director Director Director Director Chairman of the Board and Director 132 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 February 15, 2022 3 Corporate Information BOARD OF DIRECTORS JAMES C. FISH, JR. President and Chief Executive Officer Waste Management, Inc. ANDRES 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) 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 OFFICERS 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 RAFAEL E. CARRASCO Senior Vice President, Operations TARA J. HEMMER Senior Vice President and Chief Sustainability Officer 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 10, 2022 at: w ww .virtualshareholdermeeting .com/WM2022 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 10, 2022 was 8,096. Based on security position listings, the Company believes that, as of March 7, 2022, it had approximately 1,139,587 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 A NUAL REPOR 2022 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Date and Time: Tuesday, May 9, 2023 at 11:00 a.m. Central Time Place:* Waste Management, Inc. 800 Capitol Street, Suite 3000 Houston, Texas 77002 Record Date: March 14, 2023 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, 2023; • To vote on a non -binding, advisory proposal to approve our executive compensation; • To vote on a non -binding, advisory proposal regarding the frequency of future advisory votes on our executive compensation; • To vote on a proposal to approve our 2023 Stock Incentive Plan; 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, 2022 are available at investors.wm.com. 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. If you received printed copies of the materials in accordance with 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 8, 2023. If you received printed copies of the proxy materials in accordance with 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. 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. 0 k Your vote is important. We urge all stockholders to vote and submit their proxies as soon as possible using one of the methods described above. • We intend to hold our Annual Meeting in person. If for any reason it becomes not possible or advisable to hold the Annual Meeting as planned, we will announce alternative arrangements for the meeting, which may include holding the meeting solely by means of remote communication. As always, we encourage you to vote your shares prior to the Annual Meeting. Courtney A. Tippy Corporate Secretary March 28, 2023 Enroll in Electronic Delivery Today. Help us save paper, time and money! If your shares are held in street name through a bank or broker, visit www.proxyvote.com or follow the instructions on the Notice, proxy card or voting instructions. All stockholders may enroll at enroll.icsdelivery.com/wmi. PROXY STATEMENT TABLE OF CONTENTS Page GENERAL INFORMATION 1 BOARD OF DIRECTORS 4 Nominees for Director 4 Leadership Structure 4 Independence of Board Members 5 Meetings and Board Committees 5 Role in Risk Oversight 5 Oversight of ESG Risk and Performance 6 Audit Committee 9 Audit Committee Report 10 Management Development and Compensation Committee 11 Compensation Committee Report 11 Compensation Committee Interlocks and Insider Participation 12 Nominating and Governance Committee 12 Related Party Transactions 13 Board of Directors Governing Documents 15 Non -Employee Director Compensation 15 ELECTION OF DIRECTORS (Item 1 on the Proxy Card) 17 DIRECTOR AND OFFICER STOCK OWNERSHIP . 26 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 27 EXECUTIVE OFFICERS 28 EXECUTIVE COMPENSATION 29 Compensation Discussion and Analysis 29 Introduction 29 Executive Summary 29 2022 Compensation Program Results and Company Performance 30 Consideration of Stockholder Advisory Vote 32 2023 Compensation Program Preview 32 Our Compensation Philosophy for Named Executive Officers 33 Overview of Elements of Our 2022 Executive Compensation Program 34 Page How Named Executive Officer Compensation Decisions are Made 35 Named Executives' 2022 Compensation Program and Results 39 Post -Employment and Change in Control Compensation; Clawback Policies 43 Other Compensation Policies and Practices 44 Executive Compensation Tables 46 Summary Compensation Table 46 Grant of Plan -Based Awards in 2022 48 Outstanding Equity Awards as of December 31, 2022 49 Option Exercises and Stock Vested 50 Nonqualified Deferred Compensation in 2022 51 Potential Payments Upon Termination or Change in Control 52 Potential Consideration Upon Termination of Employment 54 Chief Executive Officer Pay Ratio 55 Equity Compensation Plan Table 55 Pay Versus Performance 56 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Item 2 on the Proxy Card) 60 ADVISORY VOTE ON EXECUTIVE COMPENSATION (Item 3 on the Proxy Card) 61 ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION (Item 4 on the Proxy Card) 62 APPROVAL OF 2023 STOCK INCENTIVE PLAN (Item 5 on the Proxy Card) 63 OTHER MATTERS 70 APPENDIX A A-1 GENERAL INFORMATION 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 environmental solutions, 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 Board of Directors is soliciting your proxy for the 2023 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 28, 2023, 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 28, 2023, 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 at investors.wm.com 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 lower our printing and postage costs. If you are a beneficial owner, visit www.proxyvote.com or follow the instructions on your Notice, proxy card or voting instructions. All stockholders may also enroll at enroll.icsdelivery.com/wmi. Thank you for supporting our sustainability mission. Record Date March 14, 2023. Quorum The holders of a majority of the shares of common stock of Waste Management, Inc. (our "Common Stock") outstanding on the record date must be present in person or by proxy. Shares Outstanding There were 406,767,204 shares of our Common Stock outstanding and entitled to vote as of March 14, 2023. Attending the Meeting Only stockholders, their proxy holders and our invited guests may attend the Annual Meeting. If you plan to attend, please bring identification. If you are a beneficial owner that holds shares in street name through a bank or broker, you must also bring your bank or broker statement showing your beneficial ownership of Waste Management, Inc. Common Stock in order to be admitted to the meeting. If you are planning to attend our Annual Meeting and require directions to the meeting, please contact our Corporate Secretary at 713-51 2-6200. The only items that we anticipate will be discussed at the Annual Meeting are the items set out in the Notice. We do not anticipate that there will be any presentations. Potential Alternative Meeting Arrangements We intend to hold our Annual Meeting in person. In the event that it becomes not possible or advisable to hold the Annual Meeting as planned, we will announce alternative arrangements for the meeting, which may include holding the meeting solely by means of remote communication. Any alternative arrangements for the meeting will be publicly announced in a press release available at investors.wm.com and filed with the SEC. As always, we encourage you to vote your shares prior to the Annual Meeting. Submitting Your Proxy You can submit your proxy by Internet, phone or mail. If you are a beneficial owner that holds shares 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. Voting and Asking Questions at the Meeting Stockholders can vote and ask questions at the Annual Meeting relevant to the items to be voted on or the business of the Company. If you are a beneficial owner that holds shares in street name, you must bring a legal proxy from the record holder in order to vote your shares at the Annual Meeting. Whether or not you plan to attend the 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 iiNt 2023 Proxy Statement I 1 GENERAL INFORMATION before the Annual Meeting revoking the proxy or by voting during the 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 all other proposals, 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 item 3, item 4 or item 5 below. 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 items 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 Board Vote Matter Recommendation 1 1 Election of Director Nominees set forth in this Proxy Statement FOR each director nominee 2 Ratification of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm for fiscal year 2023 FOR 3 Approve the Company's Executive Compensation FOR 4 Recommended Frequency of Future Advisory Votes on Executive Compensation EVERY YEAR 5 Approve the Company's 2023 Stock Incentive Plan FOR Stockholder Proposals and Nominees for the 2024 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 at 800 Capitol Street, Suite 3000, Houston, Texas 77002 and is available in the "ESG — Corporate Governance" section of investors.wm.com. 2 It 2023 Proxy Statement GENERAL INFORMATION 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 2024 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, 2023. 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 2024 Annual Meeting. 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 2024 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 11, 2023 and no later than January 10, 2024 and must contain the information specified in the Company's By-laws. In addition to satisfying the foregoing advance notice requirements under our By-laws, to comply with the universal proxy rules under the Exchange Act, a stockholder who intends to solicit proxies in support of director nominees other than Company's nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than January 10, 2024, and must also comply with all other requirements of Rule 14a-19 under the Exchange Act. The Company will disregard any proxies solicited for a stockholder's director nominee(s) if such stockholder fails to comply with such requirements. 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, 2023, and no later than November 29, 2023, 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 2023 Annual Meeting for a fee of $17,500 plus associated costs and expenses. Annual Report A copy of our Annual Report on Form 10-K for the year ended December 31, 2022, which includes our financial statements for fiscal year 2022, 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 Annual Report, please contact: Waste Management, Inc., Corporate Secretary, 800 Capitol Street, Suite 3000, Houston, Texas 77002, telephone 713-51 2-6200. 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. iiNt 2023 Proxy Statement I 3 BOARD OF DIRECTORS Our Board of Directors currently has ten members. Each member of our Board is elected annually. Mr. Thomas H. Weidemeyer 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 2023 Annual Meeting. The Board of Directors intends to reduce the size of the Board to nine members effective as of the expiration of Mr. Weidemeyer's term at the 2023 Annual Meeting. Nominees for Director Name Committee Management Development & Nominating & Age Tenure Independent Audit Compensation Governance Bruce E. Chinn 66 2023 — Present ✓ 8 James C. Fish, Jr. 60 2016 — Present Andres R. Gluski 65 2015 — Present 8111 Victoria M. Holt 65 2013 — Present 8 8 Kathleen M. Mazzarella 63 2015 — Present 8 Sean E. Menke 54 2021 — Present ✓ 8 William B. Plummer 64 2019 — Present ✓ © 8 John C. Pope 73 1997 — Present 8 8 Maryrose T. Sylvester 57 2021 — Present ✓ 8 Chair © Member 8 Leadership Structure Mr. Weidemeyer has served as our Non -Executive Chairman of the Board since May 2018, presiding over all meetings of the Board, including executive sessions that only non -employee directors attend. The Non -Executive Chairman also serves on all three Board committees. In March 2023, the Board elected Ms. Kathleen M. Mazzarella to serve as Non - Executive Chairman of the Board, effective upon Mr. Weidemeyer's retirement from the Board at the 2023 Annual Meeting, due to her extensive leadership experience, expertise in Board governance, and deep understanding of our Company and our strategic vision. Stockholders and interested parties wishing to communicate with the Board or the non -employee directors should address their communications to 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. At this time, we do not contemplate a situation in which our Company would not have a Non -Executive Chairman of the Board. 4 It 2023 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: Bruce E. Chinn, Andres R. Gluski, Victoria M. Holt, Kathleen M. Mazzarella, Sean E. Menke, William B. Plummer, John C. Pope and Maryrose T. Sylvester. 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 by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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, The AES Corporation and Chevron Phillips Chemical Company LLC. Ms. Mazzarella, Mr. Menke, Mr. Gluski and Mr. Chinn, 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 are prohibited by our categorical standards of independence or 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 one special meeting, 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 2022 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 business performance or strategic priorities on a short-term, intermediate or long-term basis. 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 that use of outside advisors and experts complement our ERM process by ensuring our IANt 2023 Proxy Statement I 5 BOARD OF DIRECTORS efforts are comprehensive and balanced. Our ERM 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 the most significant or immediate 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 financial impact, likelihood and potential timing 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 regularly provides an in-depth update 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, Chief Legal Officer, Chief Human Resources and Diversity & Inclusion Officer and Chief Sustainability 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 and Controls, Environmental Audit, Ethics and Compliance, Human Resources, 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: emissions and climate impact; industry disruption; revenue management; legal and regulatory; capital allocation; supply chain management; service to customers; cost discipline; physical infrastructure; brand management; environmental, health & safety; human capital; information security and privacy; 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 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 to maximize resource value, while minimizing environmental impact, and deliver on our brand promise 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. Additionally, the Company's Chief Sustainability Officer presents a quarterly ESG dashboard to the entire Board to highlight critical focus areas and track progress toward ESG goals, including our climate impact target. 6 It 2023 Proxy Statement BOARD OF DIRECTORS 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 our people, sustainable operations, waste diversion, recycling business improvements, sustainability growth investments, potentially disruptive technologies and environmental impacts, risks and opportunities. In 2022, the Board received several dedicated updates regarding ESG topics, including our sustainability growth strategy, and the Board receives regular updates from our Chief Human Resources and Diversity & Inclusion Officer with respect to our people -first strategy, including workforce evolution, labor market constraints and employee retention. Additionally, reflective of the importance of diversity, equity 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. The Board also received presentations from external experts in the areas of stockholder activism and trends and the framework for Board oversight of ESG. Through these reports and our ESG dashboard, our Board directly oversees our ESG performance and progress toward ESG goals. The Company previously announced that, in response to the civil rights audit stockholder proposal that was approved at the 2022 Annual Meeting of Stockholders, it has engaged a team led by former U.S. Attorney General Loretta Lynch, now a partner at Paul, Weiss, Rifkind, Wharton & Garrison, to perform an independent assessment of the impact of the Company's policies and practices on the civil rights of Company stakeholders, and to provide recommendations for further improvement. The assessment will include a broad review and analysis in the areas of environmental justice and diversity, equity and inclusion of employees and suppliers, with input from internal and external stakeholders, and the Company expects to publish results of the assessment before its 2024 Annual Meeting of Stockholders. Our Board has received several updates from our senior executives, including our Chief Legal Officer, Chief Human Resources and Diversity & Inclusion Officer and Chief Sustainability Officer, on the structure and progress of the assessment. Also in 2022, the Company completed the assessment discussed in last year's proxy statement of the Company's ESG goals and progress against them and consideration of new goals. The Chief Sustainability Officer presented to the Board proposed new 2030 ESG goals and implementation plans, including the decarbonization plan for meeting a science - based climate target. She also discussed with the Board the strong linkage between such ESG goals and the Company's growth strategy, inclusive of the planned expansion of the Company's recycling and renewable energy businesses. Our 2022 Sustainability Report provides details on our overall ESG performance and outlines the new 2030 goals that were finalized after discussion with our Board. Our Audit Committee also plays a significant role in oversight of ESG risk and performance. As discussed above, our Audit Committee receives regular ERM updates with in-depth discussion on specific risk topics. At least annually, one of the in-depth discussions 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 with risk assessments. During 2022, our Audit Committee received several updates on proposed regulatory disclosure requirements related to climate and cybersecurity and the Company's preparations. Our Audit Committee also has responsibility for oversight of information and cybersecurity and assessment of cyber threats and defenses. Our Audit Committee receives reports from our most senior executives in the Digital organization, and the Company's executive officers, at least twice a year. Topics historically covered in such reports include third -party evaluation of our technology infrastructure and information security against the industry -standard NIST (National Institute of Standards and Technology) cybersecurity framework; risk mitigation through the Company's enterprise -wide cybersecurity 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. Our MD&C Committee has primary oversight of human capital management, including review of employee health, welfare and benefit programs and compensation plan risk assessment. The MD&C Committee is also responsible for executive compensation incentive plan design and the incorporation and measurement of the 2023 annual cash incentive program ESG scorecard performance modifier discussed in our Compensation Discussion and Analysis below. The Committee also engages in quarterly sessions with our President and Chief Executive Officer and our Chief Human Resources and Diversity & Inclusion 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, equity 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. IANt 2023 Proxy Statement I 7 BOARD OF DIRECTORS 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. Please see the discussion of the Nominating and Governance Committee below for more information on this robust process. For additional information about the topics discussed above, including ESG goals, metrics and progress, we encourage stockholders to review our 2022 Sustainability Report at sustainability.wm.com. Our 2022 Sustainability Report does not constitute a part of, and is not incorporated by reference into, this Proxy Statement or any report we file with (or furnish to) the SEC. 8 I w 2023 Proxy Statement BOARD OF DIRECTORS THE AUDIT COMMITTEE Members: William B. Plummer, Chairman Bruce E. Chinn Andres R. Gluski Victoria M. Holt Sean E. Menke Thomas H. Weidemeyer Number of Meetings Held in 2022: 9 Mr. Plummer has been the Chairman of our Audit Committee since May 2020. Mr. Chinn was appointed to the Audit Committee effective February 10, 2023, after the filing 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. Chinn, Mr. Gluski, Ms. Holt and Mr. Menke 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 by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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. IANt 2023 Proxy Statement I 9 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, 2022 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 on Form 10-K. • First, the Audit Committee discussed with Ernst & Young LLP, the Company's independent registered public accounting firm for fiscal year 2022, 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, 2022, 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, 2022, and consolidated statements of operations, comprehensive income, cash flows and changes in equity for the fiscal year ended December 31, 2022, 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 on Form 10-K for its fiscal year ended December 31, 2022. The Committee has also approved the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal year 2023. The Audit Committee of the Board of Directors William B. Plummer, Chairman Andres R. Gluski Victoria M. Holt Sean E. Menke Thomas H. Weidemeyer 10 I w 2023 Proxy Statement BOARD OF DIRECTORS THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE Members: Andres R. Gluski, Chairman Kathleen M. Mazzarella William B. Plummer John C. Pope Maryrose T. Sylvester Thomas H. Weidemeyer Number of Meetings Held in 2022: 5 Mr. Gluski has served as the Chairman of our MD&C Committee since May 2021. Each member of our MD&C Committee is independent in accordance with the rules and regulations of the New York Stock Exchange. 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 by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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 included in this Proxy Statement 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 Andres R. Gluski, Chairman Kathleen M. Mazzarella William B. Plummer John C. Pope Maryrose T. Sylvester Thomas H. Weidemeyer IMVIL 2023 Proxy Statement I 11 BOARD OF DIRECTORS COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2022, Ms. Mazzarella, Ms. Sylvester and Messrs. 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 2022; no member of the MD&C Committee is a former officer of the Company; and during 2022, 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: Number of Meetings Held in 2022: 5 Kathleen M. Mazzarella, Chairman Victoria M. Holt John C. Pope Thomas H. Weidemeyer 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. Key Functions The Nominating and Governance Committee has a written charter that has been approved by the Board of Directors and can be found by accessing the "ESG — Corporate Governance" section of investors.wm.com. 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. Bruce E. Chinn as a potential director candidate. 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. Chinn to serve as a member of our Board, effective February 10, 2023. The Nominating and Governance Committee also recommended, and the Board approved, appointment of Mr. Chinn to the Audit Committee. Mr. Chinn is a nominee for re-election at the Annual Meeting. 12 I w 2023 Proxy Statement BOARD OF DIRECTORS The Nominating and Governance Committee considers current and future needs of the Board as a whole and reviews a matrix of experience, skills and expertise to inform nominee criteria. The Committee recommends individuals as nominees based on an evaluation of all factors deemed 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 of background, thoughts and opinions on the Board obtained through, among other factors, 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. Plummer's and Mr. Chinn'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 or re -nominating individuals to serve as directors of the Company, the Nominating and Governance Committee also considers prior contributions to the Board, evaluation feedback, tenure and age of the Board as a whole and tenure and age of the individual. The Nominating and Governance Committee takes into account the nature and extent of the directors' other commitments when determining whether to re -nominate that individual for election to the Board. In addition to complying with the limitations on public company board memberships set forth in the Corporate Governance Guidelines, the Committee expects each director to ensure that his or her other commitments do not interfere with his or her duties as a director of the Company. 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, having considered the foregoing factors, recommends 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, 2023 and November 29, 2023. Related Party Transactions The Board of Directors has adopted a written Related Party Transactions Policy for the review and approval of related party transactions. Our policy generally defines related party transactions as current or proposed transactions since the beginning of the last fiscal year in excess of $120,000 in which (a) the Company is a participant and (b) any director; executive officer; immediate family member of any director or executive officer; or party known to be the owner of more than five percent of the Company's Common Stock 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; a beneficial owner of the Company's Common Stock that reports such ownership on a Schedule 13G due to lack of control or intent to influence control; 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 as soon as practicable of any potential related party transaction that involves the Company. The Chief Legal Officer will determine whether such transaction or relationship constitutes a related party transaction that must be referred to the Nominating and Governance Committee. In the event that the Chief Legal Officer is a participant in a potential related party transaction, the determination whether the transaction must be referred to the Nominating and Governance Committee shall be made by the Chief Executive iiint 2023 Proxy Statement I 13 BOARD OF DIRECTORS Officer, with consultation from the Corporate Secretary and the Chief Compliance and Ethics Officer. 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. In determining whether to approve a related party transaction, the Nominating and Governance Committee will consider, among other things, the following factors: • whether the terms of the related party transaction are fair to the Company and such terms would be reasonable in an arms -length transaction; • whether there are business reasons for the Company to enter into the related party transaction; • whether the related party transaction would impair the independence of any non -employee director; • whether the related party transaction would present an improper conflict of interest for any director or executive officer of the Company; and • whether 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. Based on its review processes for potential related party transactions in 2022, the Company identified certain transactions involving employment of immediate family members of executive officers that the Chief Legal Officer referred to the Nominating and Governance Committee. After consideration, the Nominating and Governance Committee concluded that the following employment relationships are not inconsistent with the interests of the Company and its stockholders and approved the transactions. We have determined that the process for review and approval of these transactions did not fully comply with our Related Party Transactions Policy because, while the employment relationships between the Company and applicable immediate family members had been previously disclosed to the Compliance and Ethics department, such transactions were not identified for review as potential related party transactions and referred to the Nominating and Governance Committee for approval in advance. Other than as reported below, we are not aware of any other transactions in 2022 that are required to be disclosed. Two brothers of Kelly Rooney became employees of subsidiaries of Waste Management, Inc. prior to 2021. In August 2022, Ms. Rooney became Senior Vice President and Chief People Officer and an executive officer, and she promptly disclosed the employment relationship between the Company and her brothers for purposes of review for potential related party transactions. Both brothers are employed as Senior District Managers. Each received total cash compensation in 2022 in excess of $1 20,000 but less than $230,000, and an equity incentive grant with a target value of approximately $13,000. The compensation of Ms. Rooney's brothers is determined in accordance with the compensation practices generally applicable to employees of Company subsidiaries with comparable qualifications and responsibilities and holding similar positions, and without the involvement, input or approval of Ms. Rooney. In addition, Ms. Rooney is not directly or indirectly responsible for managing or overseeing the work of her brothers. The brother-in-law of John Morris, our Executive Vice President and Chief Operating Officer and an executive officer, became an employee of a subsidiary of Waste Management, Inc. in 2015 as an Inside Sales Manager with total annual compensation of less than $120,000. As of the end of 2022, he was employed as a Senior Manager of Talent Management with total cash compensation in 2022 in excess of $1 20,000, but less than $200,000, and an equity incentive grant with a target value of approximately $37,000. The compensation of Mr. Morris's brother-in-law is determined in accordance with the compensation practices generally applicable to employees of Company subsidiaries with comparable qualifications and responsibilities and holding similar positions, and without the involvement, input or approval of Mr. Morris. In addition, Mr. Morris is not directly or indirectly responsible for managing or overseeing the work of his brother-in-law. 14 I w 2023 Proxy Statement BOARD OF DIRECTORS 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, Waste Management, Inc., 800 Capitol Street, Suite 3000, Houston, Texas 77002 or by accessing the "ESG — Corporate Governance" section of investors.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. 2022 Non -Employee Director Compensation Changes In February 2022, 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 2022: (a) annual grant of Common Stock increased from $165,000 to $180,000 and (b) annual cash retainer increased from $11 5,000 to $120,000. 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 throughout their tenure on the Board 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 $82,500 in January 2022. Pursuant to the compensation increases discussed above, each non -employee director serving at the time received a grant of Common Stock valued at approximately $90,000 in July 2022. Mr. Weidemeyer received an additional grant of Common Stock valued at approximately $50,000 in each of January 2022 and July 2022 for his service as Non -Executive Chairman of the Board in 2022. 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 2022, after giving effect to the compensation increases discussed above: Annual Retainer: $1 20,000 Annual Chair Retainers: $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 throughout their tenure as a director. The ownership guideline for non -employee directors is equal to approximately five times the non -employee directors' annualized cash retainer. As of December 31, 2022, this amount was $600,000. There is no deadline for non -employee directors to reach their ownership guideline; however, the MD&C Committee performs regular reviews to confirm that all non -employee directors are in compliance or are showing sustained progress toward Vint 2023 Proxy Statement I 15 BOARD OF DIRECTORS achievement of their ownership guideline. Based on the closing price of our Common Stock on March 14, 2023, all non -employee directors have reached the ownership guideline with the exception of our three newest directors, Mr. Menke, Ms. Sylvester and Mr. Chinn, who are making appropriate progress toward the ownership guideline. Additionally, our Insider Trading Policy provides that directors are not permitted to hedge their ownership of Company securities, including trading in options, warrants, puts and calls or similar derivative instruments on any security of the Company or selling any security of the Company "short." 2022 Director Compensation Table The table below shows the aggregate cash paid, and stock awards issued, to the non -employee directors in 2022 in accordance with the descriptions set forth above: Fees Earned Stock or Paid in Awards Name Cash ($) ($)( Total ($) Andres R. Gluski 137,500 172,517 310,017 Victoria M. Holt 11 7,500 172,51 7 290,01 7 Kathleen M. Mozzarella 137,500 172,517 310,017 Sean E. Menke 117,500 172,517 290,017 William B. Plummer 142,500 172,517 315,017 John C. Pope 117,500 172,517 290,017 Maryrose T. Sylvester 11 7,500 172,51 7 290,01 7 Thomas H. Weidemeyer 217,500 272,459 489,959 (1) Amounts in this column represent the grant date fair value of stock awards granted in 2022, 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. 16 I w 2023 Proxy Statement ELECTION OF DIRECTORS (Item 1 on the Proxy Card — Director Nominees) The first item on the proxy card is the election of nine directors to serve until the 2024 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 and position and business experience for the past five years. Each of the director nominees currently serves on our Board of Directors. The table below also discusses the qualifications, including specific skills and areas of expertise, that make each of these individuals a valuable member of our Board and that were considered by the Board when nominating them for re- election. BRUCE E. CHINN Age: 66 Director since: February 2023 Board Committee: Audit POSITION AND BUSINESS EXPERIENCE President and Chief Executive Officer —Chevron Phillips Chemical Company LLC, or CPChem, (global petrochemical joint venture of Chevron USA Inc. and Philips 66 Company) since April 2021; has also served as a Director of CPChem since November 2020; President, Chemicals for Chevron Corporation (multinational energy corporation) from May 2020 to March 2021; President, Chevron Oronite (global lubricant and fuel additives business) for Chevron Corporation from 2018 to April 2020. QUALIFICATIONS Bruce Chinn is President, Chief Executive Officer and a Director of CPChem, where he is focused on leading the company through a period of sustainable growth. Mr. Chinn has over 40 years of experience driving operational, safety, and financial results. Prior to his current role, he held several operations and business roles at Chevron Corporation, leading large, diverse organizations. In these roles, Mr. Chinn focused on performance, partnership, and safety, while striving for continued success in the business and community. Mr. Chinn began his career at DuPont, where he held positions of increasing responsibility in manufacturing, technical, commercial and business leadership at the U.S. and international level. Mr. Chinn brings extensive knowledge of circular solutions and renewable energy that is aligned with our Company's strategic focus on making sustainability growth investments in our recycling and renewable energy businesses. His operations leadership expertise bolsters our continued efforts to drive operating efficiencies, enhance our safety culture and differentiate our service offerings. Mr. Chinn's broad and expansive dedication to operating excellence and developing strong corporate culture provides valuable perspective to the Board, and his experience allows him to share specific insight into focus areas such as renewable energy transition, environmental regulation and compliance, international exposure and risk management. Mr. Chinn is chairman of the American Institute of Chemical Engineers Foundation Board of Trustees, and he serves as a board director and executive committee member of the Alliance to End Plastic Waste and the American Chemistry Council. Mr. Chinn holds a bachelor of science degree in chemical engineering from Texas A&M University. iiint 2023 Proxy Statement I 17 ELECTION OF DIRECTORS JAMES C. FISH, JR. Age: 60 Director since: 2016 POSITION AND BUSINESS EXPERIENCE President, Chief Executive Officer and Director— Waste Management, Inc. since 2016. Director of Caterpillar Inc. since March 2023. QUALIFICATIONS Jim Fish has served as our President and Chief Executive Officer and a Director since 2016. Over more than 20 years, Mr. Fish has held several key positions in our Company, including President and Chief Financial Officer; Senior Vice President —Eastern Group; Area Vice President for Pennsylvania and West Virginia; Market Area General Manager for Massachusetts and Rhode Island; Vice President of Price Management; and Director of Financial Planning and Analysis. Before joining our Company, Mr. Fish held finance and revenue management positions at Westex, a Yellow -Roadway subsidiary, Trans World Airlines, and America West Airlines. He began his professional career at KPMG Peat Marwick. Mr. Fish's extensive leadership and operational experience, together with his tremendous understanding of the environmental services industry, are instrumental to the development and successful execution of our growth strategy to deliver stockholder value. Additionally, through his professional and educational experience, Mr. Fish has developed valuable expertise in accounting, external reporting, investor relations, human capital and performance management, and risk management. Mr. Fish oversees our Digital organization, and participates directly in matters related to cybersecurity and information security risk mitigation and response strategies. As North America's largest comprehensive environmental solutions provider, sustainability is embedded in all aspects of our business. As our President and Chief Executive Officer, Mr. Fish has a thorough understanding of the risks and opportunities presented in the areas of sustainability and environmental protection. Mr. Fish is deeply involved in our efforts to mitigate such risks and capitalize on such opportunities in order to deliver on our brand promise, ALWAYS WORKING FOR A SUSTAINABLE TOMORROW®. Mr. Fish also champions the importance of our people -first commitment and the necessity of creating a culture that truly puts the needs of WM employees first. As part of that people -first culture, Mr. Fish has been actively involved in developing initiatives to promote inclusion and diversity throughout the Company's population of nearly 50,000 employees. Mr. Fish earned a bachelor's degree in accounting from Arizona State University and a master's degree in business administration, with emphasis on finance, from the University of Chicago. He is also a Certified Public Accountant. 18 I w 2023 Proxy Statement ELECTION OF DIRECTORS ANDRES R. GLUSKI Age: 65 Director since: 2015 Board Committees: Audit and Management Development & Compensation (Chair) POSITION AND BUSINESS EXPERIENCE President, Chief Executive Officer and Director — The AES Corporation (global energy company) since 2011. Director of AES Gener (Chile) from 2005 to January 2020. QUALIFICATIONS Andres Gluski has served as President, Chief Executive Officer and a Director of The AES Corporation, a Fortune 500 global energy company, since 2011. Mr. Gluski began his tenure at AES in 2000 and previously served as Executive Vice President and Chief Operating Officer. Under his leadership, AES has become a leader in implementing clean technologies, including energy storage and renewable power. Through his professional experience, Mr. Gluski has extensive knowledge with respect to evaluating renewable energy strategies, and he has developed expertise in considering and evaluating climate -related risks and opportunities, which is directly applicable to our business and our sustainability growth strategy. Mr. Gluski also has experience in the development of sustainability and corporate social responsibility goals, as well as oversight of compliance programs. Prior to joining AES, Mr. Gluski served in a broad range of roles in the public and private sectors, including working as Executive Vice President of Corporate and Investment Banking in Grupo Santander. Mr. Gluski served as a member of the President's Export Council from 2013 to 2016 and served as an expert witness at U.S. Congressional hearings on the subject of energy policy. He currently serves as Chairman of Council of the Americas. Mr. Gluski has also focused on shaping an inclusive, innovative workplace at AES with a diverse and inclusive culture throughout the world. These efforts have given Mr. Gluski valuable expertise in the areas of human capital management and diversity, equity and inclusion that he utilizes in his role as Chair of the Management Development & Compensation Committee of the Board. Mr. Gluski has been named amongst the 100 Most Influential Latinos by Latino Leaders Magazine. The depth and breadth of Mr. Gluski's international business and finance background, and experience in managing growth opportunities while focusing on operational innovation, allow him to provide invaluable risk management, government affairs, public policy, public relations, communications and investor relations insight in his role as a member of the Board. Mr. Gluski holds a bachelor's degree from Wake Forest University, as well as a master's degree and a PhD in economics from the University of Virginia. iiint 2023 Proxy Statement I 19 ELECTION OF DIRECTORS VICTORIA M. HOLT Age: 65 Director since: 2013 Board Committees: Audit and Nominating & Governance POSITION AND BUSINESS EXPERIENCE Retired President and Chief Executive Officer— Proto Labs, Inc. (online and technology -enabled quick -turn manufacturer), served from 2014 to March 2021; also served as Director from 2014 — May 2021. Director of Piper Sandler Companies since September 2019. Director of A. 0. Smith Corp. since April 2021. QUALIFICATIONS Victoria Holt joined Proto Labs, Inc. as President, Chief Executive Officer and a Director in 2014, retiring in 2021. With manufacturing facilities in five countries, Proto Labs is a leading e-commerce technology enabled digital manufacturer of custom prototypes and on -demand product parts. Ms. Holt began her career at Monsanto Company, where she held various assignments of increasing responsibility before moving to Solutia, Inc., a divestiture of the Monsanto Company's chemical business, as Vice President and General Manager Performance Films. Ms. Holt later held various roles with PPG Industries, Inc., a leading coatings and specialty products company, including Senior Vice President of Glass and Fiber Glass. Ms. Holt then served as President and Chief Executive Officer of Spartech Corporation, a leading provider of plastic sheet, compounds and packaging products, until its sale to PolyOne in 2013. Ms. Holt has a diverse international business background serving a wide spectrum of customers looking for sustainable solutions across diverse end markets including plastics, materials, automotive, medical, aerospace, consumer and general industrial. Ms. Holt brings passion and extensive experience in the areas of sustainable innovation, environmental solutions, plastics operations and management and recycling to the Board. Ms. Holt's proven success leading large global companies across a broad range of manufacturing, chemical and materials industries has demonstrated her deep understanding of risk management, operations, strategic planning and performance measurement. Ms. Holt provides tremendous insight into the areas of continuous improvement, use of data analytics, e-commerce, digitally connected operations and execution of our technology -led, sustainability-linked strategy to grow our business and mitigate climate risks. She holds a bachelor's degree in chemistry from Duke University and a master's degree in business administration from Pace University. Ms. Holt has completed the National Association of Corporate Directors (NACD) Cyber Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight. In addition to the public company boards listed above, she also serves on the executive board of The Manufacturing Institute and is on the board of trustees of Dunwoody College. 20 I w 2023 Proxy Statement ELECTION OF DIRECTORS ATHLEEN M. MAZZARELLA Age: 63 Director since: 2015 Board Committees: Management Development & Compensation and Nominating & Governance (Chair) Chairman of the Board, to be effective May 9, 2023 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. 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 since January 2019. QUALIFICATIONS Kathleen Mazzarella has served as President and Chief Executive Officer of Graybar Electric Company, Inc. since 2012, and as Chairman since 2013. During her more than 40-year tenure at Graybar, Ms. Mazzarella has held numerous executive -level positions in operations, sales, human resources, strategic planning and marketing, including Executive Vice President and Chief Operating Officer, Senior Vice President — Sales and Marketing and Senior Vice President — Human Resources and Strategic Planning. Ms. Mazzarella has been instrumental in developing and communicating Graybar's commitment to ESG initiatives. Graybar focuses on sustainability in the way it operates and in the innovative solutions it provides to its customers. The company offers energy -saving products, renewable energy solutions and supply chain services that support sustainable construction, renovation and maintenance of infrastructure and facilities. The company also invests in the communities it serves and emphasizes integrity, inclusion and opportunity for all employees. Ms. Mazzarella brings her deep and valuable experience leading a diverse range of business functions necessary for an employee -driven, customer -focused business, similar to our Company. Through her role as Chief Executive Officer and her service on the board of directors for other public companies, she has developed expertise in evolving social and governance initiatives, which she advances as the Chair of the Nominating and Governance Committee of the Board. In addition to her experience overseeing financial reporting and controls, technology systems and platforms, and other functional and operational areas, she has particular experience in the area of human capital management, including succession planning and diversity, equity and inclusion initiatives. Ms. Mazzarella also brings expertise in labor relations, public policy, operational innovation and strategic planning. Ms. Mazzarella holds an associate degree in telecommunications engineering, a bachelor's degree in applied behavioral sciences from National Louis University, and a master's degree in business administration from Webster University. In addition to the public company boards listed above, Ms. Mazzarella also serves on the board of the National Association of Wholesaler -Distributors (NAW) and previously served on the board of the NAW Institute for Distribution Excellence. Ms. Mazzarella previously served as Chairman of the Federal Reserve Bank of St. Louis, and she has experience serving on various organizational and charitable boards, such as Greater St. Louis Inc., United Way of Greater St. Louis and the Saint Louis Club. iiint 2023 Proxy Statement I 21 ELECTION OF DIRECTORS SEAN E. MENKE Age: 54 Director since: March 2021 Board Committee: Audit POSITION AND BUSINESS EXPERIENCE Chairman and Chief Executive Officer — Sabre Corporation (software and technology solutions provider to the travel industry) since December 2016; also served as President of Sabre Corporation from 2016 to December 2021. QUALIFICATIONS As Chief Executive Officer and Chair of the Board of Directors of Sabre Corporation, Sean Menke heads a global network of development, sales, operations and corporate functions. In 2015, Mr. Menke joined Sabre as president of Sabre Travel Network, Sabre's largest line of business. Under Mr. Menke's leadership, Sabre has won major new business opportunities, increased global market share, secured Sabre's position as the leading global distribution system in North America, Latin America and Asia -Pacific, and led innovation to enable sales of more customized fares and ancillary products that help drive the changing travel industry landscape. Before joining Sabre, Mr. Menke spent more than 20 years in executive leadership roles in the airline industry. He served as Chief Executive Officer at Frontier Airlines and at Pinnacle Airlines, and he held senior level marketing, operations, customer experience, strategy, planning, sales, distribution and revenue management roles, including with Air Canada and Hawaiian Airlines. He also served as Executive Vice President at IHS Inc., a global information technology company. Mr. Menke is a proven transformation leader, and uses his extensive experience in technology and transportation operations to bring together strategy and data to address complex issues as a member of the Board. His expertise in logistics and commitment to delivering efficient, customer - focused innovation through imaginative technology -led solutions helps advance our strategy to differentiate our services. As Chief Executive Officer of Sabre and with extensive executive experience in technology -driven companies, Mr. Menke is aware of the importance and challenges of cybersecurity and privacy issues, and he has experience overseeing risk mitigation and implementing systems to protect major corporations. Mr. Menke shares with the Board his experience in the areas of cyber intrusion response planning and remediation. Mr. Menke holds a bachelor's degree in economics and aviation management from Ohio State University and a master's degree in business administration from the University of Denver. 22 I w 2023 Proxy Statement ELECTION OF DIRECTORS ILLIAM B. PLUMMER Age: 64 Director since: August 2019 Board Committees: Audit (Chair) and Management Development & Compensation POSITION AND BUSINESS EXPERIENCE Retired Executive Vice President and Chief Financial Officer — United Rentals, Inc. (world's largest equipment rental company), served from 2008 to October 2018; also served as Senior Adviser from October 2018 to January 2019. Director of Global Payments Inc. since 2017. Director of Mason Industrial Technology, Inc. since February 2021. Director of Nesco Holdings, Inc. from July 2019 to March 2021. Director of John Wiley & Sons, Inc. from 2003 to September 2019. QUALIFICATIONS William Plummer served as Executive Vice President and Chief Financial Officer for United Rentals, Inc., where he was responsible for the development of the company's finance activities and investor relations, and he co -led its mergers, acquisitions and divestitures strategies. He also led the company's safety function and its data and analytics efforts. Mr. Plummer was instrumental in helping the company execute a strategy focused on improving the profitability of its core equipment rental business through revenue growth, margin expansion, operational efficiencies and acquisitions. Mr. Plummer brought more than two decades of financial leadership experience when he joined United Rentals, having served in a several executive roles, including as Executive Vice President and Chief Financial Officer of Dow Jones & Company, Inc., where he set policy for its global finance and corporate strategy functions. Prior to Dow Jones, Mr. Plummer was Vice President and Treasurer of Alcoa Inc., where he was responsible for global treasury policy and capital markets transactions. Mr. Plummer also held several executive positions at Mead Corporation, including President of its Gilbert Paper division, Vice President of Corporate Strategy and Planning, and Treasurer. Mr. Plummer brings extensive accounting, audit, internal control, and risk management experience to the Board and as Chair of the Audit Committee. In particular, he has first-hand experience developing, enhancing and overseeing risk management programs at large public companies, including identification and oversight of risks related to human capital, climate, cybersecurity and information technology. He provides insight based on his broad and substantial background in finance, logistics, operational improvement, mergers and acquisitions and capital markets transactions. He also brings valuable experience executing a customer -focused strategy, driving organic revenue growth and improving free cash flow. Mr. Plummer is deeply engaged in advancing and overseeing results from our Company's diversity, equity and inclusion initiatives. Mr. Plummer holds bachelor's and master's degrees in aeronautics and astronautics from Massachusetts Institute of Technology and a master's degree in business administration from Stanford University. iiint 2023 Proxy Statement I 23 ELECTION OF DIRECTORS JOHN C. POPE Age: 73 Director since: 1997 Board Committees: Management Development & Compensation and Nominating & Governance POSITION AND BUSINESS EXPERIENCE Chief Executive Officer and Chairman of the Board — PFI Group (private investment firm) since 1994. 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. Chairman of the Board — R.R. Donnelley & Sons Company from 2014 to February 2022; Director of R.R. Donnelley & Sons Company, or predecessor companies, from 1996 to February 2022, until its sale to a private investment firm in 2022 QUALIFICATIONS Jack Pope serves as Chief Executive Officer and Chairman of the Board of PFI Group, a private investment firm. Mr. Pope served in various executive operational, marketing and financial positions, primarily in the airline industry, for almost 20 years, with his last position being President of United Airlines. Mr. Pope also served over nine years combined in Chief Financial Officer positions at American Airlines and United Airlines. Mr. Pope has decades of experience serving on the board of directors of multiple major public companies, including through several significant mergers, acquisitions and restructuring transactions. Through Mr. Pope's prior experience, he has developed extensive expertise and knowledge of management of large public companies with large-scale logistical challenges, labor-intensive operations, high fixed -cost structures and significant capital requirements, similar to our Company. His background, education and board service also provide him with expertise in finance and accounting matters that allow him to contribute complex and valuable insights in the areas of financial reporting and controls, tax, investor relations and in the execution of large transactions, including mergers and acquisitions, capital market offerings and corporate financing arrangements. Mr. Pope shares knowledge of governance and board oversight best practices developed as a member of other boards of directors. Additionally, through his tenure on the Board, Mr. Pope holds a deep understanding of the environmental services industry and our strategy to deliver stockholder value. Mr. Pope has a master's degree in finance from Harvard Business School and a bachelor's degree in engineering and applied science from Yale University. 24 I w 2023 Proxy Statement ELECTION OF DIRECTORS MARYROSE T. SYLVESTER Age: 57 Director since: March 2021 Board Committee: Management Development & Compensation FOR POSITION AND BUSINESS EXPERIENCE Retired U.S. Managing Director and U.S. Head of Electrification — ABB Ltd. (global technology company focused on electrification, robotics, power and automation), served from August 2019 to August 2020. Former President and Chief Executive Officer — Current, powered by GE (energy services and information technology subsidiary of General Electric subsequently acquired by private equity investors), served from 2015 to June 2019. Director of Harley-Davidson, Inc. since 2016. Director of Vontier Corporation since March 2021. Director of Flex Ltd. since September 2022. QUALIFICATIONS As U.S. Managing Director and U.S. Head of Electrification for ABB Ltd., Maryrose Sylvester was responsible for ABB's largest geographical market and the implementation of operational innovations. Ms. Sylvester also championed the company's diversity and inclusion efforts and accelerated ABB's Encompass Diversity program. Prior to joining ABB Ltd., Ms. Sylvester spent more than 30 years at General Electric, where she held a number of leadership roles, including serving as President and Chief Executive Officer of each of GE Lighting, GE Intelligent Platforms, which focused on industrial automation, and GE Current, a digital power service business that delivers integrated energy systems. Ms. Sylvester was instrumental in launching the GE Women's Network. Ms. Sylvester is a strategic, growth -oriented leader with a focus on the areas of technology, innovation and automation. Through her prior experience, Ms. Sylvester has developed expertise in delivering technology -enabled and energy -efficient sustainable solutions. Ms. Sylvester provides experience and extensive knowledge of product development, marketing, technology and supply chain strategy to the Board. Ms. Sylvester has in-depth expertise in the area of improving energy efficiency in response to climate risk. Ms. Sylvester also shares insight from her prior experience to inform our strategy to improve processes and drive efficiency through automation. Ms. Sylvester is passionate about advancing diversity, equity and inclusion and has expertise developing and driving such initiatives in the workplace. Ms. Sylvester also brings valuable governance experience from her service on the public company boards listed above. She holds a bachelor's degree in procurement and production management from Bowling Green State University and a master's degree in business administration from Cleveland State University. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NINE DIRECTOR NOMINEES. w 2023 Proxy Statement I 25 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 14, 2023, 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 Shares of Common Stock Covered by Name Stock Owned') Exercisable Options Bruce E. Chinn(3) 461 Andres R. Gluski 14,940 Victoria M. Holt 20,438 Kathleen M. Mazzarella(``) 12,852 Sean E. Menke 2,732 William B. Plummer(5) 4,957 John C. Pope 55,809 Maryrose T. Sylvester 2,732 Thomas H. Weidemeyer(6) 37,161 James C. Fish, Jr.(') 280,776 105,482 Devina A. Rankin 50,713 47,063 John J. Morris, Jr. 87,591 29,352 Steven R. Batchelor(3) 38,313 53,141 Tara J. Hemmer 41,440 65,292 All directors and currently -serving executive officers as a group (19 persons)(9) 711,977 398,393 (1) The table reports beneficial ownership in accordance with Rule 13d-3 under the Exchange Act. The amounts reported above include 4,1 51 stock equivalents attributed to Mr. Fish, 2,334 stock equivalents attributed to Mr. Morris and 1,015 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 has 2,534 phantom stock equivalents under the 409A Deferral Plan. (2) Includes the number of options currently exercisable and options that will become exercisable within 60 days of our record date. (3) Shares are held by the Chinn Family Trust, for which Mr. Chinn and his wife serve as trustees. (4) Shares are held by the Mazzarella Living Trust, for which Ms. Mazzarella and her husband serve as trustees. (5) Of this total, 588 shares are held by TPO Collectibles LLC, an entity wholly -owned and controlled by Mr. Plummer and his wife. (6) Shares are held by the Thomas H. Weidemeyer and Mary R. Weidemeyer Trust, for which Mr. Weidemeyer and his wife serve as trustees. 26 I iiN,a 2023 Proxy Statement (7) (8) Includes 95,577 shares held in trusts for the benefit of Mr. Fish's minor children. Ownership information for Mr. Batchelor is as of December 31, 2022, which is the date that he retired from the Company and the last date that he verified his ownership of the Company's Common Stock. As of that date, Mr. Batchelor also had 5,295 phantom stock equivalents under the 409A Deferral Plan not included in the table above. (9) Included in the "All directors and currently -serving executive officers as a group" are 14,677 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 7,829 phantom stock equivalents under the 409A Deferral Plan that are not included in the table. 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 14, 2023. Name and Address Shares Beneficially Owned Number Percent') The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 37,490,065(2) 9.2% Melinda French Gates; William H. Gates III 500 Fifth Avenue North Seattle, WA 98109 Bill & Melinda Gates Foundation Trust 2365 Carillon Point Kirkland, WA 98033 35,238,154(3) 8.7% BlackRock, Inc. 55 East 52nd Street New York, NY 10055 30,411,118(4) 7.5% (1) Percentage is calculated using the number of shares of Common Stock outstanding and entitled to vote as of March 14, 2023. (2) This information is based on a Schedule 13G/A filed with the SEC on February 9, 2023. The Vanguard Group reports that it has shared voting power over 590,668 shares of Common Stock, shared dispositive power over 1,638,383 shares of Common Stock and sole dispositive power over 35,851,682 shares of Common Stock beneficially owned. (3) This information is based on a Schedule 13G/A filed with the SEC on February 10, 2023. Ms. Gates, Mr. Gates and the Bill & Melinda Gates Foundation Trust each report shared voting and dispositive power over 35,234,344 shares of Common Stock beneficially owned. Ms. Gates also reports sole voting and dispositive power of 3,810 additional shares of Common Stock beneficially owned. (4) This information is based on a Schedule 13G/A filed with the SEC on February 7, 2023. BlackRock, Inc. reports that it has sole voting power over 27,159,741 shares of Common Stock and sole dispositive power over 30,411,118 shares of Common Stock beneficially owned. Vint 2023 Proxy Statement I 27 EXECUTIVE OFFICERS The following is a listing of our current executive officers, their ages and their business experience for 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 Age Positions Held and Business Experience for Past Five Years Charles C. Boettcher 49 • 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 201 7 to May 2019. Rafael E. Carrasco 51 • Senior Vice President — Operations since July 2021. • Area Vice President — Greater Mid -Atlantic Area from 201 7 to June 2021. John A. Carroll 50 • Vice President and Chief Accounting Officer since March 2023. • Vice President, Internal Audit and Controls from 2018 to March 2023. Tara J. Hemmer 50 • Senior Vice President and Chief Sustainability Officer since July 2021. • Senior Vice President — Operations from January 2019 to June 2021. • Senior Vice President — Operations, Safety and Environmental Compliance from January 2018 to December 2018. John J. Morris, Jr. 53 • Executive Vice President and Chief Operating Officer since January 2019. • Senior Vice President — Operations from 2012 to December 2018. Devina A. Rankin 47 • Executive Vice President and Chief Financial Officer since February 2020. • Senior Vice President and Chief Financial Officer from 201 7 to February 2020. Kelly C. Rooney 49 • Senior Vice President and Chief Human Resources and Diversity & Inclusion Officer since February 2023. • Senior Vice President and Chief People Officer from August 2022 to February 2023. • Vice President — People Solutions from September 2021 to August 2022. • Area General Manager from July 2020 to September 2021. • Area Director Collection Operations from April 2019 to July 2020. • Regional Manager, Advanced Disposal Services, Inc. (a waste and environmental services company acquired by our Company in 2020), from 2015 to April 2019. Donald J. Smith 56 • Senior Vice President — Operations since January 2023. • Area Vice President — Texas & Oklahoma Area from 201 2 to December 2022. Michael J. Watson 53 • Senior Vice President and Chief Customer Officer since October 2018. • Area Vice President —Illinois & Missouri Valley Area from 2013 to September 2018. 28 I w 2023 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, 2022 aligned with the Company's 2022 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 2022, 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. • Mr. John J. Morris, Jr. — Executive Vice President and Chief Operating Officer since January 2019. • Mr. Steven R. Batchelor— Senior Vice President — Operations from January 2019 until his retirement from the Company as of December 31, 2022. • Ms. Tara J. Hemmer — Senior Vice President and Chief Sustainability Officer since July 2021. For additional information about the currently -serving 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 to deliver on our brand promise, ALWAYS WORKING FOR A SUSTAINAIBLE TOMORROW®. Our strategy 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 majority 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 equity awards with a three-year performance period ended 2022 and the 2022 annual cash incentive award; • at target, 72% of total compensation of our President and Chief Executive Officer was tied to long-term equity awards, and a majority of total compensation of our other named executives, on average, was tied to long-term equity awards, which aligns executives' interests with those of stockholders; Vint 2023 Proxy Statement I 29 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- year period, link executives' interests with long-term performance and reduce incentives to maximize 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 (the "Severance Limitation Policy"); and • the Company has adopted a policy that prohibits it from entering into agreements with executive officers that provide for certain death benefits or tax gross -up payments. 2022 Compensation Program Results and Company Performance During 2022, we continued to advance our strategic priorities — enhancing employee engagement, improving our operations through the use of technology and automation, and investing in sustainable growth through our recycling and renewable energy businesses. This strategic focus, combined with strong operational execution resulted in increased revenue, income from operations and income from operations margin driven primarily by both yield and volume growth in our collection and disposal business. We were able to achieve these results despite high inflationary cost pressures and the significant downturn in commodity prices for recyclable materials in the second half of the year. During 2022, we also remained diligent in offering a competitively profitable service that meets the needs of our customers and focused on driving operating efficiencies and reducing discretionary spend. We continued to invest in our people through market wage adjustments, investments in our digital platform and training for our team members, and we continued to invest in recycling automation to reduce costs and increase throughput, positioning us to overcome commodity price headwinds and deliver a differentiated service. We also continued to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business. The Company allocated $2.577 billion of available cash to our shareholders during 2022 through dividends and Common Stock repurchases. During 2022, the Company allocated $2.587 billion of available cash to capital expenditures. This increase in capital spending was driven in large part by our intentional acceleration of investments in our recycling and renewable energy businesses. In December 2021, our Board approved $561 million of incremental 2022 capital expenditures to advance oursustainability growth strategy. The Company has since announced continued expansion of its planned investments in recycling and renewable energy growth projects in 2023. Following is a summary of the 2022 compensation program results: Total Shareholder Return With respect to the half of the performance share units ("PSUs") granted in 2020 with a three-year performance period ended December 31, 2022 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 75.84%, resulting in a maximum 200% payout on these PSUs in shares of Common Stock. This performance directly benefited our stockholders, delivering total shareholder return of 52.14% over the three-year performance period. 30 I w 2023 Proxy Statement EXECUTIVE COMPENSATION 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 2020, of $7.24 billion, exceeding the target performance level of $6.927 billion for the three-year performance period ended December 31, 2022. These results exclude the impact of $561 million of incremental sustainability growth investments in 2022 discussed above, as such capital expenditures were not contemplated at the time this performance measure was established but were subsequently approved by our Board in furtherance of the Company's strategy. This performance resulted in a 150.21 % payout on these PSUs in shares of Common Stock. The robust cash flow generation of our business over the three-year performance period has allowed the Company to fulfill its priorities of investing in the business, funding acquisitions with strong returns, and returning available cash to shareholders through dividend growth and Common Stock repurchases. Annual Cash Incentive Performance Measures Company performance on annual cash incentive performance measures for named executive officers is set forth below. Additional information about the definition and calculation of these performance measures is below under "Named Executives' 2022 Compensation Program and Results — Annual Cash Incentive." Due to these results, each of the named executives received an annual cash incentive payment for 2022 equal to 172.18% of target. Operating EBITDA (generally defined as the Company's income from operations, excluding depreciation, depletion and amortization, "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" reported in our Annual Report on Form 10-K; Operating EBITDA presented in this proxy statement is a non-GAAP measure and is defined differently than Operating EBITDA reported in the Company's quarterly earnings press release) — $5.475 billion, yielding a payout of 171.72% Income from Operations Margin (generally defined as income from operations as a percentage of revenue) — 18.2%, yielding a payout of 145.27% 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) — 8.5%, yielding a payout of 200%. In 2022, each of the executive compensation incentive awards continued to demonstrate strong alignment between executive pay and Company performance. The payouts on the PSUs granted in 2020 correlate with outstanding cash flow generation and total shareholder return over the three-year performance period. Additionally, the above -target results on our Operating EBITDA and Income from Operations Margin annual cash incentive performance measures, and above - maximum results on our Internal Revenue Growth annual cash incentive performance measure, are reflective of another year of strong business growth and overall financial performance. The Company's results on each of the performance measures evidence that our executives continue to take the right actions to deliver on operational, strategic and financial priorities in the face of broader macroeconomic pressures, including inflation, supply chain disruption, labor market constraints, rising interest rates and commodity price volatility. Management continues to successfully develop and advance strategic initiatives to grow our business while driving efficiencies. As a result, both stockholders and executives were rewarded by above -target results on all five of the Company's executive compensation financial performance measures in 2022. Synergy Generation The Company completed its acquisition of Advanced Disposal Services, Inc. ("ADS") in October 2020. In February 2021, the MD&C Committee discussed making a future supplemental award of restricted stock units ("RSUs") to executive officers, not including Mr. Fish, in connection with achievement of targeted ADS acquisition synergies. An incentive award plan was not created and award grants were not made at that time, but the MD&C Committee indicated its willingness to consider granting RSUs to the named executives in specified values at the February 2022 MD&C Committee meeting if the Company were to achieve certain synergy goals. In February 2022, the MD&C Committee confirmed that the Company exceeded $175 million in forecasted annual cost and capital synergies from the ADS acquisition. The MD&C Committee then approved the grants of RSUs to our named executives, not including Mr. Fish, in recognition of leadership and contributions critical to the acquisition of ADS and the subsequent integration and synergy generation (the "ADS Synergy Awards"). Vint 2023 Proxy Statement I 31 EXECUTIVE COMPENSATION Maximum Target Threshold $5.475B Actual $5.332B Target (50% weight) 171.72% 2022 Actual Performance and Compensation Payouts Annual Cash Incentive 18.2% Actual 17.5% Target (25% weight) 145.27% 8.5% Actual 5.0% Target (25% weight) Combined Results 172.18% Long -Term Performance Share Units 75.84th Percentile Actual 50th Percentile Target (50% weight) 200% $7.24B Actual $6.927B Target (50% weight) 150.21 Combined Results 175.11% Operating EBITDA Income from Operations Margin Internal Annual Cash Relative TSR Revenue Incentive (S&P 500) Growth Award Payout Cash Flow PSU Award Generation Payout Consideration of Stockholder Advisory Vote When establishing 2022 compensation for the named executives, the MD&C Committee noted the results of the 2021 advisory stockholder vote on executive compensation, with more than 92% of shares present and entitled to vote at the annual meeting voting in favor of the Company's executive compensation. Accordingly, the results of the stockholder advisory vote did not cause the MD&C Committee to make any changes to executive compensation practices for 2022, although the MD&C Committee does consider feedback received by the Company through stockholder engagement. 2023 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 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'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 MD&C Committee has approved keeping the 2023 long-term incentive program design for stock options and PSUs consistent with prior years. With respect to the Cash Flow PSUs granted in 2021 with a performance period ended December 31, 2023, as well as the Cash Flow PSUs granted in 2022 with a performance period ended December 31, 2024, the MD&C Committee has considered the impact of the Company's strategy to accelerate investments in recycling and renewable energy growth projects on the cash flow generation performance measure. Consistent with calculation of the performance results for the Cash Flow PSUs granted in 2020, discussed above, the MD&C Committee anticipates that it will be appropriate to exclude the impact of such incremental strategic capital investments that were approved by the Board after the applicable cash flow generation performance measures were established for the Cash Flow PSUs granted in 2021 and 2022. 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. The MD&C Committee has approved an annual cash incentive program for 2023 with the same performance measures and weighting as the 2022 annual cash incentive program; however, the MD&C Committee has also incorporated an ESG modifier into this program. Annual cash incentive payouts to executive officers for 2023 may be increased, or decreased, 32 I MM. 2023 Proxy Statement EXECUTIVE COMPENSATION up to five percent depending on achievement calculated using an ESG scorecard. The ESG scorecard contains four quantifiable performance measures; one each in the areas of safety; diversity, equity & inclusion; 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 presented in the Company's 2022 Sustainability Report. 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 generally 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. iiint 2023 Proxy Statement I 33 EXECUTIVE COMPENSATION Overview of Elements of Our 2022 Executive Compensation Program Timing Current Short -Term Performance Incentive Long -Term Performance Incentives Component Base Salary Annual Cash Incentive Performance Share Units Stock Options Restricted Stock Units Purpose To attract and retain executives with a competitive level of regular income To encourage and reward contributions to our annual financial objectives through performance -based compensation subject to challenging, yet attainable, objective and transparent metrics 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 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, new hire, special recognition) to make awards that encourage and reward long-term performance and increase alignment with stockholders 34 I w 2023 Proxy Statement Key Features Adjustments to base salary primarily consider competitive market data and the executive's individual performance and responsibilities. Cash incentives are targeted at a percentage of base salary and range from zero to 200% of target based on the following performance measures: Operating EBITDA — designed to encourage balanced growth and profitability and assess the financial outcome from execution of strategic priorities (weighted 50%); Income from Operations Margin — designed to motivate pursuit of high margin revenue growth while also controlling costs and operating efficiently (weighted 25%); and Internal Revenue Growth — targeted at executing on pricing strategy and appropriate volume growth aligned with 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 2022 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 2022 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 granted in 2022 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 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. RSUs are not routinely an element of executive compensation, but grants are made in certain circumstances, including in recognition of significant promotions and contributions, such as in the case of the ADS Synergy Awards. 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. 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)(1 7) 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 2022 table and accompanying disclosure. Perquisites. The Company provides very limited perquisites or personal benefits to executive officers, including cost to the Company for guest participation in corporate events, cost for certain event tickets 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 2022, our President and Chief Executive Officer had 25 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, although this does not occur frequently. 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 Chairman 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 non -employee 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 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 iiint 2023 Proxy Statement I 35 EXECUTIVE COMPENSATION 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 our CEO and our Human Resources 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 Human Resources 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. PeerCompanyComparisons. 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 2022 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 2021, using information from: • Size -adjusted median compensation data from two general industry surveys in which management annually participates; the Aon Hewitt 2020 Total Compensation Measurement Survey (as the 2021 Aon Radford Global Compensation Executive Data was not yet available) and the Willis Towers Watson 2021 Executive Compensation Database Survey. The 2020 Aon Hewitt Total Compensation Measurement Survey included 412 organizations ranging in size from approximately $30 million to $525 billion in annual revenue, and the 2021 Willis Towers Watson Executive Compensation Database Survey included 71 7 organizations ranging in size from approximately $50 million to $570 billion in annual revenue. Data selected from these surveys is scoped based on Company revenue; and • Median compensation data from a comparison group of 20 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. 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 2022 compensation during 2021. All financial and market data are taken from Standard & Poor's Capital IQ, with financial data as of each company's 2020 fiscal year end and market capitalization as of December 31, 2020. 36 I w 2023 Proxy Statement EXECUTIVE COMPENSATION Peer Company Comparison Group Net Revenue Operating Income Total Assets Total Equity Total Employees Market Capitalization WM Composite Percentile Rank 0% 10% 20% 30% 54% 66% 7.11m111M45% 44% 71% 66% 58% 40% 50% 60% 20 Company Comparison Group American Electric Power Avis Budget C.H. Robison WW CSX Entergy FedEx Grainger (WW) Halliburton NextEra Energy Norfolk Southern Republic Services Ryder System Schlumberger Southern Southwest Airlines Sysco Union Pacific UPS Waste Connections XPO Logistics 70% 80% 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, not including the non -recurring ADS Synergy 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 2022 target compensation among base salary, annual cash incentive and annual long-term equity awards for (a) our President and Chief Executive Officer and (b) our other named executives, on average (including and excluding the non -recurring ADS Synergy Awards). These charts reflect the MD&C Committee's 2022 ordinary course desired total mix of target compensation for named executives, other than our President and CEO, which includes approximately 60% of total compensation derived from long-term equity awards, while long-term equity awards comprised 72% of our President and Chief Executive Officer's total target compensation. These charts also reflect iiint 2023 Proxy Statement I 37 EXECUTIVE COMPENSATION that approximately 89% of our President and Chief Executive Officer's total target compensation opportunities awarded in 2022 were performance -based. Approximately 84% of the total target compensation established in February 2022 for the other named executives, on average, was comprised of annual cash incentive and long-term equity awards, all of which are performance -based with the exception of the ADS Synergy Awards, which were granted in recognition of prior performance, but are not subject to future performance measures. 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 72% Long -Term Equity Awards 11% Base Salary 17% Annual Cash Incentive Other Named Executives, on Average, excluding ADS Synergy Awards 60% Long -Term Equity Awards Other Named Executives, on Average, including ADS Synergy Awards 20% 16% 1— Base Salary 1- Base Salary 20% Annual Cash Incentive 69% Long -Term Equity Awards 15% Annual Cash Incentive 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 our President and Chief Executive Officer and the other executive officers, while recognizing the additional responsibilities of our 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 our President and Chief Executive Officer is reasonable compared to that of the other executive officers. 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 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' 2022 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 and reported in the Summary Compensation Table. 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 2022, 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. 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 38 I WWI. 2023 Proxy Statement EXECUTIVE COMPENSATION 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, the MD&C Committee has agreed that it will 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. Named Executives' 2022 Compensation Program and Results Base Salary The MD&C Committee approved increases to the 2022 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 2022 annual base salary established by the MD&C Committee for each of our named executive officers. Named Executive Officer 2022 Base Salary Mr. Fish $1,350,000 Ms. Rankin $ 738,100 Mr. Morris $ 753,800 Mr. Batchelor $ 643,000 Ms. Hemmer $ 643,000 Annual Cash Incentive • Annual cash incentives were dependent on the following performance measures: Operating EBITDA; 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 2022 equal to 172.18% 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 Operating EBITDA measure encourages balanced focus on growth and profitability. Our Income from Operations Margin performance measure encourages responsible, high margin revenue growth and cost management and reduction. The Internal Revenue Growth performance measure supports the Company's strategic growth and creation of shareholder value. The MD&C Committee believes these financial performance measures supported and aligned with the strategy of the Company in 2022, are reflective of the Company's overall performance, and are appropriate indicators of our progress toward the Company's goals. See "2022 Compensation Program Results and Company Performance" in the Executive Summary above for further discussion and definitions of the annual cash incentive performance measures. 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 pricing and volume trends, operational factors, and macroeconomic conditions, such as the recent inflationary cost pressures. Additionally, when setting the 2022 performance levels, the MD&C Committee defined the 2022 annual cash incentive awards to exclude the impacts of our recycling brokerage business. While the relatively small and traditionally lower -margin recycling brokerage business is additive to our overall customer value proposition, it can have a distorting effect on results, due in part to commodity price volatility. The table below details the performance measures set by the MD&C Committee for purposes of the named executive officers' annual cash incentive for 2022. iiint 2023 Proxy Statement I 39 EXECUTIVE COMPENSATION Threshold Target Maximum Performance Performance Performance (60% Payment) (100% Payment) (200% Payment) Operating EBITDA $5.132 billion $5.332 billion $5.532 billion Income from Operations Margin 16.0% 17.5% 19.0% Internal Revenue Growth 3.0% 5.0 % 7.0 % 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. Operating EBITDA (weighted 50%) Actual Income from Internal Revenue Operations Margin Growth (weighted 25%) (weighted 25%) Total Payout Earned Payout Payout Payout (as a percentage Earned Actual Earned Actual Earned of Target) $5.475 billion 171.72% 18.2% 145.27% 8.5% 200% 172.18% As discussed above, the MD&C Committee has discretion to adjust the performance calculations in line with its policy on calculation adjustments. The MD&C Committee did not make any adjustments to the calculation of 2022 annual cash incentive performance results. 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 2022 and annual cash incentive for 2022 paid in March 2023. Target Percentage Annual Cash Incentive Named Executive Officer of Base Salary For 2022") Mr. Fish 150 $3,459,049 Ms. Rankin 100 $1,258,404 Mr. Morris(2) 108 $1,391,871 Mr. Batchelor 90 $ 978,476 Ms. Hemmer 90 $ 978,476 (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 2022. Such amounts are lower than if calculated using the 2022 base salaries in the table above due to the timing of when base salary increases take effect. (2) In February 2022, the target percentage of base salary for Mr. Morris was increased from 100% to 110%, yielding a 108% target percentage of base salary for the full year of 2022. 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' 2022 annual long-term incentive award, the MD&C Committee decided to 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, not including the non -recurring ADS Synergy Awards that are discussed below under "Restricted Stock Units." Half of each named executives' PSUs granted in 2022 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 2022, 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. 40 I iiN,a 2023 Proxy Statement EXECUTIVE COMPENSATION Named Executive Officer Dollar Values of 2022 Long -Term Equity Incentives Set by the Committee (at Target)" Mr. Fish $8,750,000 Ms. Rankin $2,200,000 Mr. Morris $2,600,000 Mr. Batchelor $1,700,000 Ms. Hemmer $1,700,000 (1) Amount does not include the ADS Synergy Awards discussed below under "Restricted Stock Units". Overview of Performance Share Units. • Named executives were granted new PSUs with a three-year performance period ending December 31, 2024. Half of each named executive's PSUs granted in 2022 are Cash Flow PSUs and the remaining half are TSR PSUs. • Named executives received a payout of 175.11 % of the PSUs granted in 2020 with a three-year performance period ended December 31, 2022. The Company exceeded the target level of performance for the Cash Flow PSUs, and the Company exceeded the maximum level of performance for the TSR PSUs. PSUs Granted in 2022. 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 2022 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 grant date to determine the number of PSUs granted. The number of PSUs granted in 2022 are shown in the table below. Named Executive Officer Number of PSUs Mr. Fish 47,620 Ms. Rankin 11,972 Mr. Morris 14,1 50 Mr. Batchelor 9,252 Ms. Hemmer 9,252 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 economic conditions and business climate; (b) strategic acquisition, restructuring, and transformation and reorganization costs are excluded; (c) cash proceeds from strategic divestitures of assets and businesses are excluded; and (d) cash proceeds from divestitures of any other businesses and assets are included (the "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 2022. Threshold Target Maximum Performance Payout Performance Payout Performance Payout Cash Flow $6.034 billion 50% $6.634 billion 100% $7.234 billion 200% iiint 2023 Proxy Statement I 41 EXECUTIVE COMPENSATION 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 2022. Total Shareholder Return Relative to the S&P 500 Performance Payout 75th percentile (Maximum) 200% 50th percentile (Target) 100% 25th percentile (Threshold) 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 2022 and beyond, including macroeconomic and market conditions and economic indicators for future periods, to align the cash flow targets with the Company's long-range strategic plan. The 2022 cash flow targets are also reflective of planned increases in capital spending that were announced in the first quarter of 2022 to accelerate our sustainability growth strategy. Payout on PSUs for the Performance Period Ended December 31, 2022. Half of the PSUs granted in 2020 with the performance period ended December 31, 2022 were TSR PSUs, and the remaining half of the PSUs granted in 2020 were Cash Flow PSUs. With respect to the TSR PSUs with a three-year performance period ended December 31, 2022, the performance of the Company's Common Stock on this measure translated into a percentile rank relative to the S&P 500 of 75.84%, resulting in a maximum 200% payout in shares of Common Stock that were issued in February 2023. For purposes of the Cash Flow PSUs with a three-year performance period ended December 31, 2022, the Company generated net cash flow from operating activities, less capital expenditures, of $7.24 billion, exceeding the target criteria of $6.927 billion; this performance level yielded a 1 50.21 % payout in shares of Common Stock that were issued in February 2023. This performance was calculated in accordance with the Cash Flow PSU Definition above and excluded the benefit of government -required divestitures in connection with the ADS acquisition. Additionally, in line with the MD&C Committee's policy on calculation adjustments discussed above, the MD&C Committee approved an adjustment to the measurement of performance on the cash flow measure to exclude the impact of $561 million of capital expenditures allocated to strategic investments in recycling and renewable energy that were not contemplated at the time the performance measures were established. Such incremental capital expenditures to support our sustainability growth strategy were approved by the Board of Directors in December 2021 and publicly announced in the first quarter of 2022. These 2022 strategic investments did not have a material impact on any of the other 2022 executive compensation performance measures. 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 2022 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 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. Named Executive Officer Number of Options Mr. Fish 66,188 Ms. Rankin 16,641 Mr. Morris 19,667 Mr. Batchelor 1 2,859 Ms. Hemmer 1 2,859 42 I w 2023 Proxy Statement EXECUTIVE COMPENSATION The stock options granted in 2022 vest ratably in three annual increments, beginning on the first anniversary of the date of grant. The exercise price of the options granted in 2022 is $145.67, 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 valuation model 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 accelerated over the period that the recipient becomes retirement -eligible. Restricted Stock Units. The Company completed its acquisition of ADS in October 2020. In February 2021, the MD&C Committee discussed making a future supplemental award of RSUs to executive officers, not including Mr. Fish, in connection with achievement of targeted ADS acquisition synergies. An incentive award plan was not created and award grants were not made at that time, but the MD&C Committee indicated its willingness to consider granting RSUs to the named executives in specified values at the February 2022 MD&C Committee meeting if the Company were to achieve certain synergy goals. In February 2022, the MD&C Committee confirmed that the Company exceeded $175 million in forecasted annual cost and capital synergies from the ADS acquisition. The MD&C Committee then approved the grants of the following ADS Synergy Awards to our named executives, not including Mr. Fish, in recognition of leadership and contributions critical to the acquisition of ADS and the subsequent integration and synergy generation. Named Executive Officer Number Intended Value of RSUs") of RSUs Ms. Rankin 6,803 $1,000,000 Mr. Morris 10,204 $1,500,000 Mr. Batchelor 5,102 $ 750,000 Ms. Hemmer 5,102 $ 750,000 (1) The number of RSUs granted was calculated by dividing the intended values in the table above by the average of the high and low market price of our Common Stock over the 30 trading days preceding the grant date. The ADS Synergy Awards will vest in full on the third anniversary of the date of grant. Dividends on the RSUs will accrue and be paid in cash upon vesting. The RSUs may not be voted or sold until vested. Unvested RSUs are subject to forfeiture in the event of voluntary or for -cause termination. RSUs will be prorated upon involuntary termination other than for cause, and RSUs immediately vest in the event of an employee's death or disability. 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, increased responsibilities, special recognition and to attract new hires, and that RSUs will not be a routine component of named executive compensation. Post -Employment and Change in Control Compensation; Clawback Policies Severance Protection Plan. In December 2017, we adopted an Executive Severance Protection Plan (the "Severance 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 201 7 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 Mr. Batchelor nor Ms. Hemmer is a party to an employment agreement with the Company. Post -Employment Covenants and Clawback Policies. The 201 7 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 Vint 2023 Proxy Statement I 43 EXECUTIVE COMPENSATION 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. 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 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 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 senior 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 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. 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 multiple of base salary. Each currently -serving named executive's multiple of base salary and attainment as of March 14, 2023, using the closing price of our Common Stock on such date and base salaries in effect on December 31, 2022, are set forth below. 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. 44 I iiN,a 2023 Proxy Statement EXECUTIVE COMPENSATION Ownership Multiple of Ownership Base Salary Guideline Multiple Attained as of of Base Salary March 14, 2023 Mr. Fish 6x 32x Ms. Rankin 3x 11x Mr. Morris 3x 18x Ms. Hemmer 3x 10x As discussed under "Director and Officer Stock Ownership," the MD&C Committee also establishes ownership guidelines for the non -employee directors and performs regular reviews to ensure all non -employee 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. iiint 2023 Proxy Statement I 45 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 Non -Equity Stock Option Incentive Plan All Other Salary Awards Awards Compensation Compensation Total ($) ($)(1) ($)(2) ($)(3) ($)(4) ($) James C. Fish, Jr. President and Chief Executive Officer 2022 1,338,462(5) 8,023,256 1,750,011 3,459,049 249,906 14,820,684 2021 1,294,231(5) 7,312,195 1,700,005 2,656,497 94,435 13,057,363 2020 1,269,231(5) 8,110,592 1,600,003 1,277,922 116,177 12,373,925 Devine A. Rankin Executive Vice President and Chief Financial Officer 2022 730,288 3,008,095 439,988 1,258,404 98,980 5,535,755 2021 700,671 1,806,413 420,003 958,821 56,094 3,942,002 2020 677,061 2,027,801 399,993 456,597 60,493 3,621,945 John J. Morris, Jr. Executive Vice President and Chief Operating Officer 2022 748,736 3,870,479 519,995 1,391,871 131,155 6,662,236 2021 728,138 1,978,522 460,006 996,408 67,420 4,230,494 2020 712,115 2,230,520 440,002 479,777 99,517 3,961,930 Steven R. Batchelor Senior Vice President - Operations 2022 630,506 2,302,032 339,992 978,476 37,712 4,288,718 2021 585,868 1,462,439 339,998 721,549 35,482 3,145,336 2020 567,062 1,672,967 330,005 347,774 13,841 2,931,649 Tara J. Hemmer Senior Vice President and Chief Sustainability Officer 2022 630,506 2,302,032 339,992 978,476 70,648 4,321,654 2021 585,868 1,462,439 339,998 721,549 45,601 3,1 55,455 2020 567,062 1,672,967 330,005 347,774 57,125 2,974,933 (1) Amounts in this column represent the grant date fair value of PSUs granted to all named executives annually and ADS Synergy Awards comprised of RSUs granted to each named executive, except Mr. Fish, in 2022. The grant date fair values were calculated in accordance with ASC Topic 718, as further described in Note 14 in the Notes to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K. The grant date fair value of a TSR PSU granted in 2022, based on a multifactor Monte Carlo model, is $191.30, 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 2022, and an ADS Synergy Award RSU, is $145.67, which is the average of the high and low market price of our Common Stock on the date of the grant, in accordance with our 2014 Stock Incentive Plan. The table below shows (a) the aggregate grant date fair value of Cash Flow PSUs assuming target level of performance is achieved (this is the amount included in the Stock Awards column in the Summary Compensation Table) and (b) the aggregate grant date fair value of the same PSUs assuming the Company will reach the highest level of achievement for this performance measure and maximum payouts will be earned. 46 I iiN,a 2023 Proxy Statement EXECUTIVE COMPENSATION Year Aggregate Grant Date Fair Value of Cash Flow PSUs Assuming Target Level of Performance Achieved ($) Aggregate Grant Date Fair Value of Cash Flow PSUs Assuming Highest Level of Performance Achieved ($) James C. Fish, Jr. 2022 3,468,403 2021 3,304,908 6,936,806 6,609,816 2020 3,332,328 6,664,656 Devina A. Rankin 2022 871,981 2021 816,448 1,743,962 1,632,896 2020 833,145 1,666,290 John J. Morris, Jr. 2022 1,030,61 5 2021 894,237 2,061,230 1,788,474 2020 916,434 1,832,869 Steven R. Batchelor 2022 673,869 2021 660,982 1,347,738 1,321,964 2020 687,357 1,374,715 Tara J. Hemmer 2022 673,869 2021 660,982 1,347,738 1,321,963 2020 687,357 1,374,715 (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 2022, calculated using a Black-Scholes option pricing model, is $26.44 per option. See Note 14 in the Notes to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information. (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 2022 Compensation Program and Results - Annual Cash Incentive" for additional information. (4) The amounts included in "All Other Compensation" for 2022 are shown below (in dollars): 409A Deferral Perquisites 401(k) Plan and Other Plan Matching Matching Life Insurance Personal Contributions Contributions Premiums Benefits(') James C. Fish, Jr. 13,725 144,718 2,370 89,093 Devina A. Rankin 13,725 64,830 1,390 19,035 John J. Morris, Jr. 13,725 67,272 1,454 48,704 Steven R. Batchelor 13,725 23,285 702 Tara J. Hemmer 13,725 55,749 1,174 (a) This column includes perquisites and personal benefits received by a named executive officer in 2022, to the extent that the total incremental cost of such perquisites and personal benefits was at least $10,000, consisting of (i) incremental cost for personal use of Company aircraft in the following amounts: Mr. Fish - $81,133, Ms. Rankin - $14,203 and Mr. Morris - $43,872; (ii) $4,832 of income that was imputed to each of our named executive officers for the cost of the executive's guest's participation in Company events and (iii) $3,128 for personal use of event tickets by Mr. Fish. 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. When a deviation is made from business travel to pick up or drop off the executive in another location for a personal purpose, 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 in the rare event that a deadhead flight is required to iiint 2023 Proxy Statement I 47 EXECUTIVE COMPENSATION 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 our aircraft in the direct operating cost. (5) Includes $100,000 of base salary in each of 2022, 2021 and 2020 to which Mr. Fish was entitled but voluntarily relinquished to fund a scholarship program for children of Company employees. GRANT OF PLAN -BASED AWARDS IN 2022 All other All other Grant Estimated Possible Payouts Estimated Future Payouts Stock Option Exercise Closing Date Fair Awards: Awards: or BaseMarketa of Number of Number of Price of Under Non -Equity Incentive Under Equity Incentive of Price on on Stoockck and Plan Awards") Plan Awards(2) Shares of Securities Option Date of Option Threshold Target Maximum Threshold Target Maximum Stock or Underlying Awards Grant Awards Grant Date ($) ($) ($) (#) (#) (#) Units (03) Options(#)(($/sh)(5) ($/sh) ($)(6) James C. Fish, Jr. Cash Incentive 1,205,384 2,008,973 4,017,945 3/1/22 23,810 47,620 95,240 3/1/22 Devine A. Rankin 8,023,256 66,188 145.67 146.58 1,750,011 Cash Incentive 438,519 730,866 1,461,731 3/1/22 3/1/22 3/1/22 John J. Morris, Jr. 5,986 11,972 23,944 2,017,102 16,641 145.67 146.58 439,988 6,803 990,993 Cash Incentive 485,029 808,382 1,616,763 3/1/22 3/1/22 3/1/22 Steven R. Batchelor 7,075 14,150 28,300 2,384,062 19,667 145.67 146.58 519,995 10,204 1,486,417 Cash Incentive 340,972 568,287 1,136,574 3/1/22 3/1/22 3/1/22 Tara J. Hemmer 4,626 9,252 18,504 1,558,824 12,859 145.67 146.58 339,992 5,102 743,208 Cash Incentive 340,972 568,287 1,136,574 3/1/22 3/1/22 3/1/22 4,626 9,252 18,504 1,558,824 12,859 145.67 146.58 339,992 5,102 743,208 (1) Actual payouts of cash incentive awards for 2022 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 2022 Compensation Program and Results - Annual Cash Incentive" for additional information about these awards. (2) Consists of 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 Executive's 2022 Compensation Program and Results - Long -Term Equity Incentives - PSUs Granted in 2022" for additional information about these awards. The performance period for these awards ends December 31, 2024. PSUs earn dividend equivalents, which are paid out based on the number of shares earned at the end of the performance period. (3) Consists of the number of shares of Common Stock issuable upon the vesting of the ADS Synergy Awards comprised of RSUs granted under our 2014 Stock Incentive Plan. These RSUs vest in full on the third anniversary of the date of grant. See "Compensation Discussion and Analysis - Named Executive's 2022 Compensation Program and Results - Long -Term Equity Incentives - Restricted Stock Units" for additional information about this award. 48 I AN,a 2023 Proxy Statement EXECUTIVE COMPENSATION (4) Consists of 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 2022 Compensation Program and Results — Long -Term Equity Incentives — Stock Options" for additional information about these awards. Stock options vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 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. (5) 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. (6) These amounts are grant date fair values of the awards as calculated underASC Topic 718 and as further described in notes (1) and (2) to the Summary Compensation Table. OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2022 Option Awards Stock Awards') Name Equity Incentive Equity Plan Incentive Awards: Plan Market or Awards: Payout Number of Value of Market Unearned Unearned Number of Number of Number of Value of Shares, Shares, Securities Securities Shares or Shares or Units or Units or Underlying Underlying Units of Units of Other Other Unexercised Unexercised Option Stock Stock Rights Rights Options Options Exercise Option That Have That Have That Have That Have Exercisable Unexercisable Price Expiration Not Vested Not Vested Not Vested Not Vested (#)«) (#) ($) Date (#)*6) ($)(6) (07) (Sr) James C. Fish, Jr. 66,188(3) 145.67 3/1/2032 — 107,270 33,657,035 65,700(4) 110.81 2/23/2031 50,569(5) 126.005 2/19/2030 Devina A. Rankin 16,641(3) 145.67 3/1 /2032 6,803 1,067,255 26,708 8,379,902 8,116 16,232(4) 110.81 2/23/2031 1 2,642 12,642(5) 126.005 2/19/2030 John J. Morris, Jr. 19,667(3) 145.67 3/1 /2032 10,204 1,600,804 30,290 9,503,790 17,778(4) 110.81 2/23/2031 13,907(5) 126.005 2/19/2030 Steven R. Batchelor 12,859(3) 145.67 3/1/2032 5,102 800,402 21,182 6,646,064 6,570 13,140(4) 110.81 2/23/2031 10,430 10,430(5) 126.005 2/19/2030 27,005 98.898 2/19/2029 3,684 85.34 2/20/2028 5,443 73.335 2/28/2027 Tara J. Hemmer 12,859(3) 145.67 3/1/2032 5,102 800,402 21,182 6,646,064 6,570 13,140(4) 110.81 2/23/2031 10,430 10,430(5) 126.005 2/19/2030 27,005 98.898 2/19/2029 iiint 2023 Proxy Statement I 49 EXECUTIVE COMPENSATION (1) Values are based on the closing price of our Common Stock on December 31, 2022 of $1 56.88. (2) Includes vested stock options granted on February 28, 201 7; February 20, 2018; February 19, 2019; February 19, 2020 and February 23, 2021 pursuant to our 2014 Stock Incentive Plan. (3) Includes stock options granted on March 1, 2022 that vest ratably in three annual increments, beginning on the first anniversary of the date of grant. (4) Includes stock options granted on February 23, 2021 that vest ratably in three annual increments, beginning on the first anniversary of the date of grant. (5) Includes stock options granted on February 19, 2020 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. (6) Includes the ADS Synergy Awards comprised of RSUs granted on March 1, 2022 under our 2014 Stock Incentive Plan. The RSUs vest in full on the third anniversary of the date of grant. (7) Includes PSUs with three-year performance periods ending December 31, 2023 and December 31, 2024. 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 during the first quarter of the succeeding year. The PSUs for the performance period ended December 31, 2022 are not included in the table as they are considered earned as of December 31, 2022 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, 2022 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, 2023: Mr. Fish — 59,650; Ms. Rankin — 14,736; Mr. Morris — 16,140; Mr. Batchelor — 11,930; and Ms. Hemmer — 11,930. The following number of PSUs have a performance period ending December 31, 2024: Mr. Fish — 47,620; Ms. Rankin — 11,972; Mr. Morris — 14,150; Mr. Batchelor-9,252; and Ms. Hemmer-9,252. OPTION EXERCISES AND STOCK VESTED Name Option Awards Stock Awards Number of Shares Value Realized on Number of Shares Value Realized on Acquired on Exercise(#)('" Exercise ($) Acquired on Vesting (#)02) Vesting ($)(2) James C. Fish, Jr. 140,703 8,044,345 92,617 14,087,509 Devina A. Rankin 16,367 1,245,561 23,156 3,522,143 John J. Morris, Jr. 49,801 2,970,050 25,471 3,874,266 Steven R. Batchelor 19,104 2,905,814 Tara J. Hemmer 19,104 2,905,814 (1) The following number of net shares were received, after withholdings and/or sale of shares to cover option costs and taxes: Mr. Fish — 29,050; Ms. Rankin — 4,317; and Mr. Morris — 10,722. (2) Includes shares of the Company's Common Stock issued on account of PSUs granted in 2020 with a performance period ended December 31, 2022. The determination of achievement of performance results and corresponding vesting of such PSUs was performed by the MD&C Committee in January 2023. Following such determination, shares of the Company's Common Stock earned under this award were issued on February 1, 2023, based on the average of the high and low market price of our Common Stock on that date. 50 I w 2023 Proxy Statement EXECUTIVE COMPENSATION Nonqualified Deferred Compensation in 2022 Amounts that Can be Deferred. Under our 409A Deferral Plan, each of our named executive officers may elect to defer receipt of portions of their base salary and annual cash incentives for the applicable fiscal year in excess of the annual compensation threshold (the "Threshold") established under Section 401(a)(1 7) of IRC. For 2022, the Threshold was $305,000. Such deferrals will result in a deferral of taxation on the amounts deferred. The 409A Deferral Plan provides that a plan participant may defer, for payment at a future date (a) up to 25% of the participant's base salary, and up to 100% of the participant's annual cash incentives, payable after the aggregate of such base salary and annual cash incentives reaches the Threshold; (b) any RSUs that would otherwise be received by the plan participant; and (c) any PSUs that would otherwise be received by the plan participant. Matching Contributions. 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. Timing of Distributions. 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 Executive Registrant Contributions Contributions in Last in Last Fiscal Fiscal Name Year ($)V') Year ($)(2) James C. Fish, Jr. 179,498 144,718 Devina A. Rankin 83,047 64,830 John J. Morris, Jr. 86,409 67,272 Steven R. Batchelor 51,726 23,285 Tara J. Hemmer 104,706 55,749 Aggregate Earnings in Last Fiscal Year ($)03) (1,063,119) (100,059) (430,1 27) (335,804) (112,394) Aggregate Withdrawals/ Distributions ($)(3) 246,594 Aggregate Balance at Last Fiscal Year End ($)(4) 1 7,397,426 689,737 2,420,042 2,445,714 661,797 (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 the case of Mr. Fish, who has deferred receipt of a total of 94,844 shares of Common Stock in prior years, earnings reported in the column above also include the negative change in the closing price per share of the Company's Common Stock from December 31, 2021 to December 31, 2022, plus $2.60 of dividend equivalents paid per share of Common Stock in 2022, multiplied by the number of shares deferred. The dividend equivalents on the deferred shares were paid in cash to Mr. Fish during 2022 and are reflected in the Aggregate Withdrawals/ Distributions column above. The value of Mr. Fish's deferred shares was included in the Option Exercises and Stock Vested table in the years such awards vested. (4) Amounts shown in this column include the following amounts that were reported as compensation to the named executive in the Summary Compensation Table for 2020-2022: Mr. Fish — $654,065; Ms. Rankin — $346,41 5; Mr. Morris—$272,007; Mr. Batchelor—$143,903; and Ms. Hemmer—$350,496. iiint 2023 Proxy Statement I 51 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 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 Exhibit List to the Company's Annual Report on Form 10-K, for the full 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, 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 52 I WWI. 2023 Proxy Statement EXECUTIVE COMPENSATION 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. Retirement of Mr. Batchelor. Mr. Batchelor retired from the Company as of December 31, 2022. No payments were made to Mr. Batchelor as a result of his retirement from the Company. The outstanding PSUs, RSUs and stock options held by Mr. Batchelor will be treated under the retirement provisions of the applicable awards agreements as described immediately above. Explanation of Tabular Disclosure. The following table presents potential payouts to our currently -serving 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, 2022, when the closing price of our Common Stock was $1 56.88 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 2020, 2021 and 2022, based on the difference between the closing price of our Common Stock on December 31, 2022 and the exercise price of those options. • For purposes of calculating the payout of performance share unit awards outstanding as of December 31, 2022, we have assumed that target performance was achieved; 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, 2022. • 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, subject to an age -based reduction provision beginning at age 65. 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 2022 table above for aggregate balances payable to the named executives under our 409A Deferral Plan pursuant to the named executive's distribution elections. iiint 2023 Proxy Statement I 53 EXECUTIVE COMPENSATION Potential Consideration Upon Termination of Employment Mr. Fish Ms. Rankin Mr. Morris Ms. Hemmer 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 performance at end of performance period) • Accelerated vesting of RSUs • Life insurance benefit paid by insurance company (in the case of death) 5,330,084 1,324,676 1,468,878 1,071,535 16,828,518 4,189,951 4,751,895 3,323,032 — 1,067,255 1,600,804 800,402 1,200,000 705,000 732,000 589,000 Total 23,358,602 7,286,882 8,553,577 5,783,969 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) 6,750,000 2,952,400 3,165,960 2,443,400 • Continued coverage under health and welfare benefit plans for two years 29,880 29,880 29,880 29,880 • Prorated payment of PSUs (contingent on actual performance at end of performance period) 8,728,803 2,167,245 2,427,979 1,731,537 • Prorated vesting of RSUs 298,831 448,225 224,112 Total 15,508,683 5,448,356 6,072,044 4,428,929 In Event of Termination Without Cause by the Company or For Good Reason 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) 6,750,000 2,952,400 3,165,960 2,443,400 • Continued coverage under health and welfare benefit plans for two years 29,880 29,880 29,880 29,880 • Accelerated vesting of stock options 5,330,084 1,324,676 1,468,878 1,071,535 • Prorated accelerated payment of PSUs 8,728,803 2,167,245 2,427,979 1,731,537 • Accelerated payment of PSUs replacement grant 8,099,714 2,022,706 2,323,916 1,591,495 • Accelerated vesting of RSUs — 1,067,255 1,600,804 800,402 • Prorated annual cash bonus(') 4,050,000 1,476,200 1,658,360 643,000 Total 32,988,481 11,040,362 12,675,777 8,311,249 (1) Pursuant to the Severance Protection Plan, Ms. Hemmer receives 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 201 7 Employment Agreements. The 201 7 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. 54 I w 2023 Proxy Statement EXECUTIVE COMPENSATION Chief Executive Officer Pay Ratio In 2022, we reconducted our analysis to identify 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"). There have been no changes to the Company's employee population, compensation arrangements, or the circumstances of the Median Employee that the Company believes would significantly impact this pay ratio disclosure and require identification of a new Median Employee. To select the Median Employee, we determined the actual taxable compensation paid to each listed employee in 2021, 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. The Median Employee, a Senior Technician in the U.S., was identified from a list of Company employees as of December 31, 2021. Out of a total worldwide employee population of 48,687 on that date, the list included 47,61 7 employees and excluded the Chief Executive Officer and our 1,069 employees based in India. Approximately 95.7% of these total employees work in the U.S. and approximately 4.3% 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. For 2022, total annual compensation for the Median Employee was $90,521. The annual compensation of our Chief Executive Officer was $14,820,684, for a ratio of 1:164. 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, 2022 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 Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights Equity compensation plans approved by security holders(') 4,330,673(2) Weighted -Average Exercise Price of Outstanding Options and Rights $101.22(3) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans 18,393,883(4) (1) 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. (2) Includes: options outstanding for 2,923,295 shares of Common Stock; 1 78,948 shares of Common Stock to be issued in connection with deferred compensation obligations; 364,772 shares underlying unvested RSUs and 863,658 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 863,658 shares. The total number of shares subject to outstanding awards in the table above includes 279,444 shares on account of PSUs, at target, with the performance period ended December 31, 2022. The determination of achievement of performance results on such PSUs was performed by the MD&C Committee in January 2023, and the Company achieved (a) maximum performance criteria on the TSR PSUs, yielding a 200% payout and (b) above target performance criteria on the Cash Flow PSUs, yielding a 1 50.21 % payout. A total of 322,484 shares of Common Stock were issued on account of such PSUs in February 2023, net of units deferred, of which 184,423 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 note (2) above. (4) The shares remaining available include 2,268,734 shares under our ESPP and 16,1 25,149 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 16,988,787. Vint 2023 Proxy Statement I 55 EXECUTIVE COMPENSATION PAY VERSUS PERFORMANCE We are required to calculate and present the following compensation information in the tabular format prescribed by the SEC. The Compensation Discussion and Analysis and other executive compensation tables above should be read in conjunction with this section to gain a complete understanding of our executive compensation philosophy, programs and decisions. The tables and discussion below refer to an SEC -prescribed calculation of compensation actually paid, referred to as "CAP". However, CAP does not correlate to the total amount of compensation that the executive realized during the year. CAP is a detailed calculation that includes adjustments to Total Compensation as reported in the Summary Compensation Table (the "SCT") to reflect the increase (or decrease) in value of equity compensation over the course of the year, including equity compensation granted in prior years and equity compensation remaining unvested as of year-end. The equity compensation values used to determine CAP are calculated in accordance with ASC Topic 718, based on various methodologies and assumptions. The amount of compensation that the executive will actually realize when such equity awards vest or options are exercised maybe materially different from the amounts used in the CAP calculation. The table below includes our Operating EBITDA annual cash incentive performance measure as the Company Selected Measure ("CSM") that management believes is the most important annual financial performance measure used to link executive pay and Company performance in 2022. This measure is also discussed in our Compensation Discussion and Analysis and is generally defined as the Company's income from operations, excluding depreciation, depletion and amortization, "Restructuring" and "(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net" reported in our Annual Report on Form 10-K, with adjustments discussed in footnote (4) below. Operating EBITDA presented in this proxy statement is a non-GAAP measure and is defined differently than Operating EBITDA reported in the Company's quarterly earnings press release. Pay Versus Performance Table Year 2022 2021 2020 SCT Total to CEO ($) 14,820,684 13,057,363 12,373,925 Average SCT Total for Non -CEO CEO CAPS') NEOs(2) ($) ($) 13,037,001 5,202,091 44,273,994 3,637,383 15,824,928 3,372,614 Value of Initial Fixed $100 Investment Average Based on:(3) Non -CEO Peer CSM: NEOs WM Group Operating CAP(')(2) TSR TSR Net Income EBITDA( ($) ($) ($) ($ in billions) ($ in billions) 4,823,249 145 141 2.238 5.475 10,803,402 152 149 1.816 4.961 4,308,433 105 107 1.496 4.371 (1) To calculate CAP, we made specified adjustments to Total Compensation as reported in the SCT, as set forth below: 56 I w 2023 Proxy Statement EXECUTIVE COMPENSATION Adjustments to CEO's SCT Total Compensation to Calculate CAP: 2022 2021 2020 SCT Total Compensation 14,820,684 13,057,363 12,373,925 Deduction from SCT Total Compensation, in dollars • Grant date fair values of equity awards reported in the "Stock Awards" and "Options Awards" columns in the SCT 9,773,267 9,012,200 9,710,595 Additions to SCT Total Compensation, in dollars: • Fair value of stock awards granted during the year, as of 1 2/31 (a) 9,374,354 17,991,335 7,197,808 • Fair value of option awards granted during the year, as of 1 2/31 (b) 2,335,994 5,585,540 1,458,410 • Change in fair value of prior years' stock awards unvested at 1 2/31 (a) (1 22,282) 7,850,495 3,505,814 • Change in fair value of prior years' option awards unvested at 12/31(b (760,003) 4,652,852 456,153 • Change in fair value of prior years' stock awards vesting during the yea r(a) (960,794) 3,833,674 (313,787) • Change in fair value of prior years' option awards vesting during the yea r(b) (2,533,413) (392,910) 230,831 • Dividend equivalents paid upon stock awards vesting during the year 655,728 707,845 626,369 Total Additions to SCT Total Compensation, in dollars 7,989,584 40,228,831 13,161,598 CAP 13,037,001 44,273,994 15,824,928 Adjustments to Non -CEO NEOs Average SCT Total Compensation to Calculate Average CAP: 2022 2021 2020 SCT Total Compensation 5,202,091 3,637,383 3,372,614 Deduction from SCT Total Compensation, in dollars • Grant date fair values of equity awards reported in the "Stock Awards" and "Options Awards" columns in the SCT 3,280,651 2,082,902 2,276,065 Additions to SCT Total Compensation, in dollars: • Fair value of stock awards granted during the year, as of 1 2/31 (a) 3,264,715 4,098,078 1,687,1 14 • Fair value of option awards granted during the year, as of 12/31 (b) 547,280 1,21 5,672 341,815 • Change in fair value of prior years' stock awards unvested at 1 2/31 (a) (28,052) 1,754,235 939,483 • Change in fair value of prior years' option awards unvested at 12/31(b (176,271) 1,115,185 110,131 • Change in fair value of prior years' stock awards vesting during the year(a) (225,203) 978,948 (65,123) • Change in fair value of prior years' option awards vesting during the year(b) (634,358) (93,948) 73,919 • Dividend equivalents paid upon stock awards vesting during the year 1 53,698 180,751 124,545 Total Additions to SCT Total Compensation, in dollars 2,901,809 9,248,921 3,21 1,884 CAP 4,823,249 10,803,402 4,308,433 (a) Stock awards for all NEOs include annual grants of TSR PSUs and Cash Flow PSUs. The fair value of an unvested TSR PSU is calculated using a multifactor Monte Carlo model, and because total shareholder return is a market condition, projected achievement is embedded in the fair value. The fair value of an unvested Cash Flow PSU is equal to the average of the high and low market price of our Common Stock on the given date; we then multiply the fair value of a Cash Flow PSU by our projection, for accounting purposes, of the probable outcome of the Cash Flow Generation performance measure applicable to such PSUs, based on results to -date and forecast. The following grid summarizes the projected probable outcomes utilized to calculate the value of unvested Cash Flow PSUs at year-end for years prior to the end of the performance period for purposes of CAP: iiint 2023 Proxy Statement I 57 EXECUTIVE COMPENSATION Projected Payout of Unvested Cash Flow PSUs at Year -End 2022 2021 2020 2019 Cash Flow PSUs with 3-year Performance Period Ended 12/31 /2020 200% Cash Flow PSUs with 3-year Performance Period Ended 12/31 /2021 200% 100% Cash Flow PSUs with 3-year Performance Period Ended 12/31 /2022 180% 100% Cash Flow PSUs with 3-year Performance Period Ended 12/31 /2023 200% 200% Cash Flow PSUs with 3-year Performance Period Ended 12/31/2024 100% Stock awards also includes RSUs for Ms. Hemmer that vested in 2020; RSUs for Mr. Batchelor that vested in 2020 and 2021; RSUs that were granted to Mr. Boettcher in 2021; and RSUs that were granted to Ms. Rankin, Mr. Morris, Ms. Hemmer and Mr. Batchelor in 2022. The fair value of an RSU is equal to the average of the high and low market price of our Common Stock on the given date. (b) Option awards include fair values, calculated using a Black-Scholes option pricing model, for stock options granted annually to our NEOs. (2) The Non -CEO NEOs for purposes of the 2022 and 2020 disclosures include Ms. Rankin, Mr. Morris, Mr. Batchelor and Ms. Hemmer. The Non -CEO NEOs for purposes of the 2021 disclosures include Ms. Rankin, Mr. Morris, Mr. Boettcher and Ms. Hemmer. (3) Total shareholder return ("TSR") is based on a hypothetical $100 investment on December 31, 2019. The TSR amounts shown for 2020 represent the value of that $100 investment on December 31, 2020, and TSR is then calculated, on a cumulative basis, as of December 31, 2021 and December 31, 2022. The Peer Group TSR refers to the Dow Jones Waste & Disposal Services Index. (4) When establishing the 2022 compensation performance levels, the MD&C Committee defined Operating EBITDA to exclude the impacts of the Company's recycling brokerage business, which increased net Operating EBITDA results by $7 million. The MD&C Committee did not make any adjustments to the defined calculation of Operating EBITDA for 2021 and 2022. The MD&C Committee approved adjustments to the calculation of Operating EBITDA for 2020 on a basis consistent with the reporting of our 2020 financial results, excluding (a) $155 million of costs related to the acquisition and integration of ADS; (b) $46 million in costs in connection with COVID-19 and (c) $27 million in costs related to strategic initiatives launched in 2020 after the performance measures had been established. Tabular Disclosure of Most Important Measures to Determine 2022 CAP The five items listed below represent the most important measures used to determine CAP for 2022 for all of our NEOs, as each measure and its impact on executive compensation is further described in our Compensation Discussion and Analysis. Most Important Performance Measures TSR Relative to the S&P 500 Cash Flow Generation Operating EBITDA Income from Operations Margin Internal Revenue Growth Narrative Disclosure to Pay Versus Performance Table The following charts reflect the relationship of CAP over the three-year period ended December 31, 2022 to trends in the Company's TSR, net income and operating EBITDA over the same period. In addition, the first chart below reflects that the Company's TSR is highly -aligned with the Peer Group TSR. We believe variations in CAP due to use of ASC Topic 718 fair values for three years of outstanding equity grants at specified points in time have resulted in CAP for the three-year period presented not having a direct correlation to Company performance trends. However, we generally believe our CAP, and our CAP relative to our TSR, net income and operating EBITDA, is reflective of our use of equity incentives that are tied to stock price, strong operational performance and financial results, consistent above -target performance on financial compensation metrics and our TSR relative to 58 I WWI. 2023 Proxy Statement EXECUTIVE COMPENSATION the S&P 500 having exceeded the 50th percentile since 2020. Due to the size of our President and CEO's annual equity incentive award and the fact that nearly three-quarters of our President and CEO's compensation is tied to such equity incentive awards, above target performance has a more pronounced impact on his CAP, relative to our non -CEO NEOs. Operating EBITDA is identified as our CSM because it is assigned the heaviest weighting, at 50%, in our annual cash incentive awards, making it the most important annual financial performance measure used to link executive pay and Company performance in 2022. CAP in Millions $60 $50 $40 $- $60 $50 $40 $30 $20 $10 $- Relationship of CAP to WM TSR and WM TSR to Peer Group TSR 2020 CEO CAP WM TSR 2021 Non -CEO NEO Average CAP Dow Jones Waste & Disposal Services Index TSR 2022 Relationship of CAP to Net Income and Operating EBITDA 2020 CEO CAP Net Income 2021 2022 Non -CEO NEO Average CAP Operating EBITDA $160 $150 $140 $130 $120 $110 $100 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $- TSR (Value of Initial Fixed $100 Investment on 12/31/19) Net Income and Operating EBITDA in Billions 2023 Proxy Statement I 59 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 2023, subject to ratification by our stockholders. Representatives of Ernst & Young LLP will attend the Annual Meeting. They will be able to make a statement if they want, and will be available to answer appropriate questions from stockholders. 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: 2022 2021 Audit Fees Audit -Related Fees Tax Fees (In millions) $6.5 $5.9 0.2 0.3 All Other Fees Total $6.7 $6.2 Audit fees include 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 include assessment services related to the data collection for externally reported ESG information and services related to the implementation of the Company's new enterprise resource planning and human capital management system. 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 2022 and 2021, 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 2023. 60 I WWI.2023 Proxy Statement 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 included in 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 majority 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- year period, link executives' interests with long-term performance and reduce incentives to maximize 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 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. w 2023 Proxy Statement I 61 ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION (ITEM 4 ON THE PROXY CARD) Stockholders are asked to cast an advisory (non -binding) vote on whether future "say on pay" advisory votes should occur every year, every two years or every three years. The Board has determined that an advisory vote on executive compensation that occurs annually is the most appropriate interval. Conducting an advisory vote on executive compensation every year will enhance stockholder communication and provide the Company with regular feedback on its executive compensation practices and philosophy. Accordingly, our Board recommends you vote for a one-year interval for the advisory vote on executive compensation. VOTE REQUIRED FOR APPROVAL The proxy card provides stockholders with the opportunity to choose among four options (holding the vote every year, every two years or every three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the Board's recommendation. The option receiving a majority of the votes cast — every year, every two years or every three years — will be the frequency that stockholders approve. If none of the frequency options receive a majority of the votes cast, the option receiving the greatest number of votes cast will be the frequency that stockholders approve. Because the vote is advisory, it will not be binding upon the Board or the MD&C Committee. However, the MD&C Committee will carefully consider the outcome of the vote when deciding how often to conduct future stockholder advisory votes on executive compensation. FOR THE BOARD RECOMMENDS THAT YOU VOTE FOR THE OPTION OF EVERY YEAR FOR FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION. 62 I w 2023 Proxy Statement APPROVAL OF 2023 STOCK INCENTIVE PLAN (ITEM 5 ON THE PROXY CARD) Stockholders are asked to consider and vote upon a proposal to approve the Company's 2023 Stock Incentive Plan, which we refer to as the 2023 Plan. Upon the recommendation of the MD&C Committee, the Board of Directors approved the 2023 Plan, subject to receipt of stockholder approval at our 2023 Annual Meeting. The Board believes that approval of the 2023 Plan is in the best interests of the Company and its stockholders. The principal features of the 2023 Plan are summarized below. The following summary of the 2023 Plan does not purport to be a complete description of all of the provisions of the 2023 Plan. It is qualified in its entirety by reference to the complete text of the 2023 Plan, which is attached to this Proxy Statement as Appendix A. THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE 2023 STOCK INCENTIVE PLAN. As discussed in our Compensation Discussion and Analysis included in this Proxy Statement, performance -based pay elements, including equity -based awards, are key components of our overall compensation program. As of December 31, 2022, approximately 16.1 million shares remained available for issuance with respect to future grants of awards under our 2014 Stock Incentive Plan (the "2014 Plan"), but our ability to use those shares for new equity -based awards is considerably limited, as the terms of the 2014 Plan prohibit the granting of awards after May 13, 2024. The 2023 Plan is designed to allow the Company to continue to attract and retain highly -qualified persons to serve as officers, non - employee directors and key employees of the Company and/or its affiliates and to align their interests more closely with the interests of the Company's stockholders, as well as provide incentives and reward opportunities designed to enhance the profitable growth of the Company. CERTAIN FEATURES OF THE 2023 PLAN The following features of the 2023 Plan are designed to reinforce the alignment between equity compensation arrangements and stockholders' interests: No Discounting of Stock Options. The 2023 Plan prohibits the granting of stock options and stock appreciation rights with an exercise price less than the fair market value of our Common Stock on the date of grant. No Repricing or Replacement of Underwater Stock Options. The 2023 Plan prohibits, without stockholder approval, actions to amend any outstanding option award to lower the exercise price, cancel and replace any outstanding option award with an option award having a lower exercise price or repurchase any option at any time when the fair market value of the Common Stock is less than the option exercise price. Limitation on Terms of Stock Options. The maximum term of each stock option is ten years. Minimum Vesting Period. The 2023 Plan provides for a minimum vesting period of at least one year for all awards granted under the 2023 Plan, subject to an exception for up to 5% of the total shares authorized for issuance under the 2023 Plan for which our Board of Directors may retain discretion and certain other limited exceptions as set forth in the 2023 Plan. No Dividends on Unearned Awards. The 2023 Plan prohibits payment of dividends or dividend equivalents on outstanding awards until the vesting or performance conditions have been satisfied, although dividends and dividend equivalents may accrue subject to satisfaction of such conditions. No Liberal Definition of "Change in Control." No corporate change or change in control would be triggered solely by stockholder approval of a business combination transaction (see our "Corporate Change" description below). Clawback. All awards granted under the 2023 Plan will be subject to any written clawback policies that the Company has adopted or may adopt in the future, whether required pursuant to or related to any applicable law, government regulation or stock exchange listing. EFFECT OF PROPOSAL ON EXISTING INCENTIVE COMPENSATION PLANS The Company has outstanding equity -based compensation awards under its 2009 Stock Incentive Plan and 2014 Plan. Only our 2014 Plan is currently available for making additional equity -based grants. As of December 31, 2022, 16,1 25,149 iiint 2023 Proxy Statement I 63 shares remained available for issuance pursuant to future grants of awards under our 2014 Plan, assuming that outstanding PSUs payout up to the maximum performance level. This number was subsequently decreased by approximately 963,644 net shares as a result of subsequent adjustments, including (a) a reduction for equity -based awards granted between January 1, 2023 and March 14, 2023, also assuming payout up to the maximum performance level for the newly -granted PSUs, and (b) a credit for the difference between the previously -reserved maximum 200% payout on the PSUs with a performance period ended December 31, 2022 and the actual 175.11% payout in February 2023. The remaining 1 5,161,485 shares as of March 14, 2023, which will be further reduced by one share for every share subject to an equity -based award granted under our 2014 Plan after March 14, 2023 and prior to the date that the 2023 Plan is approved by our stockholders, are referred to as the "Rollover Shares". If our stockholders do not approve the 2023 Plan, then the 2014 Plan will remain in effect in accordance with its terms, although the terms of the 2014 Plan prohibit the granting of new awards after May 13, 2024. Therefore, unless the 2023 Plan is approved by our stockholders, we will be considerably limited in our ability to continue providing equity -based incentive compensation and retention awards. In this event, the MD&C Committee would be required to significantly revise its compensation philosophy and devise other programs to attract, retain and compensate officers, key employees and non -employee directors. If the 2023 Plan is approved by our stockholders, we intend to use the Rollover Shares for the available 2023 Plan share pool and no new awards will be granted under the 2014 Plan. We are not requesting that our stockholders approve shares in addition to the Rollover Shares for issuance pursuant to the 2023 Plan. DETERMINATION OF MAXIMUM AGGREGATE AUTHORIZED SHARES In determining the maximum aggregate number of authorized shares under the 2023 Plan for which stockholder approval is being sought, the MD&C Committee considered a number of factors, including: Number of Eligible Employees. Based on current equity award granting practices, grants would be limited to approximately 1,350 employees (including nine executive officers) and nine non -employee directors under the 2023 Plan. Historical Amounts of Equity Awards. Our three-year annual number of shares granted, calculated on our understanding of the methodology utilized by the Proxy Advisory Services division of Institutional Shareholder Services, Inc. ("ISS"), was approximately 985,000 shares in 2022, 1,154,000 shares in 2021, and 1,168,000 shares in 2020. However, these amounts are not necessarily indicative of the shares that might be awarded in future years under the 2023 Plan. Historical Equity Award Burn Rate. Our three-year average annual equity grant rate, or "burn rate," for the 2020-2022 period, calculated on our understanding of the methodology utilized by ISS, was 0.15%, which was lower than ISS's maximum burn rate guidance of 0.77% for our industry classification. Current and Projected Overhang Percentage. As of December 31, 2022, we had 20,455,822 shares of Common Stock subject to outstanding equity awards or available for future equity awards under our equity compensation plans, which represented approximately 5.02% of nondiluted common shares outstanding, calculated on our understanding of the methodology utilized by ISS. As of March 14, 2023, we had 1,295,115 full value awards issued and outstanding and 3,214,042 stock options outstanding under our equity compensation plans. As of that date, the weighted average exercise price of the outstanding stock options was $11 1.59 and the weighted average remaining term for the outstanding stock options was 6.90 years. The 19,670,642 shares of Common Stock subject to outstanding equity awards or available for future equity awards as of March 14, 2023 represented approximately 4.84% of nondiluted common shares outstanding. As of March 14, 2023, a total of 406,767,204 shares of Common Stock were outstanding. As of March 14, 2023, 1 5,161,485 shares remained available for issuance pursuant to future grants under our 2014 Plan. Anticipated Duration. If we continue making equity awards consistent with our practices over the past three years as set forth above, we estimate that the Rollover Shares will be sufficient for 2023 Plan awards for at least three years. However, the three-year estimate provided in the preceding sentence is provided for illustrative purposes only and the MD&C Committee retains the discretion to change its grant practices, subject to the limits set forth in the 2023 Plan. SUMMARY OF PRINCIPAL FEATURES OF THE 2023 PLAN Eligibility. Awards may be granted under the 2023 Plan only to persons who, at the time of grant, are employees or service providers of the Company or its affiliates and non -employee directors. Incentive stock options may be granted only to employees of the Company or its affiliates. 64 I WWI. 2023 Proxy Statement Administration. The 2023 Plan may be administered by the MD&C Committee or by such other committee comprised of two or more non -employee directors appointed by the Board to administer the 2023 Plan (the MD&C Committee, or such other duly appointed committee, referred to for purposes of this proposal as the "MD&C Committee"). Subject to the terms of the 2023 Plan, the MD&C Committee shall have total and exclusive responsibility to control, operate, manage and administer the 2023 Plan in accordance with its terms, including, without limitation, selecting the individuals to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards. The 2023 Plan generally gives the MD&C Committee broad authority, subject to the terms of the 2023 Plan, to enable it to discharge its responsibilities with respect to the 2023 Plan and, subject to certain limitations, delegate such authority to certain of our officers. Number of Authorized Shares. The aggregate maximum number of shares of Common Stock that may be issued under the 2023 Plan, and the aggregate maximum number of shares of Common Stock that may be issued under the 2023 Plan through Incentive Stock Options, shall be equal to the number of Rollover Shares. In the discretion of the MD&C Committee, the shares of Common Stock issuable under the 2023 Plan will consist of authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares. As of March 14, 2023, a total of 406,767,204 shares of Common Stock were outstanding. Shares shall be deemed to have been issued under the 2023 Plan only to the extent actually issued and delivered pursuant to an award. To the extent that an award lapses or the rights of its holder terminate, any shares of Common Stock subject to such award shall again be available for the grant of an award under the 2023 Plan. Shares issued under the 2023 Plan (or under the 2014 Plan) that are forfeited back to the 2023 Plan, shares subject to any award (or any award under the 2014 Plan) that expires, is cancelled or settled for cash, in each case, to the extent of such forfeiture, expiration, cancellation or cash settlement, such shares shall be added to the shares available for awards under the 2023 Plan on a one -for -one basis. Shares (a) surrendered in payment of the exercise price or purchase price of an award, (b) shares withheld for payment of applicable employment taxes and/or withholding obligations associated with an award, (c) shares subject to a stock appreciation right that are not issued in connection with its stock settlement on exercise thereof, and (d) shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of options, in all such cases, shall not be added back to the 2023 Plan and shall not again be available for the grant of an award under the 2023 Plan. In addition, the number of shares authorized under the 2023 Plan is subject to adjustment in the case of corporate events such as recapitalizations, stock splits and stock dividends, as described below. Shortly following approval of the 2023 Plan, the Company will file a post -effective amendment to the Form S-8 Registration Statement for the 2014 Plan, indicating that such registration statement will also cover the issuance of the Rollover Shares under the 2023 Plan. Limits on Awards to Non -Employee Directors. The aggregate grant date fair value (computed in accordance with generally accepted accounting principles in the United States) of all awards granted to any non -employee director during any single calendar year, plus the total cash compensation paid to such non -employee director for services rendered for such calendar year shall not exceed $1,000,000; provided however, that this limitation shall not apply to any amounts, including any severance, consulting fees or similar fees, paid to a non -employee director for prior or current service as an employee or consultant of the Company. Adjustments for Capital Structure Changes. If the Company recapitalizes, reclassifies its capital stock, otherwise changes its capital structure, effects a subdivision or consolidation of shares of Common Stock or pays a stock dividend on Common Stock without receipt of consideration by the Company, the number and class of shares of Common Stock or other property covered by an award and the purchase price per share of Common Stock or other consideration subject to such award shall be equitably adjusted as set forth in the 2023 Plan. In addition, the MD&C Committee may, at its discretion, make adjustments to awards upon certain other non -ordinary distributions or changes in capitalization. Minimum Vesting Period. All equity -based awards granted under the 2023 Plan shall vest no earlier than the first anniversary of the date the award is granted (excluding, for this purpose, any (a) substitute awards and (b) shares delivered in lieu of fully vested cash awards). Notwithstanding the foregoing, such minimum vesting periods shall not apply to awards involving an aggregate number of shares of Common Stock not in excess of 5% of the total shares authorized for issuance under the 2023 Plan. No Repricing or Repurchase of Underwater Options. The MD&C Committee may not, without approval of the stockholders of the Company, amend any outstanding option agreement to lower the exercise or grant price of a stock option, cancel and replace any outstanding option agreement with an option agreement having a lower exercise or grant price, exchange Vint 2023 Proxy Statement I 65 any outstanding option agreement for cash or for another award, or repurchase any option at a time when the fair market value of the Common Stock is less than the exercise or grant price, except in each case, in the event of a reorganization or recapitalization event, as set forth in the 2023 Plan. Clawback. All awards granted under the 2023 Plan will be subject to any written clawback policies that the Company has adopted or may adopt in the future, whether required pursuant to or related to any applicable law, government regulation or stock exchange listing. Transferability. Awards are generally not transferable other than (a) by will or the laws of descent and distribution, (b) pursuant to a qualified domestic relations order as defined by the IRC or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, or (c) with the consent of the MD&C Committee. Awards may not be transferred to a third party financial institution for value. Performance -based vesting. All awards granted under the 2023 Plan may be designed to vest upon the satisfaction of performance conditions as well as service -based vesting conditions. The MD&C Committee shall have sole discretion over determining the appropriate vesting conditions for any award granted pursuant to the 2023 Plan. TYPES OF AWARDS The 2023 Plan permits the granting of any or all of the following types of awards: Stock Options. Stock options entitle the holder to purchase a specified number of shares of Common Stock at a specified price (the exercise price), subject to the terms and conditions of the stock option grant. The MD&C Committee may grant either incentive stock options, which must comply with Section 422 of the IRC, or nonqualified stock options. The MD&C Committee sets exercise prices and terms, except that stock options must be granted with an exercise price not less than 100% of the fair market value of the Common Stock on the date of grant. In addition, if the recipient of an incentive stock option is a 10% or greater stockholder, the exercise price for the incentive stock option may not be less than 1 10% of the fair market value on the date of grant. Fair market value generally means, as of a given date, the average of the highest and lowest sales price per share of such Common Stock on the New York Stock Exchange. At the time of grant, the MD&C Committee determines the terms and conditions of stock options, including the quantity, exercise price, vesting and forfeiture conditions, term (which cannot exceed ten years) and other conditions on exercise. Stock Appreciation Rights. The MD&C Committee may grant stock appreciation rights, or SARs, as a right in tandem with the number of shares underlying stock options granted under the 2023 Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a combination of stock and cash, as determined by the MD&C Committee, equal to the excess of the share's fair market value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price of the related stock option and the grant price for a freestanding SAR is determined by the MD&C Committee in accordance with the procedures described above for stock options. Exercise of an SAR issued in tandem with a stock option will reduce the number of shares underlying the related stock option to the extent of the SAR exercised. At the time of grant, the MD&C Committee determines the terms and conditions of SARs, including the quantity, grant price, vesting and forfeiture conditions, term and other conditions on exercise. Restricted Stock. A restricted stock award is a grant of shares of Common Stock subject to a risk of forfeiture, restrictions on transferability, or any other restrictions imposed by the MD&C Committee in its discretion. Aside from the risk of forfeiture and non -transferability, an award of restricted stock will entitle the participant to the rights of a stockholder, including the right to vote the shares and to receive accruals for dividends (although no dividends will actually become payable unless the underlying restricted stock award becomes vested). Restricted Stock Units. Restricted stock units are rights to receive Common Stock, cash, or a combination of both at the end of a specified period. Settlement of restricted stock units will occur upon vesting or upon expiration of any applicable deferral period specified for such awards by the MD&C Committee. Phantom Stock. Phantom stock awards are rights to receive the fair market value of a share of Common Stock, or rights to receive an amount equal to any appreciation or increase in the fair market value of Common Stock over a specified period of time, which vest over a period of time as established by the Committee. Phantom stock awards may be designed as SARs, as described above. 66 I WWI. 2023 Proxy Statement BonusStockAwards. Bonus stock awards may be granted to any eligible person as a bonus, as additional compensation, or in lieu of cash compensation any such eligible person is otherwise entitled to receive, in such amounts and subject to such other terms as the MD&C Committee in its discretion determines to be appropriate. Cash Awards. Cash awards may be granted to any eligible person on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the 2023 Plan. The MD&C Committee shall determine the amount and terms of the award as it deems appropriate. Other Stock -Based Awards. Other stock -based awards may be granted to any eligible person. Subject to applicable legal limitations and the terms of the 2023 Plan, other stock -based awards shall be related to Common Stock (in terms of being valued, denominated, paid or otherwise defined by reference to Common Stock). Such other stock -based awards may include, but are not limited to, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock, awards with value and payment contingent upon performance of the company or any other factors designated by the MD&C Committee. EFFECT OF A CORPORATE CHANGE In the event of a Corporate Change (as defined below), the MD&C Committee shall, in connection with such Corporate Change, take one of the following actions with respect to outstanding awards under the 2023 plan (which may vary among participants and awards), which such actions may be taken without the consent of any participant or holder of an award: (a) accelerate the time at which stock options or SARs then outstanding may be exercised so that such awards may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the MD&C Committee, after which specified date all such unexercised awards and all rights of participants thereunder shall terminate; (b) require the mandatory surrender to the Company by all or selected participants of some or all of the outstanding stock options or SARs held by such participants (irrespective of whether such awards are then exercisable under the provisions of the 2023 Plan) as of a date, before or after such Corporate Change, specified by the MD&C Committee, in which event the MD&C Committee shall thereupon cancel such awards and the Company shall pay (or cause to be paid) to each participant an amount of cash per share equal to the excess, if any, of Change of Control Value (as defined in the 2023 Plan) of the shares subject to such awards over the exercise price(s) under such awards for such shares; or (c) make such adjustments in the number and type of shares (or other securities or property) subject to outstanding awards as the MD&C Committee deems appropriate to reflect such Corporate Change and prevent the dilution or enlargement of rights, including, without limitation, adjusting such an award to provide that the number and class of shares of Common Stock covered by such award shall be adjusted so that such award shall thereafter cover securities of the surviving or acquiring corporation or other property (including, without limitation, cash) as determined by the MD&C Committee in its sole discretion. The 2023 Plan deems a "Corporate Change" to have occurred if (a) the Company shall not be the surviving entity in any consummated merger, consolidation or other business combination or reorganization (or survives only as a subsidiary of an entity), (b) the Company sells, leases, or exchanges all or substantially all of its assets to any other person or entity, (c) the Company is dissolved and liquidated, (d) any person or entity, including a "group" (as contemplated by section 13(d)(3) of the Exchange Act) acquires or gains ownership or control (including, without limitation, the power to vote) of more than 50% of the outstanding shares of the Company's voting stock (based upon voting power), or (e) as a result of or in connection with a contested election of directors of the Company, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board of Directors. TERM, TERMINATION AND AMENDMENT OF THE 2023 PLAN Our Board of Directors in its discretion may terminate the 2023 Plan at any time with respect to any shares of Common Stock for which awards have not been granted. The Board of Directors shall have the right to alter or amend the 2023 Plan or any part thereof from time to time; provided that, unless otherwise provided for in the 2023 Plan, no change in the 2023 Plan may be made that would materially impair the rights of a participant with respect to an outstanding award without the consent of the participant, and the Board of Directors may not, without approval of the stockholders of the Company, (a) amend the 2023 Plan to increase the aggregate maximum number of shares that may be issued under the 2023 Plan, increase the aggregate maximum number of shares that may be issued under the 2023 Plan through Incentive Stock Options, or change the class of individuals eligible to receive awards under the 2023 Plan or (b) amend or delete the restriction on repricing of options. iiint 2023 Proxy Statement I 67 NEW PLAN BENEFITS AND PREVIOUS AWARDS A new plan benefits table for the 2023 Plan and the benefits or amounts that would have been received by or allocated to participants for the last completed fiscal year under the 2023 Plan if the 2023 Plan was then in effect, as described in the SEC's proxy rules, are not provided because all awards made under the 2023 Plan will be made at the MD&C Committee's discretion, subject to the terms of the 2023 Plan. Therefore, the benefits and amounts that will be received or allocated under the 2023 Plan are not determinable at this time, and a New Plan Benefits Table has not been provided. In 2022, we granted awards under the 2014 Plan to our named executive officers, non -employee directors and to other eligible employees. The 2022 grants to the named executive officers are reflected in the Grants of Plan -Based Awards table above. The equity grant program for our non -employee directors is described under the Non -Employee Director Compensation section in this Proxy Statement. FEDERAL INCOME TAX INFORMATION The following is a brief summary of the U.S. federal income tax consequences of the 2023 Plan generally applicable to the Company and to participants in the 2023 Plan who are subject to U.S. federal taxes. The summary is based on the IRC, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws. The specific tax consequences to a participant will depend upon a participant's individual circumstances. Nonqualified Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of our Common Stock on the date of grant and no additional deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The participant's tax basis for the Common Stock acquired under a nonqualified stock option will be equal to the exercise price paid for such Common Stock, plus any amounts included in the participant's income as compensation. Incentive Stock Options. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment with us or a 50%-or-more owned subsidiary or within three months after such employment ends (12 months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes. However, the amount by which the fair market value of Common Stock on the exercise date of an incentive stock option exceeds the exercise price generally will constitute an item that increases the participant's "alternative minimum taxable income." The federal alternative minimum tax may produce significant tax repercussions depending upon the participant's particular tax status. In addition, to the extent that the fair market value (determined as of the date of grant) of the Common Stock with respect to which the participant's incentive stock options are exercisable for the first time during any year exceeds $100,000, the incentive stock options for the Common Stock over $100,000 will be treated as nonqualified stock options, and not incentive stock options for federal tax purposes. The tax consequences of an untimely exercise of an incentive stock option will be determined in accordance with rules applicable to nonqualified stock options, discussed below. If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a "disqualifying disposition," and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant's gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be. The participant's basis in the Common 68 I WWI. 2023 Proxy Statement Stock will be increased by an amount equal to the amount treated as ordinary income due to such disqualifying disposition. In this case, we may claim an income tax deduction at the time of the disqualifying disposition for the amount taxable to the participant as ordinary income. With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of Common Stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant. Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of an SAR with a grant price at least equal to the fair market value of our Common Stock on the date of grant and no additional deferral feature. Upon the exercise of an SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR. Restricted Stock Awards, Restricted Stock Unit Awards and Phantom Stock Awards. A participant generally will not have taxable income upon the grant of restricted stock, restricted stock units or phantom stock awards. Instead, the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock awards only, a participant may instead elect under Section 83(b) of the IRC within 30 days of the date of transfer of the restricted shares to be taxed at ordinary income tax rates on the full fair market value of the restricted shares over the purchase price, if any, of such shares. If the election is made, the basis of the shares so acquired will be equal to the fair market value at the time of grant plus the purchase price (if any) paid by the participant. No tax will be payable upon the subsequent lapse or release of the restrictions, and any gain or loss upon disposition will be a capital gain or loss. Unrestricted Stock Awards (Bonus stock). Upon receipt of an unrestricted stock award, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid by the participant with respect to the shares. Other Stock or Cash -Based Awards. The U.S. federal income tax consequences of other stock or cash -based awards will depend upon the specific terms of each award. Tax Consequences to the Company. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an "excess parachute payment" within the meaning of Section 280G of the IRC and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m) of the IRC. Code Section 409A. Certain awards under the 2023 Plan may be considered "nonqualified deferred compensation" subject to Code Section 409A, which imposes additional requirements on the payment of deferred compensation. Generally, options and SARs with an exercise price at least equal to the fair market value of the underlying Common Stock on the date of grant and restricted stock will not be considered deferred compensation if such awards do not include any other feature providing for the deferral of compensation. Failure to follow the provisions of Code Section 409A can result in taxation to the grantee of a 20% additional tax and interest on the taxable amount and, depending on the state, additional state taxes. We intend that awards granted under the 2023 Plan comply with, or otherwise be exempt from, Code Section 409A, but make no representation or warranty to that effect. Employment Tax. In general, the amount that a participant recognizes as ordinary income under an award also is treated as "wages" for purposes of the Federal Insurance Contributions Act ("FICA"). The participant and the company must pay equal amounts of federal employment tax under FICA with respect to the participant's wages. Such amounts are subject to tax withholding by us. Tax Withholding. We are authorized to deduct or withhold from any award granted or payment due under the 2023 Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We are not required to issue any shares of Common Stock or otherwise settle an award under the 2023 Plan until all tax withholding obligations are satisfied. Vint 2023 Proxy Statement I 69 VOTE REQUIRED FOR APPROVAL Approval of the 2023 Plan 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 RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE 2023 STOCK INCENTIVE PLAN. 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. 70 I w 2023 Proxy Statement APPENDIX A WASTE MANAGEMENT, INC. 2023 STOCK INCENTIVE PLAN I. PURPOSE OF THE PLAN The purpose of the WASTE MANAGEMENT, INC. 2023 STOCK INCENTIVE PLAN (the "Plan") is to provide a means through which WASTE MANAGEMENT, INC., a Delaware corporation (the "Company"), and its Affiliates may attract and retain able persons to serve as Directors or Consultants or to enter the employ of the Company and its Affiliates and to provide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company and its Affiliates rest, and whose present and potential contributions to the Company and its Affiliates are of importance, can acquire and maintain stock ownership or other awards, thereby strengthening their concern for the welfare of the Company and its Affiliates and their desire to remain employed by, or continue providing services to, the Company and its Affiliates. A further purpose of the Plan is to provide such individuals with additional incentive and reward opportunities designed to enhance the profitable growth of the Company and its Affiliates. Accordingly, the Plan provides for granting Incentive Stock Options, Options that do not constitute Incentive Stock Options, Restricted Stock Awards, Restricted Stock Unit Awards, Phantom Stock Awards, Bonus Stock Awards, Cash Awards, Other Stock -Based Awards or any combination of the foregoing, as is best suited to the circumstances of the particular Eligible Person as provided herein. II. DEFINITIONS The following definitions shall be applicable throughout the Plan unless specifically modified by any paragraph: (a) "Affiliate" means any corporation, partnership, limited liability company or partnership, association, trust, or other organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. (b) "Award" means, individually or collectively, any Option, Restricted Stock Award, Restricted Stock Unit Award, Phantom Stock Award, Bonus Stock Award, Cash Award or Other Stock -Based Award. (c) "Award Agreement" means, a written agreement between the Company and a Participant with respect to an Award, which may also be in electronic form. (d) "Board" means the Board of Directors of the Company. (e) "Bonus Stock Award" means an Award granted under Paragraph XI of the Plan. (f) "Bonus Stock Award Agreement" means a written agreement between the Company and a Participant with respect to a Bonus Stock Award. (g) "Cash Award" means an Award denominated in cash granted under Paragraph XII. (h) "Change of Control Value" shall have the meaning assigned to such term in Paragraph XIV(c) of the Plan. (i) "Code" means the Internal Revenue Code of 1986, as amended from time to time. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section. (j) "Committee" means the Management Development and Compensation Committee of the Board or such other committee that is selected by the Board, in conformance with Paragraph IV(a). (k) "Common Stock" means the common stock, par value $0.01 per share, of the Company, or any security into which such common stock may be changed by reason of any transaction or event of the type described in Paragraph XIV. (l) "Company" means Waste Management, Inc., a Delaware corporation. iiN'o 2023 Proxy Statement I A-1 (m) "Consultant" means any person who is not an Employee or a Director and who is providing advisory or consulting services to the Company or any Affiliate. (n) "Corporate Change" shall have the meaning assigned to such term in Paragraph XIV(c) of the Plan. (o) "Director" means an individual who is a member of the Board, or, where the context of the Plan so permits, a member of the board of directors (or any analogous governing body) of an Affiliate of the Company. (p) "Dividend Equivalents" means an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable by the Company on one share of Common Stock to stockholders of record, which, in the discretion of the Committee, may be awarded in connection with any Award (except for an Option or Stock Appreciation Right) under the Plan on a like number of shares of Common Stock under such Award. (q) "Effective Date" shall have the meaning assigned to such term in Paragraph III. (r) "Eligible Person" means any individual who, as of the date of grant of an Award, is an officer or Employee of the Company or of any Affiliate, and any other person who provides services to the Company or any Affiliate, including Directors of the Company; provided, however, that, any such individual must be an "employee" of the Company or any of its parents or subsidiaries within the meaning of General Instruction A.1(a) to Form S-8 if such individual is granted an Award that may be settled in Common Stock. An Employee on leave of absence may be an Eligible Person. (s) "Employee" means any person (including a Director) in an employment relationship with the Company or any Affiliate. (t) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (u) "FairMarket Value" means, as to a share of Common Stock, as of a particular date, (i) if shares of Common Stock are listed on a national securities exchange, the average of the highest and lowest sales price per share of such Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (ii) if shares of Common Stock are not so listed but are quoted by The Nasdaq Stock Market, Inc., the average of the highest and lowest sales price per share of Common Stock reported on the consolidated transaction reporting system for The Nasdaq Stock Market, Inc., or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing as quoted by The Nasdaq Stock Market, Inc. on that date, (iii) if shares of Common Stock are not so listed or quoted, the average of the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations are available, as reported by The Nasdaq Stock Market, Inc., or, if not reported by The Nasdaq Stock Market, Inc., by the National Quotation Bureau Incorporated or (iv) if shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose or any other valuation deemed to be consistent with the requirements of the Nonqualified Deferred Compensation Rules. (v) "Forfeiture Restrictions" shall have the meaning assigned to such term in Paragraph VIII(a) of the Plan. (w) "Incentive Stock Option" means an incentive stock option within the meaning of Section 422 of the Code. (x) "Nonqualified Deferred Compensation Rules" means the limitations and requirements of Section 409A of the Code, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto. (y) "Option" means an Award granted under Paragraph VII of the Plan and includes both Incentive Stock Options to purchase Common Stock and Options that do not constitute Incentive Stock Options to purchase Common Stock. (z) "Option Agreement" means a written agreement between the Company and a Participant with respect to an Option. (aa) "OtherStock-Based Award" means an Award granted to an Eligible Person under Paragraph XIII. (bb) "Participant" means an Eligible Person who has been granted an Award. (cc) "Phantom Stock Award" means an Award granted under Paragraph X of the Plan. (dd) "Phantom Stock Award Agreement" means a written agreement between the Company and a Participant with respect to a Phantom Stock Award. A-2 I wit 2023 Proxy Statement (ee) "Plan" means the Waste Management, Inc. 2023 Stock Incentive Plan, as amended from time to time. (ff) "PriorPlan" means the Waste Management, Inc. 2014 Stock Incentive Plan. (gg) "Qualified Member" means a member of the Board who is (i) a "non -employee director" within the meaning of Rule 16b-3(b)(3), and (ii) "independent" under the listing standards or rules of the securities exchange upon which the Common Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules. (hh) "Restricted Stock Agreement" means a written agreement between the Company and a Participant with respect to a Restricted Stock Award. (ii) "Restricted Stock Award" means an Award granted under Paragraph VIII of the Plan. (jj) "Restricted Stock Unit Award" means an Award granted under Paragraph IX of the Plan. (kk) "Restricted Stock Unit Award Agreement" means a written agreement between the Company and a Participant with respect to a Restricted Stock Unit Award. (ll) "RSUs" shall have the meaning assigned to such term in Paragraph IX(a) of the Plan. (mm) "Rule 16b-3" means Securities Exchange Commission Rule 16b-3 promulgated under the Exchange Act, as such may be amended from time to time, and any successor rule, regulation, or statute fulfilling the same or a similar function. (nn) "Section 409A Payment Date" shall have the meaning assigned to such term in Paragraph XVI(g) of the Plan. (oo) "SecuritiesAct" means the Securities Act of 1933, as amended from time to time, including the guidance, rules and regulations promulgated thereunder and successor provisions, guidance, rules and regulations thereto. (pp) "Stock Appreciation Right" means a right to acquire, upon exercise of the right, Common Stock and/or, in the sole discretion of the Committee, cash having an aggregate value equal to the then excess of the Fair Market Value of the shares with respect to which the right is exercised over the exercise price therefor. The Committee shall retain final authority to determine whether a Participant shall be permitted, and to approve an election by a Participant, to receive cash in full or partial settlement of a Stock Appreciation Right. (qq) "Substitute Awards" shall mean Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any subsidiary or with which the Company or any subsidiary combines. III. EFFECTIVE DATE AND DURATION OF THE PLAN The Plan shall become effective following (a) its adoption by the Board and (b) its approval by the stockholders of the Company within 12 months of such adoption in a manner that satisfies the requirements of Section 422 of the Code and the regulations thereunder (the "Effective Date"). Notwithstanding any provision in the Plan to the contrary, no Option shall be exercisable, no Restricted Stock Award, Bonus Stock Award, Cash Award, or Other Stock -Based Award shall be granted, and no Restricted Stock Unit Award or Phantom Stock Award shall vest or become satisfiable prior to the Effective Date. No further Awards may be granted under the Plan after 10 years from the Effective Date. The Plan shall remain in effect until all Options granted under the Plan have been exercised or expired, all Restricted Stock Awards granted under the Plan have vested or been forfeited, and all Restricted Stock Unit Awards, Phantom Stock Awards, Bonus Stock Awards, Cash Awards, and Other Stock -Based Awards have been settled, forfeited, or expired. IV. ADMINISTRATION (a) Composition of Committee. The Plan shall be administered by a committee of, and appointed by, the Board that shall be comprised solely of two or more Qualified Members. (b) Powers. Subject to the express provisions of the Plan, the Committee shall have authority, in its discretion, to determine which Eligible Persons shall receive an Award, the time or times when such Award shall be made, the type of Award that shall be made, the number of shares of Common Stock to be subject to each Option, Restricted Stock Award, or Bonus Stock Award, and the number of shares of Common Stock to be subject to or the value of each Restricted Stock Unit Award, Phantom Stock Award, or Other Stock -Based Award. In making such determinations the Committee shall take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contribution to the Company's success, and such other factors as the Committee in its sole discretion shall deem relevant. iiN'o 2023 Proxy Statement I A-3 (c) Additional Powers. The Committee shall have such additional powers as are delegated to it by the other provisions of the Plan. Subject to the express provisions of the Plan, this shall include the power to construe the Plan and the respective agreements executed hereunder, to prescribe, amend, suspend or waive rules and regulations relating to the Plan, to determine the terms, restrictions, and provisions of the agreement relating to each Award, including such terms, restrictions, and provisions as shall be requisite in the judgment of the Committee to cause designated Options to qualify as Incentive Stock Options, and to make all other determinations necessary or advisable for administering the Plan. The Committee may, in its discretion, amend the terms of any Award Agreement provided the amendment (i) is not adverse to the Participant, or (ii) is consented to by the Participant. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any agreement relating to an Award in the manner and to the extent the Committee shall deem expedient to carry the Plan or any such agreement into effect. All determinations and decisions made by the Committee on the matters referred to in this Paragraph IV and in construing the provisions of the Plan shall be conclusive. (d) Delegation of Authority by the Committee. Notwithstanding the preceding provisions of this Paragraph IV or any other provision of the Plan to the contrary, subject to the constraints of applicable law, the Committee may from time to time, in its sole discretion, delegate to the Chief Executive Officer of the Company (the "CEO") the administration (or interpretation of any provision) of the Plan, and the right to grant Awards under the Plan, insofar as such administration (and interpretation) and power to grant Awards relates to any person who is not then subject to Section 16 of the Exchange Act (including any successor section to the same or similar effect). Any such delegation may be effective only so long as the CEO is a member of the Board, and the Committee may revoke such delegation at any time. The Committee may put any conditions and restrictions on the powers that may be exercised by the CEO upon such delegation as the Committee determines in its sole discretion. In the event of any conflict in a determination or interpretation under the Plan as between the Committee and the CEO, the determination or interpretation, as applicable, of the Committee shall be conclusive. (e) Authority as to Non -Employee Directors. The Committee's actions respecting grants of Awards to non -employee Directors shall be in accordance with Board approval. (f) Liability. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or Employee of the Company or any Affiliate, the Company's legal counsel, independent auditors, Consultants or any other agents assisting in the administration of the Plan. No member of the Committee or its delegatee shall be liable for actions or inactions under the Plan except for willful misconduct or as expressly provided by law. (g) Participants in Non-U.S. Jurisdictions. Notwithstanding any provision of the Plan to the contrary, to comply with applicable laws in countries other than the United States in which the Company or any Affiliate operates or has employees, directors, or other service providers from time to time, or to ensure that the Company complies with any applicable requirements of foreign securities exchanges, the Committee, in its sole discretion, shall have the power and authority to: (i) determine which of the Affiliates shall be covered by the Plan; (ii) determine which Employees, Directors, or other service providers outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to any Employees, Directors, or other service providers outside the United States to comply with applicable foreign laws or listing requirements of any foreign exchange; (iv) establish sub -plans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such sub -plans and/or modifications shall be attached to the Plan as appendices), provided, however, that no such sub -plans and/or modifications shall increase the share limitations contained in Paragraph V; and (v) take any action, before or after an Award is granted, that it deems advisable to comply with any applicable governmental regulatory exemptions or approval or listing requirements of any such foreign securities exchange. For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof. V. SHARES SUBJECT TO THE PLAN; AWARD LIMITS; GRANT OF AWARDS (a) Shares Subject to the Plan and Award Limits. Subject to adjustment in the same manner as provided in Paragraph XIV with respect to shares of Common Stock subject to Options then outstanding, and subject to adjustment as provided in this Paragraph, the aggregate maximum number of shares of Common Stock that may be issued under the Plan, and the aggregate maximum number of shares of Common Stock that may be issued under the Plan through Incentive Stock Options, shall not exceed 1 5,161,485 shares, which will be further reduced by one share for every share A-4 I wit 2023 Proxy Statement subject to an equity -based award granted under our Prior Plan after March 14, 2023 and prior to the effective date of the Plan. No new awards will be granted under the Prior Plan. Shares shall be deemed to have been issued under the Plan only to the extent actually issued and delivered pursuant to an Award. To the extent that an Award lapses or the rights of its holder terminate, any shares of Common Stock subject to such Award shall again be available for the grant of an Award under the Plan. In addition, shares issued under the Plan (or under the Prior Plan) that are forfeited back to the Plan, shares subject to any Award (or any award under the Prior Plan) that expires, is cancelled or settled for cash, in each such case, to the extent of such forfeiture, expiration, cancellation or cash settlement, such shares shall be added to the shares available for Awards under the Plan on a one -for -one basis. Shares (i) surrendered in payment of the exercise price or purchase price of an Award, (ii) shares withheld for payment of applicable employment taxes and/or withholding obligations associated with an Award, (iii) shares subject to a Stock Appreciation Right that are not issued in connection with its stock settlement on exercise thereof, and (iv) shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options, in all such cases, shall not be added back to the Plan and shall not again be available for the grant of an Award under the Plan. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with generally accepted accounting principles in the United States) of all Awards granted to any non -employee Director during any single calendar year, plus the total cash compensation paid to such non -employee Director for services rendered for such calendar year, shall not exceed $1,000,000; provided, however, that this limitation shall not apply to any amounts, including any severance, consulting fees or similar fees, paid to a non -employee Director for prior or current service as an employee or consultant of the Company; and provided, further, that any deferred compensation shall be counted for purposes of this limitation in the year it is first earned regardless of when paid or settled. (b) Grant of Awards. The Committee may from time to time grant Awards to one or more Eligible Persons. (c) General Terms of Awards. Awards granted under the Plan may, in the absolute discretion of the Committee, be granted either alone, in addition to, or in tandem with any other Award. In the event dividends or Dividend Equivalents are awarded in connection with any Award, such dividends or Dividend Equivalents shall be accrued in a bookkeeping account on behalf of the Participant during all applicable vesting periods and will be settled only in conjunction with the settlement of the underlying Award (or vested portion thereof). In addition, the Committee may, in its absolute discretion impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Paragraph IV), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including subjecting such awards to service- or performance -based vesting conditions. Without limiting the scope of the preceding sentence, with respect to any performance -based conditions, (i) the Committee may use one or more business criteria or other measures of performance as it may deem appropriate in establishing any performance goals applicable to an Award, (ii) any such performance goals may relate to the performance of the Participant, the Company (on a consolidated basis), or to specified subsidiaries, business or geographical units or operating areas of the Company, (iii) the performance period or periods over which performance goals will be measured shall be established by the Committee, and (iv) any such performance goals and performance periods may differ among Awards granted to any one Participant or to different Participants. To the extent provided in an Award Agreement, the Committee may exercise its absolute discretion to reduce or increase the amounts payable under any Award. (d) Stock Offered. Subject to the limitations set forth in Paragraph V(a), the stock to be offered pursuant to the grant of an Award may be authorized but unissued Common Stock or Common Stock previously issued and outstanding and reacquired by the Company. Any of such shares that remain unissued and that are not subject to outstanding Awards at the termination of the Plan shall cease to be subject to the Plan but, until termination of the Plan, the Company shall at all times make available a sufficient number of shares to meet the requirements of the Plan. The shares of the Company's stock to be issued pursuant to any Award may be represented by physical stock certificates or may be uncertificated. Notwithstanding references in the Plan to certificates, the Company may deliver uncertificated shares of Common Stock in connection with any Award. (e) Acquired Companies. If a company is acquired by or combined with the Company and has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available under such pre-existing plan (as adjusted, to the extent appropriate) may be used for Awards under the Plan and shall not reduce the shares of Common Stock authorized for issuance under the Plan. Awards using such available shares shall be made prior to the date that awards could have been made under the pre-existing plan and shall be made to individuals who were not Eligible Persons prior to such acquisition or combination. Moreover, shares of iiN'o 2023 Proxy Statement I A-5 Common Stock respecting Awards granted upon the assumption of, or in substitution or exchange for, awards outstanding under such pre-existing plan shall not reduce the shares of Common Stock authorized for issuance under the Plan (f) Minimum Vesting Periods. Subject to Paragraph XIV, any equity -based Award (or portion thereof) granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted (excluding, for this purpose, any (i) Substitute Awards and (ii) shares delivered in lieu of fully vested cash Awards); provided, however, that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the shares of Stock available pursuant to Paragraph V(a) (subject to adjustment pursuant to Paragraph XIV) may be granted to any one or more Eligible Persons without respect to and/or administered without regard for this minimum vesting provision. No Award Agreement shall be permitted to reduce or eliminate the requirements of this subparagraph (f). Nothing in this subparagraph (f) shall preclude the Committee from permitting accelerated vesting of any Award (including in cases of retirement, death, disability or a Corporate Change) in the terms of an Award or otherwise, for any reason in accordance with this Plan. VI. ELIGIBILITY Awards may be granted only to persons who, at the time of grant, are Eligible Persons. An Award may be granted on more than one occasion to the same person, and, subject to the limitations set forth in the Plan, such Award may include an Incentive Stock Option, an Option that is not an Incentive Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Phantom Stock Award, a Bonus Stock Award, a Cash Award, an Other Stock -Based Award or any combination thereof. VII. STOCK OPTIONS (a) Option Period. The term of each Option, and each Stock Appreciation Right, shall be as specified by the Committee at the date of grant, but in no event shall an Option, or a Stock Appreciation Right, be exercisable after the expiration of 10 years from the date of grant. (b) Limitations on Exercise of Option. An Option shall be exercisable in whole or in such installments and at such times as determined by the Committee. (c) Special Limitations on Incentive Stock Options. An Incentive Stock Option may be granted only to an individual who is employed by the Company or any "parent corporation" or "subsidiary corporation" (as such terms are defined in Section 424 of the Code) of the Company at the time the Option is granted. To the extent that the aggregate fair market value (determined at the time the respective Incentive Stock Option is granted) of stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of the Company and its parent and subsidiary corporations, within the meaning of Section 424 of the Code, exceeds $100,000 or such other amount as may be prescribed under Section 422 of the Code or applicable regulations or rulings from time to time, such Incentive Stock Options shall be treated as Options that do not constitute Incentive Stock Options. The Committee shall determine, in accordance with applicable provisions of the Code, Treasury regulations, and other administrative pronouncements, which of a Participant's Incentive Stock Options will not constitute Incentive Stock Options because of such limitation and shall notify the Participant of such determination as soon as practicable after such determination. No Incentive Stock Option shall be granted to an individual if, at the time the Option is granted, such individual owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation, within the meaning of Section 422(b)(6) of the Code, unless (i) at the time such Option is granted, the option price is at least 110% of the Fair Market Value of the Common Stock subject to the Option and (ii) such Option by its terms is not exercisable after the expiration of five years from the date of grant. Except as otherwise provided in Sections 421 or 422 of the Code, an Incentive Stock Option shall not be transferable otherwise than by will or the laws of descent and distribution and shall be exercisable during the Participant's lifetime only by such Participant or the Participant's guardian or legal representative. (d) Option Agreement. Each Option shall be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve, including, without limitation, provisions to qualify an Option as an Incentive Stock Option under Section 422 of the Code. Each Option Agreement shall specify the effect of termination of (i) employment, (ii) the consulting or advisory relationship or (iii) membership on the Board or the board of directors (or analogous governing body) of an Affiliate of the Company, as applicable, on the exercisability of the Option. An Option Agreement may provide for the payment of the option price, in A-6 I wit 2023 Proxy Statement whole or in part, by the delivery of a number of shares of Common Stock (plus cash if necessary) having a Fair Market Value equal to such option price. Moreover, an Option Agreement may provide for a "cashless exercise" of the Option by establishing procedures satisfactory to the Committee with respect thereto. Further, an Option Agreement may provide, on such terms and conditions as the Committee in its sole discretion may prescribe, for the grant of a Stock Appreciation Right in connection with the grant of an Option and, in such case, the exercise of the Stock Appreciation Right shall result in the surrender of the right to purchase a number of shares under the Option equal to the number of shares with respect to which the Stock Appreciation Right is exercised (and vice versa). In the case of any Stock Appreciation Right that is granted in connection with an Incentive Stock Option, such right shall be exercisable only when the Fair Market Value of the Common Stock exceeds the exercise price specified therefor in the Option or the portion thereof to be surrendered. The terms and conditions of the respective Option Agreements need not be identical. The Committee may, in its sole discretion, amend an outstanding Option Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan (including, without limitation, an amendment that accelerates the time at which the Option, or a portion thereof, may be exercisable), provided that, except as otherwise provided in the Plan or the applicable Option Agreement, any such amendment shall not materially reduce the rights of a Participant without the consent of such Participant. (e) Option Price and Payment. The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee but, subject to the special limitations on Incentive Stock Options set forth in Paragraph VII(c) and to adjustment as provided in Paragraph XIV, such purchase price shall not be less than the Fair Market Value of a share of Common Stock on the date such Option is granted. The Option or portion thereof may be exercised by delivery of an irrevocable notice of exercise to the Company, as specified by the Committee. The purchase price of the Option or portion thereof shall be paid in full in the manner prescribed by the Committee. Separate stock certificates shall be issued by the Company for those shares acquired pursuant to the exercise of an Incentive Stock Option and for those shares acquired pursuant to the exercise of any Option that does not constitute an Incentive Stock Option (f) Restrictions on Repricing of Options. Except as provided in Paragraph XIV, the Committee may not, without approval of the stockholders of the Company, (i) amend any outstanding Option Agreement to lower the option price, (ii) cancel and replace any outstanding Option Agreement with Option Agreements having a lower option price or (iii) repurchase any Option (or any exchange of such Option for cash or another Award) at a time when the Fair Market Value of the Common Stock is less than the exercise price of the Option. (g) Stockholder Rights and Privileges. The Participant shall be entitled to all the privileges and rights of a stockholder only with respect to such shares of Common Stock as have been purchased under the Option and for which shares of stock have been issued to the Participant. (h) Options and Rights in Substitution for Options Granted by Other Employers. Options and Stock Appreciation Rights may be granted under the Plan from time to time in substitution for options and such rights held by individuals providing services to corporations or other entities who become Eligible Persons as a result of a merger or consolidation or other business transaction with the Company or any Affiliate. VIII. RESTRICTED STOCK AWARDS (a) Forfeiture Restrictions to be Established by the Committee. Shares of Common Stock that are the subject of a Restricted Stock Award shall be subject to restrictions on transferability by the Participant and an obligation of the Participant to forfeit and surrender the shares to the Company under certain circumstances (the "Forfeiture Restrictions"). The Forfeiture Restrictions shall be determined by the Committee in its sole discretion, and the Committee may provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of one or more performance measures, as described in Paragraph V(c), (ii) the Participant's continued employment with the Company or one of its Affiliates or continued service as a Consultant or Director for a specified period of time, (iii) the occurrence of any event or the satisfaction of any other condition specified by the Committee in its sole discretion, or (iv) a combination of any of the foregoing. Each Restricted Stock Award may have different Forfeiture Restrictions, in the discretion of the Committee. (b) Other Terms and Conditions. The Participant shall have the right to receive dividends with respect to Common Stock subject to a Restricted Stock Award, to vote Common Stock subject thereto, and to enjoy all other stockholder rights, except that (i) the Participant shall not be entitled to delivery of the stock certificate until the Forfeiture Restrictions have expired, (ii) the Company shall retain custody of the stock until the Forfeiture Restrictions have expired, (iii) the iiN'o 2023 Proxy Statement I A-7 Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of or encumber the stock until the Forfeiture Restrictions have expired, (iv) dividends will not be paid on outstanding Restricted Stock Awards until the Forfeiture Restrictions have expired, although dividends may accrue subject to satisfaction of the Forfeiture Restrictions, and (v) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Agreement shall result in a forfeiture of the Restricted Stock Award as determined by the Committee. At the time a Restricted Stock Award is granted, the Committee may, in its sole discretion, prescribe additional terms, conditions, or restrictions relating to Restricted Stock Awards, including, but not limited to, rules pertaining to the termination of employment or service as a Consultant or Director (by retirement, disability, death, or otherwise) of a Participant prior to expiration of the Forfeitures Restrictions. Such additional terms, conditions, or restrictions shall be set forth in a Restricted Stock Agreement made in conjunction with the Award. (c) Payment for Restricted Stock. The Committee shall determine the amount and form of any payment for Common Stock received pursuant to a Restricted Stock Award, provided that in the absence of such a determination, a Participant shall not be required to make any payment for Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law. (d) Committee's Discretion to Accelerate Vesting of Restricted Stock Awards. The Committee may, in its discretion and as of a date determined by the Committee, fully vest any or all Common Stock awarded to a Participant pursuant to a Restricted Stock Award and, upon such vesting, all Forfeiture Restrictions applicable to such Restricted Stock Award shall terminate as of such date. Any action by the Committee pursuant to this Subparagraph (d) may vary among individual Participants and may vary among the Restricted Stock Awards held by any individual Participant. (e) Restricted Stock Agreements. At the time any Award is made under this Paragraph VIII, the Company and the Participant shall enter into a Restricted Stock Agreement setting forth each of the matters contemplated hereby and such other matters as the Committee may determine to be appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be identical. Subject to the restriction set forth in the first sentence of Subparagraph (d) above, the Committee may, in its sole discretion, amend an outstanding Restricted Stock Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan, provided that, except as otherwise provided in the Plan or the applicable Restricted Stock Agreement, any such amendment shall not materially reduce the rights of a Participant without the consent of such Participant. IX. RESTRICTED STOCK UNIT AWARDS (a) Restricted Stock Unit Awards. The Committee is authorized to grant restricted stock units ("RSUs") to Eligible Persons. (b) Restrictions. RSUs shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose. (c) Performance Conditions. In accordance with Paragraph VI, the Committee, in its absolute discretion, may subject any Restricted Stock Unit Award, at the date of grant or thereafter, to performance -based vesting conditions. Without limiting the scope of the preceding sentence, with respect to any performance -based conditions, (i) the Committee may use one or more business criteria or other measures of performance as it may deem appropriate in establishing any performance goals applicable to a Restricted Stock Unit Award, (ii) any such performance goals may relate to the performance of the Participant, the Company (on a consolidated basis), or to specified subsidiaries, business or geographical units or operating areas of the Company, (iii) the performance period or periods over which performance goals will be measured shall be established by the Committee, and (iv) any such performance goals and performance periods may differ among Restricted Stock Unit Awards granted to any one Participant or to different Participants. (d) Settlement. Settlement of vested RSUs shall occur upon vesting or upon expiration of the deferral period specified for such RSUs by the Committee (or, if permitted by the Committee, as elected by the Participant). RSUs shall be settled by delivery of (A) a number of shares of Stock equal to the number of RSUs for which settlement is due, or (B) cash in an amount equal to the Fair Market Value of the specified number of shares of Stock equal to the number of RSUs for which settlement is due, or a combination thereof, as determined by the Committee at the date of grant or thereafter. (e) Deferrals. With the consent of the Committee, amounts payable in respect of Restricted Stock Unit Awards (and accompanying Dividend Equivalent rights) may be subject to elective deferral by the Participant pursuant to the terms and conditions determined by the Committee and in accordance with the provisions of the Waste Management, Inc. 409A Deferral Savings Plan. A-8 I wit 2023 Proxy Statement (f) Termination of Award. A Restricted Stock Unit Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable vesting period, except as may be otherwise determined by the Committee. (g) Restricted Stock Unit Award Agreements. At the time any Award is made under this Paragraph IX, the Company and the Participant shall enter into a Restricted Stock Unit Award Agreement setting forth each of the matters contemplated hereby and such additional matters as the Committee may determine to be appropriate. The terms and provisions of the respective Restricted Stock Unit Award Agreements need not be identical. X. PHANTOM STOCK AWARDS (a) Phantom Stock Awards. Phantom Stock Awards are rights to receive the Fair Market Value of a share of Common Stock, or rights to receive an amount equal to any appreciation or increase in the Fair Market Value of Common Stock over a specified period of time, which vest over a period of time as established by the Committee. The Committee may, in its discretion, require payment or other conditions of the Participant respecting any Phantom Stock Award. Specifically. A Phantom Stock Award may include, without limitation, a Stock Appreciation Right that is granted independently of an Option; provided, however, that the exercise price per share of Common Stock subject to the Stock Appreciation Right shall be (i) determined by the Committee but, subject to adjustment as provided in Paragraph XIV, such exercise price shall not be less than the Fair Market Value of a share of Common Stock on the date such Stock Appreciation Right is granted, and (ii) subject to the restrictions on repricings described in Paragraph VII(f) in the same manner as applies to Options. (b) Award Period. The Committee shall establish, with respect to and at the time of each Phantom Stock Award, a period over which the Award shall vest with respect to the Participant. (c) Awards Criteria. In determining the value of Phantom Stock Awards, the Committee shall take into account a Participant's responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate. (d) Payment. Following the end of the vesting period for a Phantom Stock Award (or at such other time as the applicable Phantom Stock Award Agreement may provide), the holder of a Phantom Stock Award shall be entitled to receive payment of an amount, not exceeding the maximum value of the Phantom Stock Award, based on the then vested value of the Award. Payment shall be made in a lump sum or in installments as prescribed by the Committee. Any payment to be made in cash shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Phantom Stock Award Agreement. A Participant shall not be entitled to the privileges and rights of a stockholder with respect to a Phantom Stock Award. (e) Termination of Award. A Phantom Stock Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable vesting period, except as may be otherwise determined by the Committee. (f) Phantom Stock Award Agreements. At the time any Award is made under this Paragraph X, the Company and the Participant shall enter into a Phantom Stock Award Agreement setting forth each of the matters contemplated hereby and such additional matters as the Committee may determine to be appropriate. The terms and provisions of the respective Phantom Stock Award Agreements need not be identical. XI. BONUS STOCK AWARDS Each Bonus Stock Award granted to a Participant shall constitute a transfer of unrestricted shares of Common Stock on such terms and conditions as the Committee shall determine. Bonus Stock Awards shall be made in shares of Common Stock and need not be subject to performance criteria or objectives or to forfeiture. The purchase price, if any, for shares of Common Stock issued in connection with a Bonus Stock Award shall be determined by the Committee in its sole discretion. The Company and the Participant shall enter into a Bonus Stock Award Agreement setting forth the terms of any such Award. iiN'o 2023 Proxy Statement I A-9 XII. CASH AWARDS The Committee is authorized to grant Cash Awards, on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the Plan to Eligible Persons in such amounts and subject to such other terms as the Committee in its discretion determines to be appropriate, including for purposes of any annual or short-term incentive or other bonus program. XIII. OTHER STOCK -BASED AWARDS The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Common Stock or the value of securities of, or the performance of, specified Affiliates. The Committee shall determine the terms and conditions of such Other Stock -Based Awards. Common Stock delivered pursuant to an Other Stock -Based Award in the nature of a purchase right granted under this Paragraph XIII shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Common Stock, other Awards, or other property, as the Committee shall determine. XIV. RECAPITALIZATION OR REORGANIZATION (a) No Effect on Right or Power. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company's or any Affiliate's capital structure or its business, any merger, consolidation or other business combination of the Company or any Affiliate, any issue of debtor equity securities ahead of or affecting Common Stock or the rights thereof, the dissolution or liquidation of the Company or any Affiliate, any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding. (b) Subdivision or Consolidation of Shares; Stock Dividends. The shares with respect to which Awards may be granted are shares of Common Stock as presently constituted, but if, and whenever, prior to the expiration of an Award theretofore granted, the Company shall effect a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend on Common Stock without receipt of consideration by the Company, the number of shares of Common Stock with respect to which such Award may thereafter be exercised or satisfied, as applicable, (i) in the event of an increase in the number of outstanding shares, shall be proportionately increased, and the purchase price per share, if any, shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares, shall be proportionately reduced, and the purchase price per share, if any, shall be proportionately increased. Any fractional share resulting from such adjustment shall be rounded up to the next whole share. (c) Recapitalizations and Corporate Changes. If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its capital structure (a "recapitalization"), the number and class of shares of Common Stock or other property covered by an Award theretofore granted and the purchase price of Common Stock or other consideration subject to such Award shall be adjusted so that such Award shall thereafter cover the number and class of shares of stock and securities to which the Participant would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the Participant had been the holder of record of the number of shares of Common Stock then covered by such Award. If (i) the Company shall not be the surviving entity in any consummated merger, consolidation or other business combination or reorganization (or survives only as a subsidiary of an entity), (ii) the Company sells, leases, or exchanges all or substantially all of its assets to any other person or entity, (iii) the Company is dissolved and liquidated, (iv) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Exchange Act, acquires or gains ownership or control (including, without limitation, the power to vote) of more than 50% of the outstanding shares of the Company's voting stock (based upon voting power), or (v) as a result of or in connection with a contested election of directors of the Company, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board (each such event is referred to herein as a "Corporate Change"), then no later than (x) 10 days after such merger, consolidation, business combination, reorganization, sale, lease, or exchange of assets or dissolution and liquidation or such election of directors or (y) 30 days after a Corporate Change of the type described in clause (iv), the Committee, acting in its sole discretion without the consent or approval of any Participant, shall effect one or more of A-1 0 I IANt 2023 Proxy Statement the following alternatives in an equitable and appropriate manner to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, which alternatives may vary among individual Participants and which may vary among Awards held by any individual Participant, and which shall be contingent upon the occurrence of such Corporate Change: (A) accelerate the time at which Options or Stock Appreciation Rights then outstanding may be exercised so that such Awards may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all such unexercised Awards and all rights of Participants thereunder shall terminate, (B) require the mandatory surrender to the Company by all or selected Participants of some or all of the outstanding Options or Stock Appreciation Rights and/or other Awards held by such Participants (irrespective of whether such Awards are then exercisable under the provisions of the Plan) as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall thereupon cancel such Awards and the Company shall pay (or cause to be paid) to each Participant an amount of cash per share equal to the excess, if any, of the amount calculated in Subparagraph (d) below (the "Change of Control Value") of the shares subject to such Awards over the exercise price(s) under such Awards for such shares, or in the case of Awards that are not appreciation awards, an amount equal to the Change of Control Value per share subject to such Awards (with any Awards subject to performance -based vesting to be calculated in accordance with the applicable Award Agreements or as otherwise determined by the Committee), or (C) make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Corporate Change and to prevent the dilution or enlargement of rights (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to such Awards then outstanding), including, without limitation, adjusting such an Award to provide that the number and class of shares of Common Stock covered by such Award shall be adjusted so that such Award shall thereafter cover securities of the surviving or acquiring corporation or other property (including, without limitation, cash) as determined by the Committee in its sole discretion. (d) Change of Control Value. For the purposes of clause (B) in Subparagraph (c) above, the "Change of Control Value" shall equal the amount determined in the following clause (i), (ii) or (iii), whichever is applicable: (i) the per share price offered to stockholders of the Company in any such merger, consolidation, or other business combination, reorganization, sale of assets or dissolution and liquidation transaction, (ii) the per share price offered to stockholders of the Company in any tender offer or exchange offer whereby a Corporate Change takes place, or (iii) if such Corporate Change occurs other than pursuant to a tender or exchange offer, the fair market value per share of the shares into which such Options or Stock Appreciation Rights being surrendered are exercisable (or as applicable to Awards other than Options or Stock Appreciation Rights), as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Awards. In the event that the consideration offered to stockholders of the Company in any transaction described in this Subparagraph (d) or Subparagraph (c) above consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash. Notwithstanding the foregoing, the Committee shall have the right to provide that in the event of a Corporate Change of the Company, Options and Stock Appreciation Rights outstanding as of the date of the Corporate Change shall be cancelled and terminated without payment if the Fair Market Value of one share of Common Stock as of the date of the Corporate Change is less than the per share Option exercise price or Stock Appreciation Right grant price. (e) Other Changes in the Common Stock. In the event of changes in the outstanding Common Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, split-ups, split -offs, spin-offs, exchanges, or other relevant changes in capitalization or distributions (other than ordinary dividends) to the holders of Common Stock occurring after the date of the grant of any Award and not otherwise provided for by this Paragraph XIV, such Award and any agreement evidencing such Award shall be subject to adjustment by the Committee at its sole discretion as to the number and price of shares of Common Stock or other consideration subject to such Award, accelerated vesting, conversion into other securities or interests or cash settlement in exchange for cancellation in an equitable and appropriate manner so as to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under such Award. Notwithstanding the foregoing, with respect to a change that constitutes an "equity restructuring" that would be subject to a compensation expense pursuant to Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or any successor accounting standard, the provisions in Subparagraph (c) above shall control to the extent they are in conflict with the discretionary provisions of this Subparagraph (e). In the event of any such change in the outstanding Common Stock or distribution to the holders of Common Stock, or upon the occurrence of any other event described in this Paragraph XIV, the aggregate maximum number of shares available under the Plan, and the aggregate maximum number of shares that may be issued under the Plan through Incentive Stock Options shall be appropriately adjusted to the extent, if any, determined by the Committee, whose determination shall be conclusive. J%IJ 2023 Proxy Statement I A-1 1 (f) Stockholder Action. Any adjustment provided for in the above Subparagraphs shall be subject to any stockholder action required by applicable law or regulation or the Company's certificate of incorporation or bylaws. (g) No Adjustments Unless Otherwise Provided. Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to Awards theretofore granted or the purchase price per share, if applicable. XV. AMENDMENT AND TERMINATION OF THE PLAN The Board in its discretion may terminate the Plan at any time with respect to any shares of Common Stock for which Awards have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided that no change in the Plan may be made that would materially impair the rights of a Participant with respect to an Award theretofore granted without the consent of the Participant, unless otherwise provided for in the Plan, and provided, further, that the Board may not, without approval of the stockholders of the Company, (a) amend the Plan to increase the aggregate maximum number of shares that may be issued under the Plan, increase the aggregate maximum number of shares that may be issued under the Plan through Incentive Stock Options, or change the class of individuals eligible to receive Awards under the Plan, or (b) amend or delete Paragraph VII(f). XVI. MISCELLANEOUS (a) No Right To An Award. Neither the adoption of the Plan nor any action of the Board or of the Committee shall be deemed to give any individual any right to be granted an Award, or any other rights hereunder except as may be evidenced by an Award agreement duly executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the performance of its obligations under any Award. (b) No Employment/Membership Rights Conferred. Nothing contained in the Plan shall (i) confer upon any Employee or Consultant any right with respect to continuation of employment or of a consulting or advisory relationship with the Company or any Affiliate or (ii) interfere in any way with the right of the Company or any Affiliate to terminate his or her employment or consulting or advisory relationship at any time. Nothing contained in the Plan shall confer upon any Director any right with respect to continuation of membership on the Board or the board of directors (or analogous governing body) of any Affiliate of the Company. (c) Other Laws; Withholding. The Company shall not be obligated to issue any Common Stock pursuant to any Award granted under the Plan at any time when the shares covered by such Award have not been registered under the Securities Act, as amended, and such other state and federal laws, rules, and regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the registration requirements of such laws, rules, and regulations available for the issuance and sale of such shares. No fractional shares of Common Stock shall be delivered, nor shall any cash in lieu of fractional shares be paid unless otherwise determined by the Committee. The Company and any Affiliate are authorized to withhold from any Award granted, or any payment relating to an Award, including from a distribution of Common Stock, taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company, the Affiliates and Participants to satisfy the payment of withholding taxes and other tax obligations relating to any Award in such amounts as may be determined by the Committee. The Committee shall determine, in its sole discretion, the form of payment acceptable for such tax withholding obligations, including the delivery of cash or cash equivalents, Common Stock (including through delivery of previously owned shares, net settlement, a broker -assisted sale, or other cashless withholding or reduction of the amount of shares otherwise issuable or delivered pursuant to the Award), other property, or any other legal consideration the Committee deems appropriate. Any determination made by the Committee to allow a Participant who is subject to Rule 1 6b-3 to pay taxes with shares of Common Stock through net settlement or previously owned shares shall be approved by either a committee made up of solely two or more Qualified Members or the full Board. If such tax withholding amounts are satisfied through net settlement or previously owned shares, the maximum number of shares of Common Stock that may be so withheld or surrendered shall be the number of shares of Common Stock that have an aggregate Fair Market Value on the date of withholding or surrender equal to A-1 2 I IANt 2023 Proxy Statement the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, foreign and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment for the Company with respect to such Award, as determined by the Committee. (d) No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any Affiliate from taking any action which is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Participant, beneficiary or other person shall have any claim against the Company, any Affiliate, or the Board or the Committee as a result of any such action. (e) Restrictions on Transfer. An Award (other than an Incentive Stock Option, which shall be subject to the transfer restrictions set forth in Paragraph VII(c)) shall not be transferable otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, or (iii) with the consent of the Committee. In all cases, an Award shall not be transferable to a third party financial institution for value. (f) Clawback. Notwithstanding any other provisions in this Plan to the contrary, any Awards granted hereunder and any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or applicable stock exchange listing are subject to any written clawback policies that the Company may adopt either prior to or following the Effective Date of this Plan, whether required pursuant to or related to any applicable law, government regulation or stock exchange listing. Any such clawback policy may subject a Participant's Awards and amounts received with respect to Awards to reduction, cancelation, forfeiture or recoupment if certain specified events occur, including an accounting restatement, or other events or wrongful conduct specified in any such clawback policy. The Committee will make any determination for reduction, cancelation, forfeiture or recoupment in its sole discretion and in accordance with any applicable law or regulation. (g) Section 409A of the Code. It is the general intention, but not the obligation, of the Committee to design Awards to comply with or to be exempt from the Nonqualified Deferred Compensation Rules, and Awards will be operated and construed accordingly, and the Committee, in its discretion, may amend any such Award, without a Participant's consent, as necessary to avoid the imposition of additional taxes and interest under the Nonqualified Deferred Compensation Rules. Neither this Paragraph XVI(g) or any other provision of the Plan is or contains a representation to any person regarding the tax consequences of the grant, vesting, exercise, settlement, or sale of any Award (or the Stock underlying such Award) granted hereunder, and should not be interpreted as such. In no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant or any other person on account of non-compliance with the Nonqualified Deferred Compensation Rules. Notwithstanding any provision in the Plan or an Award Agreement to the contrary, in the event that a "specified employee" (as defined under the Nonqualified Deferred Compensation Rules) becomes entitled to a payment under an Award that would be subject to additional taxes and interest under the Nonqualified Deferred Compensation Rules if the Participant's receipt of such payment or benefits is not delayed until the earlier of (i) the date of the Participant's death, or (ii) the date that is six months after the Participant's "separation from service," as defined under the Nonqualified Deferred Compensation Rules (such date, the "Section 409A Payment Date"), then such payment or benefit shall not be provided to the Participant until the Section 409A Payment Date. Any amounts subject to the preceding sentence that would otherwise be payable prior to the Section 409A Payment Date will be aggregated and paid in a lump sum without interest on the Section 409A Payment Date. For purposes of an Award that provides for a deferral of compensation under the Nonqualified Deferred Compensation Rules, to the extent the impact of a Corporate Change on such Award would subject a Participant to additional taxes under the Nonqualified Deferred Compensation Rules, a Corporate Change described in Paragraph XIV(c) with respect to such Award will mean both a Corporate Change and a "change in the ownership of a corporation," "change in the effective control of a corporation," or a "change in the ownership of a substantial portion of a corporation's assets" within the meaning of the Nonqualified Deferred Compensation Rules as applied to the Company. The applicable provisions of the Nonqualified Deferred Compensation Rules are hereby incorporated by reference and shall control over any Plan or Award Agreement provision in conflict therewith. (h) Effect on Prior Plan. From and after the Effective Date, no further awards or grants will be made under the Prior Plan. The Prior Plan will, however, continue in existence and operation following the Effective Date with respect to awards or grants outstanding under the Prior Plan. From and after the Effective Date, shares available for issuance under the Prior Plan will be subject to the provisions of Paragraph V(a) of the Plan. The Prior Plan is hereby amended as necessary to effect the provisions of Paragraph V(a) of the Plan. iiMit 2023 Proxy Statement I A-13 (i) Severability and Reformation. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. If any of the terms or provisions of the Plan or any Award Agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Participants who are subject to Section 16 of the Exchange Act) or Section 422 of the Code (with respect to Incentive Stock Options), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or Section 422 of the Code, in each case, only to the extent Rule 16b-3 and such sections of the Code are applicable. With respect to Incentive Stock Options, if the Plan does not contain any provision required to be included herein under Section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided, further, that, to the extent any Option that is intended to qualify as an Incentive Stock Options cannot so qualify, that Option (to that extent) shall be deemed to not be an Incentive Stock Option for all purposes of the Plan. (j) Unfunded Status of Awards; No Trust or Fund Created. The Plan is intended to constitute an "unfunded" plan for certain incentive awards. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or such Affiliate. (k) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable. Nothing contained in the Plan shall be construed to prevent the Company or any Affiliate from taking any corporate action which is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Employee, beneficiary or other person shall have any claim against the Company or any Affiliate as a result of any such action. (l) Interpretation. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and, where appropriate, the plural shall include the singular and the singular shall include the plural. In the event of any conflict between the terms and conditions of an Award Agreement and the Plan, the provisions of the Plan shall control. The use herein of the word "including" following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non -limiting language (such as "without limitation", "but not limited to", or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. References herein to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan. (m) Facility of Payment. Any amounts payable hereunder to any individual under legal disability or who, in the judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such individual, or may be applied for the benefit of such individual in any manner that the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts. (n) Conditions to Delivery of Stock. Nothing herein or in any Award Agreement shall require the Company to issue any shares with respect to any Award if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect. In addition, each Participant who receives an Award under the Plan shall not sell or otherwise dispose of Common Stock that is acquired upon grant, exercise or vesting of an Award in any manner that would constitute a violation of any applicable federal or state securities laws, the Plan or the rules, regulations or other requirements of the SEC or any stock exchange upon which the Common Stock is then listed. At the time of any exercise A-14 I IAMit 2023 Proxy Statement of an Option or Stock Appreciation Right, or at the time of any grant of any other Award, the Company may, as a condition precedent to the exercise of such Option or Stock Appreciation Right or settlement of any other Award, require from the Participant (or in the event of his or her death, his or her legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the holder's intentions with regard to the retention or disposition of the shares of Common Stock being acquired pursuant to the Award and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holder's death, his or her legal representatives, heirs, legatees, or distributees) will not involve a violation of the Securities Act, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect. Common Stock or other securities shall not be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including any exercise price, grant price, or tax withholding) is received by the Company. (o) Status under ERISA. The Plan shall not constitute an "employee benefit plan" for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. (p) Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles thereof, except to the extent Texas law is preempted by federal law. The obligation of the Company to sell and deliver Common Stock hereunder is subject to applicable federal and state laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stock. With respect to any claim or dispute related to or arising under the Plan, the Company and each Participant who accepts an Award hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas. J%IJ 2023 Proxy Statement I A-1 5 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) 0 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 73-1309529 (State or other jurisdiction of (IR.S. Employer incorporation or organization) Identification No.) 800 Capitol Street Suite 3000 Houston, Texas 77002 (Address of principal executive offices) (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 Name of Each Exchange on Which Registered WM 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 0 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 0 Accelerated filer ❑ Non -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. 0 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ❑ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive -based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ❑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ❑ No 0 The aggregate market value of the voting stock held by non -affiliates of the registrant as of June 30, 2022 was approximately $63.1 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 January 31, 2023 was 408,152,162 (excluding treasury shares of 222,130,299). DOCUMENTS INCORPORATED BY REFERENCE Document Proxy Statement for the 2023 Annual Meeting of Stockholders Incorporated as to Part III TABLE OF CONTENTS rage PART I Item 1. Business 3 Item 1A. Risk Factors 18 Item 1B. Unresolved Staff Comments 33 Item 2. Properties 33 Item 3. Legal Proceedings 33 Item 4. Mine Safety Disclosures 33 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 6. [Reserved] 35 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65 Item 8. Financial Statements and Supplementary Data 67 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 125 Item 9A. Controls and Procedures 125 Item 9B. Other Information 126 PART III Item 10. Directors, Executive Officers and Corporate Governance 126 Item 11. Executive Compensation 126 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 126 Item 13. Certain Relationships and Related Transactions, and Director Independence 126 Item 14. Principal Accounting Fees and Services 126 PART IV Item 15. Exhibits 127 Item 16. Form 10-K Summary 129 2 PART I Item 1. Business. General 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., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term "WMI," we are referring only to Waste Management, Inc., the parent holding company. WMI 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 WMI 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 WMI, WM Holdings is a holding company and all operations are conducted by subsidiaries. Our principal executive offices are located at 800 Capitol Street, Suite 3000, 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 environmental solutions, 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, including our Waste Management Renewable Energy ("WM Renewable Energy") business, we are also a leading developer, operator and owner of landfill gas -to -energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel for our natural gas fleet. During 2022, our largest customer represented less than 5% of annual revenues. We employed approximately 49,500 people as of December 31, 2022. We own or operate 259 landfill sites, which is the largest network of landfills throughout 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 337 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 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. As North America's leading provider of comprehensive environmental solutions, sustainability and environmental stewardship is embedded in all that we do. We have enabled a people -first, technology -led focus to drive our mission to maximize resource value, while minimizing environmental impact, so that both our economy and our environment are positively impacted. Our strategy 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 and investing in automation to improve processes and drive operational efficiency will yield an attractive total cost structure and enhanced service quality. While we continue to 3 improve existing diversion technologies, such as through investments in our recycling operations, we are also evaluating and pursuing emerging diversion technologies that may generate additional value. 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. Our brand promise is ALWAYS WORKING FOR A SUSTAINABLE TOMORROW®. We live this promise through our service offerings and sustainable solutions, our investments in innovation, our people, and our commitment to the future. Through our longtime focus on fording sustainable solutions, we continue to evolve beyond being a traditional environmental waste services company. 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 tomorrow as we work together to envision and create a more sustainable future. 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 2022, we announced that our Board of Directors expects to increase the quarterly dividend from $0.65 to $0.70 per share for dividends declared in 2023, which is a 7.7% increase from the quarterly dividends we declared in 2022. This is an indication of our ability to generate strong and consistent cash flows and marks the 20th 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 Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. 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. Additional information related to our acquisition of Advanced Disposal and segments is included in Notes 17 and 19 to the Consolidated Financial Statements, respectively. We also provide additional services that are not managed through our Solid Waste business, as described below. These operations are presented in this report as "Other." The services we provide are described below. 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 4 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 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, 2022, we owned or operated 254 solid waste landfills and five secure hazardous waste landfills, which represents the largest network of landfills throughout the U.S. and Canada. As of December 31, 2022, we owned or controlled the management of 231 sites with remedial activities, that are in closure or that have received a certification of closure from the applicable regulatory agency. 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 fmal 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, 2022, we owned or operated 337 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 5 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. Recycling. Recycling involves the separation of reusable materials from the waste stream for processing and resale or other disposition. We are North America's leading recycler of post -consumer materials. We not only collect materials from households and businesses across the U.S. and Canada, we also sell them to manufacturers to be recycled and sold in the North American market. Demand for recycled materials is generally growing. Several states have recently passed minimum -recycled -content mandates, and many companies are responding to requirements for recycled content from their own customers and to meet sustainability targets. We are helping expand the availability of recycled materials by investing in infrastructure, increasing access to recycling services and educating customers through our Recycle Right® program. 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 recycling volumes. Single -stream recycling is possible through the use of various mechanized screens and optical sorting technologies. In addition to advancing our single stream recycling programs for commercial applications, we continue to invest in recycling technologies and businesses, designed to offer services and solutions to support and grow our current operations, including our recent purchase of a controlling interest in a business intended to accelerate our film and plastic wrap recycling capabilities. We are investing in enhanced MRF technology at new and existing facilities to benefit labor productivity, support increased recycling capacity and allow for dynamic adjustments to respond to evolving end -market demands. In 2022, we opened five new MRFs within the U.S. equipped with advanced recycling technology. We continue to invest in MRF automation in several markets across the U.S. 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, 2022, we operated 97 MRFs, of which 46 are single stream, 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. Our experience 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. In our materials processing business, we have been transitioning our customer base over time 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. 6 Other. Other services we provide include the following: • WM Renewable Energy— 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, 2022, we had 135 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 95 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 23 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. For 17 of these projects, the landfill gas is processed to pipeline -quality natural gas and then sold to natural gas suppliers. WM Renewable Energy produces renewable natural gas ("RNG") from landfill gas and generates renewable identification numbers ("R1Ns") under the Renewable Fuel Standard ("RFS") program and other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet. The RINs and credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs and credits proportionate to their fossil fuel production and imports. RINs prices generally respond to regulations enacted by the EPA or other regulatory bodies, as well as fluctuations in supply and demand. WM Renewable Energy currently has five owned facilities producing 3 5 million MMBtu of RNG annually and the revenue from these facilities is primarily generated through the sale of natural gas, RINs and related environmental attributes. We are also modernizing our landfills and expanding our network of renewable natural gas facilities. Together, these robust solutions will make us a better advisor to our customers while supporting our own sustainability goals. • Sustainability and Environmental Solutions ("SES') — Our SES business offers our customers a variety of services in collaboration with our Areas and strategic accounts programs, including (i) construction and remediation services; (ii) services associated with the disposal of fly ash, which is residue generated from the combustion of coal, and other forms of fuel and (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 SES business but 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, the familiarity we have with waste management practices and our use of technology give us the ability help customers reduce the amount of waste they generate, identify recycling opportunities and determine efficient and environmentally friendly means for waste collection and disposal. Through these services, we aim to help customers increase circularity and accelerate their decarbonization goals. • Strategic Business Solutions ("WMSBS) — Although many waste management services such as collection and disposal are local services, our WMSBS business works with customers whose locations span the U.S. and Canada. Our strategic accounts program provides these customers with streamlined service, enhanced reporting, measurement tools aimed at meeting sustainability objectives and centralized billing and management of accounts. • Expanded Service Offerings and Solutions — 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 7 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. Operating costs, disposal costs and collection fees vary widely throughout the geographic 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 fmal 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 also compete 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 to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers' businesses, reducing the amount of waste generated by their operations. 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 geographic 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, 2022, we had approximately 49,500 full-time employees across the U.S., Canada and India. Approximately 46,300 employees were located within the U.S. and 3,200 employees were located outside of the U.S. Approximately 8,500 employees were employed in administrative and sales positions with the remainder in operations. Approximately 8,600 of our employees are covered by collective bargaining agreements. Additional information about our workforce can be found in our 2022 Sustainability Report at https://sustainability.wm.com. Our 2022 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. 8 People First Commitment Our People First commitment means 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, increasing retention, succession planning and development, and supporting employee experience, ongoing cultural integration and knowledge transfer. We regularly focus on these objectives when managing our business. 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 "We Are WM" is our Employer Value Proposition, grounded in our People First commitment and shared through a framework that enables us to display that we are (i) investing in our teams by providing comprehensive benefits; (ii) committed to the growth of our team by providing state-of-the-art trainings and our new education benefit, Your Tomorrow, as further discussed under Compensation and Benefits; (iii) performing essential and meaningful work and (iv) working for a sustainable tomorrow by leaving the world a better place than we found it. 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 and experiential 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. In 2022, the Company announced a safety goal focused on reduction of our Total Recordable Incident Rate ("TRIR") by 3% annually, targeting TRIR of 2.0 annually by 2030. TRIR measures the number of injuries occurring per 100 employees for total hours worked annually. Our TRIR as of December 31, 2022 and 2021 was 3.02 and 3.0, respectively. The Company also remains focused on the prevention of serious injuries. Inclusion, Equity and Diversity We embrace and cultivate respect, trust, open communications and diversity of thought and people. We are committed to equality for all, and foster an environment where all team members feel welcomed, valued and seen. We see inclusion, equity and diversity ("IE&D") as core in everything that we do. Our commitment to IE&D starts at the top with our senior leadership team being comprised of 22% ethnic minorities and 33% women as of December 31, 2022; and with our overall workforce in the U.S. being comprised of approximately 45% ethnic minorities and approximately 20% women as of the same date. We are proud of what we have been able to achieve so far, and we will continue to strive to further embed IE&D within the Company. To solidify this commitment, in 2022 the Company developed two new IE&D goals: (i) increase the overall representation of women in our workforce to at least 25% by 2030 and (ii) increase the representation of racial/ethnic minority employees in our Manager roles and above to 30% by 2030. To enable us to achieve our goals, we have empowered a cross -functional IE&D Council to evaluate and enhance our policies, practices and procedures, recruitment and partnerships to ensure that our IE&D efforts are sustainable and are tied to our business strategy. 9 Learning and Development We offer expansive learning and development solutions to meet the development needs of our people and support 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. 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 recognize the value of learning beyond the workplace. In 2021, we announced a new education benefit, Your Tomorrow. Your Tomorrow was created in partnership with Guild Education to pay 100% of benefits -eligible employees' and dependents' tuition for a broad range of four-year college degree programs, as well as programs such as high-school equivalency and, for employees, other certificate programs and graduate degrees. We also provide plans to help employees save for their future; refer to Note 9 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 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. 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, 2022 are summarized in Note 10 to the Consolidated Financial Statements. 10 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 and Climate Change Canada ("ECCC"), 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, process and manage solid waste and recyclables 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, construction, 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, materials recovery facility, compost facility, transfer station, or landfill gas -to -energy facility, 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, permits are subject to renewal, modification, suspension or revocation by the issuing authority. 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. For example, divided government likely will impede significant legislative action in the 118th Congress, leading to an expectation that the White House will prioritize regulatory changes to implement parts of its agenda, including taking steps towards reinstating, and in some cases enhancing, policies and regulations rolled back by the previous administration. While increasing regulation may have a negative impact on our operating costs, extensive environmental regulation applicable to our industry is also 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. Federal Regulation 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 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 11 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 federally protected 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. The EPA also requires landfills and other waste -handling facilities to obtain storm water discharge permits, and 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 certain "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. Many of our municipal solid waste ("MSW") landfills and landfill gas -to -energy facilities are subject to regulations implemented under the Clean Air Act, including new source performance standards, emission guidelines and national emission standards for hazardous air pollutants. These 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. Our vehicle fleet also must adhere to regulations implemented under the Clean Air Act, which authorizes the EPA to mandate controls on air pollution from mobile sources. • The Occupational Safety and Health Act of 1970, 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 Depaxtiuent of Transportation and the Occupational Safety and Health Administration, 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. 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, and laws governing where recyclable materials can be sold. 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 materials at landfills, such as recyclable materials (cardboard, bottles and cans), yard waste, food waste and electronics. The number of state and local governments with recycling and diversion requirements and disposal bans continues to grow, while the logistics and economics of recycling or processing many of these items remain challenging. Various states have enacted, or are considering enacting, laws that restrict or discourage 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 12 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, which has been upheld by the U.S. Supreme Court for waste directed to facilities owned by the local government. 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. 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 significantly impact 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. Recent Developments and Focus Areas in Policy and Regulation Climate and Sustainability Jurisdictions are increasingly taking action to reduce greenhouse gas ("GHG") emissions through a broad range of climate policies. Landfills are one of the focal points for advancing climate -related goals, and we are actively working with policymakers to promote recognition of the significant reductions in GHG emissions that our industry already has achieved and the work being done to further reduce emissions, the challenges associated with quantifying landfill emissions precisely, and the role of our sector in providing an essential, and highly regulated, public service. We also are closely monitoring the evolving capabilities of ground, aerial, and satellite -based methane detection and monitoring systems, and investing in pilot programs to further explore these innovations for applicability to our operations. We continue to expand our work with various private and government entities employing ground, aerial and satellite -based measurements of our sites. As these technologies are expected to advance rapidly in the coming years, we are actively engaged with the ECCC and EPA on the implications of the changing landscape for the waste industry and potential future regulation. In light of regulatory and business developments related to concerns about climate change, we have identified strategic business opportunities 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, composting, and conversion of landfill gas and discarded materials into electricity and fuel. We use carbon life cycle assessment 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 13 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, state, and provincial 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 our Company's 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 sustainability and environmental stewardship, we have published our 2022 Sustainability Report, providing details on our environmental, social and governance ("ESG") performance and outlining new 2030 goals. The Sustainability Report conveys the strong linkage between the Company's ESG goals and our growth strategy, inclusive of the planned expansion of the Company's recycling and renewable energy businesses. The information in this 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. PFAS Efforts to safeguard communities from contamination with per- and polyfluoroalkyl substances ("PFAS") have drawn increased attention by the federal government and in the states. PFAS are a large group of chemicals that have been used in industrial and consumer products since the 1940s, including in products as diverse as carpets, paints and stains, water-resistant clothing and fabrics, nonstick cookware, food packaging, and firefighting chemicals. Possible human health effects of exposure to certain PFAS compounds may include low infant birth weights, immune system impacts, or cancer. In 2021, the EPA released its PFAS Strategic Roadmap, providing a high-level overview of activities that the agency intends to take through 2024 to address PFAS contamination. These actions include establishing drinking water standards, expanded authority for PFAS remediation, research and data collection on landfill discharges of PFAS in leachate, new risk assessments and test procedures, and updated guidance on PFAS disposal and destruction options. During 2022, the EPA proposed designation of two PFAS compounds as hazardous substances under CERCLA. We are closely monitoring this proposed rulemaking In addition, 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. Compliance with new and proposed state and federal 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. Recycling; Foreign Import and Export Regulations and Material Restrictions Enforcement or implementation of foreign and domestic regulations can affect our ability to export recyclables. Attention on waste in the environment has led to new international laws restricting the flow of certain recyclables. As an example, on January 1, 2021, new restrictions on the international 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. At this time, the U.S. is not a party to the Basel Convention, but most countries to which we export commodities are, which may limit our ability to export certain plastics. However, we do not ship plastics collected on our residential recycling routes and processed at our single stream material recovery facilities to locations outside of North America. In recent years, new and updated international regulations affecting, and in some cases restricting, the international flow of certain recyclables have led to a reduction in export activity for such recyclables, as well as higher quality requirements, and higher processing costs. COVID-19 placed additional financial stress on recyclers and municipalities, resulting in some recycling programs being paused or eliminated. These changes have led to a number of states and provinces considering and several implementing EPR regulations. Prices and demand for recyclables fluctuate. While demand for recyclables generally continues to trend upwards, during the second half of 2022, we saw significant declines in commodity prices for recycled material, and we expect significant commodity price headwinds to continue into 2023, resulting from the slowdown in the global economy, which 14 reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. Recycling revenues attributable to yield increased $19 million and $537 million in 2022 and 2021, respectively, as compared with the prior year periods primarily from higher market prices for recycling commodities in 2021 and the first half of 2022, before the significant downturn in the second half of 2022. We announced a sustainability growth strategy that includes significant planned investments in our recycling business to increase automation and reduce labor dependency. Such investments are also targeted at addressing increases in quality requirements for commodities. These investments increase our exposure to commodity price fluctuations. We mitigate some of the effects of price fluctuation through the contract terms pursuant to which we sell commodities, such as floor pricing. Additionally, future regulation, tariffs, international trade policies or other initiatives, including regulations addressing climate change or GHG emissions, may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. For the past several years, we have been working with stakeholders to educate the public on the need to recycle properly. We continue to invest time and effort in working closely with customers to improve the quality of materials received 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 continued to have a positive impact on the operating results for our recycling business in 2022. With a heightened awareness of the global problems caused by plastic waste in the environment, Canada and an increasing number of cities and states across the U.S. have passed ordinances banning certain types of plastics from sale or use. The most common materials banned include plastic bags and straws, polystyrene plastic, and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, with no or limited viable end markets for many of 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. We are also making investments in end markets to support the collection and processing of some of these materials. 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. Tax Legislation The Inflation Reduction Act of 2022 ("IRA") was signed into law by President Biden on August 16, 2022 and contains a number of tax -related provisions. The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (to be recorded as a reduction in our operating expense) from tax credits through 2024, which is in line with the benefit we have realized from our alternative fuel tax credits in prior years. Additionally, we will incur an excise tax of 1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock. The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The current expectation is the minimum corporate tax will not have an impact on the Company. With respect to only the investment tax credit aspect of the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2025. Additionally, the production tax credit incentives for investments in renewable energy and the carbon capture provisions of the IRA will likely result in incremental benefit, although at this time the amount of those benefits have not been quantified. Regulation of Oil and Gas Exploration, Production and Disposal Our Sustainability and Environmental Services 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 15 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 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 pursuing requirements for using alternative engine technology, such as electric powered vehicles, rather than natural gas or diesel vehicles. This is resulting in regulatory actions to advance the adoption of zero -emission vehicles and a gradual shift away from 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 are proactively engaging 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. Renewable Energy Production We have announced a sustainability growth strategy that includes significant planned investments in our renewable energy business. We have invested, and continue to invest, in facilities to capture methane produced from the Company's landfills and convert it into RNG and electricity. RNG produced from our landfills, as well as dairy biogas, constitute a significant source of fuel for our natural gas collection vehicles. Following enactment of the IRA, which included expanded tax credits for the construction of new RNG production and renewable electricity generation facilities, we expect to accelerate our investments in these areas. The Company's investment in renewable energy production also is guided by the EPA's implementation of the RFS program, which promotes the production and use of renewable transportation fuels. Many of our facilities are the EPA -registered producers 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 RINs, from renewable fuel producers. Notably, market uncertainty related to the EPA's implementation of the RFS program in recent years has led to volatility in the price of RINs. The EPA issued a highly anticipated proposed rule in late 2022 establishing biofuel blending volumes under the RFS program for compliance years 2023 through 2025. The proposed rule reflects the outsized role of biogas under the program, delivers on many reforms that benefit the solid waste sector, recognizes the continued growth of the market for RNG in vehicle applications, and incentivizes the generation of electricity from landfill biogas for use in fueling electric vehicles. We will continue to advocate for the current administration to implement policies that reduce the potential for volatility in the RINs market and ensure long-term stability for renewable transportation fuels, as changes in the RFS market or the 16 structure of the RFS program can and has impacted the financial performance of the facilities constructed to capture and treat the gas. Environmental Justice Federal, state, and local governments are 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, and we continue to proactively engage with local communities. 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. 17 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, including anticipated impacts of the Inflation Reduction Act of 2022; • projections, estimates or assumptions relating to our capital expenditures; 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. 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 2023 and beyond and could cause actual results to be materially different from those 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. We assume no obligation to update any forward -looking statement, whether as a result of future events, circumstances or developments or otherwise. 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 our technology -led automation and optimization strategy and other improvements to operational efficiency and such efforts may not yield the intended result. • We may not be able to maintain cost savings achieved through our automation and optimization efforts, due to inflationary cost pressure or otherwise. • 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. • 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 or lines of business may not increase our earnings in the timeframe anticipated, or at all, due to difficulties operating in new markets or providing new service offerings or lines of business, failure of technologies to perform as expected, failure to operate within budget, integration 18 issues, or regulatory issues and compliance costs, among others, and we may experience issues successfully integrating acquisitions into our internal controls, operations, and/or accounting systems. • Integration of acquisitions and/or new services offerings or lines of business could increase our exposure to the risk of inadvertent noncompliance with applicable laws and regulations, and any expansion into markets outside of North America would result in our business being subject to new laws and regulatory regimes, resulting in greater exposure to risk of inadvertent noncompliance and additional compliance costs. • 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, and businesses or assets we acquire may have undisclosed liabilities, despite our efforts to minimize exposure to such risks through due diligence and other measures. • Execution of our strategy, including growth through acquisitions and our planned expansion of our recycling and renewable energy businesses, may cause us to incur substantial additional indebtedness, which may divert capital away from our traditional business operations and other financial plans. • Supply chain disruptions or delays could detrimentally impact the execution timeline for our planned expansion of our recycling and renewable energy businesses. • 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, including slower growth or recession, 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. 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, bans, taxes or charges on disposal or transportation of out-of-state waste or certain categories of waste; • mandates regarding the management of solid waste and other materials, 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 earlier than expected closure of landfills; 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. 19 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 several 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 significantly impact the waste and recycling 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. 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, material recovery facilities ("MRFs") and other disposal facilities, and landfill gas -to -energy facilities, involves risks such as truck accidents, equipment defects, malfunctions and failures, and improper use of dangerous equipment. 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, as well as operation of heavy machinery and management of flammable materials at our MRFs and transfer stations, 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 at our landfills, due to land scarcity, public opposition or otherwise, which can require us to identify disposal alternatives, resulting in decreased revenue and increased 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 and transfer stations. 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 alleged environmental damage. Such actions could also impact our ability to do business by causing reputational harm. Federal, state and local governments 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, as well as land scarcity, particularly in densely populated areas, may prohibit us from establishing new facilities or expanding existing facilities. Diminishing disposal capacity, typically in proximity to major metropolitan areas, sometimes requires us to transport waste by rail or find alternative disposal solutions in affected areas, increasing our operating costs. Our failure to obtain the required permits and necessary capacity expansion to operate our landfills could have a material adverse impact on our financial condition, results of operations and cash flows. 20 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, 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. (Also see Item 1A. Risk Factors — Market disruption, including labor shortages and supply chain constraints, and macroeconomic pressures, including inflation, have adversely impacted our business and results of operations.) Additionally, the market for employees that serve on our digital team is highly competitive. As we have accelerated our investments in our technology -led automation and optimization strategy, it is increasingly important that we are able to attract and retain employees with the skills and expertise necessary to implement and manage these projects. 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 WM 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, or challenges to our assertions of social and environmental responsibility, could tarnish our reputation and reduce the value of our brand. Damage to our reputation could reduce demand for our services and potentially 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 pursuing requirements for using alternative engine technology, such as electric powered vehicles, rather than natural gas or diesel vehicles. This is resulting in regulatory actions to advance the adoption of zero -emission vehicles and a gradual shift away from 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 are proactively engaging 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. 21 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 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 may not be 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 or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers' businesses, reducing the amount of waste generated by their operations. 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 geographic 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 period may not be indicative of operating results for any other period. Our stock price may be negatively impacted by interim variations in our results. We may not be able to achieve our sustainability and other environmental, social and governance ("ESG')-related goals, including reduction of our greenhouse gas ("GHG') emissions, or execute on our sustainability-related growth strategy and initiatives, within planned timelines, and expectations and regulations relating to ESG performance and disclosure can result in increased costs, risk of noncompliance, and related adverse effects. Consistent with our Company's long-standing commitment to sustainability and environmental stewardship, we have set goals to reduce our GHG emissions and announced other ESG-related goals and initiatives. We have also announced a sustainability growth strategy that includes significant planned investments in our recycling and renewable energy businesses. Our ability to achieve these goals and successfully execute our sustainability growth strategy may be impacted by the numerous risks and uncertainties associated with our business and the environmental services industry, including financial and operating performance, availability of technology and financing, changes in regulation, commodity price fluctuation and general economic conditions. (Also see Item 1A. Risk Factors — 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 macroeconomic conditions and regulations that affect our ability to export products and — We have announced a sustainability growth strategy that includes significant planned investments in our renewable energy businesses; changes to federal and state renewable fuel policies could affect our financial performance, and such investments may not yield the results anticipated.) Some or all of the expected benefits of our sustainability-related investments and initiatives may not occur within the anticipated time periods, or may cost more to achieve than anticipated. An inability to develop, obtain, or scale necessary technology and innovations, and challenges arising from the availability or cost of materials and infrastructure associated 22 with our sustainability investments and initiatives, could impede our ability to execute on our plans and achieve our goals. Actions we take to achieve these goals and implement our sustainability growth strategy and initiatives, including development and implementation of enhanced technology and reporting systems, will require increased capital expenditures and management focus, which may divert investment and management focus away from other aspects of our business operations. There is increasing governmental and social pressure on companies to develop and implement robust ESG policies, practices, and disclosures. The nature, scope and complexity of matters that our Company must assess and report are expanding due to growing mandatory and voluntary reporting on climate -related risks and other topics, such as water usage, waste production, labor, human capital, environmental justice, cybersecurity and privacy, and risk oversight. Our industry faces challenges from these and other rapidly changing laws, regulations, policies and related interpretations, as well as the risk of enforcement actions by governmental and regulatory agencies for noncompliance. Significant expenditures and commitment of time by management, employees and consultants is involved in developing, implementing and overseeing policies, practices, additional disclosures and internal controls related to ESG risk and performance. An inability to implement such policies, practices, and internal controls and maintain compliance with laws and regulations, or a perception among stakeholders that our ESG disclosures and sustainability goals are insufficient or our goals are unattainable, could harm our reputation and competitive position and negatively impact our stock price and business performance. External Economic and Industry Risks The COVID-19 global pandemic disrupted social and commercial activity and financial markets throughout North America; a significant resurgence or new variant of the COVID-19 virus, or other similar pandemic conditions, may have a material adverse impact on our business, financial condition, results of operations and cash flows. The COVID-19 pandemic and related protective measures had a significant adverse impact on many sectors of the economy, including environmental services. The initial business closures and negative impact on general economic conditions resulted in volume declines and reductions in customers' waste service needs, which negatively impacted our results of operations and cash flows. In particular, COVID-19 caused decreases in volumes in higher margin businesses, impacting key financial metrics. A significant future resurgence in transmission of COVID-19, a significant new virus variant, or other pandemic conditions that result in business closures and social restrictions could adversely impact our volumes and costs. If such conditions were to deepen, resulting in a broad -based economic slow -down, 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. Additionally, if a large portion of our employee base were to become ill, it could impact our ability to provide timely and reliable service. Governmental regulation in response to pandemic conditions, including any vaccination requirements, could result in our inability to perform or compete for certain contracts, as well as significant cost, operational disruption, attrition and difficulty securing future labor needs. Market disruption, including labor shortages and supply chain constraints, and macroeconomic pressures, including inflation, have adversely impacted our business and results of operations. Macroeconomic pressures, including inflation and rising interest rates, and market disruption resulting in labor market, supply chain and transportation constraints are continuing. Significant global supply chain disruption and the heightened pace of inflation have reduced availability and increased costs for the goods and services we purchase, with a particular impact on our repair and maintenance costs. Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. Additionally, we expect continued significant headwinds from commodity prices for recycled material into 2023, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. We are also currently experiencing margin pressures from commodity -driven business impacts, particularly from higher fuel prices. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires. If we are not able to overcome limitations on labor availability, it could materially impact our ability to service our customers and our financial results. Geopolitical conflict and the resulting international response, including Russia's invasion of Ukraine, have also exacerbated market disruption, leading to volatility in commodity prices, impacts on the availability and cost of energy, and vendor and supplier disruptions across the global supply chain. 23 Accelerated and pronounced economic pressures, such as the continuing inflationary cost pressure on labor and the goods and services we rely upon to deliver service to our customers, have had and continue to have a significant impact on our cost structure and capital expenditures. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and a heightened pace of inflation, and we may not be able to dynamically manage our cost structure in response to such changes. A significant portion of our revenue is tied to a price escalation index with a lookback provision, resulting in a timing lag in our ability to recover increased costs under those contracts during periods of rapid inflation. Separately, for many of our customers we provide services under multi -year contracts that can restrict our ability to increase prices and the timing of such increases. Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate, but such efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, contractual limitations, and market responses. The inability to adequately increase prices to offset increased costs and inflationary pressures, or otherwise mitigate the impact of these macroeconomic conditions and market disruptions on our business, will increase our costs of doing business and reduce our margins. The extent and duration of the impact of these labor market, supply chain, transportation and commodity -price challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions; recessionary fears and/or an economic recession; size, location, and qualifications of the labor pool; wage and price structures; adoption of new or revised regulations; future resurgence of COVID-19 or other pandemic conditions and restrictions; geopolitical conflicts and responses; and supply and demand for recycled materials. If such impacts are prolonged and substantial, they could have a material negative effect on our results of operations. The environmental services 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 or recycling 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 macroeconomic conditions and regulations that affect our ability to export products. Enforcement or implementation of foreign and domestic regulations can affect our ability to export products. In recent years, new and updated international regulations affecting, and in some cases restricting, the international flow of certain recyclables have led to a reduction in export activity for such recyclables, as well as higher quality requirements and higher processing costs. COVID-19 placed additional financial stress on recyclers and municipalities, resulting in some recycling programs being paused or eliminated. These changes have led to a number of states and provinces considering and several implementing EPR regulations. Prices and demand for recyclables fluctuate. While demand for recyclables generally continues to trend upwards, during the second half of 2022, we saw significant declines in commodity prices for recycled material, and we expect significant commodity price headwinds to continue into 2023, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. Recycling revenues attributable to yield increased $19 million and $537 million in 2022 and 2021, respectively, as compared with the prior year periods primarily from higher market prices for recycling commodities in 2021 and the first half of 2022, before the significant downturn in the second half of 2022. 24 We have announced a sustainability growth strategy that includes significant planned investments in our recycling business to increase automation and reduce labor dependency. Such investments are also targeted at addressing increases in quality requirements for commodities. These investments increase our exposure to commodity price fluctuations. Additionally, future regulation, tariffs, international trade policies or other initiatives, including regulations addressing climate change or GHG emissions, may impact supply and demand of material, or increase operating costs, which could impact the profitability of our recycling operations. If the Company does not effectively manage changes in demand and commodity prices for recycling materials, or if we do not successfully execute our sustainability growth strategy, our investments in recycling infrastructure and technology may not yield the results anticipated. Fluctuation in energy prices also affects our business, including recycling of plastics manufactured from petroleum products. We are currently experiencing commodity -price driven impacts from higher fuel costs. We have increased our investment in landfill gas -to -energy facilities and the size of our landfill gas recovery operations. Significant variations in the price of biogas, 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 energy services business. Demand for these services decreases when drilling activity slows due to depressed oil and gas prices, and our Company and the companies for which we provide these services could face increased regulation and corresponding costs as a result of regulations related to climate change or other environmental concerns. 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 materials at landfills, such as recyclables (cardboard, bottles and cans), yard waste, food waste and electronics. Where organic waste is not banned from disposal in landfills, some large customers such as grocery stores and restaurants are choosing to divert their organic waste from landfills. Reducing landfilled organic waste also reduces the amount of landfill gas produced from our landfills, adversely impacting our landfill gas -to -energy facilities. 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, and providing alternative 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, Canada and an increasing number of cities and states across the U.S. have passed ordinances banning certain types of plastics from sale or use. The most common materials banned include plastic bags and straws, polystyrene plastic and some types of single use packaging. These bans have increased pressure by manufacturers on our recycling facilities to accept a broader array of materials in curbside recycling and composting programs to alleviate public pressures to ban the sale of those materials. However, there are currently no or limited viable end markets for recycling many of these materials, and inclusion of such materials in our recycling stream increases contamination and operating costs that can negatively affect the results of our recycling operations. General economic conditions, such as a broad -based economic recession, 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, inflation, interest rates and access to capital markets. Many in the financial industry have predicted that the North American economy is poised to enter, or has entered, into a period of economic recession. A weak economy generally results in 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 25 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 as was seen in the second half of 2022, negatively impacting 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; we may not be able to dynamically manage our cost structure in response to shifting volume levels and vendor costs, and our cost structure may not correlate with the Consumer Price Index or the waste industry. An economic recession or other economic weakness is likely to negatively impact our revenues and margins. 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, 2022, we had $725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities. 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. However, future changes in tax laws could reverse the impacts of the Tax Act and if ultimately enacted into law, such an increase could materially impact our tax provision, cash tax liability, effective tax rate and net deferred tax liabilities. 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. Fuel supply shortages and price increases could substantially increase our operating expenses. 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. 26 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 is increasingly focusing on new technologies that automate and innovate our operations, improve the customer experience and provide alternatives to traditional disposal and maximize the resource value of waste. We are continuing our multi -year commitment to strategic investments in technology that prioritize reduction of labor dependency for certain high -turnover jobs, further digitalize our customer self-service and implement technologies to further enhance the safety, reliability and efficiency of our collection operations. 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 or acquired, which may negatively impact our operating results and prevent us from recouping or realizing a return on these investments and acquisitions. 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. Significant system failures could impede our ability to timely collect and report financial results in accordance with applicable laws and regulations. In 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system. These systems increase our utilization of, and dependance on, third -party "cloud" computing services in connection with our business operations. Employee work -from -home arrangements prompted by the COVID-19 pandemic increased various technology 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. Significant cybersecurity incidents 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, customers, and vendors. These uses give rise to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent, unauthorized access and/or release of information. Our business necessitates the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers' personal information, private and sensitive personal information about employees, and financial and strategic information about the Company and its business partners. In addition to our own safeguarding efforts, we also rely on a Payment Card Industry compliant third party to protect our customers' credit card information. 27 We are regularly the target of attempted cyber intrusions, and we anticipate continuing to be subject to such attempts as cyber intrusions become increasingly sophisticated and more difficult to predict and protect against. Geopolitical conflict, including Russia's invasion of Ukraine, has also increased the risk of cyber incidents. As such, we 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. Although we believe that the probability of occurrence of a significant cybersecurity incident is less than likely, if such an incident were to occur, the impact on the Company could be substantial. The Company experienced a cyber intrusion in the first quarter of 2021 that was promptly detected, and the third -party software vulnerability was quickly remediated. There was no impact to the Company's operations, services or financial statements. A subsidiary of WMI provided notice to potentially affected individuals, U.S. state and federal regulators, and Canadian regulators. As a result of the cyber intrusion, regulatory investigations may result in costs, fines, penalties, or other obligations. A subsidiary of WMI was named as a defendant in a class action lawsuit related to this incident. Such case was dismissed in 2022, but an appeal by the plaintiffs is currently pending. The Company intends to vigorously defend itself against any such proceedings and does not expect that the outcome of any proceedings related to the 2021 incident will have a material adverse effect on the Company's business, financial condition, results of operations or cash flows; however, assessing and responding to this intrusion required a significant amount of time and management attention. While the magnitude of future cyber intrusions that result in a theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or material interference with our information technology systems or the technology systems of third parties on which we rely cannot be predicted, such incidents could result in material 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. We maintain insurance for cyber incidents; however, due to policy terms, limits and exclusions, such insurance may not apply in all cases, and it may not be adequate to cover all liabilities incurred. As the Company pursues its strategy to grow through acquisitions 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, utilization of "cloud" computing services, and corresponding exposure to cybersecurity risk. Certain new technologies, such as use of autonomous vehicles, remote -controlled equipment, virtual reality, automation and artificial intelligence, 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. Increased state, federal and international laws and regulations related to cybersecurity protections and disclosures may require additional resources for compliance, and any inability, or perceived inability, to adequately address new requirements could subject us to regulatory enforcement, private litigation, and 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. 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 in connection with providing services to our customers. We are subject to a variety of laws and regulations, and may become subject to additional pending 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, transmit and destroy personal data. We must continually monitor the development and adoption of, and commit substantial time and resources to comply with, new and emerging laws and regulations. These laws and regulations provide disclosure obligations for businesses that collect personal information, individual rights relating to personal information, collection and storage requirements, automated decision -making transparency, and potential liability expansion. 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 28 subject us to regulatory enforcement, private litigation, public criticism, business disruption, loss of customers, additional costs and legal liability, reputational damage, and other harm. 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 through 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 alleged 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. We have announced a sustainability growth strategy that includes significant planned investments in our renewable energy businesses; changes to federal and state renewable fuel policies could affect our financial performance, and such investments may not yield the results anticipated The primary drivers of renewable fuel development at our landfills are tax policies, such as the recently expanded federal tax credits for renewable natural gas ("RNG") production and renewable electricity generation, and federal and state incentive programs, such as the federal Renewable Fuel Standard ("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 renewable identification numbers ("RINs"), from renewable fuel producers. The Company has invested, and continues to invest, in facilities that capture and convert landfill gas into RNG, and also works with facilities that capture and convert dairy digester gas into RNG, so that we can participate in the program, and the Company has stated its intention to grow its asset base to notably increase its RNG production by 2026. RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand. The value of the RINs associated with RNG is set through a market established by the program. Prior to 2022, the EPA has promulgated rules on an annual basis establishing refiners' obligations to purchase RNG and other cellulosic biofuels under the RFS program; however, the EPA issued a highly anticipated proposed rule in late 2022 setting forth the direction of the RFS program for compliance years 2023 through 2025. Although this proposal delivers on many reforms that benefit the solid waste sector, the EPA's programmatic shift towards multi -year standards could lead to market uncertainty and volatility in the price of RINs. We continue to advocate for the current administration to implement policies that ensure long-term stability for renewable transportation fuels and expand opportunities for the biogas sector to participate in the RFS program. Changes in the RFS market, the structure of the RFS program or RINs prices and demand can and has impacted the financial performance of the facilities constructed to capture and treat the 29 gas. Such changes could impact or alter our projected future investments, and such investments may not yield the results anticipated. The impact of climate change, and the adoption of climate change legislation or regulations restricting emissions of GHGs, could increase our costs to operate. We continue to assess the physical risks, such as sea -level rise, catastrophic storms and other extreme weather conditions and long-term shifts in climate patterns, and transition risks, such as regulatory, market, policy, and technology changes, to our operations from the effects of climate change. These risks are expected to be unpredictable and widespread. 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, and otherwise to promote adaptation to climate change, support the transition to a low -carbon economy, and require disclosure of climate -related matters. We continue to monitor these efforts and the potential impacts to our operations. Additionally, existing technology presents challenges to our ability to quantify landfill emissions precisely. Should comprehensive federal climate change legislation be enacted, we expect it could impose operational and compliance costs that might not be offset by the revenue increases associated with our lower -carbon service options, the materiality of which we cannot predict. Climate change laws and regulations could also result in increased operational costs or disruption to the business of our customers, potentially impacting our operations and financial condition. We could also experience damage to our reputation and brand, including as a result of a failure or perceived failure to respond responsibly and effectively to changes in legal and regulatory measures adopted to address climate change. 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 or if we or our local partners failed to comply with such laws. 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. 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, including governmental proceedings. 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. 30 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. Macroeconomic pressures, including inflation and rising interest rates, and market disruption are continuing. The U.S. government's decisions regarding its debt ceiling and the possibility that the U.S. could default on its debt obligations may cause further interest rate increases, disrupt access to capital markets and deepen recessionary conditions. 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 $3.5 billion of debt as of December 31, 2022 that is exposed to changes in market interest rates within the next 12 months because of the impact of our commercial paper borrowings, our $1.0 billion, two-year, U.S. term credit agreement ("Term Loan") 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 long-term U.S. and Canadian revolving credit facility ("$3.5 billion revolving credit facility") to meet our cash needs, to the extent available, until maturity in May 2027. As of December 31, 2022, we had no outstanding borrowings under this facility. We had $166 million of letters of credit issued and $1.7 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 $1.6 billion as of December 31, 2022. In the event of a default under our $3.5 billion revolving credit facility, or our Term Loan, 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. 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 also carry a broad range of other insurance coverages that are customary for a company our size. To the extent our obligations for claims are more than we estimated, our insurance coverage is inadequate to cover our obligations, or our insurers are unable to meet their obligations, the requirement that we pay such obligations could have a material adverse effect on our financial results. In addition, to fulfill our financial assurance obligations with respect to variable -rate tax-exempt debt, and 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 WMI financial guarantees. Our financial position, which can be negatively affected by asset impairments, our credit profile and general economic factors, may increase 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. 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 31 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 required to deposit cash to collateralize certain obligations, which could negatively impact our liquidity. 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 and other facility 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, abandoning a development project, project cost overruns 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 9 and 10 to the Consolidated Financial Statements for more information related to our participation in Multiemployer Pension Plans. 32 Item 1B. Unresolved Staff Comments. None. Item 2. Properties. Our principal executive offices are in Houston, Texas where we lease approximately 285,000 square feet under a lease expiring in 2035. We also have administrative offices in Arizona, Connecticut, Illinois and India. We own or lease real property in most locations where we have operations or administrative functions. We have operations (i) in all 50 states except Montana; (ii) in the District of Columbia and (iii) 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. In addition, we continue to make progress on our planned investments to expand our renewable energy and recycling businesses. As of December 31, 2022 and 2021, we owned and operated five and four renewable natural gas facilities, respectively. 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: 2022 2021 Landfills owned or operated 259 260 Transfer stations 337 340 Material recovery facilities 97 96 Item 3. Legal Proceedings. Information regarding our legal proceedings can be found under the Environmental Matters and Litigation sections of Note 10 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. 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 January 31, 2023 was 7,847. 33 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. $250 Comparison of Cumulative Five Year Total Return $200 $150 $100 0- $50 12/31/17 - Waste Management, Inc. —A—S&P 500 Index - Dow Jones Waste & Disposal Services Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Waste Management, Inc. $ 100 $ 105 $ 137 $ 145 $ 208 $ 199 S&P 500 Index $ 100 $ 96 $ 126 $ 149 $ 192 $ 157 Dow Jones Waste & Disposal Services Index$ 100 $ 100 $ 135 $ 144 $ 201 $ 191 34 The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board of Directors. During 2022, we repurchased an aggregate of $1.5 billion of our common stock under accelerated share repurchase ("ASR") agreements and open market transactions, which equated to 9.4 million shares with a weighted average price per share of $160.32, inclusive of per-share commissions. In addition, in December 2021, we executed an ASR agreement that completed in January 2022, at which time we received 0.4 million shares. See Note 13 to the Consolidated Financial Statements for additional information. We announced in December 2022 that the Board of Directors has authorized up to $1.5 billion in future share repurchases. This new authorization replaces our prior $1.5 billion authorization that was fully utilized in 2022. The following table summarizes common stock repurchases made during the fourth quarter of 2022 (shares in millions): Issuer Purchases of Equity Securities Period Total Number of Total Shares Purchased as Approximate Maximum Number of Average Part of Publicly Dollar Value of Shares that Shares Price Paid Announced Plans or May Yet be Purchased Under Purchased per Share Programs the Plans or Programs October 1— 31 0.1 $ 159.79 (a) 0.1 $ 417 million November 1— 30 2.1 $ 161.19 (b) 2.1 $ 84 million December 1— 31 0.5 $ 161.19 (b) 0.5 $ 1.5 billion Total 2.7 $ 161.13 2.7 (a) In October 2022, we repurchased 125,167 shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for $20 million, inclusive of per-share commissions, at a weighted average price of $159.79. (b) In November 2022, we delivered $417 million cash and received 2 1 million shares pursuant to an Accelerated Share Repurchase ("ASR") agreement executed in late October 2022. In December 2022, we completed the ASR agreement and received 0.5 million additional shares based on a final weighted average price of $161.19. The "Average Price Paid per Share" in the table represents the final weighted average price per share paid for the ASR agreement. 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. Item 6. [Reserved] None. 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, 2022. 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 environmental solutions, 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 throughout 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. 35 Through our subsidiaries, including our Waste Management Renewable Energy ("WM Renewable Energy") business, we are also a leading developer, operator and owner of landfill gas -to -energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel for our natural gas fleet. 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 provide collection, transfer, disposal, and recycling and resource recovery services. Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. 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, considering 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, described under Results of Operations below. 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 service 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. This includes expanding traditional recycling services, increasing organics collection and processing, and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As North America's leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change — change that will impact our Company as well as the communities we serve. Consistent with our Company's long-standing commitment to sustainability and environmental stewardship, we published our 2022 Sustainability Report providing details on our Environmental, Social and Governance ("ESG") performance and outlining new 2030 goals. The Sustainability Report conveys the strong linkage between the Company's ESG goals and our growth strategy, inclusive of the planned expansion of the Company's recycling and renewable energy businesses. The information in this 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. For further discussion see Iteml. Business — Regulation — Recent Developments and Focus Areas in Policy and Regulation. We encounter intense competition from governmental, quasi -governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. 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 and other macroeconomic trends can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business. 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 directly as we experience changes in revenue due to volume and a heightened pace of 36 inflation. Volume changes can fluctuate significantly by line of business and volume changes in higher margin businesses, such as what we saw with COVID-19, can impact key financial metrics. We must dynamically manage our cost structure in response to volume changes and cost inflation. We believe the Company's industry -leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers. Enhancements made through these initiatives are intended to seamlessly and digitally connect all the Company's functions required to service our customers in order to provide the best experience and service. In late 2021, we began to execute on the next phase of this technology enablement strategy to automate and optimize certain elements of our service delivery model. This next phase will prioritize reduced labor dependency on certain high -turnover jobs, particularly in customer experience, recycling and residential collection. We continue to make these investments to further digitalize our customer self-service and implement technologies to further enhance the safety, reliability and efficiency of our collection operations. Additionally, in 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system, which will drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience. Macroeconomic pressures, including inflation and rising interest rates, and market disruption, resulting in labor market, supply chain and transportation constraints are continuing. Significant global supply chain disruption and the heightened pace of inflation have reduced availability and increased costs for the goods and services we purchase, with a particular impact on our repair and maintenance costs. Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. While demand for recyclables generally continues to trend upwards, during the second half of 2022, we saw significant declines in commodity prices for recycled materials, and we expect continued significant headwinds from commodity prices for recycled material into 2023, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. We are also currently experiencing margin pressures from other commodity -driven business impacts, particularly from higher fuel prices. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires. Geopolitical conflict and the resulting international response, including Russia's invasion of Ukraine, have also exacerbated market disruption, leading to volatility in commodity prices, impacts on the availability and cost of energy, and vendor and supplier disruptions across the global supply chain. The extent and duration of the impact of these labor market, supply chain, transportation and recycling challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions; recessionary fears and/or an economic recession; size, location, and qualifications of the labor pool; wage and price structures; adoption of new or revised regulations; future resurgence of COVID-19 or other pandemic conditions and restrictions; geopolitical conflicts and responses and supply and demand for recycled materials. As we experience inflationary cost pressures, we focus on our strategic pricing efforts, as well as operating efficiencies and cost controls, to maintain and grow our earnings and cash flow. With these macroeconomic pressures, we remain focused on putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely. We are encouraged by our results in 2022 and remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers' experience and reduce our cost to serve. 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 grew 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. In connection with our acquisition of Advanced Disposal, we and Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal 37 to address divestitures required by the U.S. Depaitiuent of Justice Immediately following the acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million. For the year ended December 31, 2022 and 2021, we incurred integration related costs of $10 million and $51 million, respectively, and for the year ended December 31, 2020, we incurred acquisition and integration related costs of $156 million, which were 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. Post -closing through December 31, 2020, Advanced Disposal 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. For more information related to our acquisitions, see Notes 11 and 17 to the Consolidated Financial Statements and the Summary of Cash Flow Activity section below. COVID-19 Impact The impacts of COVID-19 on the global economy increased rapidly during the second quarter of 2020, affecting our business in most geographies and across a variety of our customer types. Over the past two years, our volumes have recovered, largely exceeding volumes from the pre -pandemic levels in 2019. While we continue to be optimistic about North America's overall economic recovery from the impacts of the COVID-19 pandemic. A significant future resurgence in transmission of COVID-19, a significant new virus variant, or other pandemic conditions that result in business closures and social restrictions could adversely impact our volumes and costs in the future. Current Year Financial Results During 2022, we continued to advance our strategic priorities —enhancing employee engagement, improving our operations through the use of technology and automation, and investing in growth through our recycling and renewable energy businesses. This strategic focus, combined with strong operational execution resulted in increased revenue, income from operations and income from operations margin driven primarily by both yield and volume growth in our collection and disposal business. We were able to achieve these results despite high inflationary cost pressures. We remain diligent in offering a competitively profitable service that meets the needs of our customers and are focused on driving operating efficiencies and reducing discretionary spend. We continue to invest in our people through market wage adjustments, investments in our digital platform and training for our team members. Despite the significant downturn in commodity prices for recyclable materials in the second half of the year, we remain committed to our investment in recycling automation, which reduces costs and increases throughput, positioning us to overcome commodity price headwinds and deliver a differentiated service. We also continue to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business. During 2022, the Company allocated $2,587 million of available cash to capital expenditures. We also allocated $2,577 million of available cash to our shareholders during 2022 through dividends and common stock repurchases. Key elements of our 2022 financial results include: • Revenues of $19,698 million for 2022 compared with $17,931 million in 2021, an increase of $1,767 million, or 9.9%. The increase is primarily attributable to (i) higher yield in our collection and disposal lines of business; (ii) increases from our fuel surcharge program and (iii) higher volume in our collection and disposal lines of business; • Operating expenses of $12,294 million in 2022, or 62.4% of revenues, compared with $11,111 million, or 62.0% of revenues, in 2021. The $1,183 million increase is primarily attributable to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs; (ii) commodity -driven business impacts from higher fuel prices and recycling and (iii) labor cost increases from frontline employee wage adjustments; • Selling, general and administrative expenses of $1,938 million in 2022, or 9.8% of revenues, compared with $1,864 million, or 10.4% of revenues, in 2021. The $74 million increase is primarily attributable to (i) higher costs associated with our strategic investments in our digital platform and sustainability initiatives; (ii) increased labor costs primarily from higher annual incentive compensation costs and merit increases; (iii) increased 38 business travel and entertainment expense and (iv) an increase in provision for bad debts; partially offset by (i) lower long-term incentive compensation costs; (ii) market adjustments for deferred compensation plans related to investment performance and (iii) lower litigation costs; • Income from operations of $3,365 million, or 17.1% of revenues, in 2022 compared with $2,965 million, or 16.5% of revenues, in 2021. The increase in the current year was primarily driven by revenue growth in our collection and disposal lines of business driven by both yield and volume, partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments; (iii) non -cash asset impairments; and (iv) reduced profitability in our recycling business; • Net income attributable to Waste Management, Inc. was $2,238 million, or $5.39 per diluted share, compared with $1,816 million, or $4.29 per diluted share, in 2021. The increase in income from operations, as discussed above, in addition to a net loss on early extinguishment of debt of $220 million in 2021 that did not repeat in 2022, drove an increase in net income; • Net cash provided by operating activities was $4,536 million in 2022, compared with $4,338 million in 2021. The increase in net cash provided by operating activities was driven by (i) an increase in earnings and (ii) lower interest payments during 2022. These results were partially offset by higher income tax payments in 2022 primarily as a result of higher pre-tax earnings and a deposit of approximately $103 million that was made to the Internal Revenue Service ("IRS") related to a disputed tax matter. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. See Note 8 to the Consolidated Financial Statements for further discussion; and • Free cash flow was $1,976 million in 2022, compared with $2,530 million in 2021. The decrease in free cash flow is primarily attributable to (i) an increase in capital spending, primarily driven by our intentional investment in sustainability growth projects as well as timing differences in our fixed asset purchases to support our ongoing operations and (ii) higher income tax payments in 2022. This decrease was partially offset by increased earnings in 2022. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow below 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 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. We also provide additional services that are not managed through our Solid Waste business, including both our Strategic Business Solutions ("WMSBS") and Sustainability and Environmental Services ("SES") businesses, which include landfill gas -to -energy services, environmental solutions services and recycling brokerage services. We also offer 39 certain other expanded service offerings and solutions. The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions): 2022 2021 2020 Commercial $ 5,450 $ 4,760 $ 4,102 Industrial 3,681 3,210 2,770 Residential 3,339 3,172 2,716 Other collection 699 533 465 Total collection 13,169 11,675 10,053 Landfill 4,600 4,153 3,667 Transfer 2,143 2,072 1,855 Recycling 1,701 1,681 1,127 Other (a) 2,405 2,112 1,776 Intercompany (b) (4,320) (3,762) (3,260) Total $ 19,698 $ 17,931 $ 15,218 (a) The "Other" line of business includes (i) certain services provided by our WMSBS business; (ii) certain services within our sustainability business including our landfill gas to energy operations managed by our WM Renewable Energy business and (iii) certain other expanded service offerings and solutions and reflects the results of non -operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. Revenue attributable to collection, landfill, transfer and recycling services provided by our "Other" businesses has been reflected as a component of the relevant 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. 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): 2022 vs. 2021 2021 vs. 2020 Asa%of Asa%of Asa%of Asa%of Related Total Related Total Amount Business(a) Amount Company(b) Amount Business(a) Amount Company(b) Collection and disposal $ 1,025 6.7 % $ 468 3.5 % Recycling (c) 19 1.2 537 51.5 Fuel surcharges and other 474 51.7 240 36.9 Total average yield (d) $ 1,518 8.5 % $ 1,245 8.2 % Volume 233 1.3 435 2.8 Internal revenue growth 1,751 9.8 1,680 11.0 Acquisitions 62 0.4 1,032 6.8 Divestitures (15) (0.1) (49) (0.3) Foreign currency translation (31) (0.2) 50 0.3 Total $ 1,767 9.9 % $ 2,713 17.8 % (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. 40 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 for the year ended December 31 are as follows (dollars in millions): 2022 vs. 2021 2021 vs. 2020 Asa%of Asa%of Related Related Amount Business Amount Business Commercial $ 406 9.2 % $ 152 3.9 % Industrial 307 10.2 126 4.8 Residential 185 6.1 119 4.5 Total collection 898 8.2 397 4.2 Landfill 79 3.1 42 1.8 Transfer 48 4.5 29 2.9 Total collection and disposal $ 1,025 6.7 % $ 468 3.5 % Our overall strategic pricing efforts are focused on recovering our higher cost to service our customers that we experience in our business by increasing our average unit rate. We experienced strong average yield growth in our collection line of business of 8.2% in 2022, up from 4.2% in 2021, illustrating our focus on our pricing efforts in this inflationary environment. We are driving improvements in our residential line of business, aligning the price charged for services we provide to our customers with the costs to provide the services, resulting in increased average yield in 2022 of 6.1%, up from 4.5% in 2021. We are also continuing to see growth in our disposal business with our municipal solid waste business experiencing average yield of 6.2% in 2022, up from 3.2% in 2021. Recycling —Recycling revenues attributable to yield increased $19 million and $537 million in 2022 and 2021, respectively, as compared with the prior year periods, primarily from higher market prices for recycling commodities in 2021 and the first half of 2022, before the significant downturn in the second half of 2022. Demand for recycled materials strengthened through 2021 and into early 2022, primarily driven by the growth in e- commerce, businesses re -opening, and manufacturers committing to use more recycled content in their packaging. In 2022, we experienced all-time high recycling commodity pricing in the first half of the year to be followed by historically low pricing through the second half of the year, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. We expect significant commodity price headwinds to continue into 2023. Average market prices for recycling commodities at the Company's facilities were approximately 10% lower and 115% higher in 2022 and 2021, respectively, when compared with the prior year periods. Revenue decline from lower commodity pricing was offset by higher pricing in our recycling brokerage business as well as our continued focus on a fee -based pricing model that ensures fees paid by customers cover the cost of processing materials and the impact on our cost structure of managing contamination in the recycling stream. Fuel Surcharges and Other— These fees, which include (i) our fuel surcharge program, (ii) yield from our WM Renewable Energy business and (iii) other mandated fees, increased $474 million and $240 million in 2022 and 2021, respectively, as compared to the prior year periods. Fuel surcharge revenues are based on and fluctuate in response to changes in the national average prices for diesel fuel, and also vary with changes in our volume -based revenue activity. Market prices for diesel fuel were over 50% and 30% higher in 2022 and 2021, as compared to the prior year periods. Revenue from yield growth in our WM Renewable Energy business increased $48 million and $85 million in 2022 and 2021, respectively, as compared to the prior year period, primarily driven by increases in the value for electricity and 41 renewable natural gas credits. 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) increased $233 million, or 1.3%, and $435 million, or 2.8%, in 2022 and 2021, respectively, as compared with the prior year periods. Our collection and disposal business volumes grew 1.8% and 3.0% in 2022 and 2021, respectively. Our 2022 volume growth has moderated when compared to the accelerated volume recovery from COVID-related impacts experienced in 2021. Special waste volumes at our landfills have been the most significant driver of volume growth, primarily due to an increase in event -driven projects. In addition, our WMSBS business volumes grew as a result of our continued focus on a differentiated service model for national accounts customers. Our volumes have been impacted by our intentional efforts to reduce unprofitable residential and industrial collection volumes. We experienced higher volume growth in 2021 relative to the sharp decline experienced in April 2020 as a result of COVID-related impacts. The pace of recovery in our volumes accelerated in the second quarter of 2021 and continued in the second half of 2021 with minimal impact from periodic resurgences in transmission of COVID-19 virus variants as communities and businesses have remained open. The portions of our business that had the most pronounced decreases in volume due to the pandemic were our industrial and commercial collection businesses and our landfill volumes. Acquisitions and Divestitures Acquisitions and divestitures resulted in a net increase in revenues of $47 million, or 0.3%, and $983 million, or 6.5%, in 2022 and 2021, respectively, as compared with the prior year periods, with the increase in 2021 primarily due to our acquisition of Advanced Disposal. 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 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. 42 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): 2022 2021 2020 Labor and related benefits $ 3,452 17.5 % $ 3,223 18.0 % $ 2,746 18.1 % Transfer and disposal costs 1,215 6.2 1,161 6.5 1,135 7.5 Maintenance and repairs 1,835 9.3 1,596 8.9 1,331 8.7 Subcontractor costs 2,006 10.2 1,766 9.9 1,523 10.0 Cost of goods sold 973 4.9 936 5.2 553 3.6 Fuel 592 3.0 393 2.2 265 1.7 Disposal and franchise fees and taxes 720 3.7 698 3.9 606 4.0 Landfill operating costs 421 2.1 412 2.3 394 2.6 Risk management 348 1.8 344 1.9 269 1.8 Other 732 3.7 582 3.2 519 3.4 $ 12,294 62.4% $ 11,111 62.0% $9,341 61.4% Our operating expenses in 2022 increased, as compared with 2021, primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs; (ii) commodity -driven business impacts from higher fuel prices and recycling and (iii) labor cost pressure from frontline employee wage adjustments. We also continue to focus on operating efficiency and efforts to control costs. Our operating expenses in 2021 increased, as compared with 2020, primarily due to (i) increased volumes from the acquisition of Advanced Disposal; (ii) commodity -driven business impacts, particularly from recycling brokerage rebates and higher fuel prices; (iii) volume recovery from earlier pandemic -driven lows; (iv) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth and (v) inflationary cost pressures, primarily in the second half of 2021. These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs as volumes grow. Significant items affecting the comparison of operating expenses between reported periods include: Labor and Related Benefits - The increase in labor and related benefits costs in 2022, as compared with 2021,was largely driven by (i) proactive market wage adjustments to hire and retain talent; (ii) annual merit and annual incentive compensation cost increases and (iii) increases in health and welfare costs attributable to our intentional investment in delivering a leading benefits program for our employees and increases in medical care activity. The increase in labor and related benefits costs in 2021, as compared with 2020, was largely driven by (i) increased labor and related benefits costs related to our acquisition of Advanced Disposal; (ii) merit and proactive market wage adjustments to hire and retain talent; (iii) volume increases, particularly in our commercial and industrial collection businesses, which when combined with driver shortages and turnover in certain markets, increased overtime and training hours; (iv) higher annual incentive compensation and (v) increases in health and welfare costs attributable to medical care activity generally returning to pre -pandemic levels. Transfer and Disposal Costs - The increase in transfer and disposal costs in 2022, as compared with 2021, was largely driven by inflationary cost increases, which includes increased disposal fees at third -party sites and higher fuel from our third -party haulers offset, in part, by decreases in residential collection and transfer volume. The increase in transfer and disposal costs in 2021, as compared with 2020, was largely driven by increased volume, which includes the volumes from our acquisition of Advanced Disposal and inflationary cost increases from our third -party haulers. Maintenance and Repairs - The increase in maintenance and repairs costs in 2022, as compared with 2021,was largely driven by (i) inflationary cost increases for parts, supplies and third -party services; (ii) additional fleet maintenance driven by supply chain constraints, which have delayed deliveries of new trucks; (iii) labor cost increases for our technicians, including higher overtime; (iv) increased building maintenance costs including improvements to facilities and (v) an increase in container repairs driven by delays in delivery of steel containers due to supply chain constraints. The increase in maintenance and repairs costs in 2021, as compared with 2020, was largely driven by (i) our acquisition of Advanced Disposal, including intentional investments to bring the acquired fleet to our standards; (ii) inflationary cost 43 increases for parts, supplies and third -party services; (iii) additional fleet maintenance driven by commercial and industrial collection volume increases; (iv) labor cost increases for our technicians, including higher overtime from labor shortages; (v) an increase in container repairs driven by volume increases and delays in normal course capital expenditures for steel containers due to both steel costs and supply chain constraints and (vi) increased building maintenance costs including improvements to facilities. Subcontractor Costs — The increase in subcontractor costs in 2022, as compared with 2021,was largely driven by (i) inflationary cost increases, particularly for fuel and labor costs from third -party haulers and (ii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than our collection and disposal business. The increase in subcontractor costs in 2021, as compared with 2020, was largely driven by (i) inflationary cost increases from third -party haulers and higher volumes; (ii) an increase in volumes in our WMSBS business and (iii) the acquisition of Advanced Disposal. Cost of Goods Sold — The increase in cost of goods sold in 2022, as compared with 2021, was primarily driven by all-time high recycling commodity pricing in the first half of the year offset, in part, by the historically low pricing through the second half of the year. The increase in cost of goods sold in 2021, as compared with 2020, was primarily driven by increases in market prices for recycling commodities of approximately 115% and to a lesser extent, higher recycling volumes. Fuel — The increase in fuel costs in 2022, as compared with 2021, was primarily due to increases in market diesel and natural gas fuel prices as compared to the prior year. The increase in fuel costs in 2021, as compared with 2020, was primarily due to (i) increases in market diesel and natural gas fuel prices; (ii) the acquisition of Advanced Disposal and (iii) volume increases in our commercial and industrial collection businesses. Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes in 2022, as compared with 2021, was primarily driven by higher franchise fees, driven by an increase in landfill volumes, paid to certain municipalities where we operate and overall rate increases in our fees and taxes paid on our disposal volumes. The increase in disposal and franchise fees and taxes in 2021, as compared with 2020, was primarily driven by (i) landfill volume increases; (ii) disposal rate increases at certain landfills and (iii) additional costs attributable to our acquisition of Advanced Disposal. Landfill Operating Costs — Our landfill operating costs increased in 2022, as compared with 2021, primarily due to increases in methane and leachate management costs and other site maintenance costs, in part due to inflation. The increase in landfill operating costs in 2021, as compared with 2020, was primarily due to volume increases, including from our acquisition of Advanced Disposal and increased testing and monitoring costs. These increases were partially offset by (i) lower leachate management costs, primarily due to the cessation of certain transportation costs in our East Tier segment and (ii) changes in the measurement of our environmental remediation obligations and recovery assets. The increases in both 2022 and 2021 were offset, in part, by changes in the measurement of our environmental remediation obligations and recovery assets in each year. Our measurement of these balances includes application of a risk -free discount rate, which is based on the rate for U.S. Treasury bonds. The discount rate increased, which resulted in a reduction in the net liability balance and a credit to expense, in both 2021 and 2022 with more significant impact in 2022. Conversely, in 2020, there was a decrease in the discount rate, which resulted in an increase in the net liability balance and a charge to expense. Risk Management —Risk management costs increased slightly in 2022, as compared with 2021, primarily due to inflation in premiums. The increase in risk management costs in 2021, as compared with 2020, was primarily due to our acquisition of Advanced Disposal and overall economic recovery from COVID-driven impacts, increasing business activity and claim volumes and related costs. Other — Other operating cost increases in 2022, as compared with 2021, were primarily due to (i) inflationary cost pressures; (ii) higher equipment rental costs attributable, in part, to supply chain constraints slowing normal course fleet and equipment orders; (iii) higher utility costs at our facilities and (iv) an increase in business travel in 2022. Additionally, a favorable litigation settlement in 2021 impacted the comparison. Other operating cost increases in 2021, as compared with 2020, were due to our acquisition of Advanced Disposal and increased equipment rental costs attributable, in part, to increased volumes and supply chain constraints slowing normal course fleet and equipment orders. Additionally, during the second half of 2021, additional volumes and inflationary cost pressures drove an increase in various costs. Partially 44 offsetting these was a favorable litigation settlement in 2021. Additionally, 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): 2022 2021 2020 Labor and related benefits $ 1,195 6.1 % $ 1,215 6.8 % $ 1,057 6.9 % Professional fees 268 1.4 228 1.3 256 1.7 Provision for bad debts 50 0.2 37 0.2 54 0.4 Other 425 2.1 384 2.1 361 2.4 $ 1,938 9.8 % $ 1,864 10.4 % $ 1,728 11.4 % Selling, general and administrative expenses in 2022, as compared with 2021, increased primarily due to (i) strategic investments in our digital platform, including those that support our ongoing sustainability initiatives; (ii) higher annual incentive compensation costs and merit increases for our employees; (iii) increased business travel and entertainment expense and (iv) an increase in provision for bad debts, partially offset by (i) lower long-term incentive compensation costs; (ii) market adjustments for deferred compensation plans related to investment performance and (iii) lower litigation costs. Selling, general and administrative expenses in 2021, as compared with 2020, increased primarily due to (i) higher incentive compensation costs; (ii) strategic investments in our digital platform and (iii) increased labor, support and integration costs following our acquisition of Advanced Disposal. Partially offsetting these increases are lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020 and improvements in our provision for bad debts as collections returned to pre -pandemic levels. Although our costs increased in 2022 and 2021, the significant revenue increases positioned us to reduce our overall selling, general and administrative expenses as a percentage of revenues when compared with each of the prior year periods. Significant items affecting the comparison of our selling, general and administrative expenses between reported periods include: Labor and Related Benefits — The decrease in labor and related benefits costs in 2022, as compared with 2021, was primarily due to (i) lower long-term incentive compensation costs; (ii) reductions in contract labor and (iii) market adjustments for deferred compensation plans related to investment performance, partially offset by higher annual incentive compensation and annual merit increases for our employees. The increase in labor and related benefits costs in 2021, as compared with 2020, was primarily due to (i) higher incentive compensation costs; (ii) additional headcount, including from our acquisition of Advanced Disposal; (iii) annual merit increases for our employees; (iv) costs associated with our strategic investments in our digital platform and (v) increases in health and welfare costs attributable to medical care activities generally returning to pre -pandemic levels from the lower level experienced during 2020. Professional Fees — The increase in professional fees in 2022, as compared with 2021, was primarily driven by strategic investments in our digital platform, including those that support our ongoing sustainability initiatives, partially 45 offset by lower acquisition and integration costs. Professional fees decreased in 2021, as compared with 2020, primarily due to lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020, partially offset by increased strategic investments in our digital platform and integration costs related to our acquisition of Advanced Disposal. Provision for Bad Debts — The increase in provision for bad debts in 2022, as compared with 2021, is primarily related to (i) increased revenue; (ii) increased collection risk with certain customers and (iii) favorable adjustments to our reserves taken in 2021 as a result of improvement in customer account collections. The decrease in provision for bad debts in 2021, as compared with 2020, was primarily due to an overall improvement in customer account collections and decreased collection risk with certain customers. Other— The increase in other expenses in 2022, as compared with 2021, was primarily driven by costs associated with technology infrastructure to support our strategic investments in our digital platform and an increase in business travel and entertainment expense, partially offset by lower litigation costs. The increase in other expenses in 2021, as compared with 2020, was primarily driven by costs associated with our acquisition of Advanced Disposal and increased technology infrastructure costs to support our strategic investments in our digital platform. Depreciation, Depletion and Amortization Expenses The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues): 2022 2021 2020 Depreciation of tangible property and equipment $ 1,155 5.9 % $ 1,125 6.2 % $ 996 6.6 % Depletion of landfill airspace 754 3.8 731 4.1 568 3.7 Amortization of intangible assets 129 0.6 143 0.8 107 0.7 $ 2,038 10.3 % $ 1,999 11.1 % $ 1,671 11.0 % The increase in depreciation of tangible property and equipment in 2022, as compared with 2021, was primarily driven by investments in capital assets, including containers to service our customers and strategic investments in our digital platform. The increase in depletion of landfill airspace in 2022, as compared with 2021, was primarily driven by changes in depletion rates from revisions in landfill cost estimates and increased volumes at our landfills, partially offset by a prior year charge due to management's decision to close a landfill in our West Tier segment earlier than expected, resulting in the acceleration of the timing of capping, closure, and post -closure activities. The decrease in amortization of intangible assets in 2022, as compared with 2021, was primarily driven by the amortization of acquired intangible assets from the acquisition of Advanced Disposal. The increase in depreciation of tangible property and equipment in 2021, as compared with 2020, was related to our acquisition of Advanced Disposal and investments in capital assets, including our fleet, heavy equipment at our landfills and containers to service our customers. The increase in depletion of landfill airspace in 2021, as compared with 2020, was driven by (i) changes in depletion rates driven by revisions in landfill estimates, including a $15 million charge due to management's decision to close a landfill in our West Tier segment earlier than expected; (ii) our acquisition of Advanced Disposal and (iii) landfill volume increases associated with the economic recovery from COVID-driven impacts. Additionally, 2020 benefited from a decrease in the inflation rate used to estimate capping, closure, and post -closure asset retirement obligations. The increase in amortization of intangible assets in 2021, as compared with 2020, was primarily driven by the amortization of acquired intangible assets related to the acquisition of Advanced Disposal. Restructuring During the year ended December 31, 2021, we recognized $8 million of restructuring charges primarily related to our acquisition of Advanced Disposal. During the year ended December 31, 2020, we recognized $9 million of restructuring 46 charges primarily related to modifying our field sales and customer services structures to better support our strategic investments in our digital platform. (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): 2022 2021 2020 Gain from divestitures, net $ (5) $ (44) $ (33) Asset impairments 50 8 68 Other 17 20 $ 62 $ (16) $ 35 For the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management's decision to close two landfills within our East Tier segment and (ii) a $17 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly -owned subsidiary's estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10 to the Consolidated Financial Statements. These losses were partially offset by a $5 million gain from the divestiture of a solid waste business in our West Tier segment. For the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations in our East Tier segment and (ii) an $8 million gain from divestitures of certain ancillary operations in our Other segment. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment. For the year ended December 31, 2020, we recognized $35 million of net charges primarily related to (i) a $33 million net gain associated with net asset divestitures executed to address requirements of the U.S. Depaitinent of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment; (ii) $41 million of non -cash impairment charges primarily related to two landfills and an oil field waste injection facility in our West Tier segment; (iii) a $20 million non -cash impairment charge in our East Tier segment due to management's decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $7 million of net charges primarily related to non -cash impairments of certain assets within our WM Renewable Energy business in our Other segment. See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. 47 Income from Operations The following table summarizes income from operations for the year ended December 31 (dollars in millions): 2022 Period -to - Period Change 2021 Period -to - Period Change 2020 Solid Waste: East Tier $ 2,249 $ 212 10.4 % $ 2,037 $ 365 21.8 % $ 1,672 West Tier 2,346 243 11.6 2,103 303 16.8 1,800 Solid Waste 4,595 455 11.0 4,140 668 19.2 3,472 Other (a) 26 (8) * 34 76 * (42) Corporate and Other (b) (1,256) (47) 3.9 (1,209) (213) 21.4 (996) Total $ 3,365 $ 400 13.5 % $ 2,965 $ 531 21.8 % $ 2,434 Percentage of revenues 17.1 % 16.5 % 16.0 % * Percentage change does not provide a meaningful comparison. (a) "Other" includes (i) elements of our WMSBS business that are not included in the operations of our reportable segments; (ii) elements of our sustainability business that includes landfill gas -to -energy operations managed by our WM Renewable Energy business, our SES business and recycling brokerage services and not included in the operations of our reportable segments; (iii) certain other expanded service offerings and solutions and (iv) 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 and Other" 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. Solid Waste — The most significant items affecting the results of operations of our Solid Waste business during the three years ended December 31, 2022 are summarized below: • Income from operations in our Solid Waste business increased in 2022, as compared with 2021, primarily due to revenue growth in our collection and disposal businesses driven by both yield and volume. This increase was partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments; (iii) divestitures, asset impairments and unusual items discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net; that impacted our East Tier results and (iv) reduced profitability in our recycling business from the decline in recycling commodity prices and lower volumes. • Income from operations in our Solid Waste business increased in 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal; (ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment and (iii) changes from divestitures, asset impairments and unusual items discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net that impacted both Tiers' results. These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth; (ii) increased landfill depletion from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post -closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post -closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures. During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation, depletion and amortization of acquired assets. 48 Other— The decrease in income from operations in 2022, as compared with 2021, was due to the recognition of acquisition and integration -related costs, as well as, a prior year gain from divestitures of certain ancillary operations in our Other segment, discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net, partially offset by improved profitability in our SES and WMSBS businesses. The increase in income from operations for 2021, as compared to 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business. Corporate and Other — The most significant items affecting the results of operations for Corporate and Other during the three years ended December 31, 2022 are summarized below: • These costs increased in 2022, as compared with 2021, primarily due to strategic investments in our digital platform and sustainability initiatives, partially offset by lower acquisition and integration related costs. • These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs; (ii) increased labor, support and integration costs following our acquisition of Advanced Disposal; (iii) strategic investments in our digital platform; (iv) increased health and welfare costs attributable to medical care activity generally returning to pre -pandemic levels from the lower levels experienced during 2020 and (v) charges pertaining to reserves for certain loss contingencies during 2021. These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in the fourth quarter of 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021. Interest Expense, Net Our interest expense, net was $378 million, $365 million and $425 million in 2022, 2021 and 2020, respectively. The increase in interest expense, net for 2022 was primarily related to borrowings incurred under our $1.0 billion two-year, U.S. term credit agreement ("Term Loan") and increases in interest rates on our floating-rate debt, including commercial paper and variable -rate tax-exempt bonds. Partially offsetting these increases were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalent balances. The decrease in interest expense, net for 2021 was primarily due to certain refinancing activities, as discussed further below, including (i) the redemption of $3.0 billion of senior notes in July 2020 and the issuance of $2.5 billion of senior notes in November 2020 at lower rates and (ii) the retirement of $1.3 billion of certain high -coupon senior notes and concurrent issuance of $950 million of lower coupon senior notes in May 2021. The decreases were partially offset by decreases in interest income as a result of lower cash and cash equivalents balances in 2021. See Note 6 to the Consolidated Financial Statements for more information related to our debt balances. Loss on Early Extinguishment of Debt, Net In May 2021, WMI issued $950 million of senior notes. Concurrently, we used the net proceeds from the newly issued senior notes of $942 million and available cash on hand to retire $1.3 billion of certain high -coupon senior notes. The loss on early extinguishment of debt for 2021 includes $220 million of charges related to this tender offer, including cash paid of $211 million related to premiums and other third -party costs, and $9 million primarily related to unamortized discounts and debt issuance costs. See Note 6 to the Consolidated Financial Statements for more information related to these transactions. 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 $3.0 billion of senior notes with a special mandatory redemption feature (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 49 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. During the fourth quarter of 2020, we repaid the outstanding borrowings under a 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. Additionally, 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. Equity in Net Losses of Unconsolidated Entities We recognized equity in net losses of unconsolidated entities of $67 million, $36 million and $68 million in 2022, 2021 and 2020, respectively. The losses for each period were 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 Notes 8 and 18 to the Consolidated Financial Statements. We also held a residual financial interest in an entity that owned a refined coal facility that qualified for federal tax credits. In 2020, the entity sold the majority of its assets resulting in a $7 million non -cash impairment charge at that time. Income Tax Expense We recorded income tax expense of $678 million, $532 million and $397 million in 2022, 2021 and 2020, respectively, resulting in effective income tax rates of 23.2%, 22.6% and 20.9% for the years ended December 31, 2022, 2021 and 2020, respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the following: • Investments Qualjing for Federal Tax Credits — Our low-income housing properties investments reduced our income tax expense by $99 million, $74 million and $87 million, primarily due to tax credits realized from these investments for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities; • Equity -Based Compensation — During 2022, 2021 and 2020, we recognized a reduction in our income tax expense of $17 million, $18 million and $27 million, respectively, for excess tax benefits related to the vesting or exercise of equity -based compensation awards; • State Net Operating Losses and Credits —During 2022, 2021 and 2020, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $8 million, $15 million and $12 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 $6 million, $13 million and $10 million for the years ended December 31, 2022, 2021 and 2020, respectively; • Adjustments to Accruals and Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $1 million and $17 million for the years ended December 31, 2022 and 2021, respectively, and a reduction in our income tax expense of $3 million for the year ended December 31, 2020; • Tax Implications of Divestitures — During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations. This gain was not taxable, which benefited our effective income tax rate for the year ended December 31, 2021; 50 • Non -Deductible Transaction Costs — During 2020, we recognized the detrimental tax impact of $27 million 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; and • Tax Legislation — The Inflation Reduction Act of 2022 ("IRA") was signed into law by President Biden on August 16, 2022 and contains a number of tax -related provisions. The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (to be recorded as a reduction in our operating expense) from tax credits through 2024, which is in line with the benefit we have realized from our alternative fuel tax credits in prior years. Additionally, we will incur an excise tax of 1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock. The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The current expectation is the minimum corporate tax will not have an impact on the Company. With respect to only the investment tax credit aspect of the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2025. Additionally, the production tax credit incentives for investments in renewable energy and the carbon capture provisions of the IRA will likely result in incremental benefit, although at this time the amount of those benefits have not been quantified. See Note 8 to the Consolidated Financial Statements for more information related to income taxes. Landfill and Environmental Remediation Discussion and Analysis We owned or operated 254 solid waste landfills and five secure hazardous waste landfills as of December 31, 2022 and 255 solid waste landfills and five secure hazardous waste landfills as of December 31, 2021. 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): 2022 2021 Remaining Remaining Permitted Expansion Total Permitted Expansion Total Capacity Capacity Capacity Capacity Capacity Capacity Balance as of beginning of year (in tons) 4,889 174 5,063 4,891 191 5,082 Acquisitions, divestitures, newly permitted landfills and closures 163 — 163 (4) — (4) Changes in expansions pursued (a) 62 62 — 105 105 Expansion permits granted (b) 57 (57) — 126 (126) Depletable tons received (125) — (125) (124) — (124) Changes in engineering estimates and other (c) (d) 181 11 192 — 4 4 Balance as of end of year (in tons) (e) 5,165 190 5,355 4,889 174 5,063 Balance as of end of year (in cubic yards) (e) 5,079 180 5,259 4,808 163 4,971 (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. (b) We received expansion permits at 12 of our landfills during 2022 and seven of our landfills during 2021, 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 51 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. (d) In 2022, a change in accounting estimate resulted in an increase of 190 million tons across certain landfills. (e) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity. The depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands): 2022 2021 # of Depletable Tons per # of Depletable Tons per Sites Tons Day Sites Tons Day Solid waste landfills (a) 254 (b) 123,462 452 255 123,163 451 Hazardous waste landfills 5 652 2 5 586 2 259 124,114 454 260 123,749 453 Solid waste landfills closed, divested or lease or other contractual agreement expired during related year 4 633 9 114 124,747 123,863 (c) (a) As of December 31, 2022 and 2021, we had 15 landfills and 14 landfills, respectively, which were not accepting waste. (b) In 2022, we (i) executed one new contractual agreement; (ii) reopened one previously closed landfill; (iii) developed one new landfill; (iv) closed three landfills and (v) closed one landfill operated under contractual agreement. (c) December 31, 2021 tons have been restated for comparability purposes by removing 1.6 million tons received at the landfill that were not depleted as they were used for beneficial purposes and generally were redirected from the permitted airspace to other areas of the landfill. As of December 31, 2022, we owned or controlled the management of 231 sites with remedial activities, are in closure or have received a certification of closure or post -closure from the applicable regulatory agency. Based on remaining permitted airspace as of December 31, 2022 and projected annual disposal volume, the weighted average remaining landfill life for all of our owned or operated landfills is approximately 39 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 16 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, 2022, segregated by their estimated operating lives based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows: # of Landfills 0 to 5 years 28 6 to 10 years 23 11 to 20 years 53 21 to 40 years 62 41+ years 93 Total 259 (a) (a) Of the 259 landfills, 218 are owned, 29 are operated under lease agreements and 12 are operated under other contractual agreements. For the landfills not owned, we are usually responsible for fmal capping, closure and post -closure obligations. 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 depletion for the year ended December 31, 2022 are reflected in the table below (in millions): December 31, 2021 Capital additions Asset retirement obligations incurred and capitalized Depletion of landfill airspace Foreign currency translation Asset retirements and other adjustments December 31, 2022 Cost Basis of Landfill Assets $ 17,734 791 114 (81) (32) $ 18,526 Accumulated Landfill Airspace Depletion $ (10,390) (754) 36 212 Net Book Value of Landfill Assets $ 7,344 791 114 (754) (45) 180 7,630 $ (10,896) $ As of December 31, 2022, we estimate that we will spend approximately $731 million in 2023, and approximately $1.6 billion in 2024 and 2025 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 2 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 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. 53 The changes to landfill and environmental remediation liabilities for the year ended December 31, 2022 are reflected in the table below (in millions): Environmental Landfill Remediation December 31, 2021 $ 2,326 $ 213 Obligations incurred and capitalized 114 Obligations settled (121) (28) Interest accretion 108 4 Revisions in estimates and interest rate assumptions (a) 243 15 Acquisitions, divestitures and other adjustments (6) December 31, 2022 $ 2,664 $ 204 (a) In 2021, the increase in our landfill liabilities for revisions in estimates and interest rate assumptions was $33 million. The increase in our landfill liabilities in 2022 is primarily due to inflationary cost pressures that are expected to impact costs over the remaining landfill lives. Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended December 31 (in millions): 2022 2021 2020 Interest accretion on landfill liabilities $ 108 $ 108 $ 103 Interest accretion on and discount rate adjustments to environmental remediation liabilities and recovery assets (10) (2) 9 Leachate and methane collection and treatment 193 183 189 Landfill remediation costs 12 6 1 Other landfill site costs 118 117 92 Total landfill operating costs $ 421 $ 412 $ 394 Depletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following: • the depletion 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 depletion 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. Depletion 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 depletable basis of a landfill (net of accumulated depletion) 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, depleted 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, depleted on a per -ton basis using each discrete final capping event's estimated permitted and expansion airspace. Accordingly, each landfill has multiple per -ton depletion rates. 54 The following table presents our landfill airspace depletion expense on a per -ton basis for the year ended December 31: 2022 2021 2020 Depletion of landfill airspace (in millions) $ 754 $ 731 $ 568 Tons received, net of redirected waste (in millions) 125 124 112 Average landfill airspace depletion expense per ton $ 6.05 $ 5.90 $ 5.07 Different per -ton depletion rates are applied at each of our 259 landfills, and per -ton depletion 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 depletion expense measured on a per -ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year. Liquidity and Capital Resources The Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck -in acquisitions, and funding of strategic sustainability growth investments. 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. 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. Summary of Contractual Obligations The following table summarizes our significant contractual obligations as of December 31, 2022 (other than recorded obligations related to liabilities associated with environmental remediation costs and non -cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions): 2023 2024 2025 2026 2027 Thereafter Total Recorded Obligations: Final capping, closure and post -closure liabilities (a) $ 137 $ 219 $ 212 $ 181 $ 147 $ 3,162 $ 4,058 Debt payments (b) 2,423 1,290 1,324 673 1,163 8,275 15,148 Unrecorded Obligations: Interest on debt (c) 451 384 349 326 297 2,691 4,498 Estimated unconditional purchase obligations (d) 192 158 114 101 34 369 968 Anticipated liquidity impact as of December 31, 2022 $ 3,203 $ 2,051 $ 1,999 $ 1,281 $ 1,641 $ 14,497 $ 24,672 (a) Includes liabilities for final capping, closure and post -closure costs recorded in our Consolidated Balance Sheet as of December 31, 2022, without the impact of discounting and inflation. Our recorded liabilities for final capping, closure and post -closure costs 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. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations. (c) 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, 2022. As of December 31, 2022, we had $89 million of accrued interest related to our debt obligations. (d) Our unrecorded obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future 55 financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees. Summary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions): 2022 2021 Cash and cash equivalents $ 351 $ 118 Restricted funds: Insurance reserves $ 313 $ 305 Final capping, closure, post -closure and environmental remediation funds 113 118 Other 5 5 Total restricted funds (a) $ 431 $ 428 Debt: Current portion $ 414 $ 708 Long-term portion 14,570 12,697 Total debt $ 14,984 $ 13,405 (a) As of December 31, 2022 and 2021, $83 million and $80 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets. 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, 2022 are described in Note 6 to the Consolidated Financial Statements. As of December 31, 2022, we had approximately $3.1 billion of debt maturing within the next 12 months, including (i) $1.7 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) $725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) $500 million of 2.4% senior notes that mature in May 2023 and (iv) $192 million of other debt with scheduled maturities within the next 12 months, including $65 million of tax-exempt bonds. As of December 31, 2022, 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"). The remaining $414 million of debt maturing in the next 12 months is classified as current obligations. In May 2022, WMI issued $1.0 billion of 4.15% senior notes due April 15, 2032, the net proceeds of which were $992 million. We used the net proceeds to redeem our $500 million of 2.9% senior notes due September 2022 in advance of their scheduled maturity, to repay a portion of outstanding borrowings under our commercial paper program and for general corporate purposes. In May 2022, we entered into a Term Loan to be used for general corporate purposes and as of December 31, 2022, we had $1.0 billion of outstanding borrowings. WM Holdings guarantees all of the obligations under the Term Loan. See Note 6 to the Consolidated Financial Statements for more information related to the debt transactions. 56 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): 2022 2021 Revolving credit facility (a) $ 166 $ 167 Other letter of credit lines (b) 800 764 $ 966 $ 931 (a) As of December 31, 2022, we had an unused and available credit capacity of $1.6 billion. (b) As of December 31, 2022, these other letter of credit lines are uncommitted with terms extending through April 2024. Amendment and Extension of Revolving Credit Facility In May 2022, we amended and restated our $3.5 billion U.S. and Canadian revolving credit facility extending the term through May 2027. The agreement includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly -owned subsidiary of WMI, 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 WMI, guarantees all the obligations under the $3.5 billion revolving credit facility. Refer to Note 6 to the Consolidated Financial Statements for additional information. Guarantor Financial Information WM Holdings has fully and unconditionally guaranteed all of WMI's senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings' senior indebtedness. None of WMI's other subsidiaries have guaranteed any of WMI's or WM Holdings' debt. In lieu of providing separate financial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non -guarantor (in millions): December 31, 2022 Balance Sheet Information: Current assets $ 193 Noncurrent assets 14 Current liabilities 325 Noncurrent liabilities: Advances due to affiliates 19,740 Other noncurrent liabilities 12,618 Year Ended December 31, 2022 Income Statement Information: Revenue $ Operating income Net loss 184 57 Summary of Cash Flow Activity The following is a summary of our cash flows for the year ended December 31 (in millions): 2022 2021 2020 Net cash provided by operating activities $ 4,536 $ 4,338 $ 3,403 Net cash used in investing activities $ (3,063) $ (1,894) $ (4,847) Net cash used in financing activities $ (1,216) $ (2,900) $ (1,559) Net Cash Provided by Operating Activities — Our operating cash flows for 2022, as compared with 2021, increased by $198 million The increase was largely driven by increased earnings in our collection and disposal and WM Renewable Energy businesses. We also experienced lower interest payments due to timing and refinancing activities in 2021 that reduced our overall interest rate. Partially offsetting our increase in cash from operating activities were higher income tax payments as a result of higher earnings in 2022 and a deposit of approximately $103 million that was made to the IRS related to a disputed tax matter. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. See Note 8 to the Consolidated Financial Statements for further details. Our operating cash flows for 2021, as compared with 2020, increased by $935 million largely as a result of (i) an increase in earnings primarily attributable to our collection, disposal and recycling lines of business; (ii) our acquisition of Advanced Disposal; (iii) lower interest payments in 2021 primarily due to certain refinancing activities and the retirement of high -coupon debt during 2020 reducing our overall interest rates; (iv) lower income taxes paid in 2021 and (v) favorable changes in our working capital, net of effects of acquisitions and divestitures. Our working capital was favorably impacted by process improvements that contributed to a significant improvement in our days -to -collect metrics. These favorable impacts were partially offset by the timing of cash tax benefits received in 2020 associated with federal alternative fuel tax credits. 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 $377 million, $76 million and $4,088 million in 2022, 2021 and 2020, respectively, of which $377 million, $75 million and $4,085 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 2022 was primarily attributable to the purchase of a controlling interest in a business intended to accelerate our film and plastic wrap recycling capabilities. Our acquisition spending in 2020 was primarily attributable to Advanced Disposal. See Note 17 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 $2,587 million, $1,904 million and $1,632 million for capital expenditures in 2022, 2021 and 2020, respectively. The increase in 2022 is primarily driven by our intentional investment in growth capital spending on recycling and renewable energy projects, as well as timing differences in our fixed asset purchases to support our ongoing operations. The increase in 2021 is due in part to intentional steps the Company took to accelerate growth capital spending on recycling and renewable energy projects. Additionally, 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. The Company continues to maintain a disciplined focus on capital management to prioritize investments for expansion, the replacement of aging assets and assets that support our strategy of continuous improvement through efficiency and innovation. In addition, we continue to make progress on our planned investments to expand our renewable energy and recycling businesses. We expect to spend between $2.0 billion and $2.1 billion on capital expenditures to support our normal course business in 2023. Additionally, we expect to spend approximately $1.1 billion on capital expenditures for recycling and renewable energy growth projects in 2023. • Proceeds from Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested, were $27 million, $96 million and $885 million in 2022, 2021 and 2020, respectively. In 2021, our proceeds are primarily the result of the sale of certain non -strategic Canadian operations. In 2020, our proceeds included 58 $856 million related to the sale of assets required to be sold by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal. The remaining amounts in 2022, 2021 and 2020 generally related to the sale of fixed assets. • Other, Net— Our spending within other, net was $126 million, $11 million, and $15 million in 2022, 2021 and 2020, respectively. During 2022, 2021 and 2020, we used $23 million, $32 million and $14 million, respectively, of cash from restricted cash and cash equivalents to invest in available -for -sale securities. In 2022, we used $67 million to fund secured convertible promissory notes associated with an acquisition and $28 million to make an initial cash payment associated with a low-income housing investment. Our 2021 cash spend was partially offset by proceeds received from the sale of an equity method investment. Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below: • Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions): 2022 2021 2020 Borrowings: Revolving credit facility $ — $ — $ 50 Commercial paper program (a) 6,596 6,831 3,630 364-day revolving credit facility (b) 3,000 Term loan 1,000 Senior notes 992 942 2,479 Tax-exempt bonds 100 175 261 $ 8,688 $ 7,948 $ 9,420 Repayments: Revolving credit facility $ — $ — $ (50) Commercial paper program (a) (6,664) (6,872) (1,822) 364-day revolving credit facility (b) (3,000) Senior notes (500) (1,289) (4,000) Advanced Disposal senior notes (c) (437) Tax-exempt bonds (71) (127) (212) Other debt (93) (116) (108) $(7,328) $(8,404) $(9,629) Net cash borrowings (repayments) $ 1,360 $ (456) $ (209) (a) Commercial paper borrowings incurred in 2022 and 2021 were primarily to support acquisitions and general corporate purposes. Commercial paper borrowings incurred in 2020 were used for the redemption of the SMR Notes and to partially fund our acquisition of Advanced Disposal. (b) In November 2020, we terminated our 364-day revolving facility contemporaneously with repayment of all outstanding borrowings with proceeds from our November 2020 senior notes issuance. (c) Advanced Disposal had certain outstanding senior notes which were redeemed in 2020 pursuant to an optional redemption feature as further discussed in Note 17 to the Consolidated Financial Statements. Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments. • Premiums and Other Paid on Early Extinguishment of Debt — During 2021, we paid premiums and other third -party costs of $211 million to retire certain high -coupon notes as discussed further in Note 6 to the Consolidated Financial Statements. During 2020, we paid premiums of $30 million to redeem $3.0 billion of senior notes that contained a special mandatory redemption feature tied to the timing of the Advanced Disposal acquisition closing. See Loss on Early Extinguishment of Debt, Net for further discussion. 59 • 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 allocated $1,500 million, $1,350 million and $402 million of available cash to common stock repurchases during 2022, 2021, and 2020, respectively. See Note 13 to the Consolidated Financial Statements for additional information. We announced in December 2022 that the Board of Directors has authorized up to $1.5 billion in future share repurchases. Any future share repurchases will be made at the discretion of management and will depend on factors similar to those considered by the Board of Directors in making dividend declarations and listed below, as well as market conditions. • Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1,077 million in 2022, or $2.60 per common share, $970 million in 2021, or $2.30 per common share, and $927 million in 2020, or $2.18 per common share. In December 2022, we announced that our Board of Directors expects to increase the quarterly dividend from $0.65 to $0.70 per share for dividends declared in 2023. 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. • Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $44 million, $66 million and $63 million from the exercise of 675,000, 962,000 and 1,039,000 of employee stock options during 2022, 2021 and 2020, respectively. 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: 2022 2021 2020 Net cash provided by operating activities $ 4,536 $ 4,338 $ 3,403 Capital expenditures to support the business (2,026) (1,665) (1,606) Capital expenditures - sustainability growth investments (a) (561) (239) (26) Total Capital expenditures (2,587) (1,904) (1,632) Proceeds from divestitures of businesses and other assets, net of cash divested 27 96 885 Free cash flow $ 1,976 $ 2,530 $ 2,656 (a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation. We expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve. 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 60 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, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 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 and (iii) the determination of each landfill's remaining permitted and expansion airspace. 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 landfill buffer property. The projection of these landfill costs is dependent, in part, on future events. The remaining depletable 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 depletion, 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 and the capping costs are depleted 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 landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion. 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 landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion. 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, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. 61 Second, 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, in addition to meeting 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. 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 depletable 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 consider 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 depletion 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 earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings 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 depletion 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 62 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 and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. 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 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. 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. 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 ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, 63 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 using Level 3 inputs. We first perform a qualitative assessment to determine if it was more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is 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. 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. Generally, the valuation of our acquired asset and liabilities rely on complex estimates and assumptions. 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. See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions, including our 2020 acquisition of Advanced Disposal. 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. Inflation Macroeconomic pressures, including inflation and market disruption resulting in labor, supply chain and transportation constraints are continuing. Significant global supply chain disruption and the heightened pace of inflation has reduced availability and increased costs for the goods and services we purchase, with a particular impact on our repair and maintenance costs. Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third -party transportation providers, and such services have become more limited and expensive. Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate, but such efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, contractual limitations, and market responses. Throughout 2022, many of these contract lookback provisions began to capture the inflationary cost increases experienced since the second half of 2021 in the price escalation calculation; however, such timing lag persists and will continue to restrict our ability to address proactively future rapid cost increases for those contracts. Refer to Item 1A. Risk Factors for further discussion. 64 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, 2022. Interest Rate Exposure — Our exposure to market risk for changes in interest rates relates primarily to our financing activities. As of December 31, 2022, we had $15.1 billion of long-term debt, excluding the impacts of accounting for debt issuance costs, discounts and fair value adjustments attributable to terminated interest rate derivatives. We have $3.5 billion of debt that is exposed to changes in market interest rates within the next 12 months comprised primarily of (i) $1.7 billion of short-term borrowings under our commercial paper program; (ii) $1.0 billion of long-term borrowings under our $1.0 billion, two-year, U.S. term credit agreement and (iii) $725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months. We currently estimate that a 100-basis point increase in the interest rates of our outstanding variable -rate debt obligations would increase our 2023 interest expense by $28 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 $700 million as of December 31, 2022. We are also exposed to interest rate market risk from our cash and cash equivalent balances, as well as assets held in restricted trust fund accounts. These assets are generally invested in high -quality, liquid instruments including 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 fund account balances in available -for -sale securities, including U.S. Treasury securities, U.S. agency securities, municipal securities, mortgage - and asset -backed securities, which generally mature over the next nine years, as well as equity securities. 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, electricity (and related renewable energy credits) and recycled materials, including old corrugated cardboard and plastics. We work 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, operating costs and margins may also increase or decrease. Recycling revenues attributable to yield increased $19 million and $537 million in 2022 and 2021, respectively, as compared with the prior year periods, primarily from higher market prices for recycling commodities in 2021 and the first half of 2022, before the significant downturn in the second half of 2022. Demand for recycled materials strengthened through 2021 and into early 2022, primarily driven by the growth in e-commerce, businesses re -opening, and manufacturers committing to use more recycled content in their packaging. In 2022, we experienced all-time high recycling commodity pricing in the first half of the year to be followed by historically low pricing through the second half of the year, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods. We expect significant commodity price headwinds to continue into 2023. Average market prices for recycling commodities at the Company's facilities were approximately 10% lower and 115% higher in 2022 and 2021, respectively, when compared with the prior year periods. Revenue decline from lower commodity pricing was offset by higher pricing in our recycling brokerage business as well as our continued focus on a fee -based pricing model that ensures fees paid by customers cover the cost of processing materials and the impact on our cost structure of managing contamination in the recycling stream. Variability in commodity prices can also impact the margins of our business as certain components of our revenue are structured as a pass through of costs, including recycling brokerage and fuel surcharges. 65 The primary drivers of renewable fuel development at our landfills are tax policies, such as the recently expanded federal tax credits for renewable natural gas ("RNG") production and renewable electricity generation, and federal and state incentive programs, such as the federal Renewable Fuel Standard ("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 renewable identification numbers ("RINs"), from renewable fuel producers. The Company has invested, and continues to invest, in facilities that capture and convert landfill gas into RNG, and also works with facilities that capture and convert dairy digester gas into RNG, so that we can participate in the program, and the Company has stated its intention to grow its asset base to notably increase its RNG production by 2026. RINs prices generally respond to regulations enacted by the EPA, as well as fluctuations in supply and demand. The value of the RINs associated with RNG is set through a market established by the program. Prior to 2022, the EPA has promulgated rules on an annual basis establishing refiners' obligations to purchase RNG and other cellulosic biofuels under the RFS program; however, the EPA issued a highly anticipated proposed rule in late 2022 setting forth the direction of the RFS program for compliance years 2023 through 2025. Although this proposal delivers on many reforms that benefit the solid waste sector, the EPA's programmatic shift towards multi -year standards could lead to market uncertainty and volatility in the price of RINs. We continue to advocate for the current administration to implement policies that ensure long term stability for renewable transportation fuels and expand opportunities for the biogas sector to participate in the RFS program. Changes in the RFS market, the structure of the RFS program or RINs prices and demand can and has impacted the financial performance of the facilities constructed to capture and treat the gas. Such changes could impact or alter our projected future investments, and such investments may not yield the results anticipated. 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. 66 Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID 42) 68 Consolidated Balance Sheets as of December 31, 2022 and 2021 72 Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020 73 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020 73 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 74 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020 75 Notes to Consolidated Financial Statements 76 67 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, 2022, 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, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022 consolidated financial statements of the Company, and our report dated February 7, 2023 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. 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 7, 2023 /s/ ERNST & YOUNG LLP 68 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, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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 7, 2023 expressed an unqualified opinion thereon. 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. 69 Landfill Depletion Description of the At December 31, 2022, the Company's landfill assets, net of accumulated depletion, totaled Matter $7.6 billion and the associated depletion expense for 2022 was $754 million. As discussed in Note 2 of the financial statements, the Company updates the estimates used to calculate individual landfill depletion rates at least annually, or more often if significant facts change. Landfill depletion rates are used in the computation of landfill depletion expense. How We Addressed the Matter in Our Audit Auditing landfill depletion rates and related depletion 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 and expansion airspace, airspace utilization factors, 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 depletion rates and calculating depletion 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 depletion rates, management's review of those significant assumptions, and the mathematical accuracy of the calculation and recording of depletion expense. To test the landfill asset depletion 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 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 depletion rates. 70 Landfill — Final Capping, Closure and Post -Closure Costs Description of the At December 31, 2022, the carrying value of the Company's landfill asset retirement Matter obligations related to final capping, closure and post -closure costs totaled $2.7 billion. As discussed in Note 2 of the financial statements, the Company updates the estimates used to measure the asset retirement obligations annually, or more often if significant facts change. How We Addressed the Matter in Our Audit 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 and expansion airspace; and the projected timing of retirement activities. We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company's controls over the calculation of landfill 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 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 also tested the completeness and accuracy of the historical data utilized in preparing the estimate. We have served as the Company's auditor since 2002. Houston, Texas February 7, 2023 /s/ ERNST & YOUNG LLP 71 WASTE MANAGEMENT, INC. CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Par Value Amounts) ASSETS Current assets: Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $26 and $25, respectively... Other receivables, net of allowance for doubtful accounts of $7 and $8, respectively Parts and supplies Other assets Total current assets Property and equipment, net of accumulated depreciation and depletion of $21,627 and $20,537, respectively Goodwill Other intangible assets, net Restricted funds Investments in unconsolidated entities Other assets Total assets LIABILITIES AND EQUITY Current liabilities: 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 Commitments and contingencies (Note 10) Equity: Waste Management, Inc. stockholders' equity: Common stock, $0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued 6 6 Additional paid -in capital 5,314 5,169 Retained earnings 13,167 12,004 Accumulated other comprehensive income (loss) (69) 17 Treasury stock at cost, 222,396,166 and 214,158,636 shares, respectively (11,569) (10,072) Total Waste Management, Inc. stockholders' equity 6,849 7,124 Noncontrolling interests 15 2 Total equity 6,864 7,126 Total liabilities and equity $ 31,367 $ 29,097 December 31, 2022 2021 $ 351 2,461 291 164 284 3,551 15,719 9,323 827 348 578 1,021 $ 31,367 $ 1,766 1,625 589 414 4,394 14,570 1,733 2,700 1,106 $ 118 2,278 268 135 270 3,069 14,419 9,028 898 348 432 903 $ 29,097 $ 1,375 1,428 571 708 4,082 12,697 1,694 2,373 1,125 24,503 21,971 See Notes to Consolidated Financial Statements. 72 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) Year Ended December 31, 2022 2021 2020 Operating revenues $ 19,698 $ 17,931 $ 15,218 Costs and expenses: Operating 12,294 11,111 9,341 Selling, general and administrative 1,938 1,864 1,728 Depreciation, depletion and amortization 2,038 1,999 1,671 Restructuring 1 8 9 (Gain) loss from divestitures, asset impairments and unusual items, net 62 (16) 35 16,333 14,966 12,784 Income from operations 3,365 2,965 2,434 Other income (expense): Interest expense, net (378) (365) (425) Loss on early extinguishment of debt, net - (220) (53) Equity in net losses of unconsolidated entities (67) (36) (68) Other, net (2) 5 5 (447) (616) (541) Income before income taxes 2,918 2,349 1,893 Income tax expense 678 532 397 Consolidated net income 2,240 1,817 1,496 Less: Net income (loss) attributable to noncontrolling interests 2 1 Net income attributable to Waste Management, Inc $ 2,238 $ 1,816 $ 1,496 Basic earnings per common share $ 5.42 $ 4.32 $ 3.54 Diluted earnings per common share $ 5.39 $ 4.29 $ 3.52 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions) Year Ended December 31, 2022 2021 2020 Consolidated net income $ 2,240 $ 1,817 $ 1,496 Other comprehensive income (loss), net of tax: Derivative instruments, net 3 9 15 Available -for -sale securities, net (24) (6) 11 Foreign currency translation adjustments (65) (28) 20 Post -retirement benefit obligations, net - 3 1 Other comprehensive income (loss), net of tax (86) (22) 47 Comprehensive income 2,154 1,795 1,543 Less: Comprehensive income (loss) attributable to noncontrolling interests 2 1 Comprehensive income attributable to Waste Management, Inc $ 2,152 $ 1,794 $ 1,543 See Notes to Consolidated Financial Statements. 73 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) Year Ended December 31, 2022 2021 2020 Cash flows from operating activities: Consolidated net income $ 2,240 $ 1,817 $ 1,496 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation, depletion and amortization 2,038 1,999 1,671 Deferred income tax expense (benefit) 49 (77) 165 Interest accretion on landfill and environmental remediation liabilities 112 111 103 Provision for bad debts 50 37 54 Equity -based compensation expense 84 108 94 Net gain on disposal of assets (21) (25) (9) (Gain) loss from divestitures, asset impairments and other, net 62 (16) 43 Equity in net losses of unconsolidated entities, net of dividends 67 38 60 Loss on early extinguishment of debt, net — 220 53 Change in operating assets and liabilities, net of effects of acquisitions and divestitures: Receivables (329) 28 (179) Other current assets (35) (39) 10 Other assets 42 34 53 Accounts payable and accrued liabilities 393 206 (37) Deferred revenues and other liabilities (216) (103) (174) Net cash provided by operating activities 4,536 4,338 3,403 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired (377) (75) (4,085) Capital expenditures (2,587) (1,904) (1,632) Proceeds from divestitures of businesses and other assets, net of cash divested 27 96 885 Other, net (126) (11) (15) Net cash used in investing activities (3,063) (1,894) (4,847) Cash flows from financing activities: New borrowings 8,688 7,948 9,420 Debt repayments (7,328) (8,404) (9,629) Premiums and other paid on early extinguishment of debt — (211) (30) Common stock repurchase program (1,500) (1,350) (402) Cash dividends (1,077) (970) (927) Exercise of common stock options 44 66 63 Tax payments associated with equity -based compensation transactions (39) (28) (34) Other, net (4) 49 (20) Net cash used in financing activities (1,216) (2,900) (1,559) Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents (6) 2 4 Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents 251 (454) (2,999) Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 194 648 3,647 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 445 $ 194 $ 648 Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period: Cash and cash equivalents $ 351 $ 118 $ 553 Restricted cash and cash equivalents included in other current assets 25 7 28 Restricted cash and cash equivalents included in restricted funds 69 69 67 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 445 $ 194 $ 648 See Notes to Consolidated Financial Statements. 74 WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Millions, Except Shares in Thousands) Waste Management, Inc. Stockholders' Equity Accumulated Additional Other Common Stock Paid -In Retained Comprehensive Treasury Stock Noncontrolling Total Shares Amounts Capital Earnings Income (Loss) Shares Amounts Interests Balance, December 31, 2019 $ 7,070 630,282 $ 6 $ 5,049 $ 10,592 $ (8) (205,956) $ (8,571) $ 2 Adoption of new accounting standards (2) (2) Consolidated net income 1,496 1,496 Other comprehensive income (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 (402) (3,687) (402) Other, net (1) 4 1 Balance, December 31, 2020 $ 7,454 630,282 $ 6 $ 5,129 $ 11,159 $ 39 (207,481) $ (8,881) $ 2 Consolidated net income 1,817 1,816 1 Other comprehensive income (loss), net of tax (22) (22) Cash dividends declared of $2.30 per common share (970) (970) Equity -based compensation transactions, net 198 110 (1) 2,049 89 Common stock repurchase program (1,350) (70) — (8,731) (1,280) — Other, net (1) 4 (1) Balance, December 31, 2021 $ 7,126 630,282 $ 6 $ 5,169 $ 12,004 $ 17 (214,159) $ (10,072) $ 2 Consolidated net income 2,240 2,238 2 Other comprehensive income (loss), net of tax (86) (86) Cash dividends declared of $2.60 per common share (1,077) (1,077) Equity -based compensation transactions, net 150 75 2 1,555 73 Common stock repurchase program (1,500) 70 (9,796) (1,570) Acquisitions and other, net 11 4 11 Balance, December 31, 2022 $ 6,864 630,282 $ 6 $ 5,314 $ 13,167 $ (69) (222,396) $ (11,569) $ 15 See Notes to Consolidated Financial Statements. 75 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2022, 2021 and 2020 1. Basis of Presentation 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 18. 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., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term "WMI," we are referring only to Waste Management, Inc., the parent holding company. We are North America's leading provider of comprehensive environmental solutions, 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, including our Waste Management Renewable Energy ("WM Renewable Energy") business, we are also a leading developer, operator and owner of landfill gas -to -energy facilities in the U.S and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel for our natural gas fleet. Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. 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 17 and 19, respectively. 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. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of WMI, 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. 76 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. 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 restricted funds, 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, 2022 and 2021, 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 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. 77 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the year ended December 31 (in millions): 2022 2021 Balance as of January 1 $ 25 $ 33 Additions charged to expense 55 35 Accounts written -off, net of recoveries (49) (36) Acquisitions, divestitures and other, net (5) (7) Balance as of December 31 $ 26 $ 25 To determine the allowance for doubtful accounts for trade receivables, we rely upon, among other factors, historical loss trends, the age of outstanding receivables, and existing as well as expected economic conditions. 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. Based on aging analysis as of both December 31, 2022 and 2021, approximately 90% of our trade receivables were outstanding less than 60 days. To determine the allowance for doubtful accounts for other receivables, as well as loans and other instruments, we rely primarily on credit ratings and associated default rates based on the maturity of the instrument. Other receivables, as of December 31, 2022 and 2021, include receivables related to income tax payments in excess of our current income tax obligations of $150 million and $166 million, respectively. Other receivables as of December 31, 2022 and 2021 also include a receivable of $19 million and $14 million, respectively, related to alternative fuel tax credits. Based on an aging analysis as of December 31, 2022 and 2021, approximately 55% and 60%, respectively, of our other receivables were due within 12 months or less. 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 — Generally 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 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 78 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 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, 2022, 2021 and 2020, we inflated these costs in current dollars to the expected time of payment using an inflation rate of 2.50%, 2.25% and 2.25%, respectively. 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, 2022 was approximately 4.8%. We record the estimated fair value of fmal 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. Sustained 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 landfill depletion policy (previously landfill amortization policy), which would generally result in depletion 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 79 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) such estimates associated with a fully consumed landfill result in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill airspace depletion expense. Interest accretion on final capping, closure and post -closure liabilities is recorded using the effective interest method and is recorded as landfill operating costs, which is included in operating expenses within our Consolidated Statements of Operations. Depletion of Landfill Assets — The depletable 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 (as defined below) and (iv) projected asset retirement costs related to landfill final capping, closure and post -closure activities. Depletion 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 depletable 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, 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, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, we must generally expect the initial expansion permit application to be submitted within one year and the fmal expansion permit to be received within five years, in addition to meeting 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. 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 16 landfill sites with expansions included as of December 31, 2022, 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. 80 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 depletable 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 consider 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 depletion 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 earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings 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 depletion 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 and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. 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; 81 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • 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 $135 million higher than the $204 million recorded in the Consolidated Balance Sheet as of December 31, 2022. Our ultimate 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 inflate the cost in current dollars 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. As of December 31, 2022, 2021 and 2020, we inflated the costs by 2.50%, 2.25% and 2.25%, respectively, and discounted the costs by 3.75%, 1.50% and 1.00%, respectively. Our discount rate has increased since 2020 as a result of the overall increase in the 10-year Treasury rates. 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: 2022 2021 2020 Increase (decrease) in operating expenses $ (14) $ (4) $ 8 Risk -free discount rate applied to environmental remediation liabilities and recovery assets 3.75 % 1.50 % 1.00 % 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 $31 million as of December 31, 2022 and 2021. Had we not inflated and discounted any portion of our environmental remediation liability, the amount recorded would have increased by $10 million and decreased by $6 million as of December 31, 2022 and 2021, 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 generally 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. 82 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The estimated useful lives for significant property and equipment categories are as follows (in years): Useful Lives Vehicles — excluding rail haul cars 3 to 10 Vehicles — rail haul cars 10 to 30 Machinery and equipment — including containers 3 to 30 Buildings and improvements 5 to 40 Furniture, fixtures and office equipment 3 to 10 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. 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. Financing Leases (excluding landfill leases discussed below) — Assets under fmancing leases are capitalized using interest rates determined at the commencement of each lease and are depreciated 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. 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 depleted on a units -of -consumption basis over the shorter of the lease term or the life of the landfill. For operating and financing leases, including landfill leases, our rent expense for each of the last three years and future minimum lease payments are disclosed in Note 7. 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, subsequent remeasurements and the ultimate settlement of the obligations being recognized as an adjustment to income from operations. 83 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 readily determined, they are recognized as of the acquisition date if the contingencies are probable and an amount can be reasonably estimated. 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. See Note 17 for additional information related to our acquisitions, including our 2020 acquisition of Advanced Disposal. 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, which are combined with landfill tangible assets and depleted per our landfill depletion 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 84 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 using a measurement date of October 1, and more frequently if warranted, we assess our indefinite -lived intangible assets, including the goodwill of our reporting units, for impairment. We first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the asset's estimated fair value is 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 11 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. 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 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. WMI pays an annual premium to the insurance captive on behalf of WMI and its insured subsidiaries, typically in the first quarter of the year, for estimated losses based on an external actuarial analysis. These premiums are held in a restricted funds account to be used solely for paying insurance claims, resulting in a transfer of risk from our Company to 85 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) the insurance captive, and are allocated between current and long-term assets depending on estimated timing of the use of funds. Restricted Funds Our restricted funds accounts primarily consist 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, equity securities and available -for -sale debt 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 and the premiums paid are directly deposited into a restricted funds account to be used solely for paying insurance claims. At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds for purposes of settling final capping, closure, post -closure and environmental remediation obligations. Balances maintained in these restricted funds 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 funds accounts. See Notes 16 and 18 for additional discussion related to restricted funds 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): 2022 2021 Equity method investments $ 460 $ 335 Investments without readily determinable fair values 62 48 Redeemable preferred stock 56 49 Investments in unconsolidated entities $ 578 $ 432 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 or pending 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 our Consolidated Statements of Operations in accordance with appropriate accounting guidance. Refer to Note 11 for information related to impairments and other adjustments recognized during the reported periods. 86 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 have been impacted by decreases in the U.S. dollar/Canadian dollar exchange rate from 1.2734 at December 31, 2020, to 1.2639 at December 31, 2021 and to 1.3554 at December 31, 2022. Refer to Note 12 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 our Strategic Business Solutions ("WMSBS") and sustainability businesses, which include landfill gas -to -energy services, Sustainability and Environmental Solutions ("SES") business and recycling brokerage services. We also offer certain other expanded service offerings and solutions. 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 advanced billings are included in deferred revenues and recognized as revenue in the period service is provided. See Note 19 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. 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 five 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 87 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) the timing of when we expect to recognize amortization and are included in other assets in our Consolidated Balance Sheets. As of December 31, 2022 and 2021, we had $192 million and $175 million of deferred contract costs, respectively, of which $137 million and $126 million, respectively, were related to deferred sales incentives. During each of the years ended December 31, 2022, 2021 and 2020, we amortized $24 million, $23 million and $23 million, respectively, of sales incentives to selling, general and administrative expense. Long -Term Contracts Approximately 20% 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 2022, 2021 and 2020, total interest costs were $425 million, $388 million and $473 million, respectively, of which $29 million, $13 million and $16 million was capitalized in 2022, 2021 and 2020, 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 8 for discussion of our income taxes. 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 88 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) of the potential loss or range of loss associated with such contingencies. See Note 10 for discussion of our commitments and contingencies. Internal -Use Software We include capitalized costs associated with developing or obtaining internal -use software within long-term other assets, and these costs are amortized over the term 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, 2022 and 2021, total costs capitalized for our internal -use software were $45 million and $48 million, respectively, net of accumulated amortization of $27 million and $11 million, respectively. During each of the years ended December 31, 2022, 2021 and 2020, we amortized $16 million, $10 million and $1 million, respectively, to selling, general and administrative expense. Supplemental Cash Flow Information The following table shows supplemental cash flow information for the year ended December 31 (in millions): 2022 2021 2020 Interest, net of capitalized interest $ 348 $ 387 $ 461 Income taxes (a) 736 370 422 (a) The increase in income taxes paid in 2022 is primarily due to the increase in pre-tax book income during 2022 and a deposit of approximately $103 million made to the Internal Revenue Service ("IRS") in the fourth quarter of 2022 related to a disputed tax matter for which we expect to seek a refund. See Note 8 for further discussion. During 2022, we had $225 million of non -cash financing activities primarily from our federal low-income housing investment and new financing leases. Additionally, we had approximately $135 million of non -cash investing activities related to non -cash consideration transferred as part of our acquisitions in 2022. See Note 17 for further discussion of our 2022 acquisitions. During 2021, we had $30 million of non -cash financing activities from new financing leases. During 2020, we had $50 million of non -cash financing activities primarily related to new financing leases, a portion of which were attributed to our acquisition of Advanced Disposal. Non -cash investing and financing activities are generally excluded from the Consolidated Statements of Cash Flows. 3. Landfill and Environmental Remediation Liabilities Liabilities for landfill and environmental remediation costs as of December 31 are presented in the table below (in millions): 2022 2021 Environmental Environmental Landfill Remediation Total Landfill Remediation Total Current (in accrued liabilities) $ 137 $ 31 $ 168 $ 137 $ 29 $ 166 Long-term 2,527 173 2,700 2,189 184 2,373 $ 2,664 $ 204 $ 2,868 $ 2,326 $ 213 $ 2,539 89 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The changes to landfill and environmental remediation liabilities for the year ended December 31, 2022 are reflected in the table below (in millions): Environmental Landfill Remediation December 31, 2021 $ 2,326 $ 213 Obligations incurred and capitalized 114 Obligations settled (121) (28) Interest accretion 108 4 Revisions in estimates and interest rate assumptions (a) 243 15 Acquisitions, divestitures and other adjustments (6) December 31, 2022 $ 2,664 $ 204 (a) In 2021, the increase in our landfill liabilities for revisions in estimates and interest rate assumptions was $33 million. The increase in our landfill liabilities in 2022 is primarily due to inflationary cost pressures that are expected to impact costs over the remaining landfill lives. Our recorded liabilities as of December 31, 2022 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 $31 million in 2023, $43 million in 2024, $29 million in 2025, $19 million in 2026, $16 million in 2027 and $76 million thereafter. 4. Property and Equipment Property and equipment as of December 31 consisted of the following (in millions): 2022 2021 Land $ 752 $ 732 Landfills 18,526 17,734 Vehicles 6,173 5,893 Machinery and equipment 4,401 3,571 Containers 3,021 2,807 Buildings and improvements 3,809 3,542 Furniture, fixtures and office equipment 664 677 37,346 34,956 Less: Accumulated depreciation of tangible property and equipment (10,731) (10,147) Less: Accumulated depletion of landfill airspace (10,896) (10,390) Property and equipment, net $ 15,719 $ 14,419 See Note 11 for information regarding asset impairments. Depreciation and depletion expense, including for assets recorded as financing leases, consisted of the following for the year ended December 31 (in millions): 2022 2021 2020 Depreciation of tangible property and equipment $ 1,155 $ 1,125 $ 996 Depletion of landfill airspace 754 731 568 Depreciation and depletion expense $ 1,909 $ 1,856 $ 1,564 See Note 5 for information regarding amortization of our intangible assets. 90 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 5. Goodwill and Other Intangible Assets Goodwill was $9,323 million and $9,028 million as of December 31, 2022 and 2021, respectively. The $295 million increase in goodwill during 2022 is primarily related to acquisitions. As discussed in Note 2, 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 Notes 17 and 19 for additional information related to goodwill. Our other intangible assets consisted of the following as of December 31 (in millions): Customer Covenants Licenses, and Supplier Not -to- Permits Relationships Compete and Other Total 2022 Intangible assets $ 1,288 $ 51 $ 141 $ 1,480 Less: Accumulated amortization (543) (23) (87) (653) $ 745 $ 28 $ 54 $ 827 2021 Intangible assets $ 1,355 $ 43 $ 142 $ 1,540 Less: Accumulated amortization (538) (26) (78) (642) $ 817 $ 17 $ 64 $ 898 Amortization expense for other intangible assets was $129 million, $143 million and $107 million for 2022, 2021 and 2020, respectively. The decrease in amortization expense in 2022 was primarily due to decreasing amortization under the 150% declining balance approach for intangible assets from the acquisition of Advanced Disposal. Amortization expense for other intangible assets for 2021 increased, as compared with 2020, due to the amortization of acquired intangible assets related to our acquisition of Advanced Disposal. Additional information related to other intangible assets acquired through business combinations is included in Note 17. As of December 31, 2022 and 2021, 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. As of December 31, 2022, we expect annual amortization expense related to other intangible assets to be $120 million in 2023, $110 million in 2024, $101 million in 2025, $80 million in 2026 and $75 million in 2027. 91 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 6. 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: 2022 2021 Commercial paper program (weighted average interest rate of 4.9% as of December 31, 2022 and 0.4% as of December 31, 2021) $ 1,730 $ 1,778 Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.2% as of December 31, 2022 and 3.1% as of December 31, 2021) 8,626 8,126 Term Loan maturing May 2024, interest rate of 5.1% as of December 31, 2022 1,000 Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6%369 395 Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.4% to 4.4% (weighted average interest rate of 2.7% as of December 31, 2022 and 1.4% as of December 31, 2021) 2,648 2,619 Financing leases and other, maturing through 2071, weighted average interest rate of 4.7% as of December 31, 2022 and 4.5% as of December 31, 2021) (a) 699 567 Debt issuance costs, discounts and other (88) (80) Current portion of long-term debt 14,984 13,405 414 708 Long-term debt, less current portion $ 14,570 $ 12,697 (a) Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059. Debt Classification As of December 31, 2022, we had approximately $3.1 billion of debt maturing within the next 12 months, including (i) $1.7 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) $725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) $500 million of 2.4% senior notes that mature in May 2023 and (iv) $192 million of other debt with scheduled maturities within the next 12 months, including $65 million of tax-exempt bonds. As of December 31, 2022, 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 $414 million of debt maturing in the next 12 months is classified as current obligations. Access to and Utilization of Credit Facilities, Commercial Paper Program and Term Loan $3.5 Billion Revolving Credit Facility — In May 2022, we amended and restated our $3.5 billion U.S. and Canadian revolving credit facility extending the term through May 2027. The agreement includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly -owned subsidiary of WMI, 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 WMI, guarantees all the obligations under the $3.5 billion revolving credit facility. 92 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The $3.5 billion revolving credit facility provides us with credit capacity to be used for cash borrowings, to support letters of credit or to support our commercial paper program. The interest rates we pay on outstanding U.S. or Canadian loans are based on a secured overnight financing rate administered by the Federal Reserve Bank of New York ("SOFR") or the Canadian Dollar Offered Rate ("CDOR"), respectively, plus a spread depending on WMI's senior public debt rating assigned by Moody's Investors Service, Inc. and Standard and Poor's Global Ratings. The spread above SOFR or CDOR can range from 0.585% to 1.025% per annum, plus a credit adjustment spread of 0.10% per annum on SOFR-based rates (the "SOFR Credit Adjustment Spread") to account for the transition from the use of LIBOR to SOFR in such rate calculations. We also pay certain other fees set forth in the $3.5 billion revolving credit facility agreement, including a facility fee based on the aggregate commitment, regardless of usage. As of December 31, 2022, we had no outstanding borrowings under this facility. We had $166 million of letters of credit issued and $1.7 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program, both supported by the facility, leaving unused and available credit capacity of $1.6 billion as of December 31, 2022. 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, 2022, we had $1.7 billion of outstanding borrowings (net of related discount on issuance) under our commercial paper program. $1.0 Billion, Two -Year, Term Credit Agreement — In May 2022, we entered into a $1.0 billion, two-year, U.S. term credit agreement ("Term Loan") maturing May 2024 to be used for general corporate purposes. The interest rate we pay on our outstanding balance is generally based on SOFR, plus a spread depending on WMI's senior public debt rating assigned by Moody's Investors Service, Inc. and Standard and Poor's Global Ratings. The spread above SOFR can range from 0.50% to 0.90% per annum, plus the SOFR Credit Adjustment Spread. As of December 31, 2022, we had $1.0 billion of outstanding borrowings under our Term Loan. WM Holdings also guarantees all of the obligations under the Term Loan. Other Letter of Credit Lines — As of December 31, 2022, we had utilized $800 million of other uncommitted letter of credit lines with terms extending through April 2024. Debt Borrowings and Repayments Commercial Paper Program — During the year ended December 31, 2022 we made cash repayments of $6.7 billion, which were partially offset by $6.6 billion of cash borrowings (net of related discount on issuance). Term Loan — In May 2022, we borrowed $1.0 billion under our Term Loan for general corporate purposes. Senior Notes — In May 2022, WMI issued $1.0 billion of 4.15% senior notes due April 15, 2032, the net proceeds of which were $992 million We used the net proceeds to redeem our $500 million of 2.9% senior notes due September 2022 in advance of their scheduled maturity, to repay a portion of outstanding borrowings under our commercial paper program and for general corporate purposes. Tax -Exempt Bonds — We issued $100 million of tax-exempt bonds in 2022. 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 fmance expenditures for solid waste disposal facility, material recovery facility and renewable natural gas facility construction and development. In 2022, we also repaid $71 million of our tax-exempt bonds with available cash at their scheduled maturities. Financing Leases and Other — The increase in our financing leases and other debt obligations in 2022 is primarily related to a note payable associated with our federal low-income housing investment discussed in Note 8, which increased our debt obligations by $183 million. The increase in our debt obligations was partially offset by $93 million of cash repayments of debt at maturity. 93 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Scheduled Debt Payments Principal payments of our debt for the next five years and thereafter, based on scheduled maturities are as follows: $2,423 million in 2023, $1,290 million in 2024, $1,324 million in 2025, $673 million in 2026, $1,163 million in 2027 and $8,275 million thereafter. Our recorded debt and financing lease obligations include non -cash adjustments associated with debt issuance costs, discounts 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. As discussed above, we have the intent and ability to refinance certain 2023 scheduled maturities on a long-term basis, including our $500 million of 2.4% senior notes that mature in May 2023. See Note 7 below for further discussion of our financing lease arrangements. Secured Debt Our debt balances are generally unsecured, except for financing lease obligations and the notes payable associated with our investments in low-income housing properties. See Notes 8 and 18 for additional information related to these investments. 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 both our $3.5 billion revolving credit facility and Term Loan, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation, depletion 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"). 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. As of December 31, 2022 and 2021, we were in compliance with our Leverage Ratio covenant. Our $3.5 billion revolving credit facility, Term Loan, 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 December 31, 2022 and 2021, we were in compliance with all covenants and restrictions under our financing arrangements, in addition to our Leverage Ratio covenant, that may have a material effect on our Consolidated Financial Statements. 7. Leases Our operating lease activities primarily consist of leases for real estate, landfills (refer to Note 2 for further detail) 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 generally 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 94 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 2022 2021 Assets Long-term: Operating Other assets $ 456 $ 451 Financing Property and equipment, net of accumulated depreciation and depletion 328 364 Total lease assets $ 784 $ 815 Liabilities Current: Operating Accrued liabilities $ 64 $ 64 Financing Current portion of long-term debt 44 47 Long-term: Operating Other liabilities 460 459 Financing Long-term debt, less current portion 258 291 Total lease assets $ 826 $ 861 Operating lease expense was $183 million, $155 million and $140 million during 2022, 2021 and 2020, respectively, and is included in operating and selling, general and administrative expenses in our Consolidated Statements of Operations. Financing lease expense was $55 million, $58 million and $51 million during 2022, 2021 and 2020, respectively, and is included in depreciation, depletion and amortization expense and interest expense, net in our Consolidated Statements of Operations. 95 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Minimum contractual obligations for our leases (undiscounted) as of December 31, 2022 are as follows (in millions): Operating Financing 2023 $ 78 $ 52 2024 71 46 2025 59 56 2026 52 36 2027 40 28 Thereafter 414 169 Total undiscounted lease payments $ 714 $ 387 Less: interest (190) (85) Discounted lease liabilities $ 524 $ 302 As of December 31, 2022, we entered into operating and financing leases, primarily for real estate and equipment, that have not yet commenced and therefore are not reflected in the table above, with future lease payments of $52 million and $50 million, respectively. These leases commence through 2024 and have non -cancelable lease terms up to 17 years. Cash paid during 2022 for our operating and financing leases was $76 million and $56 million, respectively. During 2022, right -of -use assets obtained in exchange for lease obligations for our operating and financing leases were $69 million and $33 million, respectively. Cash paid during 2021 for our operating and financing leases was $70 million and $64 million, respectively. During 2021, right -of -use assets obtained in exchange for lease obligations for our operating and financing leases were $69 million and $36 million, respectively. As of December 31, 2022, the weighted average remaining lease terms of our operating and financing leases were approximately 19 years and 11 years, respectively. The weighted average discount rates used to determine the lease liabilities as of December 31, 2022 for our operating and financing leases were approximately 3.0% and 4.0%, respectively. 8. Income Taxes Income Tax Expense Our income tax expense consisted of the following for the year ended December 31 (in millions): 2022 2021 2020 Current: Federal $ 456 $ 436 $ 114 State 130 132 91 Foreign 43 41 27 629 609 232 Deferred: Federal 20 (55) 149 State 30 (22) 10 Foreign (1) — 6 49 (77) 165 Income tax expense $ 678 $ 532 $ 397 96 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: 2022 2021 2020 Income tax expense at U.S. federal statutory rate 21.00 % 21.00 % 21.00 % State and local income taxes, net of federal income tax benefit 4.16 4.14 4.46 Federal tax credits (2.81) (2.69) (3.78) Taxing authority audit settlements and other tax adjustments 0.54 0.53 (0.17) Tax impact of equity -based compensation transactions (0.45) (0.60) (1.12) Tax impact of impairments 0.02 (0.29) (0.35) Tax rate differential on foreign income 0.27 0.37 0.33 Other 0.51 0.16 0.57 Effective income tax rate 23.24 % 22.62 % 20.94 % 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) excess tax benefits associated with equity -based compensation transactions; (iv) the realization of state net operating losses and credits; (v) tax audit settlements; (vi) adjustments to our accruals and deferred taxes; (vii) the tax implications of divestitures and (viii) non -deductible transaction costs. For financial reporting purposes, income before income taxes by source for the year ended December 31 was as follows (in millions): 2022 2021 2020 Domestic $ 2,779 $ 2,211 $ 1,780 Foreign 139 138 113 Income before income taxes $ 2,918 $ 2,349 $ 1,893 Investments Qualing for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties. In February 2022, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Total consideration for this investment is expected to be $253 million, comprised of a $183 million note payable, an initial cash payment of $28 million and $42 million of interest payments expected to be paid over the life of the investment. At the time of the investment, we increased our investments in unconsolidated entities in our Consolidated Balance Sheet by $211 million, representing the principal balance of the note and the initial cash investment. 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 2033 under Section 42 or Section 45D of the Internal Revenue Code. We also held a residual financial interest in an entity that owned 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, 2022, 2021 and 2020, we recognized net losses of $65 million, $51 million and $73 million (including the $7 million impairment of the refined coal facility noted above), respectively, and a reduction in our income tax expense of $99 million, $74 million and $87 million, respectively, due to tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the years ended December 31, 2022, 2021 and 2020, we recognized interest expense of $14 million, $9 million and $11 million, respectively, associated with our investments in low-income housing properties. See Note 18 for additional information related to these unconsolidated variable interest entities. 97 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Equity -Based Compensation — During 2022, 2021 and 2020, we recognized a reduction in our income tax expense of $17 million, $18 million and $27 million, respectively, for excess tax benefits related to the vesting or exercise of equity -based compensation awards. State Net Operating Losses and Credits — During 2022, 2021 and 2020, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $8 million, $15 million and $12 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 $6 million, $13 million and $10 million for the years ended December 31, 2022, 2021 and 2020, 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. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company's Consolidated Balance Sheet. In addition, we are in the examination phase of an IRS audit for the 2022 tax year and expect the audit to be completed within the next 18 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 Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $1 million and $17 million for the years ended December 31, 2022 and 2021, respectively, and a reduction in our income tax expense of $3 million for the year ended December 31, 2020. Tax Implications of Divestitures — During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations. This gain was not taxable, which benefited our effective income tax rate for the year ended December 31, 2021. Non -Deductible Transaction Costs — During 2020, we recognized the detrimental tax impact of $27 million 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 Legislation — The Inflation Reduction Act of 2022 ("IRA") was signed into law by President Biden on August 16, 2022 and contains a number of tax -related provisions. The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (to be recorded as a reduction in our operating expense) from tax credits through 2024. Additionally, we will incur an excise tax of 1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock. The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as the overall measurement of corporate income taxes. We are in the process of evaluating the IRA and identifying all potential impacts that may be applicable. 98 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Deferred Tax Assets (Liabilities) The components of net deferred tax liabilities as of December 31 are as follows (in millions): 2022 2021 Deferred tax assets: Net operating loss, capital loss and tax credit carry -forwards $ 155 $ 189 Landfill and environmental remediation liabilities 216 238 Operating lease liabilities 131 135 Miscellaneous and other reserves, net 117 113 Subtotal 619 675 Valuation allowance (143) (158) Deferred tax liabilities: Property and equipment (1,061) (1,064) Goodwill and other intangibles (1,034) (1,027) Operating lease right -of -use assets (114) (120) Net deferred tax liabilities $ (1,733) $ (1,694) As of December 31, 2022, we had $6 million of federal net operating loss carry -forwards with expiration dates through 2026 and $2.5 billion of state net operating loss carry -forwards with expiration dates through 2042. We also had $27 million of federal capital loss carry -forwards with expiration dates through 2026, $39 million of foreign tax credit carry -forwards with expiration dates through 2032 and $8 million of state tax credit carry -forwards with expiration dates through 2038. 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): 2022 2021 2020 Balance as of January 1 $ 64 $ 37 $ 40 Additions based on tax positions related to the current year 5 22 5 Additions based on tax positions of prior years 18 Accrued interest 1 3 2 Settlements — (12) — Lapse of statute of limitations (6) (4) (10) Balance as of December 31 $ 64 $ 64 $ 37 These liabilities are included as a component of other long-term liabilities or as an offset to other long-term assets in our Consolidated Balance Sheets because the Company does not anticipate that settlement of the liabilities will require 99 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) payment of cash within the next 12 months. As of December 31, 2022, we had $53 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 material accrued liabilities or expense for penalties related to unrecognized tax benefits for the reported periods. 9. 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 $112 million, $104 million and $92 million for the years ended December 31, 2022, 2021 and 2020, 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, 2022, the combined benefit obligation of these pension plans was $117 million supported by $113 million of combined plan assets, resulting in an aggregate unfunded benefit obligation for these plans of $4 million. As of December 31, 2021, the combined benefit obligation of these pension plans was $150 million supported by $150 million of combined plan assets. 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 $8 million and $12 million as of December 31, 2022 and 2021, respectively. Our accrued benefit liabilities for our defined benefit pension and other post -retirement plans 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 100 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): Expiration Date Pension Protection Act Company of Collective EIN/Pension Plan Reported Status(a) FIP/RP Contributions Bargaining Pension Fund Number 2022 2021 Status(b)(c) 2022 2021 2020 Agreement(s) Automotive Industries Pension Plan EIN: 94-1133245; Critical and Critical and Implemented $ 1 $ 1 $ 1 6/30/2025 Plan Number. 001 Declining Declining Midwest Operating Engineers Pension Trust EIN: 36-6140097; Not Not Implemented 2 2 2 Various dates Fund Plan Number: 001 Endangered Endangered through or Critical or Critical 9/30/2026 as of asof 3/31/2022 3/31/2021 Suburban Teamsters of Northern Illinois Pension EIN: 36-6155778; Not Not Implemented 4 4 3 Various dates Plan (d) Plan Number. 001 Endangered Endangered through or Critical or Critical 9/30/2027 Westem Conference of Teamsters Pension Plan. EIN: 91-6145047; Not Not Not 37 35 33 Various dates Plan Number. 001 Endangered Endangered Applicable through or Critical or Critical 6/30/2027 $ 44 $ 42 $ 39 Contributions to other Multiemployer Pension Plans 17 19 15 Total contributions to Multiemployer Pension Plans (e) $ 61 $ 61 $ 54 (a) Unless otherwise noted in the table above, the most recent Pension Protection Act zone status available in 2022 and 2021 is for the plan's year-end as of December 31, 2021 and 2020, 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, 2021 and 2020. Total contributions to Multiemployer Pension Plans exclude contributions related to withdrawal liabilities. (e) 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 Plan could trigger a partial or complete withdrawal. In the event of a withdrawal, we may incur expenses associated with 101 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) our obligations for unfunded vested benefits at the time of the withdrawal. Refer to Note 10 for additional information related to our obligations to Multiemployer Pension Plans. Multiemployer Plan Benefits Other Than Pensions — During the years ended December 31, 2022, 2021 and 2020, the Company made contributions of $49 million, $51 million and $48 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. 10. 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 6. 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 and any amounts that exceed our insured limits 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 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. Our receivable balance 102 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) associated with insurance claims was $142 million and $155 million as of December 31, 2022 and 2021 respectively. The changes to our insurance reserves for the year ended December 31 are summarized below (in millions): 2022(a) 2021 Balance as of January 1 $ 734 $ 664 Self-insurance expense 242 240 Cash paid and other (247) (170) Balance as of December 31 $ 729 $ 734 Current portion as of December 31 $ 189 $ 191 Long-term portion as of December 31 $ 540 $ 543 (a) Based on current estimates, we anticipate that most of our insurance reserves will be settled in cash over the next six years. 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. Unconditional Purchase Obligations — 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 and consist primarily of the following: • 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. • Other — We are party to certain multi -year service agreements expiring at various dates through 2030 requiring minimum annual payments. As of December 31, 2022, our estimated minimum obligations associated with unconditional purchase obligations, which are not recognized in our Consolidated Balance Sheets, were $192 million in 2023, $158 million in 2024, $114 million in 2025, $101 million in 2026, $34 million in 2027 and $369 million thereafter. We may also establish unconditional purchase obligations in conjunction with acquisitions or divestitures. Our 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, 2022. 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 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. Other Commitments • 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 6. Guarantees — We have entered into the following guarantee agreements associated with our operations: • As of December 31, 2022, WM Holdings has fully and unconditionally guaranteed all of WMI's senior indebtedness, including its senior notes which mature through 2050, $3.5 billion revolving credit facility, Term 103 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Loan and certain letter of credit lines. WMI 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. • WMI 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, WMI 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 6 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, 2022, we have agreements guaranteeing certain market value losses for certain properties adjacent to or near 17 of our landfills. Any liability associated with the triggering of the home value guarantee has been reflected in our Consolidated Balance Sheets. We do not believe that the remaining contingent obligations will have a material adverse effect on the Company's business, 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. • WMI 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 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, 2022, we have been notified by the government that we are a PRP in connection with 73 locations listed on the Environmental Protection Agency's ("EPA's") Superfund National Priorities List ("NPL"). Of the 73 sites at which claims have been made against us, 14 are sites we own. Each of the NPL sites we own was initially developed by 104 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) others as a landfill disposal facility. At each of these facilities, we are working in conjunction with the government to characterize 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 59 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 River Waste Pits Site in Harris County, Texas. McGinnes Industrial Maintenance Corporation ("MIMC"), a subsidiary of Waste Management of Texas, Inc., operated some of the waste pits from 1965 to 1966 and has been named as a site PRP. In 1998, WMI 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, and we recorded a liability for MIMC's estimated potential share of the EPA's proposed remedy and related costs, although allocation of responsibility among the PRPs for the proposed remedy has not been established. MIMC and International Paper Company have continued to work on a remedial design to support the EPA's proposed remedy; however, design investigations indicate that fundamental changes are required to the proposed remedy and MIMC maintains its prior position that the remedy set forth in the ROD is not the best solution to protect the environment and public health. Due to further increases in the estimated cost of the remedy set forth in the ROD, we recorded an additional liability of $17 million as of March 31, 2022 for MIMC 's estimated potential share of such costs. As of December 31, 2022 and 2021, the recorded liability for MIMC's estimated potential share of the EPA's proposed remedy was $68 million and $53 million, respectively. MIMC's ultimate liability could be materially different from current estimates and MIMC will continue to engage the EPA regarding its proposed remedy. Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings, or such proceedings are known to be contemplated, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, below a stated threshold. In accordance with this SEC regulation, the Company uses a threshold of $1 million for purposes of determining whether disclosure of any such environmental proceedings is required. As of the date of this filing, we are not aware of any matters that are required to be disclosed pursuant to this standard. 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 105 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 — 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 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. In June 2022, we and certain of our officers were named as defendants in a complaint alleging violation of the federal securities laws and seeking certification as a class action in the U.S. District Court for the Southern District of New York. A lead plaintiff has been appointed and an amended complaint was filed in January 2023. The amended complaint seeks damages on behalf of a putative class of persons who purchased our SMR Notes (as defined and discussed in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Loss on Early Extinguishment of Debt, Net), asserting claims under the Securities Exchange Act based on alleged misrepresentations and omissions concerning the time for completion of our acquisition of Advanced Disposal. We will vigorously defend against this pending suit. We believe any potential recovery by the plaintiffs, in excess of applicable deductibles, will be covered by insurance, and we do not believe that the eventual outcome of this suit will have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. WMI's charter and bylaws provide that WMI 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 WMI's Board of Directors and each of WMI'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 9 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. 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 106 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. 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. In the fourth quarter of 2022, the Company received a notice of tax due for the 2017 tax year related to a remaining disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company's Consolidated Balance Sheet. 11. 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): 2022 2021 2020 Gain from divestitures, net $ (5) $ (44) $ (33) Asset impairments 50 8 68 Other 17 20 $ 62 $ (16) $ 35 For the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management's decision to close two landfills within our East Tier segment and (ii) a $17 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly -owned subsidiary's estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 10. These losses were partially offset by a $5 million gain from the divestiture of a solid waste business in our West Tier segment. For the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non -strategic Canadian operations in our East Tier segment and (ii) an $8 million gain from divestitures of certain ancillary operations in our Other segment. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment. For the year ended December 31, 2020, we recognized $35 million of net charges primarily related to (i) a $33 million net gain associated with net asset divestitures executed to address requirements of the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment; (ii) $41 million of non -cash impairment charges primarily related to two landfills and an oil field waste injection facility in our West Tier segment; (iii) a $20 million non -cash impairment charge in our East Tier segment due to management's decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $7 million of net charges primarily related to non -cash impairments of certain assets within our WM Renewable Energy business in our Other segment. 107 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) See Note 2 for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 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 For the year ended December 31, 2020, we recorded a non -cash impairment charge of $7 million related to an investment in a refined coal facility which is discussed further in Note 8. 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 inputs). The remaining losses for the years ended December 31, 2022, 2021 and 2020 were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties. Refer to Notes 8 and 18 for additional information related to these investments. 12. 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 WMI stockholders' equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income): 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) 15 11 Balance, December 31, 2020 Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $(2), $0 and $2, respectively Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $3, $0, $0 and $0, respectively 9 Net current period other comprehensive income (loss) 9 (6) Balance, December 31, 2021 $ Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $(8), $0 and $0, respectively Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $1, $0, $0 and $0, respectively Net current period other comprehensive income (loss) 3 (24) Balance, December 31, 2022 Foreign Post- Available- Currency Retirement Derivative for -Sale Translation Benefit Instruments Securities Adjustments(a) Obligations Total $ (24) $ 38 $ (21) $ (1) $ (8) 7 12 20 2 41 8 (1) (1) 6 20 1 47 $ (9) $ 49 $ (1) $ — $ 39 (6) 7 5 6 (35) (2) (28) (28) 3 (22) — $ 43 $ (29) $ 3 $ 17 (24) (65) 1 (88) 3 (1) 2 (65) (86) $ 3 $ 19 $ (94) $ 3 $ (69) (a) As a result of the divestiture of certain non -strategic Canadian operations in the third quarter of 2021, we reclassified $35 million of cumulative foreign currency translation adjustments from accumulated other comprehensive income 108 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) to (gain) loss from divestitures, asset impairments and unusual items, net within our Consolidated Statement of Operations. 13. 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, 2022, we had 407.9 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. Dividends Our quarterly dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1,077 million in 2022, or $2.60 per common share, $970 million in 2021, or $2.30 per common share, and $927 million in 2020, or $2.18 per common share. In December 2022, we announced that our Board of Directors expects to increase the quarterly dividend from $0.65 to $0.70 per share for dividends declared in 2023. However, all future dividend declarations are 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. 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. In the table below, shares repurchased are measured and reported based on the period shares are delivered to us, which can differ from the period cash is delivered to a repurchase agent for the value of such shares. The following is a summary of our share repurchases under our common stock repurchase program for the year ended December 31: 2022(a) 2021(b) 2020(c) Shares repurchased (in thousands) 9,796 8,731 3,687 Weighted average price per share $ 160.26 $ 146.61 $ 108.92 Total repurchases (in millions) $ 1,570 $ 1,280 $ 402 (a) We executed and completed four ASR agreements during 2022 to repurchase $1.417 billion of our common stock and received 8.8 million shares in connection with these ASR agreements. We also repurchased an additional 0.6 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 $83 million, inclusive of per-share commissions. Shares repurchased in 2022 include 0.4 million shares of our common stock for $70 million pursuant to our December 2021 ASR agreement that completed in January 2022. (b) We executed and completed three ASR agreements during 2021 to repurchase $1.0 billion of our common stock and received 7.0 million shares in connection with these ASR agreements. Additionally, in December 2021, we executed 109 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) an ASR agreement to repurchase $350 million of our common stock. At the beginning of the repurchase period, we delivered $350 million in cash and received 1.7 million shares based on a stock price of $160.67. The ASR agreement completed in January 2022, at which time we received 0.4 million additional shares based on a final weighted average price of $160.33. (c) 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 Exchange Act for $89 million, inclusive of per-share commissions. We announced in December 2022 that the Board of Directors has authorized up to $1.5 billion in future share repurchases. This new authorization replaces our prior $1.5 billion authorization that was fully utilized in 2022. 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. 14. 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 2022, 2021 and 2020 was approximately 455,000, 513,000 and 570,000, respectively. After the January 2023 issuance of shares associated with the July to December 2022 offering period, 2.3 million shares remain available for issuance under the ESPP. As a result of our ESPP, annual compensation expense increased by $13 million, or $10 million net of tax expense, for 2022, $12 million, or $9 million net of tax expense, for 2021 and $13 million, or $10 million net of tax expense, for 2020. 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 the number of future shares surrendered in payment of the exercise or purchase price of an award, and the number of future shares used to satisfy the withholding obligations, shall no longer be credited back to the total number of shares available for issuance under the 2014 Plan. As of December 31, 2022, approximately 16.1 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 110 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) of equity awards granted under the Incentive Plans are determined by the Management Development and Compensation Committee of our Board of Directors. The 2022 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. Additionally, several members of the Company's senior leadership team received a grant of RSUs in 2022 in special recognition of leadership and contributions critical to the acquisition of Advanced Disposal and the subsequent integration and synergy generation. Awards granted to other eligible employees under the 2014 Plan included a combination of PSUs, RSUs and stock options in 2022. The Company also periodically grants RSUs to employees working on key initiatives, in connection with new hires and promotions and to field -based managers. Restricted Stock Units — A summary of our RSUs is presented in the table below (units in thousands): Units Weighted Average Per Share Fair Value Unvested as of January 1, 2022 343 $ 114.28 Granted 162 $ 147.74 Vested (107) $ 100.11 Forfeited (33) $ 136.43 Unvested as of December 31, 2022 365 $ 131.26 The total fair market value of RSUs that vested during the years ended December 31, 2022, 2021 and 2020 was $15 million, $12 million and $14 million, respectively. During the year ended December 31, 2022, we issued approximately 77,000 shares of common stock for these vested RSUs, net of approximately 30,000 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 generally subject to pro-rata vesting upon an employee's 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. Beginning in 2021, the terms of the award agreements for new grants of RSUs were updated to provide for accelerated vesting following retirement as if the employee had remained employed until the end of the vesting period. Accordingly, compensation expense for RSUs granted to retirement eligible employees is recognized over the longer of (i) the period between grant date and the date that the recipient becomes retirement -eligible or (ii) the defined service requirement of the award. 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 Index ("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 the first half of the first quarter of the succeeding year. At the end of the performance period, the number of shares awarded can range from 0% to 200% of the 111 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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): Units Weighted Average Per Share Fair Value Unvested as of January 1, 2022 968 $ 129.60 Granted 290 $ 168.49 Vested (346) $ 116.26 Forfeited (48) $ 147.79 Unvested as of December 31, 2022 864 $ 147.00 The determination of achievement of performance results and corresponding vesting of PSUs for the three-year performance period ended December 31, 2022 was performed by the Management Development and Compensation Committee of our Board of Directors in January 2023. Accordingly, vesting information for such awards is not included in the table above as of December 31, 2022. The "vested" PSUs are for the three-year performance period ended December 31, 2021, as achievement of performance results and corresponding vesting was determined in February 2022. The performance of the Company's common stock for purposes of the TSR PSUs exceeded target performance criteria, and the Company's financial results, as measured for purposes of the Cash Flow PSUs, exceeded the maximum performance criteria. Accordingly, recipients of the PSU awards received a payout of 167.78% of the vested TSR PSUs and 200% of the vested Cash Flow PSUs. In February 2022, approximately 637,000 PSUs vested and we issued approximately 420,000 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, 2022, 2021 and 2020 for prior PSU award grants had a fair market value of $91 million, $74 million and $89 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, 2022, we had approximately 179,000 vested deferred units outstanding. 112 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Stock Options — Stock options granted prior to 2021 vest in 25% increments on the first two anniversaries of the date of grant with the remaining 50% vesting on the third anniversary. Beginning in 2021, stock options granted vest ratably in three annual increments, beginning on the first anniversary of the date of grant. 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 Options Exercise Price Outstanding as of January 1, 2022 3,206 $ 92.53 Granted 477 $ 145.67 Exercised (a) (675) $ 88.54 Forfeited or expired (85) $ 124.31 Outstanding as of December 31, 2022 (b) 2,923 $ 101.22 Exercisable as of December 31, 2022 (c) 1,762 $ 83.34 (a) Includes approximately 141,000 stock options exercised pursuant to Rule 10b5-1 trading plans that provided for net share settlement, resulting in the Company withholding approximately 112,000 shares of our common stock to cover the associated stock option exercise price and taxes. (b) Stock options outstanding as of December 31, 2022 have a weighted average remaining contractual term of 6.2 years and an aggregate intrinsic value of $163 million based on the market value of our common stock on December 31, 2022. (c) Stock options exercisable as of December 31, 2022 have an aggregate intrinsic value of $130 million based on the market value of our common stock on December 31, 2022. During 2022, 2021 and 2020, we received cash proceeds of $44 million, $66 million and $63 million, respectively, from the exercise of 675,000, 962,000 and 1,039,000 of employee stock options. The aggregate intrinsic value of stock options exercised during 2022, 2021 and 2020 was $51 million, $66 million and $58 million, respectively. Stock options exercisable as of December 31, 2022 were as follows (options in thousands): Weighted Average Per Share Weighted Average Range of Exercise Prices Options Exercise Price Remaining Years $36.88-$50.00 166 $ 40.31 1.0 $50.01-$70.00 355 $ 55.53 2.7 $70.01-$100.00 888 $ 87.95 5.3 $100.01-$145.67 353 $ 119.87 7.6 $36.88-$145.67 1,762 $ 83.34 5.0 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, 2022, 2021 and 2020 was $26.44, $17.25 and $15.82, respectively. The fair value of stock options at the date of grant is amortized to expense over the vesting period less expected forfeitures, except 113 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 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: 2022 2021 2020 Expected option life 4.7 years 4.7 years 4.6 years Expected volatility 23.4 % 23.2 % 16.6 % Expected dividend yield 1.8 % 2.1 % 1.7 % Risk -free interest rate 1.6 % 0.6 % 1.4 % 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 expected 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, 2022, 2021 and 2020, we recognized $71 million, $94 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 ended December 31, 2022, 2021 and 2020 includes related income tax benefits of $14 million, $18 million and $15 million, respectively. We have not capitalized any equity -based compensation costs during the reported periods. As of December 31, 2022, we estimate that $45 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. 15. 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): 2022 2021 2020 Number of common shares outstanding at end of period 407.9 416.1 422.8 Effect of using weighted average common shares outstanding 4.9 4.3 0.2 Weighted average basic common shares outstanding 412.8 420.4 423.0 Dilutive effect of equity -based compensation awards and other contingently issuable shares 2.2 2.5 2.1 Weighted average diluted common shares outstanding 415.0 422.9 425.1 Potentially issuable shares 5.2 5.7 6.1 Number of anti -dilutive potentially issuable shares excluded from diluted common shares outstanding 1.1 0.6 1.6 Refer to the Consolidated Statements of Operations for net income attributable to Waste Management, Inc. 114 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 16. 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 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): 2022 2021 Quoted prices in active markets (Level 1): Cash equivalents and money market funds $ 240 $ 38 Equity securities 37 25 Significant other observable inputs (Level 2): Available -for -sale securities 360 395 Significant unobservable inputs (Level 3): Redeemable preferred stock 56 49 Total Assets $ 693 $ 507 See Note 11 for information related to our nonrecurring fair value measurements and the impact of impairments. See Note 17 for information related to the nonrecurring fair value measurement of assets and liabilities acquired in connection with our acquisitions. 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 funds 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. Equity Securities We invest portions of our restricted trust funds in equity securities and we measure the fair value of these securities using quoted prices in active markets for identical assets. Any changes in fair value of these securities related to unrealized gains and losses have been appropriately reflected as a component of other income (expense). 115 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Available -for -Sale Securities Our available -for -sale securities include restricted trust funds and an investment in an unconsolidated entity, as discussed in Note 18. 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. 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 a noncontrolling investment in an unconsolidated entity and is included in investments in unconsolidated entities in our Consolidated Balance Sheets. The fair value of our investment has 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, 2022 and 2021, the carrying value of our debt was $15.0 billion and $13.4 billion, respectively. The estimated fair value of our debt was approximately $13.8 billion and $14.1 billion as of December 31, 2022 and 2021, respectively. The decrease in the fair value of debt is primarily related to increases in current market rates of our senior notes, the impacts of which were substantially offset by net borrowings of $1.4 billion during 2022. 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, 2022 and 2021. These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented. 17. Acquisitions and Divestitures Acquisitions 2022 Acquisitions During the year ended December 31, 2022, we acquired 13 businesses, including the acquisition of a controlling interest in a business intended to allow us to deliver new recycling capabilities for our customers and provide circular solutions for film and clear plastic wrap used commercially, such as plastic stretch wrap for pallets, furniture film, grocery bags and potentially shrink wrap around food and beverage containers. Our other acquisitions in 2022 primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $507 million, which included $3 72 million in net cash paid and $135 million in non -cash consideration, primarily related to purchase price holdbacks and the conversion of $67 million in secured convertible promissory notes receivable into equity of the acquired business. In addition, we paid $5 million of holdbacks related to prior year acquisitions. 116 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Total consideration for our 2022 acquisitions was primarily allocated to $138 million of property and equipment, $64 million of other intangible assets, $325 million of goodwill and $14 million of noncontrolling interests. Other intangible assets included $45 million of customer relationships and $19 million of covenants not -to -compete. We remain in the measurement period for most of our 2022 acquisitions, and further adjustments to our preliminary purchase price allocations may occur, specifically for the valuation of certain acquired intangibles. The goodwill related to our 2022 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations, of which less than half was tax deductible. 2021 Acquisitions During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $94 million, which included $73 million in net cash paid and $21 million of other consideration, primarily purchase price holdbacks and the settlement of a preexisting promissory note with one of the acquired businesses. In addition, we paid $3 million of holdbacks, primarily related to current year acquisitions. Our 2021 acquisitions discussed above include our acquisition of the remaining ownership interest in a waste diversion technology company. Concurrent with our acquisition, the acquired entity issued shares to an unrelated third -party, diluting our ownership interest. We determined the entity constituted a variable interest entity and concluded that we did not have the power to direct its significant activities. As a result, we subsequently deconsolidated the entity and account for our remaining ownership interest as an equity method investment. 2020 Acquisitions 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 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 grew 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 a $3.0 billion, 364-day, U.S. revolving credit facility and our commercial paper program. In November 2020, we issued $2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the $3.0 billion, 364-day, U.S. revolver and terminated the facility. For the year ended December 31, 2022 and 2021, we incurred integration related costs of $10 million and $51 million, respectively, and for the year ended December 31, 2020, we incurred acquisition and integration related costs of $156 million, which were 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. Post -closing through December 31, 2020, Advanced Disposal 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. 117 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Our consolidated financial statements have not been retroactively restated to include Advanced Disposal's historical financial position or results of operations. The acquisition was 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. The allocation of the purchase price was finalized in October 2021. 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 reporting units that have integrated these operations as they are benefitting from the synergies of the combination. Goodwill related to this acquisition is not deductible for income tax purposes. The following table shows the purchase price allocation as of the date acquired, and adjustments to October 30, 2021 (in millions): October 30, 2020 Adjustments October 30, 2021 Accounts and other receivables $ 159 $ 1 $ 160 Parts and supplies 8 (1) 7 Other current assets 17 (1) 16 Assets held for sale (a) 1,022 — 1,022 Property and equipment 1,278 (12) 1,266 Goodwill 2,470 26 2,496 Other intangible assets 604 (3) 601 Investments in unconsolidated entities 9 — 9 Other assets 27 (2) 25 Accounts payable (107) 1 (106) Accrued liabilities (155) (3) (158) Deferred revenues (19) (19) Current portion of long-term debt (12) (12) Liabilities held for sale (a) (234) (234) Long-term debt, less current portion (b) (441) (441) Landfill and environmental remediation liabilities (242) (13) (255) Deferred income taxes (223) 9 (214) Other liabilities (79) (2) (81) Total purchase price $ 4,082 $ — $ 4,082 (a) In connection with our acquisition of Advanced Disposal, 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. 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 final allocation of purchase price Immediately following the 118 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million. (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 $43 8 million. In November 2020, we redeemed the notes pursuant to an optional redemption feature. The final allocation of $601 million for other intangibles includes $572 million for customer relationships with an amortization period of 15 years and $29 million of other intangibles with a weighted average amortization period of seven years. The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Advanced Disposal as though the companies had been combined as of January 1, 2020. 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, 2020 for the year ended December 31 (in millions, except per share amounts): 2020 Operating revenues $ 16,192 Net income attributable to Waste Management, Inc 1,685 Basic earnings per common share 3.99 Diluted earnings per common share 3.96 Weighted average common shares outstanding: Basic Diluted Divestitures 423 425 In 2022, 2021 and 2020, the aggregate sales price for divestitures of certain landfill assets, as well as collection, hauling, disposal and ancillary operations, was $6 million, $48 million and $856 million, and we recognized net gains of $5 million, $44 million and $33 million, respectively. In 2021, divestitures primarily related to the sale of certain non -strategic Canadian operations, as discussed in Note 11. In 2020, divestitures primarily consisted of assets required to be sold by the U.S. Depaitiuent of Justice in connection with our acquisition of Advanced Disposal, as discussed above. The remaining amounts reported in the Consolidated Statements of Cash Flows generally relate to the sale of fixed assets. 119 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 18. Variable Interest Entities The following is a description of our financial interests in unconsolidated and consolidated variable interest entities that we consider significant: Low -Income Housing Properties We do not consolidate our investments in entities established to manage low-income housing properties 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 $321 million and $178 million as of December 31, 2022 and 2021, respectively. The debt balance related to our investments in low-income housing properties was $295 million and $156 million as of December 31, 2022 and 2021, respectively. Additional information related to these investments is discussed in Note 8. 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 $93 million and $110 million as of December 31, 2022 and 2021, 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 funds in our Consolidated 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 $113 million and $117 million as of December 31, 2022 and 2021, respectively. 19. Segment and Related Information Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The East and West Tiers are presented in this report and constitute our existing Solid Waste business. The operating segments not evaluated and overseen through our East and West Tiers 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. 120 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 Net Income Depreciation, Capital Total Operating Operating Operating from Depletion and Expenditures Assets Revenues Revenues(d) Revenues Operations(e) Amortization (t) (g)(h) Years Ended December 31: 2022 Solid Waste: East Tier $ 10,283 $ (1,977) $ 8,306 $ 2,249 $ 998 $ 1,129 $ 14,741 West Tier 10,190 (2,123) 8,067 2,346 878 1,047 11,916 Solid Waste (a) 20,473 (4,100) 16,373 4,595 1,876 2,176 26,657 Other (b) 3,545 (220) 3,325 26 66 328 1,972 24,018 (4,320) 19,698 4,621 1,942 2,504 28,629 Corporate and Other (c) - (1,256) 96 305 3,048 Total $ 24,018 $ (4,320) $ 19,698 $ 3,365 $ 2,038 $ 2,809 $ 31,677 2021 Solid Waste: East Tier $ 9,278 $ (1,738) $ 7,540 $ 2,037 $ 970 $ 708 $ 14,269 West Tier 9,369 (1,908) 7,461 2,103 883 579 11,476 Solid Waste (a) 18,647 (3,646) 15,001 4,140 1,853 1,287 25,745 Other (b) 3,046 (116) 2,930 34 70 181 1,275 21,693 (3,762) 17,931 4,174 1,923 1,468 27,020 Corporate and Other (c) - (1,209) 76 571 2,372 Total $ 21,693 $ (3,762) $ 17,931 $ 2,965 $ 1,999 $ 2,039 $ 29,392 2020 Solid Waste: East Tier $ 7,873 $ (1,503) $ 6,370 $ 1,672 $ 801 $ 537 $ 14,274 West Tier 8,241 (1,657) 6,584 1,800 738 465 11,501 Solid Waste (a) 16,114 (3,160) 12,954 3,472 1,539 1,002 25,775 Other (b) 2,364 (100) 2,264 (42) 87 75 2,064 18,478 (3,260) 15,218 3,430 1,626 1,077 27,839 Corporate and Other (c) - (996) 45 508 1,810 Total $ 18,478 $ (3,260) $ 15,218 $ 2,434 $ 1,671 $ 1,585 $ 29,649 (a) 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. Income from operations in our Solid Waste business increased in 2022, as compared with 2021, primarily due to revenue growth in our collection and disposal businesses driven by both yield and volume. This increase was partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments; (iii) divestitures, asset impairments and unusual items, discussed in Note 11 above, that impacted our East Tier results and (iv) reduced profitability in our recycling business from the decline in recycling commodity prices and lower volumes. 121 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Income from operations in our Solid Waste business increased in 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal; (ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment and (iii) changes from divestitures, asset impairments and unusual items, discussed in Note 11, that impacted both Tiers' results. These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth; (ii) increased landfill depletion from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post -closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post -closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures. During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation, depletion and amortization of acquired assets. (b) "Other" includes (i) elements of our Strategic Business Solutions ("WMSBS") business that are not included in the operations of our reportable segments; (ii) elements of our sustainability business that includes landfill gas -to -energy operations managed by our WM Renewable Energy business, our SES business and recycling brokerage services and not included in the operations of our reportable segments; (iii) certain other expanded service offerings and solutions and (iv) the results of non -operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. The decrease in income from operations in 2022, as compared with 2021, was due to the recognition of acquisition and integration -related costs, as well as, a prior year gain from divestitures of certain ancillary operations in our Other segment, discussed in Note 11, partially offset by improved profitability in our SES and WMSBS businesses. The increase in income from operations for 2021, as compared to 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business. (c) "Corporate and other" 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. These costs increased in 2022, as compared with 2021, primarily due to strategic investments in our digital platform and sustainability initiatives, partially offset by lower acquisition and integration related costs. These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs; (ii) increased labor, support and integration costs following our acquisition of Advanced Disposal; (iii) strategic investments in our digital platform; (iv) increased health and welfare costs attributable to medical care activity generally returning to pre -pandemic levels from the lower levels experienced during 2020 and (v) charges pertaining to reserves for certain loss contingencies during 2021. These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in the fourth quarter of 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021. (d) 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. (e) 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 2. (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, include timing differences for amounts accrued but not yet paid. 122 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (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): 2022 2021 2020 Total assets, as reported above $ 31,677 $ 29,392 $ 29,649 Elimination of intercompany investments and advances (310) (295) (304) Total assets, per Consolidated Balance Sheet $ 31,367 $ 29,097 $ 29,345 (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 Tiers 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 East Tier West Tier Other Total Balance, December 31, 2020 $ 5,101 $ 3,823 $ 70 $ 8,994 Acquired goodwill (a) 27 15 34 76 Divested goodwill (11) (7) (29) (47) Foreign currency translation and other 3 2 - 5 Balance, December 31, 2021 $ 5,120 $ 3,833 $ 75 $ 9,028 Acquired goodwill 92 24 209 325 Divested goodwill Foreign currency translation and other (30) (30) Balance, December 31, 2022 $ 5,182 $ 3,857 $ 284 $ 9,323 (a) Includes $26 million of post -closing acquisition adjustments related to our acquisition of Advanced Disposal. The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions): 2022 2021 2020 Commercial $ 5,450 $ 4,760 $ 4,102 Industrial 3,681 3,210 2,770 Residential 3,339 3,172 2,716 Other collection 699 533 465 Total collection 13,169 11,675 10,053 Landfill 4,600 4,153 3,667 Transfer 2,143 2,072 1,855 Recycling 1,701 1,681 1,127 Other (a) 2,405 2,112 1,776 Intercompany (b) (4,320) (3,762) (3,260) Total $ 19,698 $ 17,931 $ 15,218 (a) The "Other" line of business includes (i) certain services provided by our WMSBS business; (ii) certain services within our sustainability business including our landfill gas -to -energy operations managed by our WM Renewable Energy business and (iii) certain other expanded service offerings and solutions and reflects the results of non -operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. Revenue attributable to collection, landfill, transfer and recycling services provided by our "Other" businesses has been reflected as a component of the relevant 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. 123 WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Our revenues and income from operations typically reflect seasonal patterns. 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. Our 2020 operating results were negatively impacted by COVID-19, as volume declines began in March 2020 in our landfill, industrial and commercial collection businesses due to 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, shelter -in -place orders and recommendations to practice social distancing. Throughout 2021 and 2022, our volumes recovered from the sharp decline experienced in 2020, with minimal impact from the resurgence in transmission of COVID-19 associated with recent virus variants, as communities and businesses remained open. However, the potential for future resurgence in transmission of COVID-19 and related business closures, due to virus variants or other pandemic conditions, could adversely impact our volumes and costs in the future. Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. Extreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers' businesses, reducing the amount of waste generated by their operations. 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 geographic 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. Net operating revenues relating to operations in the U.S. and Canada for the year ended December 31 are as follows (in millions): 2022 2021 2020 U.S. $ 18,860 $ 17,136 $ 14,505 Canada 838 795 713 Total $ 19,698 $ 17,931 $ 15,218 Property and equipment, net of accumulated depreciation and depletion, relating to operations in the U.S. and Canada for the year ended December 31 are as follows (in millions): 2022 2021 2020 U.S. $ 14,725 $ 13,428 $ 13,168 Canada 994 991 980 Total $ 15,719 $ 14,419 $ 14,148 124 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures. Effectiveness of Disclosure 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 (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) 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, 2022 (the end of the period covered by this Annual Report on Form 10-K) at a reasonable assurance level. 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 management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). 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. 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, 2022 based on the 2013 framework in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2022. 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 in Item 8 of this Annual Report on Form 10-K. 125 Changes in Internal Control over Financial Reporting In 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system. These new system implementations were achieved after a multi -year review of existing accounting, reporting and human capital processes and the design and configuration of system -enabled enhancements to such processes. The changes in our general ledger, finance enterprise resource planning and human capital management systems were subject to thorough testing and review by internal and external parties both before and after implementation. While these systems implementations enhance our framework for internal control over fmancial reporting, management, together with our CEO and CFO, has determined that the changes in our internal controls over financial reporting during the quarter ended December 31, 2022 have not been material and are not reasonably likely to materially affect our internal controls over financial reporting. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item is incorporated by reference to the sections entitled "Board of Directors," "Election of Directors" and "Executive Officers" in the Company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders (the "Proxy Statement"), to be held May 9, 2023. 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," "— Executive Compensation Tables" and "— Pay Versus Performance" in the Proxy Statement. 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. 126 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) (1) Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2021 and 2020 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. Description 3.1 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]. 3.2 Amended and Restated By-laws of Waste Management, Inc. [incorporated by reference to Exhibit 3.2 to Form 8-K dated November 8, 2022]. 4.1 Specimen Stock Certificate [incorporated by reference to Exhibit 4.1 to Form 10-K for the year ended December 31, 1998]. 4.2 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]. 4.3 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]. 4.4 Indenture for Subordinated Debt Securities dated February 1, 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]. 4.5 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 Officers' Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997 establishing the terms and form of the 4.15% Senior Notes due 2032 [incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarter ended June 30, 2022]. 4.9 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 4.15% Senior Notes due 2032 [incorporated by reference to Exhibit 4.2 to Form 10-Q for the quarter ended June 30, 2022]. 127 10.1 ]- 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated May 13, 2014]. 10.2t First Amendment to 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.2 to Form 8-K dated May 12, 2020]. 10.31- Second Amendment to 2014 Stock Incentive Plan [incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended June 30, 2022]. 10.41- 2009 Stock Incentive Plan [incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed March 25, 2009]. 10.51- 2005 Annual Incentive Plan [incorporated by reference to Appendix D to the Proxy Statement on Schedule 14A filed April 8, 2004]. 10.6t 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]. 10.7t 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]. 10.8 $3.5 Billion Sixth Amended and Restated Revolving Credit Agreement dated as of May 27, 2022 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 May 27, 2022]. 10.9 $1.0 Billion Term Loan Credit Agreement dated as of May 27, 2022 by and among Waste Management, Inc., Waste Management Holdings, Inc., certain banks party thereto, and Bank of America, N.A., as administrative agent [incorporated by reference to Exhibit 10.2 to Form 8-K dated May 27, 2022]. 10.10 Commercial Paper Dealer Agreement, substantially in the form as executed with each of Mizuho Securities USA LLC, BofA Securities, Inc., J.P. Morgan Securities LLC, MUFG Securities Americas Inc., Wells Fargo Securities, LLC, RBC Capital Markets, LLC and Siebert Williams Shank & Co., LLC as Dealer [incorporated by reference to Exhibit 10.11 to Form 10-K for the year ended December 31, 2016]. 10.11* Commercial Paper Issuing and Paying Agent Agreement between Waste Management, Inc. and U.S. Bank Trust Company, National Association dated October 28, 2022. 10.12t 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]. 10.13t 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]. 10.14 j- 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]. 10.15t 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]. 10.16t 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]. 10.17t Waste Management Holdings, Inc. Executive Severance Plan [incorporated by reference to Exhibit 10.1 to Form 8-K dated December 22, 2017]. 10.18t 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]. 10.19t Form of 2021 Long Term Incentive Compensation Award Agreement for Senior Leadership Team [incorporated by reference to Exhibit 10.1 to Form 8-K dated February 23, 2021]. 10.20t Form of 2021 Long Term Incentive Compensation RSU Award Agreement [incorporated by reference to Exhibit 10.19 to Form 10-K for the year ended December 31, 2021]. 10.21t Form of 2022 Long Term Incentive Compensation Award Agreement for Senior Leadership Team [incorporated by reference to Exhibit 10.1 to Form 8-K dated March 1, 2022]. 10.22t Form of 2022 Long Term Incentive Compensation RSU Award Agreement [incorporated by reference to Exhibit 10.2 to Form 8-K dated March 1, 2022]. 21.1* Subsidiaries of the Registrant. 22.1* Guarantor Subsidiary. 128 23.1* Consent of Independent Registered Public Accounting Firm. 31.1* Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 of James C. Fish, Jr., President and Chief Executive Officer. 31.2* Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 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. 95* Mine Safety Disclosures. 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. t Denotes management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary. None. 129 SIGNATURES 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. WASTE MANAGEMENT, INC. By: /s/ JAMES C. FISH, JR. James C. Fish, Jr. President, Chief Executive Officer and Director Date: February 7, 2023 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 /s/ JAMES C. FISH, JR. James C. Fish, Jr. /s/ DEVINA A. RANKIN Devina A Rankin /s/ LESLIE K. NAGY Leslie K. Nagy /s/ ANDRES R. GLUSKI Andres R. Gluski /s/ VICTORIA M. HOLT Victoria M. Holt /s/ KATHLEEN M. MAZZARELLA Kathleen M. Mazzarella /s/ SEAN E. MENKE Sean E. Menke /s/ WILLIAM B. PLUMMER William B. Plummer /s/ JOHN C. POPE John C. Pope /s/ MARYROSE T. SYLVESTER Maryrose T. Sylvester /s/ THOMAS H. WEIDEMEYER Thomas H. Weidemeyer Title Date President, Chief Executive Officer and Director February 7, 2023 (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President and Chief Accounting Officer (Principal Accounting Officer) Director Director Director Director Director Director Director Chairman of the Board and Director 130 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 February 7, 2023 3 Corporate Information BOARD OF DIRECTORS BRUCE E. CHINN (A) President and Chief Executive Officer Chevron Phillips Chemical Company LLC JAMES C. FISH, JR. President and Chief Executive Officer Waste Management, Inc. ANDRES 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) Chief Executive Officer Sabre Corporation WILLIAM B. PLUMMIER (A, C) Former Executive Vice President and Chief Financial Officer United Rentals, Inc. JOHN C. POPE (C, N) Chief Executive Officer and 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 OFFICERS JAMES C. FISH, JR. President and Chief Executive Officer CHARLES C. BOETTCHER Executive Vice President, Corporate Development and Chief Legal Officer RAFAEL E. CARRASCO Senior Vice President, Operations TARA J. HEMMER Senior Vice President and Chief Sustainability Officer JOHN J. MORRIS, JR. Executive Vice President and Chief Operating Officer DEVINA A. RANKIN Executive Vice President and Chief Financial Officer KELLY C. ROONEY Senior Vice President, Chief Human Resources and Diversity & Inclusion Officer DONALD J. SMITH Senior Vice President, Operations MICHAEL J. WATSON Senior Vice President and Chief Customer Officer JEFF R. BENNETT Assistant Treasurer JOHN A. CARROLL Vice President and Chief Accounting Officer MARK A. LOCKETT Vice President, Tax LESLIE K. NAGY 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 The annual meeting of the stockholders of the Company is scheduled to be held at 11:00 a.m. CT May 9, 2023 at the offices of: Waste Management, Inc. 800 Capitol Street, Suite 3000 Houston, Texas 77002 INDEPENDENT AUDITORS Ernst & Young LLP 5 Houston Center 1401 McKinney Street, Suite 2400 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, 2023 was 7,824. Based on security position listings, the Company believes that, as of March 10, 2023, it had approximately 1,322,071 beneficial owners. TRANSFER AGENT AND REGISTRAR Computershare Shareholder Services: (800) 696-1190 Shareholder Services - International: +1 (201) 680-6578 P.O.Box 43006 Providence, Rhode Island 02940 Overnight Delivery: 150 Royall Street, Suite 101 Canton, Massachusetts 02021 800 Capitol Street - Suite 3000 - Houston, Texas 77002 www.wm.com D&B Finance Analytics LIVE REPORT Printed By:Shanna Gilsrud Date Printed:12/16/2024 WASTE MANAGEMENT, INC. D-U-N-S Number: 19-467-2085 Phone: +1 713 512 6200 Address: 800 Capitol St Ste 3000, Houston, TX, 77002, United States Of America Web: www.wm.com Endorsement: sgilsrud@wm.com Summary Currency: USD KEY DATA ELEMENTS (Formerly: SCORE BAR) KDE Name PAYDEX® Delinquency Score Failure Score D&B Viability Rating + Current Status Details 69 37 31 16 Days Beyond Terms Moderate Risk of severe payment delinquency_ Moderate to High Risk of severe financial stress. Bankruptcy Found N D&B Rating 5A3 View More Details US$ 50,000,000 and over in Net Worth or Equity, Moderate Risk ALL ACCOUNTS Totals Total Outstanding Approved Credit Limit Credit Limit Utilization Total Past Due Account Level Detail Approved Credit Account Name Total Outstanding Limit Credit Limit Utilization Total Past Due Account Status Folders There are currently no account associated with this D-U-N-S. Upload account or create an account to view summary. COMPANY PROFILE O D-U-N-S Mailing Address Annual Sales UNITED STATES 20,426,000,000 (USD) History Record Telephone Employees +1 713 512 6200 48,000 (50 here) Date Incorporated Website Age (Year Started) 04/28/1995 www.wm.com 38 Years (1987) State of Incorporation Present Control Succeeded Named Principal DELAWARE James C Fish Jr, PRES-CEO Ownership Line of Business Public: WM(NYS) Refuse system Washington Ave CE MILITARY SIC 4953 NAICS 562119 WASHINGS UquarI wn m- z�I l AVENUE Aquanum-Houston ���r' COALITION / MEMORIAL PARK ©r Memorial Dr Q,PkWY W Dallas St W Gray St a al 00 Clinton. Minute Maid Park Street Address: eri The Original Ninfa' 800 Capitol St Ste 3000, on Navigation Houston, TX, 77002, United States Of America hlavigat/on e/b a DOWNTOWN HOUSTON ✓streetAddress OVERALL BUSINESS RISK O'+ Dun & Bradstreet thinks... MODERATE -HIGH Overall assessment of this organization over the next 12 months: Based on the predicted risk of business discontinuation: Based on the predicted risk of severely delinquent payments: LOW -MODERATE Stable Condition Due To Large Business Size Exhibiting Some Financial Stress Moderate Potential For Severely Delinquent Payments D&B MAX CREDIT RECOMMENDATION O'+ MAXIMUM CREDIT RECOMMENDATION 60,000 (USD) The recommended limit is based on a moderate probability of severe delinquency. FAILURE SCORE ® (Formerly Financial Stress Score) Company's Risk Level Probability of failure over the next 12 months 0.44 % 31 High Risk (1) Low Risk (100) Past 12 Months Low Risk High Risk DELINQUENCY SCORE ® (Formerly Commercial Credit Score) Company's Risk Level Probability of delinquency over the next 12 months 7.22 % High Risk (1) Past 12 Months Low Risk High Risk Low Risk (100) VIABILITY RATING SUMMARY O'+ Viability Score 1 High Risk (9) Low Risk (1) Data Depth Indicator A Descriptive (G) Predictive (A) Portfolio Comparison Financial Data Trade Payments Company Size Years in Business 2 Available Available: 3+Trade Large: Employees:50+ or Sales: $500K+ Established Low Risk (1) D&B PAYDEXO OO High Risk (1) 16 days beyond terms Past 24 Months Low Risk High Risk 69 Low Risk (100) D&B PAYDEX - 3 MONTHS O'+ High Risk (1) Low Risk (100) 14 days beyond terms PAYDEXO TREND CHART O'+ SBRI ORIGINATION 0 No SBRI Origination Score data is currently available. D&B SBFE SCORE 0 No D&B SBFE Score data is currently available. D&B RATING O'+ Financial Strength 5A : 50 000 000 (USD) () and over in Net Worth or EgtAy Current Rating as of 02/24/2021 Risk Indicator 3 : Moderate Risk LEGAL EVENTS Events Occurrences Last Filed Bankruptcies 0 Judgements 2 02/21/2018 Liens 8 10/24/2024 Suits 35 11/26/2024 UCC 72 06/10/2021 DETAILED TRADE RISK INSIGHT" Days Beyond Terms 2 Days High Risk (120+) Days Beyond Terms Past 3 months : 2 Low Risk:O ; High Risk:120+ 3 Months From Oct-24 to Dec-24 Dollar -weighted average of 374 payment experiences reported from 132 companies. DETAILED TRADE RISK INSIGHT" 13 MONTH TREND Total Amount Current and Past Due - FINANCIAL OVERVIEW - BALANCE SHEET Balance Sheet (1) Amount [2) Net Worth 6,903,000,000 (USD) Total Current Assets 3,804,000,000 (USD) Total Assets 32,823,000,000 (USD) Total Current Liabilities 4,226,000,000 (USD) Working Capital/Net Current Assets (422,000,000) (USD) Total Liabilities 25,920,000,000 (USD) Long Term Liabilities 21,694,000,000 (USD) 1. Fiscal (Consolidated) 12/31/2023 2. (In Single Units) Source: Edgar Last 3 Years TRADE PAYMENTS Highest Past Due: 4,000,000 Highest Now 0 Total Trade Exp Largest High C wing eriences redit 15,000,000 504 20,000,000 FINANCIAL OVERVIEW - PROFIT AND LOSS Profit & Loss (1) Amount [2) Sales 20,426,000,000 (USD) EBIT 3,521,000,000 (USD) EBITDA 5,722,000,000 (USD) Net Income 2,304,000,000 (USD) 1. Fiscal (Consolidated) 12/31/2023 2. (In Single Units) Source: Edgar Last 3 Years --- OWNERSHIP Subsidiaries Branches Total Members 451 120 2,584 This company is a Global Ultimate, Domestic Ultimate, Headquarters, Parent. Name Country D-U-N-S Others Global Ultimate Domestic Ultimate Waste Management, Inc. Waste Management, Inc. United States 19-467-2085 United States 19-467-2085 FINANCIAL OVERVIEW - KEY BUSINESS RATIOS Key Business Ratios Business Ratio Current Ratio 0.9 Quick Ratio 0.79 Current Liabilities/Net Worth 0.61 Sales to Net Working Capital (48.4) Interest Coverage 7.04 Debt to Equity 3.75 Source: Edgar ALERTS OO 0 There are no alerts for this D-U-N-S Number. NEWS GENERAL INDUSTRY Eco-tip: Reducing plastic during gift -giving season Ventura County Star - Frontpage 12/14/2024 GENERAL INDUSTRY Why the dramatic rise in small business optimism is due to more than just small businesses: Chart of the week The Times Of Update 12/14/2024 GENERAL INDUSTRY Why a dramatic jump in small business optimism is about more than small businesses: Chart of the Week The Bharat Express News 12/14/2024 GENERAL INDUSTRY But warranted or not, a surge in optimism that big for this oft -ignored index deserves a second look this time — and our selection as Chart of the Week. Because sentiment can have real dollar effects in markets. Yahoo Finanzas - Sitemap 12/14/2024 GENERAL INDUSTRY News Highlights: Top Energy News of the Day - Friday at 11 AM ET Morningstar 12/13/2024 GENERAL INDUSTRY Landfill Gas Market Estimation Worth $2.8 Billion By 2030 Menafn 12/13/2024 GENERAL INDUSTRY Landfill Gas Market Estimation Worth $2.8 Billion by 2030 US Daily Ledger 12/13/2024 EARNINGS RELEASE, GENERAL INDUSTRY, FINANCIAL NEWS Stifel Nicolaus Increases Waste Management (NYSE:WM) Price Target to $252.00 Defense World - Companies 12/13/2024 GENERAL INDUSTRY News Highlights: Top Energy News of the Day - Friday at 12 AM ET Morningstar 12/13/2024 MANAGEMENT CHANGE, GENERAL INDUSTRY, EXECUTIVE ACTIVITY News Highlights: Top Company News of the Day - Thursday at 7 PM ET Morningstar 12/13/2024 COUNTRY/REGIONAL INSIGHT United States Of America Risk Category With the US economy still strong and inflation edging up, the Federal Reserve will be restricted in its ability to cut interest rates, supporting the ongoing strength of the dollar. High Risk Low Risk Available Reports Country Insight Report (CIR) O Current Publication Date: 12/16/2024 Country Insight Snapshot (CIS) O Current Publication Date: 12/16/2024 STOCK PERFORMANCE History Daily High 52-Week High Performance P/E: EPS: Div/Yield The scores and ratings included in this report are designed as a tool to assist the user in making their own credit related decisions, and should be used as part of a balanced and complete assessment relying on the knowledge and expertise of the reader, and where appropriate on other information sources. The score and rating models are developed using statistical analysis in order to generate a prediction of future events. Dun & Bradstreet monitors the performance of thousands of businesses in order to identify characteristics common to specific business events. These characteristics are weighted by significance to form rules within its models that identify other businesses with similar characteristics in order to provide a score or rating. Dun & Bradstreet's scores and ratings are not a statement of what will happen, but an indication of what is more likely to happen based on previous experience. Though Dun & Bradstreet uses extensive procedures to maintain the quality of its information, Dun & Bradstreet cannot guarantee that it is accurate, complete or timely, and this may affect the included scores and ratings. Your use of this report is subject to applicable law, and to the terms of your agreement with Dun & Bradstreet. Risk Assessment Currency: All figures in USD unless otherwise stated D&B RISK ASSESSMENT OVERALL BUSINESS RISK IGH MODERATE - HIGH Dun & Bradstreet thinks... MODERATE LOW - MODERATE LOW • Overall assessment of this organization over the next 12 months: STABLE CONDITION DUE TO LARGE BUSINESS SIZE • Based on the predicted risk of business discontinuation: EXHIBITING SOME FINANCIAL STRESS • Based on the predicted risk of severely delinquent payments: MODERATE POTENTIAL FOR SEVERELY DELINQUENT PAYMENTS MAXIMUM CREDIT RECOMMENDATION 60,000 (USD) The recommended limit is based on a moderate probability of severe delinquency. D&B VIABILITY RATING SUMMARY The D&B Viability Rating uses D&B's proprietary analytics to compare the most predictive business risk indicators and deliver a highly reliable assessment of the probability that a company will go out of business, become dormant/inactive, or file for bankruptcy/insolvency within the next 12 months. The D&B Viability Rating is made up of 4 components: Viability Score Portfolio Comparison Compared to All US Businesses within the D&B Compared to All US Businesses within the same Database: MODEL SEGMENT: • Level of Risk:Low Risk • Businesses ranked 1 have a probability of becoming no longer viable: 0.2 % • Percentage of businesses ranked 1: 0.3 % • Across all US businesses, the average probability of becoming no longer viable:14 % • Model Segment :Available Financial Data • Level of Risk:Low Risk • Businesses ranked 2 within this model segment have a probability of becoming no longer viable: 0.2 % • Percentage of businesses ranked 2 with this model segment: 14 % • Within this model segment, the average probability of becoming no longer viable:0.6 % Data Depth Indicator Company Profile: Data Depth Indicator: Company Profile Details: Rich Firmographics w Extensive Commercial Trading Activity Comprehensive Financial Attributes Greater data depth can increase the precision of the D&B Viability Rating assessment. To help improve the current data depth of this company, you can ask D&B to make a personalized request to this company on your behalf to obtain its latest financial information. To make the request, click the link below. Note, the company must be saved to a folder before the request can be made. Request Financial Statements Reference the FINANCIALS tab for this company to monitor the status of your request. • Financial Data: True • Trade Payments: Available: 3+Trade • Company Size: Large: Employees:50+ or Sales: $500K+ • Years in Business: Established: 5+ Financial Trade Company Years in Data Payments Size Business True Available: Large Established 3+Trade FAILURE SCORE FORMERLY FINANCIAL STRESS SCORE High Risk (1) Low Risk (100) • Low proportion of satisfactory payment experiences to total payment experiences • High proportion of slow payment experiences to total number of payment experiences • High proportion of past due balances to total amount owing • UCC Filings reported • High number of enquiries to D&B over last 12 months • Evidence of open liens and judgments Level of Risk MQd a mite; Raw Score 1444 Probability of Failure 0.44 % Average Probability of Failure for Businesses in D&B Database 0.48 Class 4 Business and Industry Trends BUSINESS AND INDUSTRY COMPARISON Norms This Business Selected Segments of Business Attributes National Wo 31 Region:(WEST SOUTH CENTRAL) 33 Industry:INFRASTRUCTURE Employee range:(500-2300000) Years in Business:(26+) 29 53 68 DELINQUENCY SCORE FORMERLY COMMERCIAL CREDIT SCORE High Risk (1) Low Risk (100) • Proportion of past due balances to total amount owing • Proportion of slow payments in recent months • Higher risk industry based on delinquency rates for this industry • Evidence of open suits, liens, and judgments Level of Risk Raw Score 487 Probability of Delinquency 7.22 % Compared to Businesses in D&B Database 10.2 % Class 3 Business and Industry Trends BUSINESS AND INDUSTRY COMPARISON Norms This Business Selected Segments of Business Attributes National Wo 37 Region:(WEST SOUTH CENTRAL) 35 Industry:INFRASTRUCTURE Employee range:(500-2768886) Years in Business:(26+) 15 75 79 D&B PAYDEX 69 High Risk (1) Low Risk (100) When weighted by amount, Payments to suppliers average 16 Days Beyond Terms ❑ High risk of late payment (Average 30 to 120 days beyond terms) ❑ Medium risk of late payment (Average 30 days or less beyond terms) ❑ Low risk of late payment (Average prompt to 30+ days sooner) Industry Median: 75 Equals 8 Days Beyond Terms Business and Industry Trends D&B 3 MONTH PAYDEX 71 High Risk (1) Low Risk (100) Based on payments collected 3 months ago. When weighted by amount, Payments to suppliers average 14 days beyond terms ❑ High risk of late payment (Average 30 to 120 days beyond terms) ❑ Medium risk of late payment (Average 30 days or less beyond terms) ❑ Low risk of late payment (Average prompt to 30+ days sooner) Industry Median: 75 Equals 8 Days Beyond Terms 4953 - Refuse system D&B RATING Current Rating as of 02/24/2021 Financial Strength 5A : 50 000 000 (USD) and over in Net Worth or Equity Previous Rating Financial Strength 5A : 50 000 000 (USD) and over in Net Worth or Equity Risk Indicator 3: Moderate Risk Risk Indicator 2 : Low Risk History since 04/21/1992 Date Applied D&B Rating 03/17/2001 5A2 11/19/1998 05/06/1998 04/23/1996 11/16/1995 5A2 4A3 Trade Payments Currency: All figures in USD unless otherwise stated TRADE PAYMENTS SUMMARY (Based on 24 months of data) Overall Payment Behaviour % of Trade Within Terms 16 54% Days Beyond Terms Highest Now Owing : 15,000,000 (USD) Total Trade Experiences: 504 Largest High Credit : 20,000,000 (USD) Average High Credit : 141,556 (USD) Highest Past Due 4,000,000 (USD) Total Unfavorable Comments : 0 Largest High Credit: 0 (USD) Total Placed in Collections: 0 Largest High Credit: 0 (USD) D&B PAYDEX 69 High Risk (1) Low Risk (100) When weighted by amount, Payments to suppliers average 16 Days Beyond Terms ❑ High risk of late payment (Average 30 to 120 days beyond terms) L. Medium risk of late payment (Average 30 days or less beyond terms) ❑ Low risk of late payment (Average prompt to 30+ days sooner) Industry Median: 75 Equals 8 Days Beyond Terms D&B 3 MONTH PAYDEX 71 High Risk (1) Low Risk (100) Based on payments collected 3 months ago. When weighted by amount, Payments to suppliers average 14 days beyond terms ❑ High risk of late payment (Average 30 to 120 days beyond terms) ❑ Medium risk of late payment (Average 30 days or less beyond terms) ❑ Low risk of late payment (Average prompt to 30+ days sooner) Industry Median: 75 Equals 8 Days Beyond Terms BUSINESS AND INDUSTRY TRENDS 1/23 2/23 3/23 4/23 5/23 6/23 7/23 8/23 9/23 10/23 11/23 This 76 76 76 75 75 75 75 75 75 75 74 Business Industry Quartile Upper - - 79 - - 79 - - 79 - - Median - - 76 - - 76 - - 75 - - Lower - - 68 - - 68 - - 68 - - 4953 - Refuse system Current 12/23 1/24 2/24 3/24 4/24 5/24 6/24 7/24 8/24 9/24 10/24 11/24 2024 73 74 73 73 72 72 70 70 70 70 69 69 69 79 76 68 79 - 75 - 68 - 79 - 75 - 68 - 79 75 68 TRADE PAYMENTS BY CREDIT EXTENDED (Based on 12 months of data) Range of Credit Extended (US$) Number of Payment Experiences Total Value % Within Terms 100,000 & over 50,000 - 99,999 46 54,900,000 (USD) 31 2,290,000 (USD) 75 36 15,000 - 49,999 63 1,620,000 (USD) 52 Range of Credit Extended (US$) Number of Payment Experiences Total Value % Within Terms 5,000 - 14,999 1,000 - 4,999 Less than 1,000 123 882,500 (USD) 56 82 154,000 (USD) 53 78 32,050 (USD) 55 TRADE PAYMENTS BY INDUSTRY (BASED ON 24 MONTHS OF DATA) Collapse All I Expand All Industry Category- Number of Payment Largest High Credit % Within Terms 1 - 30 31 - 60 61 - 90 91 + Experiences (US$) (Expand to View) Days Days Days Days Late (%) Late (%) Late (%) Late (%) +14 - Mining and Quarrying of Non- metallic Minerals except Fuels 8 300,000 29 65 0 6 1423 - Granite 300,000 3 95 2 mining 1442 - Gravel/sand mine 2 10,000 83 0 17 1422 - Limestone 25,000 100 0 mining +15 - Building Construction - General Contractors and Operative Builders 2 2,500 50 25 0 25 0 1542 - Nonresident builders 2 2,500 50 25 25 +16 - Heavy Construction other than Building Construction - Contractors 2 55,000 8 50 0 42 0 1611 - Street/hwy builder 2 55,000 50 42 +17 - Construction - Special Trade Contractors 7 30,000 42 7 7 25 19 1711 - Mechanical contractor 6 30,000 34 14 14 0 38 1794 - Excavation contractor 1 30,000 50 0 50 0 +26 - Paper and 2,000,000 60 7 17 0 16 Allied Products 2653 - Mfg corrugated boxes 4 100,000 80 20 0 0 2631 - Paperboard mill 3 2,000,000 49 2 0 49 2621 - Paper mill 1 15,000 50 50 0 +27 - Printing, Publishing and Allied Industries 3 75,000 14 62 25 0 2759 - Misc coml printing 2 75,000 27 73 0 0 2741 - Misc 2,500 50 50 0 publishing �28 - Chemicals and 3 7,500 24 77 0 Allied Products 2851 - Mfg paint/allied prdt 2 7,500 47 53 0 2813 - Mfg 1 5,000 0 100 0 0 industrial gases 30 - Rubber and Miscellaneous Plastics Products 3 100,000 17 17 17 0 50 3089 - Mfg misc plastic prdt 1 100,000 50 0 50 3081 - Mfg plastic 85,000 50 0 50 sheet/flm 3053 - Mfg sealing devices 1 1,000 0 50 50 32 - Stone, Clay, Glass, and Concrete Products 4 45,000 28 50 11 0 11 3273 - Mfg readymix concrete 2 1,000 34 33 33 3274 - Mfg lime 45,000 50 50 0 3241 - Mfg 1 35,000 0 100 0 0 hydraulic cement 33 - Primary Metal 2,500 50 0 0 50 Industries 3312 - Steel works 1 2,500 50 0 50 .34 - Fabricated 3 20,000 33 33 0 33 Metal Products except Machinery and Transportation Equipment 3491 - Mfg industrial valves 1 20,000 100 0 0 3498 - Mfg fab pipe/fitting 750 100 0 3442 - Mfg metal doors/trim 1 750 0 0 100 .35 - Industrial and 21 900,000 40 24 6 26 Commercial Machinery and Computer Equipment 3531 - Mfg 5 900,000 8 67 19 6 construction mach 3579 - Mfg misc office eqpt 2,500 31 41 14 14 3571 - Mfg 2 55,000 48 4 0 48 computers 3572 - Mfg 2 30,000 100 0 0 computer storage 3585 - Mfg 2 10,000 20 0 40 40 refrig/heat equip 3534 - Mfg elevator/escaltrs 2 7,500 50 0 25 0 25 3593 - Mfg 250,000 50 50 0 cylinder/actuator 3564 - Mfg blowers/fans 1 10,000 50 0 50 3562 - Mfg 1 5,000 0 50 0 50 ball/roll bearing .36 - Electronic and other electrical equipment and components except computer equipment 5 7,500 88 13 0 3625 - Mfg relays/controls 2 7,500 50 50 0 3613 - Mfg switchgear- boards 1 750 100 0 0 3648 - Mfg misc light equip 1 750 100 0 0 3699 - Mfg misc elect. equip 750 100 0 0 .37 - Transportation Equipment 1 250,000 0 100 0 0 3715 - Mfg truck 1 250,000 0 100 0 0 trailers 38 - Measuring 13 800,000 40 57 3 0 Analyzing and Controlling Instruments; Photographic Medical and Optical Goods; Watches and Clocks 3861 - Mfg photograph equip 4 800,000 0 100 0 0 3823 - Mfg 4 40,000 24 64 12 0 process controls 3824 - Mfg fluid 3 10,000 86 14 0 0 meters 3825 - Mfg 2 10,000 50 50 0 0 electric test prd 40 - Railroad Transportation 2 2,000,000 50 45 0 4011 - Railroad 2 2,000,000 50 45 0 �42 - Motor Freight Transportation and Warehousing 5 80,000 20 17 32 29 2 4213 - Trucking non -local 5 80,000 20 17 32 29 2 �47 - Transportation Services 6 400,000 17 33 17 32 4731 - Arrange 6 400,000 17 33 17 32 cargo transpt 48 - Communications 9 70,000 50 0 50 4813 - Telephone communictns 6 70,000 100 0 0 4833 - Television station 2 15,000 0 0 0 0 100 4812 - Radiotelephone commun 1 250 50 0 0 0 50 �49 - Electric, Gas and Sanitary Services 9 5,000 95 5 0 0 0 4911 - Electric services 7 1,000 84 16 0 0 0 4953 - Refuse system 1 5,000 100 0 0 0 0 4923 - Gas transmission dist 1 500 100 0 0 0 0 50 - Wholesale Trade - Durable Goods 149 600,000 48 28 10 5 10 5084 - Whol industrial equip 35 100,000 38 44 5 0 13 5085 - Whol industrial suppl 33 200,000 34 55 5 6 0 5082 - Whol const/mine equip 21 600,000 31 24 13 10 22 5074 - Whol plumb/hydronics 12 20,000 47 25 3 25 0 5063 - Whol electrical equip 11 20,000 36 29 10 0 25 5051 - Whol 7 200,000 10 84 0 0 6 metal 5013 - Whol auto parts 6 20,000 48 22 22 0 8 5046 - Whol misc coml equip 5 7,500 78 12 0 0 10 5049 - Whol misc profsn eqpt 4 40,000 39 0 46 0 15 5045 - Whol computers/softwr 3 250,000 50 25 0 0 25 5083 - Whol farm/garden mach 3 200,000 3 47 49 0 1 5088 - Whol transport equip 3 30,000 79 0 0 21 0 5012 - Whol motor vehicles 3 5,000 77 0 0 0 23 5031 - Whol lumber/millwork 2 5,000 93 0 0 7 0 5032 - Whol brick/stone 1 10,000 50 50 0 0 0 51 - Wholesale Trade - Nondurable Goods 23 7,000,000 70 5 5 7 14 5169 - Whol chemicals 9 200,000 63 36 0 1 0 5172 - Whol petroleum prdts 6 75,000 46 0 38 5 11 5171 - Petroleum terminal 2 7,000,000 100 0 0 5149 - Whol groceries 2 7,500 100 0 0 0 0 5113 - Whol service paper 1 20,000 100 0 0 5199 - Whol 1 15,000 100 0 0 0 0 nondurable goods 5111 - Whol 1 10,000 50 0 50 0 printing paper 5112 - Whol office 1 2,500 0 0 0 0 100 supplies �52 - Building 4 10,000 67 33 0 0 Materials Hardware Garden Supply and Mobile Home Dealers 5251 - Ret hardware 2 10,000 0 100 0 0 0 5211 - Ret building material 1 750 100 0 0 5231 - Ret paint/wallpaper 1 250 100 0 0 0 0 �55 - Automotive 16 20,000,000 89 12 0 0 Dealers and Gasoline Service Stations 5531 - Ret auto supplies 9 20,000,000 100 0 0 0 0 5521 - Ret used 4 100,000 54 46 0 0 automobiles 5511 - Ret new/used autos 2 5,000 100 0 0 0 0 5599 - Ret misc vehicles 1 5,000 100 0 0 �57 - Home Furniture Furnishings and Equipment Stores 4 15,000 70 10 20 0 0 5712 - Ret 4 15,000 70 10 20 0 furniture �59 - Miscellaneous 4 1,000 5 54 41 0 0 Retail 5999 - Ret misc 4 1,000 5 54 41 0 merchandise -60 - Depository Institutions 2 7,500 1 0 50 49 0 6021 - Natnl 2 7,500 1 50 49 0 commercial bank -61 - Nondepository 14 250,000 50 25 0 1 24 Credit Institutions 6153 - Short-trm 10 250,000 92 7 0 1 busn credit 6159 - Misc business credit 4 5,000 8 43 0 2 47 -67 - Holding and 4 100,000 77 3 19 1 Other Investment Offices 6799 - Misc 4 100,000 77 3 19 1 investor 73 - Business 29 2,000,000 44 20 13 16 Services 7353 - Hvy const 6 2,000,000 57 3 40 0 eqpt rental 7389 - Misc 6 35,000 100 0 0 business service 7359 - Misc 85,000 34 22 44 equipment rental 7381 - 4 60,000 42 16 32 Detective/guard svcs 7372 - 3 20,000 56 44 0 Prepackaged software 7374 - Data 2 85,000 3 48 49 processing svcs 7363 - Help 2 10,000 100 0 0 supply service 7361 - 75,000 0 50 0 Employment agency 75 - Automotive 12 95,000 50 20 25 Repair, Services and Parking 7513 - Truck 95,000 29 21 2 36 rental/leasing 7538 - General 4 5,000 79 7 7 auto repair 7514 - Passenger 2 5,000 42 0 58 car rental 7536 - Auto glass 250 50 50 0 shop 76 - Miscellaneous 20,000 50 0 50 0 Repair Services 7699 - Misc repair 20,000 50 0 50 0 services -87 - Engineering 12 4,000,000 50 10 13 7 Accounting Research Management and Related Services 8721 - Accounting 4,000,000 99 0 1 services 8748 - Business 3 40,000 0 64 36 consulting 8742 - 2 5,000 100 0 0 Management consulting 8711 - 5,000 50 50 0 Engineering services 8741 - 1 0 0 0 0 0 0 Management services -91 - Executive 5 2,500 100 0 0 Legislative and General Government except Finance 9199 - Misc 5 2,500 100 0 0 0 0 general gov't -93 - Public Finance 21 300,000 100 0 0 Taxation and Monetary Policy 9311 - Public 21 300,000 100 0 0 0 0 finance -94 - Administration 2 80,000 100 0 0 of Human Resource Programs 9431 - Admin 2 80,000 100 0 0 0 0 public health -99 - Nonclassifiable 10 4,000,000 6 49 45 0 Establishments 9999- 10 4,000,000 6 0 49 45 0 Nonclassified TRADE LINES Date of Selling High Credit Now Owes Past Due Months Since Last Experience - Payment Status Terms (US$) (US$) (US$) Sale 12/24 Pays Prompt to Slow 30+ 250,000 60,000 10,000 1 11/24 Pays Promptly 0 0 0 Between 6 and 12 Months 11/24 Pays Promptly - 3,000,000 3,000,000 0 1 11/24 Pays Promptly - 250,000 250,000 0 1 11/24 Pays Promptly - 85,000 15,000 0 1 11/24 Pays Promptly - 35,000 50 0 1 11/24 Pays Promptly - 30,000 50 0 1 11/24 Pays Promptly - 20,000 20,000 10,000 1 11/24 Pays Promptly Special Agreemnt 15,000 7,500 250 1 11/24 Pays Promptly - 10,000 7,500 0 1 11/24 Pays Promptly - 10,000 2,500 0 1 11/24 Pays Promptly - 7,500 2,500 0 1 11/24 Pays Promptly - 7,500 1,000 0 1 11/24 Pays Promptly N45 5,000 0 0 Between 6 and 12 Months 11/24 Pays Promptly 5,000 2,500 0 1 11/24 Pays Promptly 5,000 0 0 Between 2 and 3 Months 11/24 Pays Promptly 2,500 0 0 Between 6 and 12 Months 11/24 Pays Promptly 2,500 0 0 Between 4 and 5 Months 11/24 Pays Promptly 2,500 2,500 0 1 11/24 Pays Promptly 2,500 0 0 Between 6 and 12 Months 11/24 Pays Promptly 2,500 0 0 Between 6 and 12 Months Date of Selling High Credit Now Owes Past Due Months Since Last Experience Payment Status Terms (US$) (US$) (US$) Sale 11/24 Pays Promptly 2,500 0 0 Between 6 and 12 Months 11/24 11/24 11/24 11/24 11/24 Pays Promptly Pays Promptly Pays Promptly Pays Promptly Pays Promptly N30 2,500 0 0 Between 6 and 12 Months 2,500 0 0 1 1,000 0 0 Between 4 and 5 Months 750 750 0 1 500 0 0 Between 6 and 12 Months 11/24 Pays Promptly 500 0 0 Between 6 and 12 Months 11/24 Pays Promptly 500 0 0 Between 6 and 12 Months 11/24 Pays Promptly 250 0 0 Between 6 and 12 Months 11/24 Pays Promptly 250 250 0 1 11/24 Pays Promptly N45 250 0 0 Between 6 and 12 Months 11/24 Pays Promptly 250 0 0 Between 4 and 5 Months 11/24 Pays Promptly 50 0 0 Between 6 and 12 Months 11/24 Pays Prompt to Slow 15+ N45 10,000 10,000 0 1 11/24 Pays Prompt to Slow 30+ 75,000 20,000 0 1 11/24 Pays Prompt to Slow 30+ 45,000 20,000 10,000 1 11/24 Pays Prompt to Slow 30+ 35,000 15,000 0 1 11/24 Pays Prompt to Slow 30+ 15,000 0 0 Between 4 and 5 Months 11/24 Pays0Prompt to Slow 7,500 750 250 1 11/24 Pays Prompt to Slow 30+ 5,000 2,500 1,000 1 11/24 Pays Prompt to Slow 30+ 5,000 2,500 1,000 1 11/24 Pays Prompt to Slow 30+ 2,500 0 0 Between 2 and 3 Months 11/24 Pays Prompt to Slow 30+ 1,000 750 0 1 11/24 Pays Prompt to Slow 1,000 0 0 Between 6 and 12 30+ Months 11/24 Pays Prompt to Slow N30 500 0 0 Between 6 and 12 30+ Months 11/24 Pays Prompt to Slow 90+ 100,000 25,000 7,500 1 11/24 Pays Prompt to Slow 90+ 85,000 0 0 Between 2 and 3 Months 11/24 Pays Prompt to Slow 90+ 5,000 5,000 2,500 1 11/24 Pays Prompt to Slow 90+ 1,000 500 500 1 11/24 Pays Prompt to Slow 120+ 30,000 30,000 7,500 1 11/24 Pays Prompt to Slow 120+ 10,000 5,000 5,000 1 11/24 Pays Prompt to Slow 120+ 5,000 0 0 1 11/24 Pays Prompt to Slow 240+ 2,500 2,500 0 1 11/24 Pays Slow 5+ Special Between 6 and 12 50 0 0 Agreemnt Months 11/24 Pays Slow 10+ N30 50 50 0 1 Date of Selling High Credit Now Owes Past Due Months Since Last Experience Payment Status Terms (US$) (US$) (US$) Sale 11/24 Pays Slow 30+ - 800,000 700,000 0 Between 2 and 3 Months 11/24 Pays Slow 30+ - 200,000 200,000 200,000 1 11/24 Pays Slow 30+ - 65,000 0 0 Between 6 and 12 11/24 11/24 Pays Slow 30+ Pays Slow 30+ Months 15,000 15,000 7,500 1 5,000 5,000 2,500 1 11/24 Pays Slow 30+ 750 50 0 Between 6 and 12 Months 11/24 Pays Slow 30-60+ - 20,000 7,500 2,500 11/24 Pays Slow 60+ - 10,000 10,000 10,000 11/24 Pays Slow 30-90+ - 85,000 45,000 20,000 1 1 11/24 Pays Slow 90+ 5,000 0 0 Between 6 and 12 Months 11/24 Pays Slow 30-90+ - 250 250 100 1 11/24 Pays Slow 30-90+ - 90,000 0 0 Between 4 and 5 Months 11/24 Pays Slow 90+ 11/24 11/24 Pays Slow 30-120+ Pays Slow 30-120+ 2,500 2,500 2,500 Between 4 and 5 Months 30,000 2,500 1,000 1 15,000 15,000 15,000 1 11/24 Pays Slow 90-120+ - 2,500 0 0 Between 6 and 12 Months 11/24 Pays Slow 150+ 250 0 0 Between 6 and 12 Months 11/24 Pays Slow 30-180+ N30 5,000 0 0 1 11/24 Pays Slow 90-180+ 2,500 1,000 1,000 1 11/24 Cash account 0 0 0 Between 6 and 12 Months 10/24 Pays Promptly 10/24 Pays Promptly 10/24 Pays Promptly 10/24 Pays Promptly 500 0 0 1 100 100 0 1 100 100 0 1 50 0 0 1 OTHER PAYMENT CATEGORIES Other Payment Categories Experience Total Amount Cash experiences 68 4,700 (USD) Payment record unknown 9 3,650 (USD) Unfavorable comments 0 (USD) Placed for collections 0 (USD) Total in D&B's file 504 59,886,900 (USD) Accounts are sometimes placed for collection even though the existence or amount of the debt is disputed. Payment experiences reflect how bills are met in relation to the terms granted. In some instances payment beyond terms can be the result of disputes over merchandise, skipped invoices etc. Each experience shown represents a separate account reported by a supplier. Updated trade experiences replace those previously reported. Legal Events Currency: All figures in USD unless otherwise stated The following Public Filing data is for information purposes only and is not the official record. Certified copies can only be obtained from the official source. Bankruptcies Judgements Liens Suits UCCs No 2 8 35 72 EVENTS Judgement - Court Judgement Filing Date 02/21/2018 Filing Number 1934/601 status Unsatisfied Date Status Attained 02/21/2018 Received Date 03/02/2018 Award 2,500 (USD) Debtors WASTE MANAGEMENT OF KY LLC Creditors PETERSON AND ASSOCIATES INC Court JEFFERSON COUNTY DEEDS AND RECORDS, LOUISVILLE, KY Judgement - Court Judgement Filing Date 09/26/2013 Filing Number 691/333 status Unsatisfied Date Status Attained 09/26/2013 Received Date 11/05/2013 Award 2,141 (USD) Debtors WASTE MANAGEMENT, WOODSTOCK, GA Creditors LISA TRACY Court CHEROKEE COUNTY SUPERIOR COURT, CANTON, GA Lien - Tax Lien Filing Date 10/24/2024 Filing Number 2024UC001117 status Open Date Status Attained 10/24/2024 Received Date 11/29/2024 Amount 1,357 (USD) Debtors WASTE MANAGEMENT OF ILLINOIS INC Creditors DEPT. OF WORKFORCE DEVELOPMENT Court DANE COUNTY CIRCUIT COURT, MADISON, WI Lien - Tax Lien Filing Date 07/19/2024 Filing Number 2024UC001515 status Open Date Status Attained 07/19/2024 Received Date 10/25/2024 Amount 10,152 (USD) Debtors WASTE MANAGEMENT OF ILLINOIS INC Creditors DEPT. OF WORKFORCE DEVELOPMENT Court MILWAUKEE COUNTY CIRCUIT COURT, MILWAUKEE, WI Lien - Tax Lien Filing Date 09/18/2023 Filing Number 202300047840 status Open Date Status Attained 09/18/2023 Received Date 10/05/2023 Amount 180 (USD) Debtors WASTE MANAGEMENT OF OHIO INC Creditors STATE OF OHIO Court MONTGOMERY COUNTY RECORDER OF DEEDS, DAYTON, OH Lien Filing Date 09/13/2023 Filing Number J23000437087 status Open Date Status Attained 09/13/2023 Received Date 05/30/2024 Amount 1,293 (USD) Debtors WASTE MANAGEMENT OF ARIZONA INC Creditors STATE OF FLORIDA, DEPARTMENT OF REVENUE Court SECRETARY OF STATE/UCC DIVISION, TALLAHASSEE, FL Lien - Tax Lien Filing Date 06/26/2023 Filing Number 202300032276 status Open Date Status Attained 06/26/2023 Received Date 07/13/2023 Amount 1,213 (USD) Debtors WASTE MANAGEMENT OF OHIO INC Creditors STATE OF OHIO Court MONTGOMERY COUNTY RECORDER OF DEEDS, DAYTON, OH Lien - Tax Lien Filing Date 12/06/2019 Filing Number 2451/3897 status Open Date Status Attained 12/06/2019 Received Date 01/04/2020 Amount 2,917 (USD) Debtors WASTE MANAGEMENT OF SOUTH CAROLINA INC Creditors SOUTH CAROLINA DEPARTMENT OF EMPLOYMENT AND WORKFORCE Court RICHLAND COUNTY REGISTER OF DEEDS, COLUMBIA, SC Lien - Tax Lien Filing Date 11/05/2019 Filing Number SL19-131543 status Release Date Status Attained 05/06/2020 Received Date 06/11/2021 Amount 2,777 (USD) Debtors TYLERS SANITATION INC, AIKEN, SC Creditors STATE OF SOUTH CAROLINA Court AIKEN COUNTY REGISTER OF DEEDS, AIKEN, SC Lien - Tax Lien Filing Date 07/18/2017 Filing Number 1719901189 status Open Date Status Attained 07/18/2017 Received Date 07/27/2019 Amount 5,898 (USD) Debtors WASTE MANAGEMENT INC, OAK BROOK, IL Creditors IL DEPT OF REVENUE Court COOK COUNTY RECORDER OF DEEDS, CHICAGO, IL Suit Filing Date Filing Number 11/26/2024 C1202404627 status Pending Date Status Attained 11/26/2024 Received Date 12/05/2024 Plaintiffs SHIRLEY C CRABTREE Defendant WASTE MANAGEMENT INC Defendant AND OTHERS Court LUCAS COUNTY COMMON PLEAS COURT, TOLEDO, OH Suit Filing Date 08/07/2024 Filing Number 2024-014909-CA-01 status Pending Date Status Attained 08/07/2024 Received Date 08/08/2024 Plaintiffs SANTIAGO, SASHA Defendant WASTE MANAGEMENT, INC. OF FLORIDA Defendant AND OTHERS Court DADE COUNTY CIRCUIT COURT, MIAMI, FL Suit Filing Date 07/23/2024 Filing Number 24CV005722 status Pending Date Status Attained 07/23/2024 Received Date 10/17/2024 Plaintiffs FREDERICK CLAYTON Defendant WASTE MANAGEMENT OF OHIO INC Court FRANKLIN COUNTY COMMON PLEAS COURT, COLUMBUS, OH Suit Filing Date 04/26/2024 Filing Number 2024-007685-CA-01 status Moved to higher court Date Status Attained 05/31/2024 Received Date 06/01/2024 Cause Discrimination Plaintiffs BARSIMANTOV, GEORGE Defendant WASTE MANAGEMENT INC. OF FLORIDA Court DADE COUNTY CIRCUIT COURT, MIAMI, FL Suit Filing Date 04/09/2024 Filing Number 2024-006286-CA-01 status Pending Date Status Attained 04/09/2024 Received Date 04/10/2024 Plaintiffs LITTLE, DANIEL Defendant WASTE MANAGEMENT, INC. Court DADE COUNTY CIRCUIT COURT, MIAMI, FL Suit Filing Date 04/02/2024 Filing Number 2024CV000021 status Pending Date Status Attained 04/02/2024 Received Date 10/04/2024 Cause Property damage Plaintiffs RANEY, LARRY& DIANE, MONTELLO, WI Plaintiffs MT. MORRIS MUTUAL INSURANCE COMPANY, COLOMA, WI Defendant WASTE MANAGEMENT OF WISCONSIN, INC. Defendant AND OTHERS Court MARQUETTE COUNTY CIRCUIT COURT, MONTELLO, WI Suit Filing Date 01/23/2024 Filing Number 2024CV000044 status Pending Date Status Attained 01/23/2024 Received Date 07/26/2024 Plaintiffs KUPPER, RYAN, ALTOONA, WI Defendant WASTE MANAGEMENT, INC. Defendant AND OTHERS Court EAU CLAIRE COUNTY CIRCUIT COURT, EAU CLAIRE, WI Suit Filing Date 11/03/2023 Filing Number 2023-24549 status Pending Date Status Attained 11/03/2023 Received Date 11/17/2023 Plaintiffs STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (HERNANDEZ, LEVI), BLOOMINGTON, IL Defendant WASTE MANAGEMENT INC Defendant AND OTHERS Court MONTGOMERY COUNTY PROTHONOTARY, NORRISTOWN, PA Suit Filing Date 10/17/2023 Filing Number 202301357521CJC status Pending Date Status Attained 10/17/2023 Received Date 11/17/2023 Plaintiffs ERICK CAMARENA Defendant WASTE MANAGEMENT OF CALIFORNIA INC, ORANGE, CA Defendant AND OTHERS Court ORANGE COUNTY SUPERIOR COURT, SANTA ANA, CA Suit Filing Date 07/17/2023 Filing Number DV-2023-905148-00 status Pending Date Status Attained 07/17/2023 Received Date 10/26/2023 Plaintiffs RAY SHARHONDA, BIRMINGHAM, AL Defendant WASTE MANAG, BIRMINGHAM, AL Defendant AND OTHERS Court JEFFERSON COUNTY DISTRICT COURT/BIRMINGHAM DIVISION, BIRMINGHAM, AL UCC Filing - Original Filing Date 08/05/2019 Filing Number 19080566724 Received Date 08/07/2019 Collateral Account(s) and proceeds - Contract rights and proceeds - Leased Equipment and proceeds Secured Party Debtors Filing Office UCC Filing - Original CARTER MACHINERY COMPANY, INCORPORATED, SALEM, VA WASTE MANAGEMENT OF VIRGINIA, INC., PORTLAND, OR SECRETARY OF THE COMMONWEALTH/UCC DIVISION, RICHMOND, VA Filing Date 06/27/2019 Filing Number 91956111 Received Date 07/05/2019 Collateral Negotiable instruments - Leased Equipment Secured Party RED-D-ARC INC, AUSTELL, GA Debtors WASTE MANAGEMENT, INC., PORTLAND, OR Filing Office SECRETARY OF STATE/UCC DIVISION, SALEM, OR UCC Filing - Original Filing Date 12/26/2018 Filing Number 91758855 Received Date 01/04/2019 Collateral Negotiable instruments - Leased Equipment Secured Party RED-D-ARC INC, AUSTELL, GA Debtors WASTE MANAGEMENT, INC., PORTLAND, OR Filing Office SECRETARY OF STATE/UCC DIVISION, SALEM, OR UCC Filing - Continuation Filing Date 08/08/2018 Filing Number 201806122403 Received Date 08/09/2018 Original Filing Date 11/21/2013 Original Filing Number 201300256743 Secured Party THE BANK OF NEW YORK MELLON, AS TRUSTEE, WEST PATERSON, NJ Debtors WASTE MANAGEMENT INC. OF FLORIDA Debtors and OTHERS Filing Office SECRETARY OF STATE/UCC DIVISION, TALLAHASSEE, FL UCC Filing - Original Filing Date 12/30/2016 Filing Number 91054190 Received Date 01/06/2017 Collateral Negotiable instruments - Leased Equipment Secured Party RED-D-ARC INC, AUSTELL, GA Debtors WASTE MANAGEMENT, INC., PORTLAND, OR Filing Office SECRETARY OF STATE/UCC DIVISION, SALEM, OR UCC Filing - Original Filing Date 12/06/2016 Filing Number Received Date Collateral Secured Party Debtors Filing Office 61206109000165 12/13/2016 All Negotiable instruments including proceeds and products - All Inventory including proceeds and products - All Account(s) including proceeds and products - All Timber including proceeds and products - and OTHERS BANGOR SAVINGS BANK, BANGOR, ME MAINE WASTE SOLUTIONS LLC, SCARBOROUGH, ME SECRETARY OF STATE/UCC DIVISION, AUGUSTA, ME UCC Filing - Continuation Filing Date 10/20/2014 Filing Number 2014 4208344 Received Date 12/12/2014 Original Filing Date 02/17/2010 Original Filing Number 2010 0519797 Secured Party TOYOTA MATERIAL HANDLING, U.S.A., INC., IRVINE, CA Debtors WASTE MANAGEMENT, INC. Filing Office SECRETARY OF STATE/UCC DIVISION, DOVER, DE UCC Filing - Original Filing Date 11/21/2013 Filing Number 201300256743 Received Date 12/06/2013 Collateral Negotiable instruments and proceeds Secured Party THE BANK OF NEW YORK MELLON, AS TRUSTEE, WEST PATERSON, NJ Debtors WASTE MANAGEMENT INC. OF FLORIDA Debtors and OTHERS Filing Office SECRETARY OF STATE/UCC DIVISION, TALLAHASSEE, FL UCC Filing - Original Filing Date 02/17/2010 Filing Number 2010 0519797 Received Date 03/19/2010 Collateral Inventory Secured Party TOYOTA MATERIAL HANDLING, U.S.A., INC., IRVINE, CA Debtors WASTE MANAGEMENT, INC. Filing Office SECRETARY OF STATE/UCC DIVISION, DOVER, DE UCC Filing - Original Filing Date 11/02/2009 Filing Number Received Date Collateral Secured Party Debtors Filing Office UCC Filing - Original Filing Date Filing Number Received Date Collateral Secured Party Debtors Filing Office UCC Filing - Original Filing Date Filing Number Received Date Collateral Secured Party Debtors Filing Office 2009 3514954 12/02/2009 Negotiable instruments BANK OF AMERICA, N.A., BOSTON, MA WASTE MANAGEMENT, INC. SECRETARY OF STATE/UCC DIVISION, DOVER, DE 09/17/2009 2009 2987359 10/22/2009 Negotiable instruments and proceeds BANK OF AMERICA, N.A., BOSTON, MA WASTE MANAGEMENT, INC. SECRETARY OF STATE/UCC DIVISION, DOVER, DE 08/03/2009 2009 2474564 09/03/2009 Negotiable instruments and proceeds BANK OF AMERICA, N.A., BOSTON, MA WASTE MANAGEMENT, INC. SECRETARY OF STATE/UCC DIVISION, DOVER, DE The public record items contained in this report may have been paid, terminated, vacated or released prior to the date this report was printed. This information may not be reproduced in whole or in part by any means of reproduction. There may be additional UCC Filings in D&Bs file on this company available by contacting 1-800-234-3867. There may be additional suits, liens, or judgments in D&B's file on this company available in the U.S. Public Records Database, also covered under your contract. If you would like more information on this database, please contact the Customer Resource Center at 1-800-234-3867. If it is indicated that there are defendants other than the report subject, the lawsuit may be an action to clear title to property and does not necessarily imply a claim for money against the subject. A lien holder can file the same lien in more than one filing location. The appearance of multiple liens filed by the same lien holder against a debtor may be indicative of such an occurrence. Special Events Currency: All figures in USD unless otherwise stated SPECIAL EVENTS Date Event Description MERGER/ACQUISITION: According to published reports, Waste Management, Inc., DUNS 194672085, (Houston, TX) 11/12/2024 announced its acquisition of Stericycle, DUNS 363596297, (Bannockburn, IL). The deal is valued at USD 7.2 billion and likely to close in the fourth quarter of 2024. EARNINGS UPDATE: According to published reports, comparative operating results for the 6 months ended June 30, 2024: 10/23/2024 Revenue of $10,561,000,000, Net Income of $1,387,000,000; compared to Revenue of $10,011,000,000, Net Income of $1,145,000,000 for the comparable period in the prior year. STOCK/BOND ISSUANCE/REDEMPTION/REPURCHASE: According to published reports, Waste Management, Inc. announced the pricing of $1.5 billion aggregate principal amount of senior notes. The public offering includes two tranches of $750 07/25/2024 million each, both bearing an interest rate of 4.950%. The first tranche is set to mature on July 3, 2027, and the second on July 3, 2031. This move comes under an effective shelf registration statement previously filed with the U.S. Securities and Exchange Commission. ANNOUNCED WORK FORCE CHANGES: According to published reports, Waste Management announced the start of 07/03/2024 construction on two new landfill gas -to -renewable natural gas facilities. The new facilities will be located at WM's Medley, FL Landfill and Okeechobee, FL Landfill. ANNOUNCED MERGER/ACQUISITION: According to published reports, WM, DUNS 194672085, (Houston, TX) announced that 07/02/2024 it will acquire all outstanding shares of Stericycle, DUNS 363596297, (Bannockburn, IL). The transaction, which was unanimously approved by both companies' boards of directors, is expected to close by the fourth quarter. EARNINGS UPDATE: According to published reports, comparative operating results for the 3 months ended March 31, 2024: 05/11/2024 Revenue of $5,159,000,000, Net Income of $707,000,000; compared to Revenue of $4,892,000,000, Net Income of $532,000,000 for the comparable period in the prior year. Financials - D&B Financials Currency: All figures in USD unless otherwise stated FINANCIAL STATEMENT COMPARISON 20.4 16.3 12.3 8.2 41 • 2021 • Current Assets •Total Current Liabilities *Sales •Current Ratio 2022 2023 Fiscal Fiscal Fiscal Consolidated Consolidated Consolidated 12/31/2023 12/31/2022 12/31/2021 In Thousands In Thousands In Thousands Last 3 years Current Assets 3,804,000 3,551,000 3,069,000 Current Liabilities 4,226,000 4,394,000 4,082,000 Tangible Net Worth 6,896,000 6,864,000 7,126,000 Sales 20,426,000 19,698,000 17,931,000 Net Income 2,276,000 2,240,000 1,817,000 Current Ratio 0.9 0.81 0.75 Working Capital (422,000) (843,000) (1,013,000) Other Assets 29,019,000 27,816,000 26,028,000 === Long Term Liabilities 21,701,000 20,109,000 17,889,000 --- Explanations: The net worth of this company includes intangibles. Other Long Term Liabilities consists of landfill & environmental remediation liabilities and other long-term liabilities; Adjustments consists of accumulated other comprehensive and noncontrolling interests. Accounts receivable shown net less $30,000,000 allowance. Fixed assets shown net less $22,826,000,000 depreciation. Explanations: The net worth of this company includes intangibles. Other Long Term Liabilities consists of landfill & environmental remediation liabilities and other liabilities; Adjustments consists of accumulated other comprehensive income and noncontrolling interests. Financials Currency: All figures in USD unless otherwise stated BALANCE SHEET Balance Sheet Assets Interim Fiscal Current Assets 09/30/2024 12/31/2023 Other Receivables -Net USD 284,000 USD 237,000 Accounts Receivable USD 2,841,000 USD 2,633,000 Cash USD 614,000 USD 458,000 Other Current Assets USD 336,000 USD 303,000 Inventory USD 184,000 USD 173,000 Total Current Assets USD 4,259,000 Interim Long Term Assets 09/30/2024 Last 2 years == == Fiscal 12/31/2023 Last 2 years Property, Plant, Fixtures & USD 17,931,000 USD 16,968,000 Equipment Investments USD 524,000 USD 606,000 Goodwill USD 9,822,000 USD 9,254,000 Restricted Funds USD 457,000 USD 422,000 Other Intangible Assets -Net USD 742,000 USD 759,000 Other long term assets USD 995,000 USD 1,010,000 Total Assets USD 34,730,000 Liabilities Interim Fiscal Total Current Liabilities 09/30/2024 12/31/2023 Last 2 years Deferred Revenues USD 599,000 USD 578,000 Accruals USD 1,651,000 USD 1,605,000 Current Portion Of Long USD 676,000 USD 334,000 Term Debt Accounts Payable USD 1,853,000 USD 1,709,000 Total Current Liabilities USD 4,779,000 Interim Fiscal Long Term Liabilities 09/30/2024 12/31/2023 Last 2 years TREASURY STOCK ( USD 12,999,000) ( USD 12,751,000) JIM Common Stock USD 6,000 USD 6,000 I== Other Long Term Liabilities USD 4,119,000 USD 3,980,000 == Retained Earnings USD 15,563,000 USD 14,334,000 == Long -Term Debt -Net USD 15,977,000 USD 15,895,000 == Interim Fiscal Long Term Liabilities 09/30/2024 12/31/2023 Additional Paid In Capital / USD 5,485,000 USD 5,351,000 Capital Surplus Deferred Income Taxes USD 1,883,000 USD 1,826,000 ADJUSTMENTS ( USD 83,000) ( USD 44,000 ) Total Liabilities & Net USD 34,730,000 Worth Last 2 years PROFIT AND LOSS INFORMATION Date Description 09/30/2024 From JAN 01 2024 to SEP 30 2024 sales $16,170,000,000; operating expenses $13,026,000,000. Operating income $3,144,000,000; other income $11,000,000; other expenses $397,000,000; net income before taxes $2,758,000,000; Federal income tax $611,000,000; net income $2,147,000,000. 12/31/2023 From JAN 01 2023 to DEC 31 2023 annual sales $20,426,000,000. Operating expenses $16,851,000,000. Operating income $3,575,000,000; other income $6,000,000; other expenses $560,000,000; net income before taxes $3,021,000,000; Federal income tax $745,000,000. Net income $2,276,000,000. Financial Ratios Currency: All figures in USD unless otherwise stated KEY BUSINESS RATIOS Statement date 09/30/2024 Based on Number of Establishments 18 Ratio for the business Industry Median Industry Quartile Profitability Return On Assets 6.2 2.2 1 Return on Net Worth 26.9 6.3 1 Return on Sales 13.3 1.7 1 Short Term Solvency Accounts Payable to Sales 11.5 8.8 1 Assets Over Sale 214.8 180.6 1 Collection Period 64.1 44.3 1 Sales to Inventory 87.9 75.1 2 Sales Over Net Working Capital - 3.5 - Utilization Total Liabilities Over Net Worth 335.6 157.7 1 Efficiency Income Statement Currency: All figures in USD unless otherwise stated Value (In Billions) 204 163 123 82 41 2021 • Net Income •Sales (Revenue) • Profit Margin Fiscal Consolidated 12/31/2023 2022 Fiscal Fiscal Consolidated Consolidated 12/31/2022 12/31/2021 2023 Last 3 years Sales (Revenue) 20,426,000,000 19,698,000,000 17,931,000,000 Cost of Revenue 12,606,000,000 12, 294, 000, 000 11,111, 000, 000 Gross Profit 7,820,000,000 7,404,000,000 6,820,000,000 Sales and General Admin 1,926,000,000 1, 938, 000, 000 1, 864, 000, 000 Research and Development Expense Non -Recurring Expenses 248,000,000 63,000,000 (8,000,000) Other Operating Items 2,071,000,000 2, 038, 000, 000 1, 999, 000, 000 Operating Income 3,575,000,000 3,365,000,000 2,965,000,000 Net Total Other Income and 6,000,000 Expenses (2,000,000) (215,000,000) Earnings Before Interest and 3,521,000,000 Taxes 3,296,000,000 2,714,000,000 Interest Expense 500,000,000 378,000,000 365,000,000 Earnings Before Tax 3,021,000,000 2,918,000,000 2,349,000,000 Income Tax Expense 745,000,000 678,000,000 532,000,000 Equity Earnings or Loss (60,000,000) (67,000,000) (36,000,000) Minority Interest Expense (28,000,000) 2,000,000 1,000,000 Net Income from Continuing 2,244,000,000 Operations 2,171, 000, 000 1,780,000,000 Discontinued Operations Effect of Accounting Changes Extraordinary Items Net Income 2,304,000,000 2,238,000,000 Preferred Stocks & Other Adjustments Net Income Applicable to Common Shares Balance Sheet 2,304,000,000 2,238,000,000 1,816,000,000 ==m 1,816,000,000 ==m Currency: All figures in USD unless otherwise stated FINANCIAL STATEMENT COMPARISON 328 263 2 197 66 Assets •Total Assets •Total Liabilities • Liabilities to Assets 0 2021 1 Fiscal Consolidated 12/31/2023 2022 2023 Fiscal Fiscal Consolidated Consolidated 12/31/2022 12/31/2021 Trends Cash and Cash Equivalents 458,000,000 351,000,000 118,000,000 Short Term Investments Net Trade Receivables 2,870,000,000 2,752,000,000 2,546,000,000 Inventory 173,000,000 164, 000, 000 135,000,000 Other Current Assets 303,000,000 284,000,000 270,000,000 Total Current Assets 3,804,000,000 3,551,000,000 3,069,000,000 Fixed Assets 16,968,000,000 15, 719, 000, 000 14,419,000,000 Long Term Investments 606,000,000 578,000,000 432,000,000 Deferred Long Term Asset Charges Other Assets 1,432,000,000 1,369,000,000 1,251,000,000 Goodwill 9,254,000,000 9,323,000,000 9,028,000,000 Total Assets 32,823,000,000 31,367,000,000 29,097,000,000 Accumulated Amortization Intangible Assets 759,000,000 827,000,000 898,000,000 i�r-- Liabilites Fiscal Fiscal Fiscal Consolidated Consolidated Consolidated 12/31/2023 12/31/2022 12/31/2021 Trends Accounts Payable 3,314,000,000 3,391,000,000 2,803,000,000 Short Term and Current Long Term Debt 334,000,000 414,000,000 708,000,000 Other Current Liabilities 578,000,000 589,000,000 571,000,000 Total Current Liabilities 4,226,000,000 4,394,000,000 4,082,000,000 Long Term Debt 15,895,000,000 14, 570, 000, 000 12, 697, 000, 000 Deferred Long Term Liability 1,826,000,000 Charges 1,733,000,000 1,694,000,000 Negative Goodwill Minority Interest (7,000,000) 15,000,000 2,000,000 Other Liabilities 3,980,000,000 3,806,000,000 3,498,000,000 Misc Stocks, Options & Warrants Total Liabilities 25,920,000,000 Shareholder's Equity 24,518,000,000 21,973,000,000 Fiscal Fiscal Fiscal Consolidated Consolidated Consolidated 12/31/2023 12/31/2022 12/31/2021 Trends Preferred Stocks Common Stocks 6,000,000 6,000,000 6,000,000 --- Retained Earnings 14,334,000,000 13,167,000,000 12,004,000,000 === Treasury Stocks 12,751,000,000 11,569,000,000 10,072,000,000 Capital Surplus 5,351,000,000 5,314,000,000 5,169,000,000 Other Equity (37,000,000) (69,000,000) 17,000,000 Total Equity 6,903,000,000 6,849,000,000 7,124,000,000 --- Cash Flow Currency: All figures in USD unless otherwise stated CASH FLOW 47 4 2021 2022 •Operating Cash Flow •Investing Cash Flow •Financing Cash Flow IU 2023 Fiscal Fiscal Fiscal Consolidated Consolidated Consolidated 12/31/2023 12/31/2022 12/31/2021 Last 3 years Depreciation 2,201,000,000 2,150,000,000 2,110,000,000 Net Income Adjustments 493,000,000 291,000,000 285,000,000 Changes in Liabilities (149,000,000) 177, 000, 000 103, 000, 000 Changes in Accounts 161,000,000 Receivables 329,000,000 (28,000,000) Changes in Inventories - Changes in Other Operating (59,000,000) Activities (7,000,000) 5,000,000 Net Cash Flows - Operating 4,719,000,000 Activities 4,536,000,000 4,338,000,000 Capital Expenditures 2,895,000,000 2,587,000,000 1,904,000,000 Investments Other Cash Flows from Investing (196,000,000) Activities (476,000,000) 10,000,000 Net Cash Flows - Investing (3,091,000,000) Activities (3,063,000,000) (1,894,000,000) Dividends Paid 1,136,000,000 1,077,000,000 970,000,000 Sale and Purchase of Stock (1,258,000,000) (1,456,000,000) (1,284,000,000) Net Borrowings 912,000,000 1,360,000,000 (456,000,000) Other Cash Flows from (11,000,000) Financing Activities (4,000,000) (162,000,000) e�- Net Cash Flows - Financing (1,524,000,000) Activities (1,216,000,000) (2,900,000,000) Effect of Exchange Rate 3,000,000 (6,000,000) 2,000,000 Change in Cash and Cash 107,000,000 Equivalents 251,000,000 (454,000,000) - Company Profile Currency: All figures in USD unless otherwise stated COMPANY OVERVIEW D-U-N-S 19-467-2085 History Record Clear Date Incorporated 04/28/1995 Mailing Address UNITED STATES Telephone +1 713 512 6200 Website www.wm.com Business Commenced On Present Control Succeeded State of Incorporation DELAWARE Ownership Public: WM(NYS) SIC NAICS 562119 Annual Sales 20,426,000,000 (USD) Employees 48,000 (50 here) Age (Year Started) 38 Years(1987) Named Principal James C Fish Jr, PRES-CEO Line of Business Refuse system Washington Ave CE MILITARY 4KWY W Dallas St 0 WASHINGTON AVENUE COALITION / MEMORIAL PARK Merrfona/pr W Gray St ar Downtown �, Minute Maid Park Houston DOWNTOWN HOUSTON .11 `o�mr The Original Ninfa on Navigation Navigation g/`a Clinton D� Street Address: 800 Capitol St Ste 3000, Houston, TX, 77002, United States Of America BUSINESS REGISTRATION Corporate and business registrations reported by the secretary of state or other official source as of: 2012-05-19 This data is for informational purposes only, certification can only be obtained through the Office of the Secretary of State. Registered Name State of Incorporation Date Incorporated Registration ID Registration Status Filing Date Where Filed Registered Agent Name Address WASTE MANAGEMENT, INC. DELAWARE 04/28/1995 2495792 STATUS NOT AVAILABLE 04/28/1995 SECRETARY OF STATE/CORPORATIONS DIVISION THE CORPORATION TRUST COMPANY CORPORATION TRUST CENTER 1209 ORANGE STREET, WILMINGTON, DE, 198010000 PRINCIPALS Officers JAMES C FISH JR, PRES-CEO+ KATHLEEN M MAZZARELLA, NON EXEC CHB+ JOHN J MORRIS JR, EXEC V PRES-COO DEVINA A RANKIN, EXEC V PRES-CFO CHARLES C BOETTCHER, EXEC V PRES-CLO JOHN A CARROLL, V PRES-CAO Directors THE OFFICER(S) and Bruce E Chinn, Andres R Gluski, Victoria M Holt, Sean E Menke, William B Plummer, Jonh C Pope, Maryrose T Sylvester and Tom Ben. COMPANY EVENTS The following information was reported on: 11/22/2024 The Delaware Secretary of State business registrations file showed that Waste Management, Inc. was registered as a Corporation on April 28, 1995, under file registration number 2495792. Business started 1987. The company 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 the company and changed its name to Waste Management Holdings, Inc. (WM Holdings). At the same time, the company changed its name from USA Waste Services to Waste Management, Inc. Like the company, WM Holdings is a holding company and all operations are conducted by subsidiaries. The company's common stock is traded on the NYSE under the symbol "WM". As of January 31, 2023, there were 7,847 shareholders of record. As of March 14, 2023, those shareholders identified by the company as beneficially owning 5% or more of the outstanding shares were: The Vanguard Group (9.2 % ); Melinda French Gates; William H Gates III; Bill & Melinda Gates Foundation Trust (8.7 % ); and BlackRock, Inc. (7.5%). As of the same date, officers and directors as a group beneficially owns less than 1% of the total outstanding shares. RECENT EVENT:. On November 21, 2024, sources stated that Waste Management, Inc. d/b/a WM, Houston, TX, has acquired all outstanding shares of Stericycle, Inc., Bannockburn, IL, on November 4, 2024. With the acquisition, Stericycle, Inc. will now operate as a wholly owned subsidiary of Waste Management, Inc.. Stericycle stock will cease trading on NASDAQ from November 4, 2024. Under the terms of the transaction, the purchase price was for $62.00 per share in cash, representing a total enterprise value of approximately $7.2 billion when including approximately $1.4 billion of Stericycles net debt. The per share price represents a premium of 24 to Stericycles 60-day volume weighted average price as of May 23, 2024, which was the last trading day before an article reported that Stericycle was considering a potential sale. Employees and management were retained. Further details are unavailable. JAMES C FISH JR. Director since 2016. He has served as the company's President and CEO since 2016. Over more than 20 years, he has held several key positions in the company, including President and CFO; Senior Vice President - Eastern Group; Area Vice President for Pennsylvania and West Virginia; Market Area General Manager for Massachusetts and Rhode Island; Vice President of Price Management; and Director of Financial Planning and Analysis. KATHLEEN M MAZZARELLA. Director since 2015. She serves as the company's Non -Executive Chairman of the Board since May 9, 2023. She has served as President and CEO of Graybar Electric Company, Inc. since 2012 and as Chairman since 2013. JOHN J MORRIS JR. He serves as the company's Executive Vice President and COO since January 2019 after having previously served in other various positions with the company since 2012. DEVINA A RANKIN. She has been the company's Executive Vice President and CFO since February 2020 after serving in other various positions with the company since 2017. CHARLES C BOETTCHER. He serves as the company's Executive Vice President, Corporate Development and Chief Legal Officer (CLO) since February 2020 after serving in other various roles with the company since 2017. JOHN A CARROLL. He serves as the company's Vice President and CAO since March 2023 after serving in other various roles with the company since 2018. BRUCE E CHINN. Director since 2023. He is President and CEO of Chevron Phillips Chemical Company LLC or CPChem. ANDRES R GLUSKI. Director since 2015. He has been the President and CEO at The AES Corporation since September 2011. VICTORIA M HOLT. Director since 2013. She joined Proto Labs, Inc. as President, CEO in 2014, retiring in 2021. SEAN E MENKE. Director since 2021. He serves as President and CEO Sabre Corporation since December 2016. WILLIAM B PLUMMER. Director since 2019. He was Executive Vice President and CFO of United Rentals, Inc. from 2008 to October 2018. JOHN C POPE. Director since 1997. He has been serving as the Chairman of the Board and CEO of PFI Group since 1994. MARYROSE T SYLVESTER. Director since 2021. Most recently, she served as US Managing Director and US Head of Electrification for ABB Group. TOM BENE. Antecedents were not available. AFFILIATES: The following are related through common principals, management and/or ownership: Graybar Electric Company, Inc., Saint Louis, MO. Started'1925'. DUNS #001903202. Operates as whol electrical equip, whol electronic parts. BUSINESS ACTIVITIES AND EMPLOYEES The following information was reported on: 11/22/2024 Business Information Trade Names WM Business Information Description Employees Financing Status Financial Condition Seasonality Facilities Related Concerns SIC/NAICS Information Industry Code 4953 49530200 49530201 49530203 49530302 42129906 NAICS Codes 562119 562119 562119 562212 562111 The company, through its subsidiaries, engages in the provision of environmental solutions to residential, commercial, industrial, and municipal customers. It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns and operates transfer stations, as well as owns, develops, and operates landfill facilities that produce landfill gas used as renewable natural gas for generating electricity. It also provides materials processing and commodities recycling services at its 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 brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions. In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in -plant services comprising full -service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations. Terms are on contract basis. Sells to general public and commercial concerns. Territory : United States & Canada. 48,000 which includes officer(s). 50 employed here. Secured Strong The company's 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 it operates also tend to increase during the summer months. Second and third quarter revenues and results of operations typically reflect these seasonal trends. Leases 285,000 sq. ft. in a building. Percentage of Description Business Refuse system - Refuse collection and disposal services - Garbage: collecting, destroying, and processing - Rubbish collection and disposal - Sanitary landfill operation - Garbage collection and transport, no disposal - NAICS Description Other Waste Collection Other Waste Collection Other Waste Collection Solid Waste Landfill Solid Waste Collection GOVERNMENT ACTIVITY Activity Summary Borrower(Dir/Guar) Administrative Debt No No Activity Summary Contractor Grantee Yes No Party excluded from federal program(s) No Your Information Currency: All figures in USD unless otherwise stated Record additional information about this company to supplement the D&B information. Note: Information entered in this section will not be added to D&B's central repository and will be kept private under your user ID. Only you will be able to view the information. In Folders: Account Number Endorsement/Billing Reference Sales Representatives sgilsrud@wm.com Credit Limit Total Outstanding Your Information Currency US Dollar (USD) Last Login : 12/16/2024 09:50:31 AM ©Dun & Bradstreet, Inc. 2005-2024. All rights reserved Privacy Policy l Terms of Use l US Government Employee Disclaimer ATV OF , * INCOOP OHAEEO * BB CITY OF MIAMI BUSINESS TAX RECEIP FY 24- 25 ISSUED: Oct 24, 2024 Robert Santos-Alborna Director, Code Compliance BUSINESS NAME: Waste Management Inc of Florid DBA: BTR HOLDER NAME: BUSINESS ADDRESS: EXPIRES: ACCOUNT NUMBER: RECEIPT NUMBER: COMMENTS: RESTRICTIONS: Waste Management Inc. of Florida Waste Management Inc of Florid 2120 NW 11 AV Effective Year Oct. 1 2024 Thru Sep. 30 2025 137255 171418 WASTE COLLECTORS (COMMERCIAL) This issuance of a business tax receipt does not permit the holder to violate any zoning laws of the City nor does it exempt the holder from any licenseor permits that may be required by law. This document does not constitute a certification that the holder is qualified to engage in the business, profession or occupation specified herein. The document indicates payment of the business tax receipt only. PLEASE DISPLAY THIS CERTIFICATE IN A CONSPICUOUS LOCATION AT OCCUPANCY ADDRESS. FAVOR DE MOSTRAR ESTE CERTIFICADO EN UN SITIO VISIBLE EN LA DIRECCION DEL COMERCIO. • TANPRI AFICHE SETIFIKA SA A NAN YON KOTE KONSIDEB NAN ADRES OKIPANS. www.miamigov.com Local Business Tax Receipt Miami —Dade County, State of Florida —THIS IS NOT A BILL — DO NOT PAY 7233604 BUSINESS NAME/LOCATION WASTE MANAGEMENT INC OF FLORIDA 2120 NW 11TH ST MIAMI, FL 33125 OWNER WASTE MANAGEMENT INC OF FLORIDA Employee(s) MIAMI RECEIPT NO. RENEWAL 7519256 LBT EXPIRES SEPTEMBER 30, 2025 Must be displayed at place of business Pursuant to County Code Chapter 8A — Art. 9 & 10 SEC. TYPE OF BUSINESS 213 SERVICE BUSINESS PAYMENT RECEIVED RY TAX COLLECTOR 51.75 11/08/2024 5 0217-25-000294 This Local Business Tax Receipt only confirms payment of the Local Business Tax. The Receipt is not a license. permit, or a certification of the holder's qualifications, to do business. Holder must comply with any governmental or nongovernmental regulatory laws and requirements which apply'a the business. The RECEIPT NO. above must be displayed on all commercial vehicles — Miami —Dade Code Sec 8a-276. For more information, visit www miamidade.govltaxcollector MIAM COUNTY miamidade.gov January 28, 2015 CERTIFIED MAIL No. 7010 1870 0000 2684 7294 RETURN RECEIPT REQUESTED In the Matter of an Application for Permit Renewal By: Waste Management Inc. of Florida 2700 N.W. Wiles Road Pompano Beach, FL 33073 NOTICE OF PERMIT ISSUANCE Dear Mr. Tim Hawkins: Regulatory and Economic Resources Environmental Resources Management 701 NW 1st Court • 7th Floor Miami, Florida 33136-3912 T 305-372-6600 F 305-372-6893 FDEP File No. 055980-015-S0 WACS No. 59248 DERM File No. SW-1103 Enclosed is Permit Number 055980-015-SO to operate the Waste Management Inc. of Florida d/b/a WM Recycling Hialeah facility, issued by the Miami -Dade County Department of Regulatory and Economic Resources (RER) — Division of Environmental Resources Management (DERM), under delegation by the Florida Department of Envi- ronmental Protection (FDEP). This Permit is issued pursuant to Chapter 403, Florida Statutes (F.S.) and Chapters 62-4 and 62-701, Florida Administrative Code (F.A.C.). The Department's agency action shall become final unless a timely petition for an administrative hearing is filed under Sections 120.569 and 120.57, F.S., before the deadline for filing a petition. The procedures for petitioning for a hearing are set forth below. A person whose substantial interests are affected by the Department's agency action may petition for an adminis- trative proceeding (hearing) under Sections 120.569 and 120.57, F.S. The petition must contain the information set forth below and must be filed (received) in the Office of Miami -Dade County Attorney, 111 N.W. 1s1 Street, Suite 2810, Miami, Florida 33128. Petitions by the applicant or any of the parties listed below must be filed within fourteen (14) days of receipt of this written notice. Petitions filed by other persons must be filed within fourteen (14) days of publication of the notice or the receipt of the written notice, whichever occurs first. Under Section 120.60(3), F.S., however, any person who asked the Department for notice of agency action may file a petition within fourteen (14) days of receipt of such no- tice, regardless of the date of publication. The petitioner shall mail a copy of the petition to the applicant at the ad- dress indicated above at the time of filing. The failure of any person to file a petition within the appropriate time period shall constitute a waiver of that person's right to request an administrative determination (hearing) under Sections 120.569 and 120.57, F.S., or to intervene in this proceeding and participate as a party to it. Any subse- quent intervention (in a proceeding initiated by another party) will be only at the discretion of the presiding officer upon the filing of a motion in compliance with Rule 28-106.205, F.A.C. A petition that disputes the material facts on which the Department's action is based must contain the following in- formation: The name, address, and telephone number of each petitioner, the applicant's name and address, the Depart- ment File Number and the county in which the project is proposed; A statement of how and when each petitioner received notice of the Department's action or proposed action; A statement of how each petitioner's substantial interests are or will be affected by the Department's action or proposed action; A statement of all material facts disputed by Petitioner or a statement that there are no disputed facts; A statement of the ultimate facts alleged, including a statement of the specific facts which The petitioner contends warrant reversal or modification of the Department's action or proposed action. A statement of the specific rules or statutes the petitioner contends require reversal or modification of the De- partment's action or proposed action; and A statement of the relief sought by the petitioner, stating precisely the action the petitioner wants the Depart- ment to take with respect to the Department's action or proposed action. P:4Porlulion RegulalionlDelegated Env Permitting\Permitting)&CorrespondencelSolid Waste Program18W1103_WM Recycling Hialeah1L12014 \SW1103_FDEP Notice of Permit Issuance01-28-2014 _ Waste Management Inc. of Florida. (FDEP File No. 055980-015-SO/ WACS No. 592481 DERM File No. SW-1103) Notice of Permit Issuance January 28, 2015 Page 2 of 3 A petition that does not dispute the material facts on which the Department's action is based shall state that no such facts are in dispute and otherwise shall contain the same information as set forth above, as required by Rule 28-106.301, F.A.C. Because the administrative hearing process is designed to formulate final agency action, the filing of a petition means that the Department's final action may be different from the position taken by it in this notice. Persons whose substantial interests will be affected by any such final decision of the Department have the right to petition to become a party to the proceeding, in accordance with the requirements set forth above. Mediation is not available in this proceeding. Any party to this order has the right to seek judicial review of it under Section 120.68, F.S., by filing a notice of ap- peal under Rule 9.110, Florida Rules of Appellate Procedure, with the clerk of the FDEP in the Office of General Counsel, Mail Station 35, 3900 Commonwealth Boulevard, Tallahassee, Florida 32399-3000, and by filing a copy of the notice of appeal accompanied by the applicable filing fees with the appropriate district court of appeal. The no- tice of appeal must be filed within thirty days after this order is filed with the clerk of the FDEP. If you have any questions regarding this Notice, please contact the Pollution Regulation Division of the Department of Regulatory and Economic Resources at telephone number 305-372-6600. Executed in Miami -Dade County, Florida this 2 day of January, 2015. MIAMI-DADE COUNTY DEPARTMENT OF REGULATORY AND ECONOMIC RESOURCES 1i1 � Mr. Rash-' i tambouli, P.E., Chief Pollutiio Regulation Division P;1Potlution RegulafionlDelegated Env PermittinglPerrnitting\&Correspondencel5olid Waste Program1SW1103 WM Recycling HialeehlL120141SW1103_FDEP_Nofice of Permit Issuance 01-28-2015 Waste Management inc. of Florida. (FDEP File No. 055980-015-SOl WAGS No. 592481 DERM File No. SVV-1103) Notice of Permit Issuance January 28, 2015 Page 3 of 3 FILING AND ACKNOWLEDGMENT FILED, on this date, pursuant to Section 120.52, F.S. with the designated Department Clerk, receipt of which is hereby acknowledged. r\ Clerk: Date: tIaS�� CERTIFICATE OF SERVICE This is tot ify tha this NOTICE OF PERMIT ISSUANCE and all copies were mailed before the close of business thq on T' - 1 s to the listed persons. Clerk: Enclosure(s): 1, Permit No. 055980-015-S0 Copies furnished to: Johnny Vega, P.E., Francisco Teresa Calleja, Patti Emad, Mayra Flagler — RER Tim Hawkins — Waste Management Inc. of Florida (via e-mail: thawkins@wm.com) Craig Ash — Waste Management Inc. of Florida (via e-mail: cash1 @wm.com) Ali Khatami, Ph.D., P.E. — SCS Engineers (via e-mail: akhatami@scsengineers.com) Myles Clewner, L.E.P. — SCS Engineers (via e-mail: mclewer@scsengineers.com) Amede Dimonnay — FDEPIWPB (via e-mail: amede.dimonnay@dep.state.fl.us) SW Financial Coordinator — FDEP (via e-mail: Solid.Waste.Financial.Coordinator@dep.state.fl,us) Tor Bejnar — FDEPITLH (via e-mail: tor.bejnar@dep.state.fl) DERM File No. SW-1103 P 4Pollulion Regulation\Delegated Env PermittinglPermittingl&Correspondence\Solid Waste Program1SW1103_WM Recycling HialeahlLt20141SW1103_FDEP_Notice of Permit Issuance 01-28-2015 MIAM I°DADE COUNTY miamidade.gov Permit Issued To: Facility Name: Facility Address: Regulatory and Economic Resources Environmental Resources Management 701 NW lst Court • 7th Floor Miami, Florida 33136-3912 T 305-372-6600 F 305-372-6893 SOLID WASTE OPERATING PERMIT — WASTE PROCESSING FACILITY Waste Management Inc. of Florida 2700 N.W. Wiles Road Pompano Beach, FL 33073 WM Recycling Hialeah 5000 N.W. 371h Avenue Hialeah, Miami -Dade County, Florida Contact Person: Mr. Tim Hawkins Permit No.: 055980-015-SO Replaces Permit No.: 055980-014-S0 Issuance Date: January 28, 2015 Expiration Date: January 28, 2035 Renewal Application Due: November 28, 2035 Facility WACS ID No.: 00059248 The Miami -Dade County Department of Regulatory and Economic Resources (RER) — Division of Environmental Resources Management (DERM), under delegation by the Florida Department of Environmental Protection (jointly referred to as the Department, hereafter), hereby issues this permit under the provisions of Chapter403, Florida Statutes (F.S.), and Chapters 62-4 and 62-701, Florida Administrative Code (F.A.C.). The above named permittee is hereby authorized to operate the facility shown on the application and approved drawings, plans and other documents on file with the Department, and made a part thereof, and specifically described as follows: TO OPERATE: A Waste Processing Facility pursuant to Rule 62-701.710, F.A.C. as a Material Recovery Facility limited to the acceptance of Construction & Demolition (C&D) debris, source separated commingled recyclables and source separated yard trash as defined in Rule 62-701.200, F.A.0 with a leachate collection system. The facility is limited to the acceptance of 1,500 tons per day of (C&D) debris, source separated commingled recyclables and source separated yard trash. LOCATED AT: 5000 NW 37 Avenue, Hialeah, Florida 33142 LATITUDE: 25°49'12" NI LONGITUDE: 80°15'28° W SECTION: 20; TOWNSHIP: 53S; RANGE: 41E IN ACCORDANCE WITH: the information referenced in Specific Condition #1 of this permit. SUBJECT TO: the General Conditions and Specific Conditions of this permit. GENERAL CONDITIONS 1. The terms, conditions, requirements, limitations, and restrictions set forth in this permit, are 'permit conditions" and are binding and enforceable pursuant to Sections 403.141, 403.727, or 403.859 through 403.861, F.S. The permittee is placed on notice that the Department will review this permit periodically and may initiate enforcement action for any violation of these conditions. 2. This permit is valid only for the specific processes and operations applied for and indicated in the approved drawings or exhibits. Any unauthorized deviation from the approved drawings, exhibits, specifications, or conditions of this permit may constitute grounds for revocation and enforcement action by the Department. 3. As provided in Subsections 403.087(6) and 403.722(5), F.S., the issuance of this permit does not convey any vested rights or any exclusive privileges. Neither does it authorize any injury to public or private property or any invasion of personal rights, nor any infringement of federal, state, or local laws or regulations. This permit is not a waiver of or approval of any other Department permit that may be required for other aspects of the total project which are not addressed in this permit. 4. This permit conveys no title to land or water, does not constitute State recognition or acknowledgment of title, and does not constitute authority for the use of submerged lands unless herein provided and the necessary title or leasehold interests have been obtained from the state. Only the trustees of the Internal Improvement Trust Fund may express State opinion as to title. Permittee Name: Waste Management Inc. of Florida Facility Name: WM Recycling Hialeah Page 2of8 FDEP Permit No. 055980-015-SO WAGS Facility ID No. No. 59248 DERM File No. SW-1103 5. This permit does not relieve this permittee from liability for harm or injury to human health or welfare, animal, plant or aquatic life, or property caused by the construction or operation of this permitted source, or from penalties therefore; nor does it allow the permittee to cause pollution in contravention of Florida Statutes and Department rules, unless specifically authorized by an order from the Department. 6. The permittee shall at all times properly operate and maintain the facility and systems of treatment and control (and related appurtenances) that are installed or used by the permittee to achieve compliance with the conditions of this permit, as required by Department rules. This provision includes the operation of backup or auxiliary facilities or similar systems when necessary to achieve compliance with the conditions of this permit and when required by Department rules. 7. The permittee, by accepting this permit, specifically agrees to allow authorized Department personnel, upon presentation of credentials or other documents as may be required by law and at reasonable times, access to the premises where the permitted activity is located or conducted to: a) Have access to and copy any records that must be kept under conditions of the permit; b) inspect the facility, equipment, practices, or operations regulated or required under this permit; and c) Sample or monitor any substances or parameters at any location reasonable necessary to assure compliance with this permit or Department rules. Reasonable time may depend on the nature of the concern being investigated. 8. If, for any reason, the permittee does not comply with or will be unable to comply with any condition or limitation specified in this permit, the permittee shall immediately provide the Department with the following information: (a) A description of and cause of non-compliance; and (b) The period of non-compliance, including dates and times; or, if not corrected, the anticipated time the non-compliance is expected to continue, and steps being taken to reduce, eliminate, and prevent recurrence of the non-compliance. The permittee shall be responsible for any and all damages, which may result and may be subject to enforcement action by the Department for penalties or revocation of this permit. 9. In accepting this permit, the permittee understands and agrees that all records, notes, monitoring data and any other information relating to the construction or operation of this permitted source which are submitted to the Department may be used by the Department as evidence in any enforcement case involving the permitted source arising under the Florida Statutes or Department rules, except where such use is prescribed by Sections 403.111 and 403.73, F.S. Such evidence shall only be used to the extent of is consistent with the Florida Rules of Civil Procedure and appropriate evidentiary rules. 10. The permittee agrees to comply with changes in the Department rules and Florida Statutes after a reasonable time for compliance; provided, however, the permittee does not waive any other rights granted by Florida Statutes or Department rules. A reasonable time for compliance with a new or amended surface water quality standard, other than those standards addressed in Rule 62-302,500, shall include a reasonable time to obtain or be denied a mixing zone for the new or amended standard. 11. This permit is transferable only upon Department approval in accordance with Rules 62-4.120 and 62-730.300, F.A.C., as applicable. The permittee shall be liable for any non-compliance of the permitted activity until the transfer is approved by the Department. 12. This permit or a copy thereof shall be kept at the work site of the permitted activity. 13. This permit also constitutes: a. Determination of Best Available Control Technology (BACT) b. Determination of Prevention of Significant Deterioration (PSD) c. Certification of compliance with state Water Quality Standard (Section 401, PL 92-500) d. Compliance with New Source Performance Standards 14. The permittee shall comply with the following: a. Upon request, the permittee shall furnish all records and plans required under Department rules. During enforcement actions, the retention period for all records will be extended automatically unless otherwise stipulated by the Department. b. The permittee shall hold at the facility or other location designated by this permit records of all monitoring information (including all calibration and maintenance records and all original strip chart recordings for continuous monitoring instrumentation) required by the permit, copies of all reports required by this permit, and records of all data used to complete the application for this permit. These materials shall be retained at least three years from the date of the sample, measurement, report, or application unless otherwise specified by Department rule. Permittee Name: Waste Management Inc. of Florida Facility Name: WM Recycling Hialeah Page 3 of 8 FDEP Permit No. 055980-015-S0 WAGS Facility ID No. No. 59248 DERM File No. SW-1103 c. Records of monitoring information shall include: i. the date, exact place, and time of sampling of measurements; ii. the person responsible for performing the sampling or measurements; iii. the dates analyses were performed; iv. the person responsible for performing the analyses; v. the analytical techniques or methods used; vi. the results of such analyses. 15. When requested by the Department, the permittee shall within a reasonable time furnish any information required by law, which is needed to determine compliance with the permit. If the permittee becomes aware the relevant facts were not submitted or were incorrect in the permit application or in any report to the Department, such facts or information shall be corrected promptly. SPECIFIC CONDITIONS 1. Documents Part of This Permit. The permit application as finally revised, replaced or amended in response to the Department's Request(s) for Additional information are contained in the Department's files and are made a part of this permit. Those documents that make up the complete permit application are listed in Appendix A. Construction Requirements [There are no construction requirements for this facility]. Operational Requirements 2. General Operating Requirements. The permittee shall operate the facility in accordance with the approved Operation Plan. The Department shall be notified before any changes, other than minor deviations, to the approved Operation Plan are implemented in order to determine whether a permit modification is required pursuant to Rule 62-701.320(4), F.A.C. 3. Authorized Waste and Material Types. The facility is authorized to manage only Construction and Demolition (C&D) debris, source separated commingled recyclables and source separated yard trash as defined in Rule 62-701.200, F.A.C. 4. Unauthorized Waste Types. The permittee is not authorized to accept or manage any waste types not listed in specific condition #3. Any unauthorized waste inadvertently received by the facility shall be managed in accordance with the approved Operation Plan. 5. Maximum Daily Processing Quantities. The permittee shall not accept those authorized waste and material types specified in specific condition #3 in excess of 1500 tons per day. 6. Maximum Storage Quantities. The permittee shall not store the authorized waste and material types in excess of the total allowable storage quantity for any one category noted below and as determined in the most recent Department approved itemized closure cost estimate for the facility. (a) Construction & Demolition Debris (unprocessed) — 5,000 cubic yards. (b) Yard trash (unprocessed) -- 5,000 cubic yards. (c) Concrete Rubble (processed/separated) —1,000 cubic yards. (d) Non -marketable Construction & Demolition Debris (processed/separated) — 90 cubic yards. (e) Tires (processed/separated) —10 cubic yards. 7. Facility Capacity. If the facility has reached its permitted capacity for storage of wastes or recyclable materials pursuant to specific condition #6 of this permit, the permittee shall not accept additional waste for processing until sufficient capacity has been restored. 8. Management of Incoming Wastes. All incoming wastes and materials shall be tipped, processed, and removed off site in accordance with the Department approved designated areas indicated in the permit application documents identified in Appendix A. All incoming loads shall be evaluated through visual inspection by trained spotter(s) for any unacceptable solid waste or prohibited wastes before being sent to a permitted facility for recycling and/or disposal. Permittee Name: Waste Management inc. of Florida Facility Name: WM Recycling Hialeah Page 4 of 8 FDEP Permit No. 055980-015-SO WAGS Facility ID No. No. 59248 DERM File No. SW-1103 9. Putrescible and Unauthorized Wastes. Putrescible waste received with the incoming loads shall be removed for disposal within forty-eight (48) hours. Any other unauthorized waste shall be segregated and transported to an authorized disposal or recycling facility within thirty (30) days of receipt. 10. Hazardous Waste. If any regulated hazardous wastes are discovered to be deposited at the facility, the facility operator shall promptly notify the Department, the person responsible for shipping the wastes to the facility, and the generator of the wastes, if known. The area where the wastes are deposited shall immediately be cordoned off from public access. If the generator or hauler cannot be identified, the facility operator shall assure the cleanup, transportation, and disposal of the waste at a permitted hazardous waste management facility. In the event that hazardous wastes are discovered they shall be managed in accordance with the procedures provided in facility Operation Plan. 11 Training and Certification of Operator(s) and Spotter(s). The permittee shall ensure that operators and spotters employed at this facility are properly trained in accordance with the requirements of Rule 62-701.320(15), F.A.C., to operate the facility, and to identify and properly manage unacceptable and prohibited solid waste received at the facility. The operators and spotters shall attend courses approved by the Department. A trained operator may perform the duties of a trained spotter. Any additional training requirement for all operators and spotters employed by the permittee shall be completed before the expiration of their current certification. 12. On -site Operator(s) and Spotter(s) Requirement. A trained operator shall be on duty whenever the facility is operating, and at least one trained spotter shall be on duty at all times that waste is received at the site to inspect the incoming waste. 13. Contingency Plan and Notification of Emergencies. In the event of an emergency (e.g., fires, explosions, etc.) that may require the implementation of the facility's approved contingency plan, or should the facility suffer damage or failure to any of the site facilities or equipment, or if the facility is disabled or otherwise unable to operate, the following shall be implemented as applicable: (a) The permittee shall notify the Department within twenty-four (24) hours of such an event, explaining the occurrence and remedial measures to be taken and time needed for repairs. The 24-hour emergency telephone number for the State's Warning Point, as designated in Chapter 62-150, F.A.C., is 850-413-9911. The teiephone number for Miami -Dade County RER emergency hotline (24 hours) is (305) 372-6955. Provide the name of the permittee, the facility file number (RER File No. SW-1103), and a brief description of the incident. A written preliminary report describing the incident shall be submitted to the Department within seventy-two (72) hours of the start of the incident. In addition, a final written report shall be sent to the Department within two (2) weeks of the incident. The final report shalt contain a complete description of, and discuss the cause of the emergency and/or discharge, the anticipated time that the discharge, if any, will continue, the steps that will be taken to evaluate, reduce, eliminate, and prevent recurrence of the event, and all other information deemed necessary by the Department. In addition, all applicable federal, state, and local discharge notifications shall be adhered to. (b) The permittee shall adjust operation of the facility and implement appropriate procedures (e.g., transfer of existing and incoming solid waste to other permitted solid waste management facilities in Miami -Dade County), to prevent accumulation of solid waste in excess of the allowable storage quantities authorized by this permit. . (c) The facility operator or his/her designee shall take appropriate actions to protect the health and safety of the environment, personnel and populace by following procedures which will mitigate, lessen or prevent damage to the environment or health and welfare of personnel and the public. 14. Housekeeping. The facility shall be operated to control dust, vectors, litter and objectionable odors. Storage of solid waste shall not result in vector breeding and animal attraction, or discharge of contaminants to ground or groundwater, or cause a public nuisance, or result in violations of the conditions of this permit. 15. Open Burning. Open burning is not permitted at this facility. 16. Access Control. Access control to the facility shall be maintained during non -working hours of the facility to prevent disposal of unauthorized solid waste. 17. Stormwater Management System. The existing stormwater system in the facility shall be maintained clean of debris and have the capacity to avoid any stormwater discharge offsite during regular storm events. Permittee Name: Waste Management Inc. of Florida Facility Name: WM Recycling Hialeah Page 5 of 8 FDEP Permit No. 055980-015-SO WACS Facility ID No. No. 59248 DERM File No. SW-1103 18. Leachate Control System. The facility shall be operated with a leachate control system to prevent discharge of leachate and avoid mixing of leachate with stormwater, and to minimize the presence of standing water. The leachate control system shall be operated and maintained in accordance with the approved leachate control system design drawings and permit application documents identified in Appendix A. Water Quality Monitoring Requirements [There are no water quality monitoring requirements for this facility]. Reporting Requirements 19. The permittee shall comply with the following reporting requirements: a. A Monthly Operating Report (MOR) on the Operating Report form attached to this permit, by the fifteenth (15) day of the succeeding month. Reports shall be submitted to the addresses indicated below and shall include the following information based on daily logs: i. Types and quantities of unprocessed solid waste received (cubic yards and/or tons). ii. Types and quantities of solid waste processed (e.g., clean wood, C&D debris, etc.) in cubic yards and/or tons. iii. Type and quantities of solid waste (processed and unprocessed) disposed off site (cubic yards and/or tons) along with disposal locations and disposal receipts. iv. Quantity of unprocessed solid waste remaining at the facility (cubic yards and/or tons). v. Type and quantities of unacceptable and prohibited wastes that are stored at the facility, removed for disposal, along with the name of the disposal facility. • Attn: Solid Waste Compliance Supervisor Environmental Evaluations Delegated Programs Section Pollution Regulation Division Department of Regulatory and Economic Resources 701 NW 1' Ct., r Floor Miami, Florida 33136 b. In accordance with Rule 62-701.710, F.A.C., an annual report using FDEP Form #62-701.900(7) for the preceding calendar year shall be submitted no later than February 1 of each year. These reports shall be submitted concurrently to the following addresses: • Attn: Solid Waste Compliance Supervisor Environmental Evaluations Delegated Programs Section Pollution Regulation Division Department of Regulatory and Economic Resources 701 NW 1' Ct., 71Floor Miami, Florida 33136 • Florida Department of Environmental Protection Waste Reduction Section 2600 Blair Stone Road, MS 4570 Tallahassee, Florida, 32399-2400 Financial Assurance Requirements 20. Financial Assurance Mechanism. The permittee shall maintain, in good standing, the financial assurance mechanisms established to demonstrate proof of financial assurance in accordance with Rule 62-701.630, F.A.C. Supporting documentation and evidence of inflation adjustment increases shall be submitted within the time frames specified in Rule 62- 701.630, F.A.C. All submittals in response to this specific condition shall be sent to: • Florida Department of Environmental Protection Financial Coordinator - Solid Waste Section 2600 Blair Stone Road, MS 4548 Permittee Name: Waste Management Inc. of Florida Facility Name: WM Recycling Hialeah Page 6 of 8 FDEP Permit No. 055980-015-SO WACS Facility ID No. No. 59248 DERM File No. SW-1103 Tallahassee, Florida, 32399-2400 21. Annual Cost Estimates. The permittee shall annually adjust the closure cost estimate(s) for inflation using FDEP Form 62- 701.900(28). Adjustments shall be made in accordance with Rule 62-701.630(4), F.A.C. and, as applicable, 40 CFR Part 264.142(a) and 264.144(a). An owner or operator using a letter of credit, guarantee bond, performance bond, financial test, corporate guarantee, trust fund or insurance shall submit the adjusted cost estimate(s) between January 1 and March 1. An owner or operator using an escrow account shall submit the adjusted estimate(s) between July 1 and September 1. 22. 5-vear Recalculation of Closure Cost Estimate. At the time of permit renewal or every fifth year when a permit is issued with duration greater than five (5) years, the permittee shall recalculate the facility's total closure cost, and long term care cost if applicable, as specified in Rule 62-701.630(3), F.A.C. 23. Closure Cost Estimate Submittal Requirements. Annual adjustments and 5-year recalculations of the facility's closure cost estimate as indicated in the preceding specific conditions shall be provided on FDEP Form #62-701.900(28) and submitted to: • Pollution Regulation Division Attn: Division Chief Department of Regulatory and Economic Resources 701 NW 1st Ct. 7th Floor Miami, Florida 33136 With a copy to: • Florida Department of Environmental Protection Financial Coordinator Solid Waste Section 2600 Blair Stone Road, MS 4548 Tallahassee, Florida, 32399-2400 Or via email to Solid.Waste.Financial.Coordinator@dep.state.fl.us. Closure Requirements 24. General Closure Requirements. The permittee shall close the waste processing facility in accordance with the provisions of the approved Closure Plan and Rule 62-701.710, F.A.C. The Department shall be notified before any changes, other than minor deviations, to the approved Closure Plan are implemented in order to determine whether a permit modification is required. 25. Closure Notification Requirements. The permittee shall notify the Department prior to ceasing operations, and shall submit a written certification to the Department when closure is complete. Other 26. Permit Modification. Any change to operation or monitoring requirements of this permit may require a modification to this permit, in accordance with the provisions of Rule 62-701.320(4), F.A.C. 27. Permit Renewal. In order to ensure uninterrupted operation of this facility, a timely and sufficient permit renewal application must be submitted to the Department in accordance with Rule 62-701.320(10), F.A.C, A permit application submitted at least 61 days prior to the expiration of this permit is considered timely and sufficient. 28. Permit Fee Submittal Requirement. This permit is valid for a twenty year period and the total permit fee for this period is $4,000.00. The applicant submitted a fee of $1,000.00 with the permit application referenced in AppendixA and has selected to pay the remainder of the permit fee in five year installments in accordance with Rule 62-701.315. The permittee is required to submit the permit fee installments as noted below: a) On or before 01/27/2020 in the amount of $ 1,000.00 b) On or before 01/27/2025 in the amount of $ 1,000.00 c) On or before 01/27/2030 in the amount of $ 1,000.00 Future amendments to Rule 62-701.315, F.A.C. that result in increases in permit fees will not increase the fees for the permittee until a renewal permit or permit modification is submitted to the Department. Permittee Name: Waste Management inc. of Florida FDEP Permit No. 055980-015-SO Facility Name: WM Recycling Hialeah WACS Facility 1D No. No. 59248 Page 7 of 8 DERM File No. SW-1103 29. Transfer of Permit or Name Chanoe. In accordance with Rule 62-701.320(11), F.A.C., the Department must be notified in writing within 30 days: (a) of any sale or conveyance of the facility; (b) if a new or different person takes ownership or control of the facility; or (c) if the facility name is changed. 30. Non -Compliance with Permit Conditions. If for any reason, the permittee does not comply with or is unable to comply with any condition specified herein, the permittee shall immediately notify and provide the Department with the following information: (a) a description of and cause of non-compliance; and (b) the period of non-compliance including exact dates and times; or, if not corrected, the anticipated time the non-compliance is expected to continue, and steps taken to reduce, eliminate, and prevent recurrence of the non-compliance. The permittee shall be responsible for any and all environmental damages, which may result and may be subject to enforcement action by the Department. 31. Facility Inspections. The permittee specifically agrees to allow access to the facility at reasonable times by Department personnel presenting credentials for the purposes of inspection and testing to determine compliance with this Permit and Department rules. 32. Compliance with Chapter 62-701, F.A.C. Unless otherwise notified by the Department, this Permittee shall comply with all applicable requirements of Chapter 62-701, F.A.C. 33. This Permit does not release the permittee from obtaining all other required permits and approvals for the construction, operation, and closure of the Facility. Appendices Made Part of this Permit Appendix A — List of Approved Permit Application Documents Attachments • Monthly Operating Report (MOR) Form • Annual Report for a Construction and Demolition Debris Facility - FDEP Form 62-701.900(7) 4 Issued this Lg day of `1 a ' "',^1 2015 DEPARTMENT OF ULATORY AND ECONOMIC RESOURCES -Rashi•=mbouli, P.E., Chief Poll On egulation Division Department of Regulatory and Economic Resources Permittee Name: Waste Management Inc. of Florida Facility Name: WM Recycling Hialeah Page 8 of 8 Appendix A FDEP Permit No. 055980-015-SO WAGS Facility ID No. No. 59248 DERM File No. SW-1103 List of Approved Permit Application Documents 1. Permit modification application dated September 16, 2003 received by the Department on September 17, 2003 for the WM Recycling Hialeah Facility for the addition of 300 tons per day of source separated yard trash to the Waste Processing Facility. 2. Permit application dated September 24, 2003 received by the Department on September 25, 2003 which includes the specifications for the on site leachate collection system. 3. Intermediate modification permit application dated March 30, 2007 received by the Department on April 05, 2007 for the addition of the acceptance of 200 tons per day of source separated commingled recyclables. 4. Minor modification permit application dated November 11, 2008 received by the Department on November 12, 2008 for the removal of the maximum daily limit for the acceptance of source separated commingle recyclables and source separated yard trash from the operational permit and instead include a combined maximum daily tonnage for the various waste streams accepted at the facility. 5. Permit renewal application dated September 05, 2014 received by the Department on September 05, 2014. 6. Response to the Department Request for Additional Information #1 letter dated October 03, 2014 received by the Department on November 06, 2014 which includes the facility's updated and approved Emergency Preparedness Plan, Contingency Plan and Closure Plan. 7. Itemized Financial Assurance Closure Cost Estimate (FACCE) dated October 31, 2014 received by the Department on November 06, 2014, and modifications/recalculations approved thereafter by the Department. 8. Permit renewal application supplementary information dated December 04, 2014 received by the Department on December 04, 2014 which includes the facility's updated and approved Operations Plan and Site Plan. 9. Permit Application Completion letter issued by the Department on January 27, 2015. Florida Department of Environmental Protection Bob Martinez Center 2600 Blair Stone Road, MS 4555 Tallahassee, Florida 32399-2400 1t — DEP Form is 62-701.900(7), R.A.C. Form Title. Annual. Report for a Construction and Demolition Debris Facility Effective Date: January 6, 2010 Incorporated in Rule: 62-701 710(8)(b), F.A.C. Annual Report for a Construction and Demolition Debris Facility NOTE: Use one of these forms for each county from which the facility received materials 1. Company Name: 2. Name of Facility: 3. Physical Address: 4. Mailing Address. 5. County Location:: 6. Debris County of Origin: k,'_ ems" - 7. Company Contact `— - Y ''` .. - (the individual responsible for this information) 8. Phone Number: fi `.sy, . E-Mail:' Year of data: ❑ Landfill 0 MRF 0 TS = ' - MATERIAL TYPES MATERIALS RECOVERED TOTAL TONS RECYCLED (SHIPPED) ASPHALT Subtotal Asphalt! — - - Used for -- - . CONCRETE Source: Roads, Bridges, Sidewalks, Curbs Source: Building Construction/Demolition: Used for fill (lake or land) Used for Road base Other Use Ir - Subtotal Concrete -. - FINES /RECOVERED SCREEN Subtotal Fines / RSM Used for '_. MATERIALS WOOD Daily/Intermediate Cover Waste -to -Energy fuel (see pg.2 for facility list) Other processed fuel Mulch, compost Final cover - .=- -:=c-:;'r-:. Other Use Subtotal Wood LAND CLEARING DEBRIS Daily/Intermediate Cover Waste -to -Energy fuel (see pg.2 for facility list) Other processed fuel Mulch, compost Final cover - Other Use , ;4. Subtotal Land Clearing Debris DRYWALL All — ---- Subtotal Drywall SHINGLES/ROOFING How used? : Subtotal Shingles/Roofing Subtotal Page 1 Subtotal Page 2' 9. TOTAL TONS OF C&D DEBRIS RECYCLED (add subtotals page 1 & 2 above): 10. TOTAL TONS OF C&D DEBRIS DISPOSED (all debris landfilled): 0 on -site 0 off -site Signature (authorized Representative) Title Date OVER PLEASE!! MATERIAL TYPES MATERIALS RECOVERED TOTAL TONS RECYCLED PAIFR Old Corrugated Containers (OCC) Other Paper Subtotal Paper PLASTIC Plastic containers/buckets All other plastic Subtotal Plastic METALS Aluminum Other Non -Ferrous (brass, copper, etc.) Steel Other Ferrous . Subtotal Metals TEXTILES Miscellaneous/carpet Subtotal Textiles - Subtotal Page 2 Waste to Energy Facilities •Bay County Resource Recovery • Broward County N. Resource Recovery • Broward County S. Resource Recovery • Dade County Resource Recovery • Hillsborough County SWE Recovery • Lake County Resource Recovery • Lee County SW Resource Recovery •McKay Bay Refuse to Energy Project • Southernmost WTE Facility •North County Regional Resource Recovery • Pasco County SW Resource Recovery • Pinellas County Resource Recovery Processed wood/land clearing debris that goes to any facility for fuel other than above is considered "Other Processed Fuel". Mail completed form to: Florida Department of Environmental Protection Bureau of Solid & Hazardous Waste 2600 Blair Stone Road, MS 4555 Tallahassee, Florida 32399-2400 DEP FORM 62-701.900(7) Page 2 of 2 Effective January 6, 2010 RCR JVF.II-/ 111P1a11 C Vi—GI\ A I Ir , RGrVR I r.jru I Facility Name; Facility Address: Operating Schedule: hrs./day days/week or dayslquarter Facility Type (Landfill, C&D MRF, etc.): Permit Number: Reporting Period (MonthNear): Waste Type Waste Received this Reporting Period On -Site Disposal this Reporting Period Off -Site Disposal this Reporting Period(1) Amount Units (2) Amount Units (2) - Facility Name and address Amount Units (2) Concrete, Stone, Brick, Ceramic Tiles Soil Construction & Demolition (C&D) Debris Recovered Screen Material (RSM) RSM Reused(4) C & D Residuals (screening avers) Metals (Ferrous) Metals (Non Ferrous) Land Clearing Debris/Lumber C & D Wood Roofing Plastic Tires Paper/Cardboard Glass Garbage Filters Bio-hazardous Waste Unacceptable (fist below) Mixed Waste (list below) TOTALS 0 0 TOTALS 0 l hereby certify, under penalty of perjury, that the information given in this report is accurate to the best of my knowledge Name of Operating Authority Representative) Facility Operator Signature of Operating Authority Representativet3) Signature of Operator Notes: (1) ATTACH DISPOSAL RECEIPTS FOR ALL WASTE DISPOSED OFF SITE (2) Cubic Yards or Tons (3) Corporate Officer or Authorized Representative (letter of authorization must be ow -Me with RER if not a corporate Officer) (4) RER Approval required for REUSE of RSM Date Date KCK .OULIU WHO 1 C urCKH 1 Irvv INCrI-111. 1 rur i 02/01114 ANNIE PEREZ, CPPO Director of Procurement ADDENDUM NO. 5 ARTHUR NORIEGA V City Manager IFB 1848386 DECEMBER 4, 2024 INVITATION FOR BID ("IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged. Please note the contents herein, reflect same on the documents you have on hand. The Procurement Contracting Officer for IFB No. 1848386 has been changed to Teresa Soto. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. 0,1-4.0.. a �c Y . (���:G�f e&Lorl/ FOR Annie Perez, CPPO Director/Chief Procurement Officer Procurement Department AP:ts c. Larry M. Spring, Jr., CPA, Assistant City Manager, Chief Financial Officer Thomas M. Fossler, Assistant City Attorney Yadissa A. Calderon, CPPB, Assistant Director of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: DATE: SIGNATURE: ANNIE PEREZ, CPPO Director of Procurement ADDENDUM NO. 4 ARTHUR NORIEGA V. City Manager IFB No. 1848386 November 26, 2024 INVITATION FOR BID ("IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged. Please note the contents herein, reflect same on the documents you have on hand. A. The IFB's closing date and time has been changed to Friday, December 20, 2024, at 2:00 pm. B. Section 2.6 Bidder's Minimum Qualifications section of the solicitation has been deleted in its entirety and replaced with the following: (1) Have a record of performance with the same Federal Employee Identification Number ("FEIN") for the past five (5) consecutive years; (2) Have a facility located within a twelve (12) mile radius of the City Solid Waste Fleet Yard, which is located at 1290 NW 20th Street, Miami, FL 33142. (3) Submit three (3) references, for clean yard waste disposal services performed within the past five (5) years by your firm in the Certification Section of this Solicitation. The references must include the entity's name, and the name, title, address, and telephone number of the contact person who can confirm that the Bidder has successfully provided clean yard waste disposal services. These references shall ascertain to the City's satisfaction that the Bidder has sufficient experience and expertise in performing clean yard waste disposal services. The Bidder may only use one (1) department from each entity as a reference. This is reflected in the Certifications section of this Solicitation. (4) a) Bidder shall include with their Bid response, a minimum of the three (3) most recent completed Annual Financial Reports. The City would prefer the past (3) years of audited financial statements. Additionally, a current Dun & Bradstreet number and a current Dun & Bradstreet Comprehensive Report must be submitted with your response. Failure to submit the above documents as requested may deem your bid non -responsive. b) Bidder shall provide a detailed list, of all owned trucks and equipment in its possession to service the City with Clean Yard Waste Disposal Services at the time of submittal. Bidder shall provide at a minimum, the type of truck or equipment, make, model, license plate number, State registered in, truck or equipment vehicle identification number ("VIN") with pictures of all trucks and equipment, and copies of ownership, purchase, or leasing documentation for each. Failure to demonstrate an adequate number of trucks and equipment to service this contract and to submit required detailed list of trucks and equipment with proof of ownership, purchase, or leasing documents may render your response non -responsive or Bidder non -responsible. (5) Not have a member, principal, officer, or stockholder who is in arrears or in default of any debt or contract involving the City, is a defaulter or surety upon any obligation to the City, and/or has failed to perform faithfully any contract with the City. (6) Have no record of pending lawsuits or criminal activities and have not been declared bankrupt within the last five (5) years. C. The following are inquiries received from Prospective Bidder(s) and the City's corresponding responses: Q1. Although the bid rate will clearly affect the City's disposal/processing cost, it does not take into account the City's trucking, labor, and transportation costs to deliver the materials to various distances within the allowable 12 mile radius as specified in the IFB. Will the City award the contract to the responsive and responsible bidder with the lowest disposal price, irrespective of relative distance of the various Bidders' delivery sites from the City's reference point of 1290 NW 20th St.? If not, please clarify exactly how the City will consider the impact of relative differences in distance within the 12- mile radius comparing various Bidder's responses? Al. Yes, the City will award to the lowest responsive and responsible Bidder who meets the minimum requirements. The 12 mile radius is one of the minimum requirements. Q2. Section 2.10 Equitable Adjustment references CPI-U at the City's sole discretion. If a Bidder is not ensured of receiving the CPI each year, it will be necessary for the Bidder to anticipate inflation over a term of up to 7 years, and then include all the estimated future costs increases with the initial bid. In order to obtain the most favorable pricing, would the City consider making the CPI automatic each year rather than making it " at the City's sole discretion" ? A2. The yearly price can be adjusted to the general CPI-U as stated on Section 2.10 Equitable Adjustment. Q3. Section 2.10 Equitable Adjustment references CPI-U mentioned is for general goods and services, such as bread and milk, and is not directly related to the actual cost of providing waste -related to the actual cost of providing waste -related services. Will the City instead consider utilizing the CPI based on "Garbage and Trash", which is published by the same government agency that publishes CPI-U, but is more closely aligned to the scope of service for this IFB? A3. The City prefers to use the general CPI-U for the general goods and services. Q4. Section 2.22 Performance Bond references a performance bond, but a bid bond is not clearly addressed. Is a bid bond required with the Bid submittal? A4. No Bid bond is required however, refer to Section 2.22 Performance Bond. Q5. Can the City clarify if the renewal options are at the City's sole option or if they require mutual consent. This is particularly important given that the significant inflationary risks over the potential 7.5 years of this agreement. (three (3) year with an option to renew for two (2) additional two (2) year periods, plus a 180-day extension.) Mutual consent renewals reduce the inflationary risk somewhat and are likely to result in more favorable responses. A5. Per the IFB, the City will retain the options at its sole discretion, the vendors can always request CPI-U under Section 2.10 Equitable Adjustment. Q6. What is the commencement date for the work to be performed through this contract? A6. Commencement would depend on the date the award has been finalized and approved by the City's Commission. Q7. The definition of "Clean Yard Waste" states that plastic bags are accepted and are not included as contamination. Plastic through can interfere with processing, However, will the City change the definition so that plastic bags (and any materials contained therein) are not accepted as Clean Yard Waste and shall be considered contamination? A7. Plastic bags shall be accepted solely when they are containing the items described above. Q8. On Section 2.4 Term of the Contract it states the potential of a contract for 7.5 years, during which the Successful Bidder must maintain capacity for the City's Clean Yard Waste, but it also mentions on Section 2.27 Termination it states a termination for convenience for the City, which means that a Bidder could go through great expense to provide long-term capacity, and then have it's contract terminated at any time, without a cause. Will the City delete the termination for convenience? If not, will the City make the termination for convenience a right of both parties? A8. No, the termination for convenience language will remain as written in the IFB on Section 2.27 Termination. This language is standard to all City contracts. Q9. How is it that the Solicitation requests bids for "disposal" only? A9. The collection is not subject to bidding. The Department of Solid Waste ("SW') is exclusively soliciting to dispose of Clean Yard Waste collected by the department. Q10. Nothing is mentioned about recycling, Why? A10. The scope of work for this solicitation does not specify recycling, therefore the City is not requesting such services. Q11. Is the City aware of the facility in Miami Dade County, that has been recycling yard waste for 30 years? Actually, that the facility happens to have a contract with Miami Dade County for the Recycling of Clean Yard Waste. Why doesn't the City of Miami piggyback on that contract? All. Refer to A.10. Q12. In Section 2.6 MINIMUM QUALIFICATIONS, (4) Have adequate financial support, equipment, and organization to ensure that they can satisfactorily provide the goods and/or services if awarded a Contract under the terms and conditions herein stated. How will the City determine if a Bidder has "adequate financial support" to provide the services over a term that may be as long as 7.5 years? Al2. Refer to Section B. above. Q13. Is it required to submit financial statements with the bid response? A13. Refer to Section B. above. Q14. We understand that the Contractors are responsible for their own actions, but it would be unreasonable to expect contractors to be held responsible for negligent or wrongful conduct from any customer. Would the City agree to change the language to the indemnity provisions making clear that the Contractor is not responsible for indemnifying the City or any other party for the City's own negligent or wrongful conduct? A14. The City does not agree to change the language to the indemnity provisions on Section 2.9 Insurance Requirements. Q15. On Section 2.6 MINIMUM REQUIREMENTS (2) Have a facility located within a twelve (12) mile radius of the City Solid Waste Fleet Yard, which is located at 1290 NW 20th Street, Miami, FL 33142. Is it required that, as of the bid submittal date, the proposed facility located within 12 miles must be fully permitted by all relevant government and/or regulatory agencies to accept Clean Yard Waste deliveries from the City? A15. Yes, the facility must be fully permitted by all relevant governmental and/or regulatory agencies to accept Clean Yard Waste deliveries from the City. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. yade.e..e_d_ .c Y. /�,:G2:(�fiC�/C.CJit. FOR Annie Perez, CPPO Director/Chief Procurement Officer City of Miami Procurement Department AP:vg cc. Larry M. Spring Jr., CPA, Assistant City Manager, Chief Financial Officer 4 Thomas M. Fossler, Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A. Calderon, CPPB, Assistant Director, Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: DATE: SIGNATURE: ANNIE PEREZ, CPPO Director of Procurement ADDENDUM NO. 3 ARTHUR NORIEGA V. City Manager IFB No. 1848386 November 14, 2024 INVITATION FOR BID ("IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged. Please note the contents herein, reflect same on the documents you have on hand. The IFB's closing date and time has been changed to Tuesday, November 26, 2024, at 2:00 pm. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. AP:vg cc. Annie Perez, CPPO Director/Chief Procurement Officer City of Miami Procurement Department Larry Spring, Assistant City Manager, Chief Financial Officer Thomas M. Fossler, Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A. Calderon, CPPB, Assistant Director, Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: DATE: SIGNATURE: ANNIE PEREZ, CPPO Director of Procurement ADDENDUM NO. 2 ARTHUR NORIEGA V. City Manager IFB NO. 1848386 October 31, 2024 INVITATION FOR BID ("IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged. Please note the contents herein, reflect same on the documents you have on hand. The IFB's closing date and time has been changed to Friday, November 15, 2024, at 2:00 pm. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. AP:vg cc. la .�Y . �����EdaA-9/?- for Annie Perez, CPPO Director/Chief Procurement Officer City of Miami Procurement Department Larry Spring, Assistant City Manager, Chief Financial Officer Thomas M. Fossler, Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A. Calderon, CPPB, Assistant Director, Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: DATE: SIGNATURE: ANNIE PEREZ, CPPO Director of Procurement ADDENDUM NO. 1 ARTHUR NORIEGA V. City Manager IFB No. 1848386 October 24, 2024 INVITATION FOR BID ("IFB") FOR CLEAN YARD WASTE DISPOSAL TO: ALL PROSPECTIVE BIDDERS: The following changes, additions, clarifications, and deletions amend the IFB documents of the above captioned IFB and shall become an integral part of the Contract Documents. Words and/or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged. Please note the contents herein, reflect same on the documents you have on hand. The IFB's closing date and time has been changed to Friday, November 1, 2024, at 2:00 pm. ALL OTHER TERMS AND CONDITIONS OF THE IFB REMAIN THE SAME. THIS ADDENDUM IS AN ESSENTIAL PORTION OF THE IFB AND SHALL BE MADE A PART THEREOF. AP:vg cc. Annie Perez, CPPO Director/Chief Procurement Officer City of Miami Procurement Department Larry Spring, Assistant City Manager, Chief Financial Officer Thomas M. Fossler, Assistant City Attorney, City of Miami Office of the City Attorney Yadissa A. Calderon, CPPB, Assistant Director, Department of Procurement This Addendum shall be signed by an authorized representative and dated by the Bidder and submitted as proof of receipt with the submission of the Bid. NAME OF FIRM: DATE: SIGNATURE: City of Miami Procurement Department Miami Riverside Center 444 SW 2^d Avenue, 6th Floor Miami, Florida 33130 Web Site Address: www.miamigov.com/procurement Number: Title: Issue Date/Time: IFB Closing Date/Time: Pre-Bid/Pre-Proposal Conference: Pre-Bid/Pre-Proposal Date/Time: Pre-Bid/Pre-Proposal Location: Deadline for Request for Clarification: Contracting Officer: Contracting Officer E-Mail Address: 1848386,5 IFB for CLEAN YARD WASTE DISPOSAL 20- SEPT-2024 01-NOV-2024 @ 14:00:00 Voluntary 25-SEPT-2024 @ 10:00:00 Virtual Via TEAMS Meeting 04-OCT-2024 @ 14:00:00 Soto, Teresa tsoto(c�miamigov.com Certification Statement Please quote on this form, if applicable, net prices for the item(s) listed. Return signed original and retain a copy for your files. Prices should include all costs, including transportation to the destination. The City reserves the right to accept or reject all or any part of this submission. Prices should be firm for a minimum of 180 days following the time set for closing of the submissions. In the event of errors in extension of totals, the unit prices shall govern in determining the quoted prices. We (I) certify that we have read your solicitation, completed the necessary documents, and propose to furnish and deliver, F.O.B. DESTINATION, the items or services specified herein. The undersigned hereby certifies that neither the contractual party nor any of its principal owners or personnel have been convicted of any of the violations or debarred or suspended as set in section 18-107 or Ordinance No. 12271. All exceptions to this submission have been documented in the section below (refer to paragraph and section). EXCEPTIONS: We (I) certify that any and all information contained in this submission is true; and we (I) further certify that this submission is made without prior understanding, agreement, or connection with any corporation, firm, or person submitting a submission for the same materials, supplies, equipment, or service, and is in all respects fair and without collusion or fraud. We (I) agree to abide by all terms and conditions of this solicitation and certify that I am authorized to sign this submission for the submitter. Please print the following and sign your name: BIDDER'S NAME: ADDRESS: PHONE: FAX: EMAIL: CELL(Optional): SIGNED BY: TITLE: DATE: FAILURE TO COMPLETE, SIGN, AND RETURN THIS FORM SHALL DEEM YOUR BID NON RESPONSIVE. Certifications Legal Name of Firm: Entity Type: Partnership, Sole Proprietorship, Corporation, etc. Year Established: Office Location: City of Miami, Miami -Dade County, or Other Federal Employer Identification Number ("EIN/FEIN"): Business Tax Receipt/ Occupational License Number: Business Tax Receipt/ Occupational License Issuing Agency: Business Tax Receipt/ Occupational License Expiration Date: Will subcontractor(s) be used? (Yes or No) If subcontractor(s) will be utilized, provide their name, address, and the portion of the work they will be responsible for under this contract (a copy of their license(s) must be submitted with your bid response). If no subcontractor(s) will be utilized, please enter N/A. Please list and acknowledge all addendum/addenda received. List the addendum/addenda number and date of receipt (i.e., Addendum No. 1, 1/1/24.) If no addendum/addenda was/were issued, please enter N/A. Does Bidder have any pending lawsuits with or against the City of Miami, any of its agencies and/or instrumentalities? (Yes or No) If Yes, please list. Does Bidder have any record of criminal activities? (Yes or No) If Yes, please list. Has Bidder declared bankruptcy within the past seven (5) years? (Yes or No) If Yes, when? Does Bidder have any prior or pending litigation, either civil or criminal, involving a governmental agency, or which may affect the performance of the services to be rendered herein, in which the Bidder, any of its employees, or subcontractors is, or has been involved in within the last five (5) years? (Yes or No) If Yes, please list. Reference No. 1: Name of Company/Agency for which Bidder is currently providing the services/goods as described in this solicitation, or has provided such services/goods in the past: Reference No. 1: Address, City, State, and Zip for above referenced company/agency listed: Reference No. 1: Name of Contact Person, Email, and Telephone Number for above referenced No. 1 Reference No. 1: Date of Contract or Sale for above referenced No. 1 Reference No. 2: Name of Company/Agency for which Bidder is currently providing the services/goods as described in this solicitation, or has provided such services/goods in the past: Reference No. 2: Address, City, State, and Zip for above referenced company/agency listed: Reference No. 2: Name of Contact Person, Email, and Telephone Number for above referenced No. 2 Reference No. 2: Date of Contract or Sale for above referenced No. 2 Reference No. 3: Name of Company/Agency for which Bidder is currently providing the services/goods as described in this solicitation, or has provided such services/goods in the past: Reference No. 3: Address, City, State, and Zip for above referenced company/agency listed: Reference No. 3: Name of Contact Person, Email, and Telephone Number for above referenced No. 3 Reference No. 3: Date of Contract or Sale for above referenced No. 3 Does the Bidder have a facility(ies) within a 12 miles radius of the City's Solid Waste Fleet Yard, which is located at 1290 NW 20th Street, Miami, FL 33142, If so, state each location. The Bidder can provide prompt payment discount, pursuant to Section 1.66, Prompt Payment of the Terms and Conditions. If no prompt payment discount is being offered, the Bidder must enter zero (0) for the percentage discount to indicate no discount. If the Bidder fails to enter a percentage, it is understood and agreed that the terms shall be two percent (2%), 20 days effective after receipt of invoice or final acceptance by the City, whichever is later. IMPORTANT NOTICE TO BIDDERS: • FAILURE TO COMPLETE, SIGN AND UPLOAD THE CERTIFICATION STATEMENT, CERTIFICATIONS SECTION WILL RENDER YOUR BID NON -RESPONSIVE. • FAILURE TO COMPLETE, SIGN AND UPLOAD THE ANTI -HUMAN TRAFFICKING AFFIDAVIT WILL RENDER YOUR BID NON- RESPONSIVE. • ALL UPLOADS SHALL BE IN PDF FILE FORMAT, NO OTHER FILE FORMATS WILL BE ACCEPTED BY THE CITY. • ATTACHMENT FILES SHALL BE NO MORE THAN 500MB IN SIZE EACH, SHOULD THERE BE A NEED FOR A LARGER SIZE FILE TO BE UPLOADED SPLIT IN MULTIPLE FILES. • ALL ATTACHMENTS PERTAINING TO THIS SOLICITATION ARE LOCATED ON THE DOCUMENTS SECTION. • FOR ANY PERISCOPE S2G (FORMALLY BIDSYNC) TECHNICAL ISSUES AND/OR DIFFICULTIES PLEASE CONTACT PERISCOPE'S VENDOR SUPPORT TOLL -FREE NUMBER 800-990-9339, EMAIL SUPPORT(a_BIDSYNC.COM OR SUPPORT.BIDSYNC.COM Table of Contents Terms and Conditions 1. General Conditions 1.1...GENERAL TERMS AND CONDITIONS 2. Special Conditions 2.1. PURPOSE 2.2. PRE-BID/PRE-PROPOSAL CONFERENCE 2.3. DEADLINE FOR RECEIPT OF REQUEST FOR ADDITIONAL INFORMATION/CLARIFICATION 2.4. TERM OF CONTRACT 2.5. CONDITIONS FOR RENEWAL 2.6. MINIMUM QUALIFICATIONS 2.7. METHOD OF AWARD 2.8. TIE BIDS 2.9. INSURANCE REQUIREMENTS 2.10. EQUITABLE ADJUSTMENT 2.11. NON -APPROPRIATION OF FUNDS 2.12. PROJECT MANAGER 2.13. CURES 2.14. SUBMISSION AND RECEIPT OF BIDS 2.15. LOCAL OFFICE PREFERENCE 2.16. PUBLIC ENTITY CRIMES 2.17. ANTITRUST VIOLATOR VENDORS 2.18. ANTI -HUMAN TRAFFICKING 2.19. CITY OF MIAMI LIVING WAGE ORDINANCE 2.20. E-VERIFY EMPLOYMENT VERIFICATION 2.21. FAILURE TO PERFORM 2.22. PERFORMANCE BOND 2.23. INVOICING 2.24. SUCCESSFUL BIDDER POINT OF CONTACT 2.25. FORCE MAJEURE 2.26. ADDITIONS/DELETIONS OF FACILITIES/ITEMS/PRODUCTS/SERVICES 2.27. TERMINATION 2.28. ADDITIONAL TERMS AND CONDITIONS 3. Specifications 3.1. SPECIFICATIONS/SCOPE OF WORK Terms and Conditions 1. General Conditions 1.1. General Terms and Conditions for Invitation for Bids (IFB) 1. GENERAL TERMS AND CONDITIONS FOR INVITATION FOR BID (IFB)- References to goods only apply insofar as they are applicable to "Goods" as defined in Section 18-73 of the City Code. References to "Professional and Personal Services" are as defined in Section 18-73 of the City Code. Intent: The General Terms and Conditions described herein apply to the acquisition of goods/equipment/services with an estimated aggregate cost of $25,000.00 or more. Definition: A formal solicitation is defined as issuance of an Invitation for Bids, Request for Proposals, Request for Qualifications, or Request for Letters of Interest pursuant to the City of Miami (City) Procurement Code and/or Florida Law, as amended. Formal Solicitation and Solicitation shall be defined in the same manner herein. 1.1. ACCEPTANCE OF GOODS OR EQUIPMENT - Any good(s) or equipment delivered under this formal solicitation, if applicable, shall remain the property of the seller until a physical inspection and actual usage of the good is made, and thereafter is accepted as satisfactory to the City. It must comply with the terms herein and be fully in accordance with specifications and of the highest quality. In the event the goods supplied to the City are found to be defective or do not conform to specifications, the City reserves the right to cancel the order upon written notice to the Successful Bidder/Contractor and return the product to the Successful Bidder/Contractor at the Successful Bidder's/Contractor's expense. 1.2.ACCEPTANCE OF OFFER - The signed or electronic submission of a Bidder's response shall be considered an offer on the part of the Bidder; such offer shall be deemed accepted upon issuance by the City of a purchase order. 1.3. ACCEPTANCE/REJECTION — The City reserves the right to accept, reject any or all, or portion of responses after opening/closing date, and request re -issuance on the goods/services described in the Formal Solicitation. In the event of a rejection, the Director of Procurement shall notify all affected Bidders and provide a written explanation for such rejection. The City also reserves the right to reject the Response of any Bidder which has previously failed to properly perform under the Terms and Conditions of a City Contract, to deliver on time contracts of a similar nature, and which is not capable to perform the requirements defined in this Formal Solicitation. The foregoing is not an all-inclusive list of reasons for which a response may be rejected. The City further reserves the right to waive any irregularities. minor informalities, or technicalities in any or all responses and may, at its sole discretion, re -issue the Formal Solicitation. 1.4.ADDENDA — It is the Bidder's responsibility to ensure receipt of all Addenda. Responses to questions/inquiries from prospective Bidders will be provided in the form of an Addendum. Addenda are attached in the Documents Section of BidSync. 1.5. ALTERNATE RESPONSES — Alternate responses will not be considered, unless specifically requested by the City. 1.6.ASSIGNMENT — Successful Bidder/Contractor agrees not to subcontract, assign, transfer, convey, sublet, pledge, encumber, or otherwise dispose of the resulting Contract, in whole or in part, or any or all of its rights, title or interest herein, without the City's prior written consent. 1.7.ATTORNEY'S FEES - In connection with any litigation, appellate, administrative, mediation, and/or arbitration arising out of resulting Contract, each party shall bear their own attorney's fees through and including appellate litigation and any post -judgment proceedings. 1.8.AUDIT RIGHTS AND RECORDS RETENTION - The Successful Bidder/Contractor agrees to provide access at all reasonable times to the City, or to any of its duly authorized representatives, to any books, documents, papers, and records of Successful Bidder/Contractor which are directly pertinent to this Formal Solicitation, for the purpose of audit, examination, excerpts, and transcriptions. The Successful Bidder/Contractor shall maintain and retain any and all of the books, documents, papers and records pertinent to the resulting Contract for three (3) years after the City makes final payment and all other pending matters are closed. Successful Bidder's/Contractor's failure to, or refusal to comply with this condition shall result in the immediate cancellation of this Contract by the City. The Audit Rights set forth in Section 18-102 of the City Code apply as supplemental terms and are deemed as being incorporated by reference herein. 1.9. AVAILABILITY OF CONTRACT STATE-WIDE - Any governmental, not -for -profit or quasi - governmental entity in the State of Florida, may avail itself of this Contract and purchase any, and all goods/services, specified herein from the Successful Bidder/Contractor at the Contract price(s) established herein, when permissible by Federal, State, and local laws, rules, and regulations. Additionally, any governmental entity outside of the State of Florida but, within the Continental United States of America, may avail itself to this Contract and purchase any and all goods/services, specified herein from the Successful Bidder/Contractor at the Contract price(s) established herein, when permissible by Federal, State, and local laws, rules, and regulations. Each governmental, not -for -profit, or quasi -governmental entity which uses this Formal Solicitation and resulting Contract will establish its own Contract, place its own orders, issue its own purchase orders, be invoiced there from and make its own payments, determine shipping terms and issue its own exemption certificates as required by the Successful Bidder/Contractor. 1.10. AWARD OF CONTRACT: A. The Formal Solicitation, any addenda issued, the Bidder's response, and the Purchase Order shall constitute the entire Contract, unless modified in accordance with any ensuing Contract, or amendment. B.The award of a Contract where there are Tie Bids, the tie breaker will be decided by the Director of Procurement or designee, in the instance that Tie Bids cannot be determined by applying Florida Statute 287.087, Preference to Businesses with Drug -Free Workplace Programs. C. The award of this contract may be preconditioned on the subsequent submission of other documents as specified in the Special Conditions or Specifications/Scope of Work. Bidder may be found non -responsive if such documents are not submitted in a timely manner and in the form required by the City. Where Bidder is found non -responsive, the City, through action taken by the Department or Procurement, will void its acceptance of the Bidder's Response and may accept the Response from the next lowest responsive, responsible Bidder most advantageous to the City or may re -solicit for the goods/services. The City, at its sole discretion, may seek monetary restitution from Bidder and/or its bid bond or guaranty, and/or similar security, if applicable, as a result of damages or increased costs sustained as a result of the Bidder's failure to satisfy the City's requirements. D. The term of the Contract shall be specified in one of three documents which shall be issued to the Successful Bidder. These documents may either be a Purchase Order, Notice of Award, and/or Contract Award Sheet. E. The City reserves the right to automatically extend this Contract for up to one hundred eighty (180) calendar days beyond the stated Contract term, in order to provide City departments with continual service and supplies while a new Contract is being solicited, evaluated, and/or awarded. If the right to extend is exercised, the City shall notify the Successful Bidder/Contractor, in writing, of its intent to extend the Contract in accordance with the existing terms and conditions for a specific number of days. Additional extensions over the first one hundred eighty (180) day extension may occur, if, the City and the Successful Bidder/Contractor are in mutual agreement of such extensions. F. Where the Contract involves a single shipment of goods to the City, the Contract term shall conclude upon completion of the expressed or implied warranty periods. G. The City reserves the right to award the Contract on a split -order, lump sum, individual - item basis, or such method of award in the best interest of the City, unless otherwise specified. H. A Contract may be awarded to the Successful Bidder/Contractor by the City Commission based upon the minimum qualification requirements reflected herein. 1.11. BID BOND/ BID SECURITY - A cashier's or certified check issued by a bank authorized to transact banking business in Florida, or a Bid Bond/Bid Security signed by a surety company that is licensed to do business in the state of Florida, payable to the City of Miami, for the amount as specified in the bid, is required from all Bidders., so indicated under the Special Conditions. This check or bond guarantees that a Bidder will accept the Contract as bid if it is awarded to Bidder. The Bidder shall forfeit bid deposit to the City, should City award Contract to Bidder and Bidder fails to accept the award. The City reserves the right to reject any and all surety tendered to the City. Bid deposits are returned to unsuccessful Bidders within ten (10) days after the award and Successful Bidder's acceptance of award. If one hundred eighty (180) days have passed after the date of the Formal Solicitation closing date, and no Contract has been awarded, all bid deposits will be returned on demand. 1.12. BID SECURITY FORFEITED LIQUIDATED DAMAGES - Failure to execute a Contract and/or file an acceptable Performance Bond, when required, as provided herein, shall be just cause for the annulment of the award and the forfeiture of the Bid Bond/Bid Security to the City, which forfeiture shall be considered, not as a penalty, but in mitigation of damages sustained which cannot be determined at the time of award. Award may then be made to the next lowest responsive and responsible Bidder, or all Bid responses may be rejected. 1.13. BID RESPONSE FORM — All required forms in the Formal Solicitation should be completed, signed, and submitted accordingly through the BidSync Electronic Portal. 1.14. BRAND NAMES — If, and wherever in the specifications, brand names, makes, models, names of any manufacturers, trade names, or Bidder catalog numbers are specified, it is for the purpose of establishing the type, function, minimum standard of design, efficiency, grade, or quality of goods only. When the City does not desire to rule out other competitors' brands or makes, the phrase "APPROVED EQUAL" is added. Unless otherwise specified, any manufacturers' names, trade names, brand names, information or catalog numbers listed in a specification are descriptive, not restrictive, or exclusive. The Bidder shall provide any equipment that meets or exceeds the applicable specifications, including without limitation the following: Equal in every important attribute, to include industry quality measurable standard, quality of product, accessibility of distribution, durability/reliability/dependability and warranty coverage, and the delivery schedule. When bidding an "APPROVED EQUAL", Bidders shall submit, with their response, complete sets of necessary data (e.g., factory information sheets, specifications, brochures, etc.) in order for the City to evaluate and determine the equality of the item(s) bid. The Bidder shall demonstrate comparability, including appropriate catalog materials, literature, specifications, test data, etc. The City shall be the sole judge of equality and its decision shall be final. The City shall determine in its sole discretion, subject to the concurrence of the Project Manager whether goods are acceptable as an equivalent. Unless otherwise specified, evidence in the form of samples may be requested, if the proposed brand is other than specified by the City. Such samples are to be furnished after Formal Solicitation opening/closing, upon request of the City. If samples are requested by the City, such samples must be received by the City no later than seven (7) calendar days after a formal request is made. When "NO SUBSTITUTION" is used in conjunction with a manufacturer's name, brand name, and/or model number, that named item is the only item that will be accepted by the City in that particular instance. 1.15. CANCELLATION - The City reserves the right to cancel all Formal Solicitation before its opening/closing. In the event of cancellation, the Director of Procurement shall notify all prospective Bidders and provide a written explanation for the cancellation. There shall be no recourse against the City for a cancellation made in accordance with this Section. 1.16. CAPITAL EXPENDITURES — Successful Bidder/Contractor understands that any capital expenditures that the Successful Bidder/Contractor makes, or prepares to make, in order to deliver/perform the goods/services required by the City, is a business risk which the Successful Bidder/Contractor must assume. The City will not be obligated to reimburse amortized or unamortized capital expenditures, or to maintain the approved status of any Successful Bidder/Contractor. If Successful Bidder/Contractor has been unable to recoup its capital expenditures during the time it is rendering such goods/services, it shall not have any claim upon the City. 1.17. CITY NOT LIABLE FOR DELAYS - It is further expressly agreed that in no event shall the City be liable for, or responsible to, the Bidder, any subcontractor, or to any other person for, or on account of, any stoppages or delay in the work herein provided for by injunction, or other legal or equitable proceedings, or on account of any delay for any cause over which the City has no control. 1.18. COLLUSION — Bidder, by submitting a response, certifies that its response is made without previous understanding, agreement, or connection either with any person, firm, or corporation submitting a Bid for the same goods/services, or with the City of Miami's Procurement Department or initiating department. The Bidder certifies that its response is fair, without control, collusion, fraud, or other illegal action. Bidder certifies that it is in compliance with the Conflict of Interest and Code of Ethics Laws. The City will investigate all potential situations where collusion may have occurred, and the City reserves the right to reject any and all Bids where collusion may have occurred. 1.19. COMPLIANCE WITH FEDERAL, STATE AND LOCAL LAWS — Successful Bidder/Contractor understands that contracts between private entities and local governments are subject to certain laws, codes, and regulations, including laws pertaining to public records, sunshine (open meetings), conflict of interest, ethics records keeping, etc. City and Successful Bidder/Contractor agree to comply with and observe all applicable laws, codes, regulations, and ordinances, and to secure all applicable public approvals and/or consents, of any governmental agency and/or owner of intellectual property rights as that may in any way affect the goods or services offered, including but not limited to: A. Executive Order 11246, which prohibits discrimination against any employee, applicant, or client because of race, creed, color, national origin, sex, or age with regard to, but not limited to, the following: employment practices, rate of pay or other compensation methods, and training selection. B. Occupational, Safety and Health Act (OSHA), as applicable to this Formal Solicitation. C. The State of Florida Statutes, Section 287.133(3)(A) on Public Entity Crimes. D. Environment Protection Agency (EPA), as applicable to this Formal Solicitation. E. Uniform Commercial Code (Florida Statutes, Chapter 672). F. Americans with Disabilities Act of 1990, as amended. G. National Institute of Occupational Safety Hazards (NIOSH), as applicable to this Formal Solicitation. H. National Forest Products Association (NFPA), as applicable to this Formal Solicitation. I. City Procurement Ordinance City Code Section 18, Article III. J. Conflict of Interest, City Code Section 2-611;61. K. Cone of Silence, City Code Section 18-74. L. The Florida Statutes Sections 218.70 and 218.79, the Prompt Payment Act. Lack of knowledge by the Successful Bidder/Contractor will in no way be a cause for relief from responsibility. Non- compliance with all applicable local, State, and Federal directives, orders, codes, rules, regulations, and laws may be considered grounds for termination of Contract at the option of the City Manager. Copies of the City Ordinances may be obtained from the City Clerk's Office. 1.20. CONE OF SILENCE - Pursuant to Section 18-74 of the City of Miami Code, a "Cone of Silence" is imposed upon each Formal Solicitation once advertisement and terminates at the time the City Manager issues a written recommendation to the Miami City Commission. The Cone of Silence shall be applicable only to Formal Solicitation for the provision of goods and services for amounts greater than $200,000. The Cone of Silence prohibits any communication regarding Formal Solicitations between, among others: Potential vendors, service providers, bidders, lobbyists or consultants and the City's professional staff including, but not limited to, the City Manager and the City Manager's staff; the Mayor, City Commissioners, or their respective staffs. The provision does not apply to, among other communications: oral communications with the City Procurement staff, provided the communication is limited strictly to matters of process or procedure already contained in the Formal Solicitation document; the provisions of the Cone of Silence do not apply to oral communications at duly noticed site visits/inspections, pre -bid conferences, or public presentation, made to the Miami City Commission during a duly noticed public meeting; or communications in writing or by email at any time with any City employee, official or member of the City Commission unless specifically prohibited by the applicable Formal Solicitation documents; or communications in connection with the collection of industry comments or the performance of market research regarding a particular Formal Solicitation by City Procurement staff. Bidders must file a copy of any written communications with the Office of the City Clerk, which shall be made available to any person upon request. The City shall respond in writing and file a copy with the City Clerk's Office, which shall be made available to any person upon request. Written communications may be in the form of e-mail, or fax with a copy to the City Clerk's Office being required. In addition to any other penalties provided by law, violation of the Cone of Silence by any Bidder shall render any award voidable. A violation by a particular Bidder, lobbyist or consultant shall subject same to potential penalties pursuant to the City Code. Any person having personal knowledge of a violation of these provisions shall report such violation to the State Attorney and/or may file a complaint with the Miami Dade County Commission on Ethics. This language is only a summary of the key provisions of the Cone of Silence. Please review City of Miami Code Section 18-74 for a complete and thorough description of the Cone of Silence. You may contact the City Clerk's Office at 305-250-5360, or clerks@miamigov.com, to obtain a copy of same. 1.21. CONFIDENTIALITY - As a political subdivision, the City of Miami is subject to the Florida Government in the Sunshine (public Meetings) Act and Public Records Act. If this Contract contains a confidentiality provision, it shall have no application when disclosure is required by Florida law or upon court order. 1.22. CONFLICT OF INTEREST — Bidders, by responding to this Formal Solicitation, certify that to the best of their knowledge or belief, no elected/appointed official or employee of the City of Miami is financially interested, directly or indirectly, in the purchase of goods/services specified in this Formal Solicitation. Any such interests on the part of the Bidder or its employees must be disclosed in writing to the City. Further, Bidder shall disclose the name of any City employee who owns, directly or indirectly, an interest of five percent (5%) or more of the total assets of capital stock in Bidder's firm. A. Bidder further agrees not to use or attempt to use any knowledge, property, or resource which may be within his/her trust, or perform his/her duties, to secure a special privilege, benefit, or exemption for himself/herself, or others. Bidder may not disclose or use information not available to members of the general public and gained by reason of his/her position, except for information relating exclusively to governmental practices, for his/her personal, or benefit, or for the personal gain, or benefit of any other person, or business entity. B. Bidder hereby acknowledges that he/she has not contracted or transacted any business with the City or any person, or agency acting for the City, and has not appeared in representation of any third party before any board, Commission, or agency of the City within the past two years. Bidder further warrants that he/she is not related, specifically the spouse, son, daughter, parent, brother, or sister, to: (i) any member of the Commission; (ii) the Mayor; (iii) any City employee; or (iv) any member of any board or agency of the City. C. A violation of this section may subject the Bidder to immediate termination of any contract with the City, and imposition of the maximum fine and/or any penalties allowed by law. Additionally, violations may be considered by and subject to action by the Miami -Dade County Commission on Ethics. 1.23. COPYRIGHT OR PATENT RIGHTS — Bidders warrant that there has been no violation of copyright or patent rights in manufacturing, producing, or selling the goods shipped or ordered and/or services provided as a result of this Formal Solicitation, and Bidders agree to hold the City harmless from any and all liability, loss, or expense occasioned by any such violation. 1.24. COST INCURRED BY BIDDER - All expenses involved with the preparation and submission of Bids to the City, or any work performed in connection therewith shall be borne by the Bidder. 1.25. DEBARMENT AND SUSPENSIONS (Sec 18-107) A. Authority and requirement to debar/suspend. After reasonable notice to an actual or prospective Contractual Party, and after reasonable opportunity for such party to be heard, the City Manager, after consultation with the Chief Procurement Officer and the City Attorney, shall have the authority to debar a Contractual Party, for the causes listed below, from consideration for award of City Contracts. The debarment shall be for a period of not fewer than three (3) years. The City Manager shall also have the authority to suspend a Contractual Party from consideration for award of City Contracts if there is probable cause for debarment, pending the debarment determination. The authority to debar/suspend contractors shall be exercised in accordance with regulations which shall be issued by the Chief Procurement Officer after approval by the City Manager, the City Attorney, and the City Commission. B. Causes for debarment/suspension. Causes for debarment or suspension include the following: 1) Conviction for commission of a criminal offense incident to obtaining or attempting to obtain a public or private Contract or subcontract, or incident to the performance of such Contract or subcontract. 2) Conviction under state or federal statutes of embezzlement, theft, forgery, bribery, falsification, or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty. 3) Conviction under state or federal antitrust statutes arising out of the submission of Bids or Proposals. 4) Violation of Contract provisions, which is regarded by the Chief Procurement Officer to be indicative of non- responsibility. Such violation may include failure without good cause to perform in accordance with the terms and conditions of a Contract or to perform within the time limits provided in a Contract, provided that failure to perform caused by acts beyond the control of a party shall not be considered a basis for debarment/suspension. 5) Debarment/suspension of the Contractual Party by any federal, state, or other governmental entity. 6) False certification pursuant to paragraph C below. 7) Found in violation of a zoning ordinance or any other city ordinance or regulation and for which the violation remains noncompliant. 8) Found in violation of a zoning ordinance or any other city ordinance or regulation and for which a civil penalty or fine is due and owing to the city. 9) Any other cause judged by the City Manager to be so serious and compelling as to affect the responsibility of the Contractual Party performing city Contracts. C. Certification. All Contracts for goods and services, sales, and leases by the city shall contain a certification that neither the Contractual Party nor any of its principal owners or personnel have been convicted of any of the violations set forth above or debarred or suspended as set forth in paragraph (b)(5). D. Debarment and suspension decisions. Subject to the provisions of paragraph (a), the City Manager shall render a written decision stating the reasons for the debarment or suspension. A copy of the decision shall be provided promptly to the Contractual Party, along with a notice of said party's right to seek judicial relief. 1.26. DEBARRED/SUSPENDED VENDORS — An entity or affiliate who has been placed on the State of Florida debarred or suspended vendor list may not submit a Response for a solicitation to provide goods or services to a public entity; may not submit a Response to a solicitation with a public entity for the construction or repair of a public building or public work; may not submit response on leases of real property to a public entity; may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity; and may not transact business with any public entity. 1.27. DEFAULT/FAILURE TO PERFORM - The City shall be the sole judge of nonperformance, which shall include any failure on the part of the Successful Bidder/Contractor to accept the award, to furnish required documents, and/or to fulfill any portion of this Contract within the time stipulated. Upon default by the Successful Bidder/Contractor to meet any terms of a Contract, the City will notify the Successful Bidder/Contractor of the default and will provide the Successful Bidder/Contractor three (3) days (weekends and holidays excluded) upon notification, by the City, to remedy the default. Failure by the Successful Bidder/Contractor to correct the default within the required three (3) days, shall result in the Contract being terminated upon the City notifying in writing the Successful Bidder/Contractor of its intentions and the effective date of the termination. The following shall constitute default: A. Failure to perform the work or deliver the goods/services required under the Contract, and/or within the time required, or failing to use the subcontractors, entities, and personnel as identified and set forth, and to the degree specified in the Contract. B. Failure to begin the work under this Contract within the time specified. C. Failure to perform the work with sufficient workers and equipment, or with sufficient materials to ensure timely completion. D. Neglecting or refusing to remove materials or perform new work where prior work has been rejected as nonconforming with the terms of the Contract. E. Becoming insolvent, being declared bankrupt, or committing any act of bankruptcy or insolvency, or making an assignment for the benefit of creditors, if the insolvency, bankruptcy, or assignment renders the Successful Bidder/Contractor incapable of performing the work in accordance with, and as required by the Contract. F. Failure to comply with any of the terms of the Contract in any material respect. All costs and charges incurred by the City as a result of a default, or a default incurred beyond the time limits stated, together with the cost of completing the work, shall be deducted from any monies due, or which may become due on this Contract to the Successful Bidder/Contractor. 1.28. DETERMINATION OF RESPONSIVENESS AND RESPONSIBILITY - Each Bid will be reviewed to determine if it is responsive to the submission requirements outlined in the Formal Solicitation. A. Responsive Bid is one which follows the requirements of the Formal Solicitation, includes all documentation, is submitted in the format outlined in the Formal Solicitation, is of timely submission, and has appropriate signatures as required on each document. Failure to comply with these requirements may deem a Bid non- responsive. B. Determination of Responsibility. A Responsible Bidder shall mean a Bidder who has submitted a Bid and who has the capability, as determined under Section 18-95 of the City Code, in all respects to fully perform the Contract requirements, and the integrity and reliability of which give reasonable assurance of good faith and performance. 1) Bids will only be considered from any person or firm who are regularly engaged in the business of providing the good(s)/service(s) required by the Formal Solicitation. Bidder must be able to demonstrate a satisfactory record of performance and integrity, and have sufficient financial, material, equipment, facility, personnel resources, and expertise to meet all contractual requirements. 2) The City may consider any information available regarding the financial, technical, and other qualifications and abilities of a Bidder, including past performance (experience) with the City or any other governmental entity, in making the award. 3) The City may require the Bidder(s) to provide documentation that they have been designated as an authorized representative of a manufacturer or supplier which is the actual source of supply, if required by the Formal Solicitation. 1.29. DISCOUNTS OFFERED DURING TERM OF CONTRACT - Discount Prices offered in the Response shall be fixed after the award of a Contract by the Commission, unless otherwise specified in the Special Terms and Conditions. Price discounts, off the original prices quoted in the Response, will be accepted from Successful Bidder/Contractor during the term of the Contract. Such discounts shall remain in effect for a minimum of one hundred and eighty (180) days from approval by the City Commission. Any discounts offered by a manufacturer to Successful Bidder/Contractor will be passed on to the City. 1.30. DISCREPANCIES, ERRORS, AND OMISSIONS - Any discrepancies, errors, or omissions in the Formal Solicitation, or Addenda (if applicable), should be reported in writing to the City's Procurement Department. Should it be found necessary, a written Addendum will be incorporated in the Formal Solicitation and will become part of the Purchase Order (Contract documents). The City will not be responsible for any oral instructions, clarifications, or other communications. A. Order of Precedence — Any inconsistency in this Formal Solicitation shall be resolved by giving precedence to the following documents, the first of such list being the governing documents. 1)Addenda (as applicable) 2) Specifications 3)Special Conditions 4) General Terms and Conditions 1.31. EMERGENCY / DISASTER PERFORMANCE - In the event of a natural disaster or other emergency, or disaster situation, the Successful Bidder/Contractor shall provide the City with the commodities/services defined within the scope of this Formal Solicitation at the price contained within Bidder's response. Further, Successful Bidder/Contractor shall deliver/perform for the City on a priority basis during such times of emergency. 1.32. ENTIRE BID CONTRACT - The Bid Contract consists of any amendments to the Bid Contract, the Formal Solicitation, including any addenda, Bidder's Response and any written agreement entered into by the City of Miami and Successful Bidder/Contractor, and represents the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all other negotiations, understanding, and representations, if any, made by and between the parties. To the extent that the Bid Contract conflicts with, modifies, alters, or changes any of the terms and conditions contained in the Formal Solicitation and/or Bid, the Formal Solicitation, including any addenda, and then the Bid shall control. This Contract may be amended only by a written agreement signed by the City and Successful Bidder/Contractor. 1.33. ESTIMATED QUANTITIES — Estimated quantities or dollars are provided for the Bidder's guidance only: (a) estimates are based on the City's anticipated needs and/or usage during a previous contract period and; (b) the City may use these estimates to determine the low Bidder. Estimated quantities do not contemplate or include possible additional quantities that may be ordered by other government, quasi -government or non-profit entities utilizing this Contract. No guarantee is expressed or implied as to quantities that will be purchased during the Contract period. The City is not obligated to place an order for any given amount subsequent to the award of the Contract. Said estimates may be used by the City for purposes of determining the low Bidder meeting specifications. The City reserves the right to acquire additional quantities at the prices bid or at lower prices in this Formal Solicitation. 1.34. EVALUATION OF RESPONSES A. Rejection of Bids. The City may reject a Response for any of the following reasons: 1) Bidder fails to acknowledge receipt of addenda; 2) Bidder misstates or conceals any material fact in the Bid; 3) Bid does not conform to the requirements of the Formal Solicitation; 4) Bid requires a conditional award that conflicts with the method of award; 5) Bid does not include required samples, certificates, licenses; and, 6) Bid was not executed by the Bidder's authorized agent. The foregoing is not an all-inclusive list of reasons for which a Bid may be rejected. The City may reject, and/or re- advertise for all or any portion of the Formal Solicitation, whenever it is deemed in the best interest of the City. B. Elimination From Consideration 1) A Bid Contract shall not be awarded to any person or firm which is in arrears to the City upon any debt or contract, or which is a defaulter as surety or otherwise upon any obligation to the City. 2) A Bid Contract may not be awarded to any person or firm which has failed to perform under the terms and conditions of any previous contract with the City or failed to deliver on time, contracts of a similar nature. 3) A Bid Contract may not be awarded to any person or firm which has been debarred by the City, in accordance with the City's Debarment and Suspension Ordinance (Section 18-107) or is currently debarred by the State of Florida or any political subdivision or is on the convicted vendor's list per Section 287.133, Florida Statutes. 1.35. EXCEPTIONS TO GENERAL AND/OR SPECIAL CONDITIONS OR SPECIFICATIONS - Exceptions to the specifications shall be listed in the Bid and shall reference the section. Any exceptions to the General Terms and/or Special Conditions shall be cause for a Bid to be considered non -responsive. 1.36. Freight on Board (F.O.B.) DESTINATION - Unless otherwise specified in the Formal Solicitation, all prices quoted/proposed by the Bidder must be F.O.B. DESTINATION, inside delivery, with all delivery costs and charges included in the bid price, unless otherwise specified in this Formal Solicitation. Failure to do so may be the cause for rejection of Bid. 1.37. FIRM PRICES - The Bidder warrants that prices, terms, and conditions quoted in its Bid will be firm throughout the duration of the Bid Contract unless otherwise specified in the Formal Solicitation. Such prices will remain firm for the period of performance, or resulting purchase orders, or Bid Contracts. 1.38. FLORIDA MINIMUM WAGE AND CITY OF MIAMI LIVING WAGE ORDINANCE - A. Florida Minimum Wage. In accordance with the Constitution of the State of Florida, Article X, Section 24, employers shall pay employee wages no less than the minimum wage for all hours worked in Florida. Accordingly, it is the Successful Bidder's/Contractor's and their subcontractor's responsibility to understand and comply with this Florida minimum wage requirement and pay its employees the current established hourly minimum wage rate. This minimum wage rate is subject to change or adjusted by the rate of inflation using the consumer price index ("CPI") for urban wage earners and clerical workers, CPI-W, or a successor index as calculated by the United States Department of Labor. Each adjusted minimum wage rate calculated shall be determined and published by the Agency Workforce Innovation on September 30th of each year and take effect on the following January 1st. It is the Bidder's and their subcontractor's, (if applicable), full responsibility to determine whether any of their employees may be impacted by this Florida Minimum Wage Law, at any given point in time during the term of the Bid Contract. If impacted, Bidder must provide, with its bid, employee name(s), job title(s), job description(s), and current pay rate(s). Failure to submit this information at the time of bid submittal constitute Successful Bidder's/Contractor's acknowledgement and understanding that the Florida Minimum Wage Law will not impact its prices throughout the term of the Bid Contract, and waiver of any contractual price increase request(s). The City reserves the right to request, and the Successful Bidder/Contractor must provide for any, and all information to make a wage and contractual price increase(s) determination. B. City of Miami Living Wage Ordinance. The City of Miami adopted a Living Wage Ordinance for City Service Contracts with a total contract value exceeding $100,000 annually, and that have been competitively solicited and awarded on, or after January 1, 2017, but the City. "Service Contract" means a contract to provide services to the City, excluding, however, professional services as defined by the "Consultants Competitive Negotiation Act" set forth in F.S. § 287.055, and Section 18-87 of the City Code, and/or the other exclusions provided in Section 18-557 of the City Code. Section 18-557 is attached as Attachment A. Please see provisions in Attachment A. If a solicitation required services, effective on January 1, 2017, Contractors must pay to all its employees, who provide services, a living wage of no less than $15.00 per hour without health benefits; or a wage of no less than $13.19 an hour, with health benefits. This language is only a summary of the key provisions of the City of Miami Living Wage Ordinance. Please review Attachment A, attached hereto, for a complete and thorough description of the City of Miami Living Wage Ordinance. 1.39. GOVERNING LAW AND VENUE - The validity and effect of any Bid Contract as a result of this Formal Solicitation shall be governed by the laws of the State of Florida. The parties agree that any action, mediation, or arbitration arising out of the Bid Contract shall take place in Miami -Dade County, Florida. In any action or proceeding each party shall bear their own respective attorney's fees. 1A0. HEADINGS AND TERMS - The headings to the various paragraphs of the Bid Contract have been inserted for convenient reference only and shall not in any manner be construed as modifying, amending, or affecting in any way, the expressed terms, and conditions hereof. 1.41. HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPPA) - Any person, firm, or entity that performs or assists the City of Miami with a function or activity involving the use or disclosure of "individually identifiable health information (IIHI), and/or Protected Health Information (PHI), shall comply with the Health Insurance Portability and Accountability Act (HIPAA) of 1996, and the City of Miami Privacy Standards. HIPAA mandates for privacy, security, and electronic transfer standards, which include, but are not limited to: A. Use of information only for performing services required by the contract or as required by law; B. Use of appropriate safeguards to prevent non -permitted disclosures; C. Reporting to the City of Miami of any non -permitted use or disclosure; D. Assurances that any agents and subcontractors agree to the same restrictions and conditions that apply to the Bidder and reasonable assurances that IIHI/PHI will be held confidential; E. Making PHI available to the customer; F. Making PHI available to the customer for review and amendment; and incorporating any amendments requested by the customer; G. Making PHI available to the City of Miami for an accounting of disclosures; and H. Making internal practices, books and records related to PHI available to the City of Miami for compliance audits. PHI shall maintain its protected status regardless of the form and method of transmission (i.e., paper records, and/or electronic transfer of data). The Successful Bidder/Contractor must give its customers written notice of its privacy information practices, including specifically, a description of the types of uses and disclosures that would be made with protected health information. 1.42 INDEMNIFICATION — Successful Bidder/Contractor shall indemnify, hold and save harmless, and defend (at its own costs and expense), the City, its officers, agents, directors, and/or employees, from all liabilities, damages, losses, judgements, and costs, including, but not limited to, reasonable attorney's fees, to the extent caused by the negligence, recklessness, negligent act or omission, or intentional wrongful misconduct of Successful Bidder/Contractor and persons employed or utilized by Successful Bidder/Contractor in the performance of this Contract. The Successful Bidder/Contractor shall further, hold the City, its officials, and employees, indemnify, save and hold harmless for, and defend (at its own cost), the City its officials and/or employees against, any civil actions, statutory or similar claims, injuries or damages arising or resulting from the permitted Work, even if it is alleged that the City, its officials, and/or employees were negligent. In the event that any action or proceeding is brought against the City by reason of any such claim or demand, the Successful Bidder/Contractor shall, upon written notice form the City, resist, and defend such action or proceeding aby counsel satisfactory to the City. The Successful Bidder/Contractor expressly understands and agrees that any insurance protection required by this Contract or otherwise provided by the Successful Bidder/Contractor shall in no way limit the responsibility to indemnify, keep and save harmless and defend the City or its officers, employees, agents, and instrumentalities as herein provided. The indemnification provided above shall obligate the Successful Bidder/Contractor to defend, at its own expense, to and through trial, administrative, appellate, supplemental or bankruptcy proceeding, or to provide for such defense, at City's option, any and all claims of liability and all suits and actions of every name and description which may be brought against City, whether performed by the Successful Bidder/Contractor, or persons employed or utilized by the Successful Bidder/Contractor. These duties will survive the cancellation or expiration of the Contract. This Section will be interpreted under the laws of the State of Florida, including without limitation and interpretation, which conforms to the limitations of Sections 725.06 and/or 725.08, Florida Statutes, as applicable and as amended. Successful Bidder/Contractor shall require all sub-consultant/contractor agreements to include a provision that each sub -contractor will indemnify the City in substantially the same language as this Section. The Successful Bidder/Contractor agrees and recognizes that the City shall not be held liable or responsible for any claims which may result from any actions or omissions of the Successful Bidder/Contractor in which the City participated either through review or concurrence of the Consultant's actions. In reviewing, approving, or rejecting any submissions by the Successful Bidder/Contractor or other acts of the Successful Bidder/Contractor, the City, in no way, assumes or shares any responsibility or liability of the Successful Bidder/Contractor or sub-consultant/contractor under this Contract. Ten dollars ($10) of the payments made by the City constitute separate, distinct, and independent consideration for the granting of this Indemnification, the receipt and sufficiency of which is voluntarily and knowingly acknowledged by the Successful Bidder/Contractor. 1.43. FORMATION AND DESCRIPTIVE LITERATURE — Bidders must furnish all information requested in the spaces provided in the Formal Solicitation. Further, as may be specified elsewhere, each Bidder must submit for evaluation, cuts, sketches, descriptive literature, technical specifications, and Material Safety Data Sheets (MSDS) as required, covering the products offered. Reference to literature submitted with a previous bid, or on file with the City, will not satisfy this provision. 1.44. INSPECTIONS - The City may, at reasonable times during the term of the Bid Contract, inspect Successful Bidder's/Contractor's facilities and perform such tests, as the City deems reasonably necessary, to determine whether the goods and/or services required to be provided by the Successful Bidder/Contractor, under the Bid Contract conform to the terms and conditions of the Formal Solicitation. The Successful Bidder/Contractor shall make available to the City all reasonable facilities and assistance to facilitate the performance of tests or inspections by City representatives. All tests and inspections shall be subject to, and made in accordance with, the provisions of the City of Miami Ordinance No. 12271 (Section 18-101) City Code, as same may be amended or supplemented, from time to time, which, in conjunction with Section 18-102, providing for audits of City contractors, are applicable and are deemed as being incorporated by reference as supplemental terms. 1.45. INSPECTION OF BID - Bids received by the City, pursuant to a Formal Solicitation, will not be made available until such time as the City provides notice of a decision, or intended decision, or within 30 days after bid closing, whichever is earlier. Bid results will be tabulated and may be furnished upon request, via fax or e-mail, to the City's Procurement Contracting Officer, issuing the Formal Solicitation. Tabulations are also available on the City's website following recommendation for award. 1.46. INSURANCE - Within ten (10) days after receipt of Notice of Award, the Successful Bidder/Contractor shall furnish the evidence of insurance to the Procurement Department, as applicable. Submitted evidence of insurance shall demonstrate strict compliance to all requirements stipulated on the Special Conditions section titled "Insurance Requirements". The City shall be listed as an "Additional Insured." Issuance of a Purchase Order is contingent upon the receipt of proper insurance documents. If the certificate of insurance is received within the specified time frame but not in the manner prescribed in the Formal Solicitation, the Successful Bidder/Contractor shall be verbally notified of such deficiency and shall have an additional five (5) calendar days to submit a corrected certificate to the City. If the Successful Bidder/Contractor fails to submit the required insurance documents in the manner prescribed in the Formal Solicitation within fifteen (15) calendar days after receipt Notice of Award, the Successful Bidder/Contractor shall be in default of the contractual terms and conditions and shall not be awarded the contract. Information regarding any insurance requirements shall be directed to the Risk Management Director, Department of Risk Management, at 444 SW 2nd Avenue, 9th Floor, Miami, Florida 33130, 305-416-1384. The Successful Bidder/Contractor shall be responsible for ensuring that the insurance documents required in conjunction with this Section remain in effect for the duration of the contractual period; including any renewals and extensions that may be exercised by the City. 1.47. INVOICES - Invoices submitted by Successful Bidder/Contractor to the City shall include the Purchase Order number and description of goods and/or services delivered (i.e., quantity, unit price, extended price, etc.); and in compliance with Chapter 218 of the Florida Statutes (Prompt Payment Act). 1.48. LOCAL PREFERENCE - City Code Section 18-85, states, "when a responsive, responsible non -local Bidder submits the lowest bid price, and the bid submitted by one or more responsive, responsible local Bidders who maintain a local office, as defined in Section 18-73, is within fifteen percent (15%) of the price submitted by the non -local Bidder, then that non -local Bidder and each of the aforementioned responsive, responsible local Bidders shall have the opportunity to submit a best and final bid equal to or lower than the amount of the low bid previously submitted by the non -local Bidder. The contract award shall be made to the lowest responsive, responsible Bidder submitting the lowest best and final bid. In the case of a tie in the best and final bid between a local Bidder and a non -local Bidder, contract award shall be made to the local Bidder." 1.49. MANUFACTURER'S CERTIFICATION - The City reserves the right to request from Bidders a separate Manufacturer's Certification of all statements made in the Bid. Failure to provide such certification may result in the rejection of the Bid, or termination of the Bid Contract, for which the Bidder/Successful Bidder/Contractor shall bear full liability. 1.50. MODIFICATIONS OR CHANGES IN PURCHASE ORDERS AND CONTRACTS - No contract or understanding to modify the Formal Solicitation and resultant Purchase Order(s) or Bid Contract, if applicable, shall be binding upon the City, unless made in writing by the City's Director of Procurement through the issuance of a change order, addendum, amendment, or supplement to the Bid Contract, Purchase Order, or Award Sheet as applicable. 1.51. MOST FAVORED NATIONS — Successful Proposer shall not treat the City of Miami ("City") worse than any other similarly -situated local government and, in this regard, grants the City a "most favored nations clause" meaning the City will be entitled to receive and be governed by the most favorable terms and conditions that Successful Bidder/Proposer grants now or in the future to a similarly situated local government. 1.52. NO PARTNERSHIP OR JOINT VENTURE - Nothing contained in the Bid Contract will be deemed or construed to create a partnership or joint venture between the City and Successful Bidder/Contractor, or to create any other similar relationship between the parties. 1.53. NONCONFORMANCE TO CONTRACT CONDITIONS - Items may be tested for compliance with specifications under the direction of the Florida Department of Agriculture and Consumer Services, or by other appropriate testing laboratories as determined by the City. The data derived from any test for compliance with specifications is public record, and open to examination thereto in accordance with Chapter 119, Florida Statutes. Items delivered, not conforming to specifications may be rejected, and returned at Successful Bidder's/Contractor's expense. These non -conforming items not delivered in accordance with the stipulated delivery date in the Bid and/or Purchase Order, may result in Successful Bidder/Contractor being found in default, in which event, any and all re- procurement costs may be charged against the defaulted Successful Bidder/Contractor. Any violation of the above stipulations may also result in the Successful Bidder/Contractor being removed from the City supplier's list. 1.54. NONDISCRIMINATION, EQUAL EMPLOYMENT OPPORTUNITY, AND AMERICANS WITH DISABILITIES ACT — Successful Bidder shall not unlawfully discriminate against any person in its operations and activities or in its use or expenditure of funds in fulfilling its obligations under this Agreement. Successful Bidder shall affirmatively comply with all applicable provisions of the Americans with Disabilities Act (ADA) in the course of providing any services funded by City, including Titles I and II of the ADA (regarding nondiscrimination on the basis of disability), and all applicable regulations, guidelines, and standards. In addition, Successful Bidder shall take affirmative steps to ensure nondiscrimination in employment against disabled persons. Successful Bidder affirms that it shall not discriminate as to race, age, religion, color, gender, gender identity, sexual orientation, national origin, marital status, physical or mental disability, political affiliation, or any other factor which cannot be lawfully used in connection with its performance under the Formal Solicitation. Furthermore, Successful Bidder affirms that no otherwise qualified individual shall solely by reason of their race, age, religion, color, gender, gender identity, sexual orientation, national origin, marital status, physical or mental disability, political affiliation, or any other factor which cannot be lawfully used, be excluded from the participation in, be denied benefits of, or be subjected to, discrimination under any program or activity. In connection with the conduct of its business, including performance of services and employment of personnel, Successful Bidder shall not discriminate against any person on the basis of race, age, religion, color, gender, gender identity, sexual orientation, national origin, marital status, physical or mental disability, political affiliation, or any other factor which cannot be lawfully used. All persons having appropriate qualifications shall be afforded equal opportunity for employment. 1.55. NON-EXCLUSIVE CONTRACT/ PIGGYBACK PROVISION - At such times as may serve in the City's best interest, the City reserves the right to advertise for, receive, and award additional contracts for the goods and/or services described herein, and to make use of other competitively bid (governmental) contracts, agreements, or other similar sources for the purchase of the goods and/or services described herein, as may be available in accordance with the applicable provisions of the City of Miami Procurement Ordinance. It is hereby agreed and understood that the Formal Solicitation does not constitute the exclusive rights of the Successful Bidder(s)/Contractor(s) to receive all orders that may be generated by the City, in conjunction with this Formal Solicitation. In addition, any and all goods, and/or services required by the City in conjunction with construction projects are solicited under a distinctly different solicitation process and shall not be purchased under the terms, conditions and awards rendered under the Formal Solicitation, unless such purchases are determined to be in the best interest of the City. 1.56. NOTICE REGARDING "CURES" — Bids submitted with irregularities, deficiencies, and/or technicalities that deviate from the minimum qualifications and submission requirements of Request for Qualifications (RFQ), Request for Proposals (RFP), invitation to bid (ITB), invitation for bids (IFB), invitation to quote (ITQ), Requests for Letter of Interest (RFLI) and Request for Sponsorships (RFS) shall result in a non -responsive determination. Any solicitation issued after May 6, 2019, shall comply with APM 2-19. APM 2-19 is attached hereto, only minor irregularities, deficiencies, and technicalities may be allowed to be timely cured by the proposer at the sole discretion of the City. Material irregularities, deficiencies, and technicalities cannot be cured by the proposer, and are not waivable by the City. BIDS SUBMITTED WITH IRREGULARITIES, DEFICIENCIES, AND/OR TECHNICALITIES THAT DEVIATE FROM THE MINIMUM QUALIFICATIONS AND SUBMISSION REQUIREMENTS OF THIS IFB SHALL RESULT IN A NON -RESPONSIVE DETERMINATION. The City will not give consideration to the curing of any Bids that fail to meet the minimum qualifications and submission requirements of this IFB. Bidder understands that non -responsive Bids will not be evaluated. 1.57. OCCUPATIONAL LICENSE/BUSINESS TAX RECEIPT - Any person, firm, corporation, or joint venture, with a business location in the City's municipal boundaries and is submitting a Bid under the Formal Solicitation shall meet the City's Tax Receipt requirements in accordance with Chapter 31.1, Article I of the City of Miami Charter. Others with a location outside the City's municipal boundaries shall meet their local Occupational License/Business Tax Receipt requirements. A copy of the Occupational License/Business Tax Receipt must be submitted with the Bid; however, the City may, at its sole discretion, and in its best interest, allow the Bidder to provide the Occupational License/Business Tax Receipt to the City during the evaluation period, but prior to award. A Certificate of Use ("CU") will be required if applicable under City regulations. 1.58. ONE PROPOSAL - Only one (1) Bid from an individual, firm, partnership, corporation, or joint venture will be considered in response to the Formal Solicitation, unless otherwise stipulated in the Formal Solicitation. 1.59. OWNERSHIP OF DOCUMENTS - It is understood by and between the parties that any documents, records, files, or any other matter whatsoever, which is given by the City to the Successful Bidder/Contractor. pursuant to the Formal Solicitation shall at all times remain the property of the City and shall not be used by the Successful Bidder/Contractor for any other purposes whatsoever, without the written consent of the City. 1.60. PARTIAL INVALIDITY - If any provision of the Bid Contract or the application thereof, to any person or circumstance, shall to any extent be held invalid, then the remainder of the Bid Contract or, the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby, and each provision of the Bid Contract shall be valid and enforced to the fullest extent permitted by law. 1.61. PERFORMANCE/PAYMENT BOND — A Successful Bidder/Contractor may be required to furnish a Performance/Payment Bond as part of the requirements of the Bid Contract, in an amount equal to one hundred percent (100%) of the Bid Contract price. Any bond furnished will comply with Florida Law and be in a form acceptable to the City of Miami Risk Management Director. 1.62. PREPARATION OF BIDS — Bidders are expected to examine the specifications, required delivery, drawings, and all special and general conditions. A. Each Bidder shall furnish the information required in the Formal Solicitation. The Bidder shall print, type or manually enter all requested information, sign and upload the Certification Statement. B. If so required, the unit price for each unit offered shall be shown, and such price shall include packaging, handling, and shipping, and F.O.B. Miami delivery inside City premises, unless otherwise specified. Bidder shall include in their Bid all taxes, insurance, social security (if applicable), workmen's compensation, and any other benefits normally paid by the Bidder to its employees. If applicable, a unit price shall be entered in the "Unit Price" column for each item. Based upon estimated quantity, an extended price shall be entered in the "Extended Price" column for each item offered. In case of a discrepancy between the unit price and extended price, the unit price will prevail. C. The Bidder must state a definite time, if required, in calendar days, for delivery of goods and/or services. D. The Bidder should retain a copy of all response documents for future reference. E. All Bids, as described, must be fully completed, and typed, or printed in ink and must be signed in ink with the Bidder's name, and by an officer or employee having authority to represent the Bidder by their signature. Bids having any erasures or corrections, must be initialed in ink by person signing the Bid or the Bid may be rejected. F. Bids shall remain valid for at least 180 days. Upon award of a Bid contract, the content of the Successful Bidder's/Contractor's Bid may be included as part of the Bid Contract, at the City's discretion. G. The City's Bid Forms shall be used when the Bidder is submitting its Bid. Use of any other forms will result in the rejection of the Bid. 1.63. PRICE ADJUSTMENTS — Any price decrease effectuated during the Bid Contract period, either by reason of market change, or on the part of the Successful Bidder/Contractor to other customers, shall be passed on to the City. 1.64. PRODUCT SUBSTITUTES - In the event a particular awarded and approved manufacturer's product becomes unavailable during the term of the Bid Contract, the Successful Bidder/Contractor awarded that item may arrange with the City's authorized representative(s) to supply a substitute product at the awarded price or lower, provided that a sample is approved in advance of delivery, and that the new product meets or exceeds all quality requirements. 1.65. CONFLICT OF INTEREST, AND UNETHICAL BUSINESS PRACTICE PROHIBITIONS — Successful Bidder/Contractor represents and warrants to the City, that it has not employed, or retained any person, or company employed by the City to solicit or secure the Bid Contract and that the Successful Bidder/Contractor has not offered to pay, paid, or agreed to pay any person any fee, commission, percentage, brokerage fee, or gift of any kind contingent upon, or in connection with, the award of the Bid Contract. 1.66. PROMPT PAYMENT — Bidders may offer a cash discount for prompt payment; however, discounts shall not be considered in determining the lowest net cost for Bid evaluation purposes. Bidders are required to provide their prompt payment terms in the space provided on the Formal Solicitation. If no prompt payment discount is being offered, the Bidder must enter zero (0) for the percentage discount to indicate no discount. If the Bidder fails to enter a percentage, it is understood and agreed that the terms shall be two percent (2%), 20 days, effective after receipt of invoice or final acceptance by the City, whichever is later. When the City is entitled to a cash discount, the period of computation will commence on the date of delivery, or receipt of a correctly completed invoice, whichever is later. If an adjustment in payment is necessary due to damage, the cash discount period shall commence on the date final approval for payment is authorized. If a discount is part of the contract, but the invoice does not reflect the existence of a cash discount, the City is entitled to a cash discount with the period commencing on the date it is determined by the City that a cash discount applies. Price discounts off the original prices quoted on the Price Sheet will be accepted from Successful Bidder(s) during the term of the contract. The City will comply with the Florida Prompt Payment Act, as applicable. 1.67. PROPERTY - Property owned by the City is the responsibility of the City. Such property furnished to a Successful Bidder/Contractor for repair, modification, study, etc., shall remain the property of the City. Damages to such property occurring while in the possession of the Successful Bidder/Contractor shall be the responsibility of the Successful Bidder/Contractor. Damages occurring to such property while in route to the City, shall be the responsibility of the Successful Bidder/Contractor. In the event that such property is destroyed, or declared a total loss, the Successful Bidder/Contractor shall be responsible for the replacement value of the property, at the current market value, less depreciation of the property, if any. 1.68. PROVISIONS BINDING - Except as otherwise expressly provided in the resultant Bid Contract, all covenants, conditions, and provisions of the resultant Bid Contract, shall be binding upon, and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns 1.69. PUBLIC ENTITY CRIMES - A person or affiliate who has been placed on the convicted vendor list, following a conviction for a public entity crime may not: A. Submit a Bid to provide any goods or services to a public entity. B. Submit a Bid on a contract with a public entity for the construction or repair of a public building or public work. C. Submit responses on leases of real property to a public entity. D. Be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity. E. Transact business with any public entity in excess of the threshold amount provided in Section 287.017, for CATEGORY TWO for a period of 36 months from the date of being placed on the convicted vendor list. 1.70. PUBLIC RECORDS — Successful Bidder/Contractor understands that the public shall have access, at all reasonable times, to all documents and information pertaining to City contracts, subject to the provisions of Chapter 119, Florida Statutes, and City Code, Section 18, Article III, and agrees to allow access by the City and the public to all documents subject to disclosure under applicable law. Successful Bidder/Contractor shall additionally comply with the provisions of Section 119.0701, Florida Statutes, titled "Contracts; public records". Successful Bidder/Contractor shall additionally comply with Section 119-0701, Florida Statutes, including without limitation: A. Keep and maintain public records that ordinarily and necessarily would be required by the City to perform this service. B. Provide the public with access to public records on the same terms and conditions as the City would at the cost provided by Chapter 119, Florida Statutes, or as otherwise provided by law. C. Ensure that public records that are exempt or confidential and exempt from disclosure are not disclosed except as authorized by law. D. Meet all requirements for retaining public records and transfer, at no cost, to the City all public records in its possession upon termination of this Agreement and destroy any duplicate public records that are exempt or confidential and exempt from disclosure requirements. E. All electronically stored public records must be provided to the City in a format compatible with the City's information technology systems. IF THE CONSULTANT HAS QUESTIONS REGARDING THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO THE CONSULTANT'S DUTY TO PROVIDE PUBLIC RECORDS RELATING TO THIS AGREEMENT, CONTACT THE DIVISION OF PUBLIC RECORDS AT (305) 416-1800, VIA EMAIL AT PUBLICRECORDSMIAMIGOV.COM, OR REGULAR MAIL AT CITY OF MIAMI OFFICE OF THE CITY ATTORNEY, 444 SW 2ND AVENUE, 9TH FLOOR, MIAMI, FL 33130. THE CONSULTANT MAY ALSO CONTACT THE RECORDS CUSTODIAN AT THE CITY OF MIAMI DEPARTMENT WHO IS ADMINISTERING THIS CONTRACT. Successful Bidder/Contractor's failure or refusal to comply with the provision of this Section shall result in the immediate cancellation of the Bid Contract by the City. 1.71. QUALITY OF GOODS, MATERIALS, SUPPLIES, AND PRODUCTS - All materials used in the manufacturing or construction of supplies, or materials, covered by the Formal Solicitation shall be new. The items bid shall be of the latest make or model, of the best quality, and of the highest grade of workmanship, unless as otherwise specified in the Formal Solicitation. 1.72. QUALITY OF WORK/SERVICES - The work/services performed must be of the highest quality and workmanship. Materials furnished to complete the service shall be new and of the highest quality, except as otherwise specified in Formal Solicitation. 1.73. REMEDIES PRIOR TO AWARD (SECTION 18-106) - If prior to a Bid Contract award, it is determined that a Formal Solicitation or proposed bid award is in violation of law, then the Formal Solicitation or proposed award bid award shall be cancelled and all bids rejected by the City Commission, the City Manager, or the Chief Procurement Officer, as may be applicable, or revised to comply with the law. 1.74. RESOLUTION OF CONTRACT DISPUTES (SECTION 18-105) A. Authority to resolve Contract disputes. The City Manager, after obtaining the approval of the City Attorney, shall have the authority to resolve disputes between the Successful Bidder/Contractor and the City which arise under, or by virtue of, a Contract between them; provided that, in cases involving an amount greater than $25,000, the City Commission must approve the City Manager's decision. Such authority extends, without limitation, to disputes based upon breach of Contract, mistake, misrepresentation, or lack of complete performance, and shall be invoked by a Contractual Party by submission of a protest to the City Manager. B. Contract dispute decisions. If a dispute is not resolved by mutual consent, the City Manager shall promptly render a written report stating the reasons for the action taken by the City Commission, or the City Manager, which shall be final and conclusive. A copy of the decision shall be immediately provided to the protesting party, along with a notice of such party's right to seek judicial relief, provided that the protesting party shall not be entitled to such judicial relief without first having followed the procedure set forth in this Section. 1.75. RESOLUTION OF PROTESTED SOLICITATIONS AND AWARDS (SECTION 18-104) (a) Right to protest. The following procedures shall be used for resolution of protested solicitations and awards except for purchases of goods, supplies, equipment, and services, the estimated cost of which does not exceed $25,000. Protests thereon shall be governed by the administrative policies and procedures of purchasing. (1) Protest of Solicitation. a. Any prospective proposer who perceives itself aggrieved in connection with the solicitation of a contract may protest to the chief procurement officer. A written notice of intent to file a protest shall be filed with the chief procurement officer within three days after the request for proposals, request for qualifications or request for letters of interest is published in a newspaper of general circulation. A notice of intent to file a protest is considered filed when received by the chief procurement officer; or b. Any prospective bidder who intends to contest the bid specifications or a bid solicitation may protest to the chief procurement officer. A written notice of intent to file a protest shall be filed with the chief procurement officer within three days after the bid solicitation is published in a newspaper of general circulation. A notice of intent to file a protest is considered filed when received by the chief procurement officer. (2) Protest of Award. a. Any actual proposer who perceives itself aggrieved in connection with the recommended award of contract may protest to the chief procurement officer. A written notice of intent to file a protest shall be filed with the chief procurement officer within two days after receipt by the proposer of the notice of the city manager's recommendation for award of contract. The receipt by proposer of such notice shall be confirmed by the city by facsimile or electronic mail of U.S. mail, return receipt requested. A notice of intent to file a protest is considered filed when received by the chief procurement officer; or b. Any actual responsive and responsible bidder whose bid is lower than that of the recommended bidder may protest to the chief procurement officer. A written notice of intent to file a protest shall be filed with the chief procurement officer within two days after receipt by the bidder of the notice of the city's determination of non -responsiveness or non -responsibility. The receipt by bidder of such notice shall be confirmed by the city by facsimile or electronic mail or U.S. mail, return receipt requested. A notice of intent to file a protest is considered filed when received by the chief procurement officer. c. A written protest based on any of the foregoing must be submitted to the chief procurement officer within five days after the date the notice of protest was filed. A written protest is considered filed when received by the chief procurement officer. The written protest may not challenge the relative weight of the evaluation criteria or the formula for assigning points in making an award determination. The written protest shall state with particularity the specific facts and law upon which the protest of the solicitation or the award is based and shall include all pertinent documents and evidence and shall be accompanied by the required filing Fee as provided in subsection (f). This shall form the basis for review of the written protest and no facts, grounds, documentation, or evidence not contained in the protester's submission to the chief procurement officer at the time of filing the protest shall be permitted in the consideration of the written protest. No time will be added to the above limits for service by mail. In computing any period of time prescribed or allowed by this section, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday or legal holiday in which event the period shall run until the end of the next day, which is neither a Saturday, Sunday or legal holiday. Intermediate Saturdays, Sundays and legal holidays shall be excluded in the computation of the time for filing. (b)Authority to resolve protests; hearing officer(s). Hearing officers appointed by the city shall have authority to resolve protests filed under this chapter of the City Code. The city manager shall appoint a hearing officer, from a separate list of potential hearing officers pre -approved by the city commission, to resolve protests filed in accordance with this section, no later than five working days following the filing of a bid protest. The hearing officer shall have the authority to settle and resolve any written protest. The hearing officer shall submit said decision to the protesting party and to the other persons specified within ten days after he/she holds a hearing under the protest. (1) Hearing officer. The hearing officer may be a special master as defined in chapter 2, article X, section 2-811 of the City Code or a lawyer in good standing with the Florida Bar for a minimum of ten years with a preference given to a lawyer who has served as an appellate or trial court judge. The hearing officer may be appointed from alternative sources (e.g., expert consulting agreements, piggyback contract, etc.) where the city commission adopts a recommendation of the city attorney that such action is necessary to achieve fairness in the proceedings. The engagement of hearing officers is excluded from the procurement ordinance as legal services. The hearing officers appointed in the pre -qualified group should be scheduled to hear protests on a rotational basis. (2) Right to protest. Any actual bidder or proposer who has standing under Florida law dissatisfied and aggrieved with the decision of the city regarding the protest of a solicitation or the protest of an award as set forth above in this section may request a protest hearing. Such a written request for a protest hearing must be initiated with a notice of intent to protest followed by an actual protest as provided in subsection 18-104(a). The notice of intent to protest and the actual protest must each be timely received by the chief procurement officer and must comply with all requirements set forth in subsection 18-104(a). Failure to submit the required notice of intent to protest and the actual protest within the specified timeframes will result in an administrative dismissal of the protest. (3) Hearing date. Within 30 days of receipt of the notice of protest, the chief procurement officer shall schedule a hearing before a hearing officer, at which time the person protesting shall be given the opportunity to demonstrate why the decision of the city relative to the solicitation or the award, which may include a recommendation for award by the city manager to the city commission, as applicable, should be overturned. The party recommended for award, if it is a protest of award, shall have the right to intervene and be heard. (4) Hearing procedure. The procedure for any such hearing conducted under this article shall be as follows: a. The City shall cause to be served by certified mail a notice of hearing stating the time, date, and place of the hearing. The notice of hearing shall be sent by certified mail, return receipt requested, to the mailing address of the protestor. b. The party, any intervenor, and the city shall each have the right to be represented by counsel, to call and examine witnesses, to introduce evidence, to examine opposing or rebuttal witnesses on any relevant matter related to the protest even though the matter was not covered in the direct examination, and to impeach any witness regardless of which party first called him/her to testify. The hearing officer may extend the deadline for completion of the protest hearing for good cause shown, but such an extension shall not exceed an additional five business days. The hearing officer shall consider the written protest and supporting documents and evidence appended thereto, supporting documents or evidence from any intervenor, and the decision or recommendation as to the solicitation or award being protested, as applicable. The protesting party, and any intervenor, must file all pertinent documents supporting his/her protest or motion to intervene at least five business days before the hearing, as applicable. The hearing officer shall allow a maximum of two hours for the protest presentation and a maximum of two hours for the city response. When there is an intervenor, a maximum of two hours will be added for the intervenor. In the event of multiple protests for the same project, the hearing officer shall allocate time as necessary to ensure that the hearing shall not exceed a total of one day. c. The hearing officer shall consider the evidence presented at the hearing. In any hearing before the hearing officer, irrelevant, immaterial, repetitious, scandalous, or frivolous evidence shall be excluded. All other evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs shall be admissible whether or not such evidence would be admissible in trial in the courts of Florida. The hearing officer may also require written summaries, proffers, affidavits, and other documents the hearing officer determines to be necessary to conclude the hearing and issue a final order within the time limits set forth by this section. d. The hearing officer shall determine whether procedural due process has been afforded, whether the essential requirements of law have been observed, and whether the decision was arbitrary, capricious, an abuse of discretion, or unsupported by substantial evidence as a whole. Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. e. Within ten days from the date of the hearing, the hearing officer shall complete and submit to the City Manager, the City Attorney, any intervenor, the Chief Procurement Officer, and the person requesting said hearing a final order consisting of his/her findings of fact and conclusions of law as to the denial or granting of the protest, as applicable. f. The decisions of the hearing officer are final in terms of city decisions relative to the protest. Any appeal from the decision of the hearing officer shall be in accordance with the Florida Rules of Appellate Procedure. (c) Compliance with filing requirements. Failure of a party to timely file either the notice of intent to file a protest or the written protest, together with the required filing fee as provided in subsection (f), with the chief procurement officer within the time provided in subsection (a), above, shall constitute a forfeiture of such party's right to file a protest pursuant to this section. The protesting party shall not be entitled to seek judicial relief without first having followed the procedure set forth in this section. Stay of procurements during protests. Upon receipt of a written protest filed pursuant to the requirements of this section, the city shall not proceed further with the solicitation or with the award of the contract until the protest is resolved by the chief procurement officer or the city commission as provided in subsection (b) above, unless the city manager makes a written determination that the solicitation process or the contract award must be continued without delay in order to avoid an immediate and serious danger to the public health, safety or welfare. (d) Costs. All costs accruing from a protest shall be assumed by the protestor. (e) Filing fee. The written protest must be accompanied by a filing fee in the form of a money order or cashier's check payable to the city in an amount equal to one percent of the amount of the bid or proposed contract, or $5,000.00, whichever is less, which filing fee shall guarantee the payment of all costs which may be adjudged against the protestor in any administrative or court proceeding. If a protest is upheld by the chief procurement officer and/or the city commission, as applicable, the filing fee shall be refunded to the protestor less any costs assessed under subsection (e) above. If the protest is denied, the filing fee shall be forfeited to the city in lieu of payment of costs for the administrative proceedings as prescribed by subsection e above. (Ord. No. 12271, § 2, 8-22-02; Ord. No. 13629, § 2, 9-8-16). 1.76. SAMPLES - Samples of items, when required, must be submitted within the time specified at no expense to the City. If not destroyed by testing, Bidder(s) will be notified by the City to remove samples, at Bidder's expense, within 30 days after notification. Failure to remove the samples will result in such samples becoming the property of the City. 1.77. SELLING, TRANSFERRING OR ASSIGNING RESPONSIBILITIES — Successful Bidder/Contractor shall not sell, assign, transfer or subcontract at any time during the term of the Contract, the Contract itself, or any portion thereof, or any part of its operations, or assign, sell, pledge, dispose, convey, or encumber any portion of the performance required by this Bid Contract, except under, and by virtue of written permission granted by the City through the proper officials, which may be withheld or conditioned, in the City's sole discretion. 1.78. SERVICE AND WARRANTY — When specified, the Bidder shall define all warranties, service, and replacements that will be provided. Bidders must explain on the Bid to what extent warranty and service facilities are available. A copy of the manufacturer's warranty, if applicable, should be submitted with Bidder's response. 1.79. SILENCE OF SPECIFICATIONS - The apparent silence of the scope of work/specifications, and any supplemental scope of work/specification as to any detail or the omission from it, of detailed description concerning any point, shall be regarded as meaning that only the best commercial practices are to prevail, and that only materials of first quality and correct type, size, and design shall be used. All workmanship and services shall be first quality. All interpretations of the scope of work/specifications shall be made upon the basis of this statement. If Bidder has a current contract with the State of Florida, Department of General Services, to supply the items in the Formal Solicitation, the Bidder shall quote not more than the contract price; failure to comply with this request will result in disqualification of Bid. 1.80. SUBMISSION AND RECEIPT OF RESPONSES - Electronic Bid submittals to this IFB are to be submitted through Bid Sync Electronic Bidding System ("BidSync") until the date and time as indicated in the Solicitation. The responsibility for submitting a Bid on/or before the stated closing time and date is solely and strictly the responsibility of the Bidder. The City will in no way be responsible for delays caused by technical difficulties or caused by any other occurrence. Electronic Bid submissions may require the uploading of electronic attachments. The submission of attachments containing embedded documents or proprietary file extensions is prohibited. All documents should be attached as individual files and labeled. Any Bids received and time stamped through BidSync, prior to the Bid submittal deadline, shall be accepted as a timely submittal and anything thereafter will be rejected. Additionally, BidSync will not allow for the electronic Bid submittal after the closing date and time has lapsed. Bids will be opened promptly at the time and date specified. All expenses involved with the preparation and submission of Bids to the City, or any work performed in connection therewith, shall be borne by the Bidder(s). Accordingly, Bidder(s): 1. Must register, free of charge, with BidSync Electronic Bidding System ("BidSync") to establish an account in order to have access to view and/or respond to any solicitations issued by the City of Miami's Procurement Department ("City"). 2. Shall submit all Bids electronically. Hard copy Bid submittals will not be accepted. NO EXCEPTIONS. 3. Must submit the Certification Statement and associated solicitation documents which define requirements of items and/or services to be purchased and must be completed and submitted as outlined within the solicitation via Bid Sync. The use of any other forms and/or the modification of City forms will result in the rejection of the Bidder's Bid submittal. 4. Shall ensure that the Certification Statement is fully completed and provided with your Bid. Failure to comply with these requirements may cause the Bid to be rejected. 5. Must ensure that an n authorized agent of the Bidder's firm signs the Certification Statement and submits it electronically. FAILURE TO SIGN THE CERTIFICATION STATEMENT SHALL DEEM THE BID NON -RESPONSIVE. 6. May be considered non -responsive if Bids do not conform to the terms and conditions of this solicitation. 1.81. TAXES - The City is exempt from any taxes imposed by the State and/or Federal Government. Exemption certificates will be provided upon request. Notwithstanding, Bidders should be aware that all materials and supplies that are purchased by the Bidder for the completion of the Bid Contract is subject to the Florida State Sales Tax in accordance with Section 212.08, Florida Statutes, as amended, and all amendments thereto, and shall be paid solely by the Bidder. 1.82. TERMINATION — The City Manager, on behalf of the City, reserves the right to terminate the Bid Contract by written notice to the Successful Bidder/Contractor effective as of the date specified in the notice, should any of the following apply: A. The Successful Bidder/Contractor is determined by the City, to be in breach of any of the terms and conditions of the Bid Contract. B. The City has determined that such termination will be in the best interest of the City, to terminate the Bid Contract for its own convenience; C. Funds are not available to cover the cost of the contracted goods and/or services. The City's obligation is contingent upon the availability of appropriate funds. 1.83. TERMS OF PAYMENT - Payment will be made by the City after the goods and/or services have been received, inspected, and found to comply with award specifications, free of damage, or defect, and properly invoiced. Payment will be made after delivery, within forty-five (45) days of receipt of an invoice, and authorized inspection and acceptance of the goods/services, and pursuant to Section 218.74, Florida Statutes, and other applicable law. 1.84. TIMELY DELIVERY - Time will be of the essence for any orders placed as a result of the Formal Solicitation. The City reserves the right to cancel such orders, or any part thereof, without obligation, if delivery is not made within the time(s) specified in the Bid. Deliveries shall be made during regular City business hours, unless otherwise specified in the Special Conditions. 1.85. TITLE - Title to the goods shall not pass to the City until after the City has inspected and accepted the goods or used the goods, whichever comes first. 1.86. TRADE SECRETS EXECUTION TO PUBLIC RECORDS DISCLOSURE- All Bids submitted to the City are subject to public disclosure, pursuant to Chapter 119, Florida Statutes. An exception may be made for "trade secrets." If the Bid contains information that constitutes a "trade secret", all material that qualifies for exemption from Chapter 119, must be submitted in a separate envelope, clearly identified as "TRADE SECRETS EXCEPTION," with Bidder's name, the Formal Solicitation number, and title marked on the outside. Please be aware that the designation of an item as a trade secret by Bidder may be challenged in court by any person. By Bidder's designation of material in Bidder's Response as a "trade secret" Bidder agrees to indemnify and hold harmless the City for any award to a plaintiff for damages, costs, or attorney's fees and for costs and attorney's fees, incurred by the City, by reason of any legal action challenging Bidder's claim. 1.87. UNAUTHORIZED WORK OR DELIVERY OF GOODS- Neither the Successful Bidder/Contractor nor any of their employees shall perform any work, or deliver any goods, unless a change order or purchase order is issued and received by the Successful Bidder/Contractor. The Successful Bidder/Contractor will not be paid for any work performed, or goods delivered outside the scope of the Bid Contract, or any work performed by Successful Bidder's/Contractor's employee(s) not otherwise previously authorized. 1.88. USE OF NAME - The City is not engaged in research for advertising, sales promotion, or other publicity purposes. No advertising, sales promotion, or other publicity materials containing information obtained from the Formal Solicitation shall be mentioned, or imply the name of the City, without prior express written permission from the City Manager, or the City Commission. 1.89. VARIATIONS OF SPECIFICATIONS - For purposes of the Formal Solicitation evaluation, Bidder(s) must indicate any variances from the Formal Solicitation scope of work/specifications and/or conditions, no matter how slight. If variations are not stated on their Bid, it will be assumed that the product fully complies with the Formal Solicitation's scope of work/specifications. 2.Special Conditions 2.1. PURPOSE The purpose of this Solicitation is to establish a contract, for Clean Yard Waste Disposal, as specified herein, from a source(s), fully compliant with the terms, conditions and stipulations of the Solicitation. 2.2. PRE-BID/PRE-PROPOSAL CONFERENCE A Virtual Voluntary pre -bid conference will be held on September 25, 2024 at 10:00 AM through Microsoft TEAMS Click here to join the meeting or via phone: 786-598-2961 Conference ID: 209 272 407# . A discussion of the requirements of the Solicitation will occur at that time. Each potential Bidder is required, prior to submitting their Bid, to acquaint themselves thoroughly with any and all conditions and/or requirements that may in any manner affect the work to be performed. All questions and answers affecting the scope of work/specifications of the IFB will be included in an addendum that will be distributed through BidSync following the Pre -Bid Conference to all the attendees. Because the City considers the Pre -Bid Conference to be critical to understanding the Solicitation requirements, attendance is highly recommended. 2.3. DEADLINE FOR RECEIPT OF REQUEST FOR ADDITIONAL INFORMATION/CLARIFICATION Any questions or clarifications concerning this solicitation shall be submitted electronically via Bidsync. All questions must be received no later than Friday, October 04, 2024 at 2:00 p.m. All responses to questions will be sent to all prospective Bidders in the form of an addendum. NO QUESTIONS WILL BE RECEIVED VERBALLY OR AFTER SAID DEADLINE 2.4. TERM OF CONTRACT The Contract shall commence upon the date of notice of award and shall be effective for three (3) years with the option to renew for two (2) additional two (2) year periods, subject to the availability of funds for succeeding fiscal years. Continuation of the contract beyond the initial period is a City prerogative; not a right of the Bidder. This prerogative will be exercised only when such continuation is clearly in the best interest of the City. 2.5. CONDITIONS FOR RENEWAL Each renewal of this contract is subject to the following: (1) Continued satisfactory performance compliance with the specifications, terms and conditions established herein. (2) Availability of funds 2.6. MINIMUM QUALIFICATIONS Bids will only be considered from firms that are regularly engaged in the business of providing the services as described in this Bid. Bidders shall: (1) Have a record of performance with the same Federal Employee Identification Number ("FEIN") for the past five (5) consecutive years; (2) Have a facility located within a twelve (12) mile radius of the City Solid Waste Fleet Yard, which is located at 1290 NW 20th Street, Miami, FL 33142. (3) Submit three (3) references, for clean yard waste disposal services performed within the past five (5) years by your firm in the Certification Section of this Solicitation. The references must include the entity's name, and the name, title, address, and telephone number of the contact person who can confirm that the Bidder has successfully provided clean yard waste disposal services. These references shall ascertain to the City's satisfaction that the Bidder has sufficient experience and expertise in performing clean yard waste disposal services. The Bidder may only use one (1) department from each entity as a reference. This is reflected in the Certifications section of this Solicitation. (4) Have adequate financial support, equipment, and organization to ensure that they can satisfactorily provide the goods and/or services if awarded a Contract under the terms and conditions herein stated. (5) Not have a member, principal, officer, or stockholder who is in arrears or in default of any debt or contract involving the City, is a defaulter or surety upon any obligation to the City, and/or has failed to perform faithfully any contract with the City. (6) Have no record of pending lawsuits or criminal activities and have not been declared bankrupt within the last five (5) years. 2.7. METHOD OF AWARD Award of this contract will be made to the lowest responsive and responsible Bidder who meets Specifications, herein. 2.8. TIE BIDS Whenever two or more Bids which are equal with respect to price, quality and service are received by the City for the procurement of commodities or contractual services, a Bid received from a business that certifies that it has implemented a drug -free workplace program shall be given preference in the award process. Established procedures for processing tie Bids will be followed if none of the tied vendors have a drug -free workplace program. In order to have a drug - free workplace program, a business shall: (1) Publish a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the workplace and specifying the action that will be taken against employees for violations of such prohibition. (2) Inform employees about the dangers of drug abuse in the workplace, the business' policy of maintaining a drug -free workplace, any available drug counseling, rehabilitation, and employee assistance programs, and the penalties that may be imposed upon employees for drug abuse violations. (3) Give each employee engaged in providing the commodities or contractual services that are under Bid a copy of the statement specified in subsection (1). (4) In the statement specified in subsection (1), notify the employees that, as a condition of working on the commodities or contractual services that are under Bid, the employee will abide by the terms of the statement and will notify the employer of any conviction of, or plea of guilty or nolo contendere to, any violation of Chapter 893 or of any controlled substance law of the United States or any state, for a violation occurring in the workplace no later than five (5) days after such conviction. (5) Impose a sanction on, or require the satisfactory participation in a drug abuse assistance or rehabilitation program, if such is available in the employee's community, by any employee who is so convicted. (6) Make a good faith effort to continue to maintain a drug -free workplace through implementation of this section. 2.9. INSURANCE REQUIREMENTS Successful Bidder shall indemnify, hold and save harmless, and defend (at its own cost and expense), the City, its officers, agents, directors, and/or employees, from all liabilities, damages, losses, judgements, and costs, including, but not limited to, reasonable attorney's fees, to the extent caused by the negligence, recklessness, negligent act or omission, or intentional wrongful misconduct of Successful Bidder and persons employed or utilized by Successful Bidder in the performance of this Contract. Successful Bidder shall further, hold the City, its officials and employees, indemnify, save and hold harmless for, and defend (at its own cost), the City its officials and/or employees against any civil actions, statutory or similar claims, injuries or damages arising or resulting from the permitted Work, even if it is alleged that the City, its officials, and/or employees were negligent. In the event that any action or proceeding is brought against the City by reason of any such claim or demand, the Successful Bidder shall, upon written notice from the City, resist and defend such action or proceeding by counsel satisfactory to the City. The Successful Bidder expressly understands and agrees that any insurance protection required by this Contract or otherwise provided by the Successful Bidder shall in no way limit the responsibility to indemnify, keep and save harmless and defend the City or its officers, employees, agents and instrumentalities as herein provided. The indemnification provided above shall obligate the Successful Bidder to defend, at its own expense, to and through trial, administrative, appellate, supplemental or bankruptcy proceeding, or to provide for such defense, at the City's option, any and all claims of liability and all suits and actions of every name and description which may be brought against the City, whether performed by the Successful Bidder, or persons employed or utilized by Successful Bidder. These duties will survive the cancellation or expiration of the Contract. This Section will be interpreted under the laws of the State of Florida, including without limitation and interpretation, which conforms to the limitations of Section 725.08, Florida Statutes, as applicable and as amended. Successful Bidder shall require all sub -consultant agreements to include a provision that each sub -consultant will indemnify the City in substantially the same language as this Section. The Successful Bidder agrees and recognizes that the City shall not be held liable or responsible for any claims which may result from any actions or omissions of the Successful Bidder in which the City participated either through review or concurrence of the Successful Bidder's actions. In reviewing, approving or rejecting any submissions by the Successful Bidder or other acts of the Successful Bidder, the City, in no way, assumes or shares any responsibility or liability of the Successful Bidder or sub -consultant under this Contract. Ten dollars ($10) of the payments made by the City constitute separate, distinct, and independent consideration for the granting of this Indemnification, the receipt and sufficiency of which is voluntarily and knowingly acknowledged by the Successful Bidder. The Successful Bidder shall furnish to City of Miami, c/o Procurement Department, 444 SW 2nd Avenue, 6th Floor, Miami, Florida 33130, Certificate(s) of Insurance which indicate that insurance coverage has been obtained which meets the requirements as outlined below: (1) Worker's Compensation A. Limits of Liability - Statutory - State of Florida (2) Commercial General Liability (Primary and Non -Contributory): A. Limits of Liability Bodily Injury and Property Damage Liability - Each Occurrence: $1,000,000 General Aggregate Limit: $2,000,000 Personal and Adv. Injury. Products and Completed Operations and Fire Damage: $1,000,000. B. Endorsements Required: City of Miami included as an Additional insured. Employees included as insured. Contractual Liability. Business Automobile Liability A. Limits of Liability Bodily injury and property damage liability combined single limits. Any Auto, including hired, borrowed or owned, or non -owned autos used in connection with the work - $1,000,000 B. Endorsements Required: City of Miami included as an Additional Insured (3) BINDERS ARE UNACCEPTABLE. The insurance coverage required shall include those classifications, as listed in standard liability insurance manuals, which most nearly reflect the operations of the bidder. All insurance policies required above shall be issued by companies authorized to do business under the laws of the State of Florida, with the following qualifications: The Company must be rated no less than "A" as to management, and no less than "Class V" as to financial strength, by the latest edition of Best's Insurance Guide, published by A.M. Best Company, Oldwick, New Jersey, or its equivalent. All policies and/or certificates of insurance are subject to review and verification by Risk Management prior to insurance approval. Certificates will indicate no modification or change in insurance shall be made without thirty (30) days written advance notice to the certificate holder. NOTE: CITY BID NUMBER AND/OR TITLE OF BID MUST APPEAR ON EACH CERTIFICATE. Compliance with the foregoing requirements shall not relieve the bidder of his liability and obligation under this section or under any other section of this Agreement. --If insurance certificates are scheduled to expire during the contractual period, the Successful Bidder shall be responsible for submitting new or renewed insurance certificates to the City at a minimum of ten (10) calendar days in advance of such expiration. --In the event that expired certificates are not replaced with new or renewed certificates which cover the contractual period, the City shall: (4) Suspend the contract until such time as the new or renewed certificates are received by the City in the manner prescribed in the Invitation To Bid. (5) The City may, at its sole discretion, terminate this contract for cause and seek re - procurement damages from the Successful Bidder in conjunction with the General and Special Terms and Conditions of the Bid. The Successful Bidder shall be responsible for assuring that the insurance certificates required in conjunction with this Section remain in force for the duration of the contractual period; including any and all option terms that may be granted to the Successful Bidder. 2.10. EQUITABLE ADJUSTMENT The Procurement Department may, in its sole discretion, make an equitable adjustment in the contract terms and/or pricing if pricing or availability of supply is affected by extreme or unforeseen volatility in the marketplace, that is, by circumstances that satisfy all the following criteria: (1) the volatility is due to circumstances beyond the Successful Bidder control, (2) the volatility affects the marketplace or industry, not just the particular contract source of supply, (3) the effect on pricing or availability of supply is substantial, and (4) the volatility so affects the Successful Bidder(s) that continued performance of the contract would result in a substantial loss. Successful Bidder(s) may be required to supply documentation to justify any requested percentage increase in cost to the City of Miami. The equitable adiustment shall be considered by a rate consistent with the latest Consumer Price Index (CPI). This CPI adiustment will be based on CPI Index- All Urban Consumers, Miami -Ft. Lauderdale, FL. all items. 2.11. NON -APPROPRIATION OF FUNDS In the event no funds or insufficient funds are appropriated and budgeted or are otherwise unavailable in any fiscal period for payments due under this contract, then the City, upon written notice to the Successful Bidder(s) or his assignee of such occurrence, shall have the unqualified right to terminate the contract without any penalty or expense to the City. No guarantee, warranty or representation is made that any project(s) will be awarded to any firm(s). 2.12. PROJECT MANAGER Upon award, Successful Bidder shall report and work directly with Scotty Rogers, Superintendent of Solid Waste or designee, who shall be designated as the Project Manager(s) or designee for the City. 2.13. CURES Please refer to Section 1.56 Notice Regarding "Cures" of the General Terms and Conditions of this solicitation. 2.14. SUBMISSION AND RECEIPT OF BIDS Please refer to Section 1.80, Submission and Receipt of Bids of the General Terms and Conditions of this solicitation. 2.15. LOCAL OFFICE PREFERENCE Bidders wishing to apply for the local office preference shall comply with the General Terms and Conditions, Section 1.48 Local Preference of this Solicitation and with Section 18-73 of the City of Miami Procurement Code, titled "Definitions", and shall submit with the Bid at the time of the Bid due date the following: • Completion and submission of the attached City of Miami Local Office Certification Form; • Submission of a copy of the Proposer's lease documents at the location being deemed a City of Miami Local Office; • Submission of a City of Miami Business Tax Receipt; • Submission of a Miami Dade County Business Tax Receipt; and • Submission of a copy of the license, certificate of competency, and certificate of use that authorizes the performance of the Bidder. 2.16. PUBLIC ENTITY CRIMES To be eligible for award of a contract, firms wishing to do business with the City must comply with Section 287.133(2)(a) of the Florida Statutes, which provides that a person or affiliate who has been placed on the convicted vendor list following a conviction for a public entity crime may not submit a Proposal on a contract to provide any goods or services to a public entity, may not submit a Proposal on a contract with a public entity for the construction or repair of a public building or public work, may not submit Proposals on leases of real property to a public entity, may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity, and may not transact business with any public entity in excess of the threshold amount provided in Section 287.017 of the Florida Statutes, for CATEGORY TWO, as defined by Section 287.017(2) of the Florida Statutes, for a period of thirty-six (36) months from the date of being placed on the convicted vendor list. 2.17. ANTITRUST VIOLATOR VENDORS Pursuant to Section 287.137, Florida Statutes, a person or an affiliate who has been placed on the Antitrust Violator Vendors List following a conviction or being held civilly liable for an antitrust violation may not submit a bid, proposal, or reply on any agreement to provide any goods or services to a public entity; may not submit a bid, proposal, or reply on any agreement with a public entity for the construction or repair of a public building or public work; may not submit a bid, proposal, or reply on leases of real property to a public entity; may not be awarded or perform work as a grantee, supplier, subcontractor, or consultant under an agreement with a public entity; and may not transact new business with a public entity. 2.18. ANTI -HUMAN TRAFFICKING The Bidder confirms and certifies that it is not in violation of Section 787.06, Florida Statutes, and that it does not and shall not use "coercion" for labor or services as defined in Section 787.06, Florida Statutes. The Bidder shall execute and submit to the City an Affidavit, of even date herewith, in compliance with Section 787.06(13), Florida Statutes, attached an incorporated herein as "Anti -Human Trafficking Affidavit". If the Successful Bidder fails to comply with the terms of this Section, the City may suspend or terminate this Agreement immediately, without prior notice, and in no event shall the City be liable to Successful Bidder for any additional compensation or for any consequential or incidental damages. Please refer to Documents Section of Bidsync for the "Anti -Human Trafficking Affidavit" attachment located in the Document Section. It is MANDATORY for the Bidders to return this form signed along with their bid. Failure to complete, sign and upload the Anti -Human Trafficking Affidavit may render your bid non -responsive. 2.19. CITY OF MIAMI LIVING WAGE ORDINANCE The City of Miami adopted a Living Wage Ordinance for City Service Contracts with a total contract value exceeding $100,000 annually, and that have been competitively solicited and awarded on, or after January 1, 2017, by the City. "Service Contract" means a contract to provide services to the City, excluding, however, professional services as defined by the "Consultants Competitive Negotiation Act" set forth in F.S. § 287.055, and Section 18-87 of the City Code, and/or the other exclusions provided by Section 18-557 of the City Code. Section 18-557 is attached as Attachment A. Please see provisions in Attachment A. If a solicitation requires services, effective on January 1, 2017, contractors must pay to all its employees, who provide services, a living wage of no less than $15.00 per hour without health benefits; or a wage of no less than $13.19 an hour, with health benefits. This language is only a summary of the key provisions of the City of Miami Living Wage Ordinance. Please review Attachment A, attached hereto, for a complete and thorough description of the City of Miami Living Wage Ordinance. 2.20. E-VERIFY EMPLOYMENT VERIFICATION Successful Bidder shall E-Verify the employment status of all employees and subcontractors to the extent required by federal, state, and local laws, rules, and regulations. The City shall consider the employment by any Successful Bidder of unauthorized aliens a violation of Section 274A(e) of the Immigration and Nationality Act. If the Successful Bidder knowingly employs unauthorized aliens, such violation shall be cause for termination of the Contract. Furthermore, the Successful Bidder agrees to utilize the U.S. Agency of Homeland Security's E-Verify System, https://e-verify.uscis.gov/emp, to verify the employment eligibility of all employees during the term of this Contract. The Successful Bidder shall also include a requirement in subcontracts that the subcontractor shall also utilize the E-Verify System to verify the employment eligibility of all employees of the subcontractor during the term of this Contract. 2.21. FAILURE TO PERFORM Should it not be possible to reach the Successful Bidder or supervisor and/or should remedial action not be taken within 48 hours of any failure to perform according to specifications, the City reserves the right to declare Successful Bidder in default of the contract or make appropriate reductions in the contract payment. 2.22. PERFORMANCE BOND Within ten (10) working days following notice of award by the City, the Successful Bidder shall furnish to the City of Miami, a Performance Bond in the total amount of the annual Cost to the City for the period of the contract (to be determined at the time of award). The Performance Bond can be in the form of a Cashier's or Certified Check, a bond written by a surety company that is licensed to do business in the State of Florida; or an Irrevocable Letter of Credit, all made payable to the City of Miami. If the latter is chosen, it must be written on a bank located in Miami - Dade County, be in the amount of the annual contract and should clearly and expressly state that it cannot be revoked until express written approval has been given by the City of Miami. The City, to draw on same, would merely have to give written notice to the bank with a copy to the selected Bidder. a) Performance Bonds shall be maintained through the duration of the contract and any extensions. b) If the Surety on any bond furnished by the Successful Bidder is declared bankrupt or becomes insolvent or its right to do business is terminated in the State of Florida or it ceases to meet the requirements imposed by the City, the Successful Bidder shall within five (5) calendar days substitute another bond and surety, both of which shall be acceptable to the City. c) If the Bidder cannot obtain another bond and surety within (5) calendar days, the City will accept and the Successful Bidder shall provide an irrevocable letter of credit drawn on a Miami -Dade County, Florida bank until the bond and surety can be obtained. 2.23. INVOICING The City's Finance Department requires that original invoices be forwarded to a prescribed address and/or email address as denoted in every purchase order. However, Successful Bidder shall forward a hardcopy and/or email of any digital original invoice to the City's specific department Project Manager and/or designee. Monthly Invoice must have the following information as a minimum: 1. Description of Service; 2. Clean yard waste material, weight by tons and total cost; 3. Purchase Order Number; 4. Ticket number; and 5. Time period of service. 2.24. SUCCESSFUL BIDDER POINT OF CONTACT The Successful Bidder shall provide a single point -of -contact for all administration functions (billing, etc.) and a single point -of -contact for any and all project -related work. These individuals, which can be one in the same, shall have the authority to act on behalf of the Successful Bidder and respond to all inquiries, problems, and complaints of the proper authority. This individual shall have the authority to make management decisions or address issues of concern by the City. 2.25. FORCE MAJEURE A "Force Majeure Event" shall mean an act of God, act of governmental body or military authority, fire, explosion, power failure, flood, storm, hurricane, sink hole, other natural disasters, epidemic, riot or civil disturbance, war or terrorism, sabotage, insurrection, blockade, or embargo. In the event that either party is delayed in the performance of any act or obligation pursuant to or required by the Agreement by reason of a Force Majeure Event, the time for required completion of such act or obligation shall be extended by the number of days equal to the total number of days, if any, that such party is actually delayed by such Force Majeure Event. The party seeking delay in performance shall give notice to the other party specifying the anticipated duration of the delay, and if such delay shall extend beyond the duration specified in such notice, additional notice shall be repeated no less than monthly so long as such delay due to a Force Majeure Event continues. Any party seeking delay in performance due to a Force Majeure Event shall use its best efforts to rectify any condition causing such delay and shall cooperate with the other party to overcome any delay that has resulted. 2.26. ADDITIONS/DELETIONS OF FACILITIES/ITEMS/PRODUCTS/SERVICES Although this Solicitation identifies specific facilities/items/products/services to be provided, it is hereby agreed and understood that any facility/item/products may be added/deleted to/from this contract at the option of the City. When an addition to the contract is required, the Successful Bidder(s) under this contract shall be invited to submit price quotes for these new services/items/products. If these quotes are comparable with market prices offered for similar services/items/products, they shall be added to the contract whichever is in the best interest of the City and an amendment and a separate purchase order shall be issued by the City. 2.27. TERMINATION A.FOR DEFAULT If Successful Bidder defaults in its performance under this Contract and does not cure the default within 30 days after written notice of default, the City Manager may terminate this Contract, in whole or in part, upon written notice without penalty to the City of Miami. In such event the Successful Bidder shall be liable for damages including the excess cost of procuring similar supplies or services: provided that if, (1) it is determined for any reason that the Successful Bidder was not in default or (2) the Successful Bidder's failure to perform is without his or his Subcontractor's control, fault or negligence, the termination will be deemed to be a termination for the convenience of the City of Miami. B.FOR CONVENIENCE The City Manager may terminate this Contract, in whole or in part, upon 30 days prior written notice when it is in the best interest of the City of Miami. If this Contract is for supplies, products, equipment, or software, and so terminated for the convenience by the City of Miami the Successful Bidder will be compensated in accordance with an agreed upon adjustment of cost. To the extent that this Contract is for services and so terminated, the City of Miami shall be liable only for payment in accordance with the payment provisions of the Contract for those services rendered prior to termination. 2.28. ADDITIONAL TERMS AND CONDITIONS No additional terms and conditions included as part of your solicitation response shall be evaluated or considered, and any and all such additional terms and conditions shall have no force or effect and are inapplicable to this solicitation. If submitted either purposely, through intent or design, or inadvertently, appearing separately in transmittal letters, specifications, literature, price lists or warranties, it is understood and agreed that the General Conditions and Special Conditions in this solicitation are the only conditions applicable to this solicitation and that the Successful Bidder's authorized signature affixed to the Successful Bidder's acknowledgment form attests to this. 3.Specifications 3.1. SPECIFICATIONS/SCOPE OF WORK The Solid Waste Department ("Solid Waste") currently handles weekly collection of clean yard waste for the City of Miami ("City"); However, Solid Waste is seeking a firm to provide clean yard waste disposal services for waste collected and delivered by the Solid Waste to the Successful Bidder's designated facility(ies) in accordance with the following responsibilities. 3.2 DEFINITIONS Clean Yard Waste: The term "Clean Yard Waste" shall mean horticulture and vegetation material including but not limited to: tree limbs, trunks, shrubs, palm fronds, coconuts, fiber matting, spathe, plants, leaves, grass clippings, fruit, berries and recyclable wood products, etc., containing less than ten percent (10%) contamination per load of mixed debris by weight or volume. Plastic bags shall be accepted in Clean Yard Waste loads and not counted as contamination. Disposal Fee: the fee charged for clean yard waste disposal at Successful Bidders' facility(ies). This fee shall be inclusive of any transfer fee, as may be applicable. 3.3 RESPONSIBILITIES OF THE SUCCESSFUL BIDDER The Successful Bidder shall: A. Provide disposal services for all clean yard waste the City collects and delivers to the Successful Bidder's facility(ies) in accordance with this IFB and all applicable state, federal and local laws. B. Maintain a Solid Waste Facility Annual Operating Permit as required under Chapter 24-18, Miami -Dade County Code, for facilities whose purpose is for the disposal, recycling, incineration, processing, storage, transfer or treatment of solid or liquid waste. C. Process an estimated amount of 100-400 tons per day of Clean yard waste on behalf of the City. D. Ensure a safe work environment. E. Allow City personnel access to the facility for accidents involving the City, or safety inspections if and/or when a City employee reports an unsafe or hazardous condition. F. Provide a monthly invoice to the City which shall include the following information: clean yard waste material, date, ticket number, tons and contracted rate charged. G. Be willing to extend receiving hours or days of operation (i.e. Sunday) to facilitate efficient and timely debris removal by the City or City Contractors, during disaster recovery operations such as Hurricanes. The quoted rate per ton shall apply to any such emergency operations' regular or extended business hours of operations. H. Operate and maintain motor truck scales calibrated to the accuracy required by Florida law to weigh all vehicles delivering clean yard waste. Each vehicle delivering clean yard waste from the City will have its tare weight and cubic yard capacity permanently and conspicuously displayed on the exterior of the vehicle. The Successful Bidder or its Contractor may, from time to time, require revalidation of the tare weight of any vehicle. The Successful Bidder shall use reasonable efforts to maintain the scales in an operable and accurate weighing condition. 3.4 RECORD KEEPING/REPORTING The Successful Bidder shall supply the City with monthly weighing records as may be reasonably required by the City to monitor its clean yard waste program. Copies of all transaction tickets will be maintained by the Successful Bidder for at least five (5) years. If weighing scales are inoperable or are being tested, the Successful Bidder shall estimate the quantity of clean yard waste delivered using a schedule of estimated waste material weights in accordance with Section 15-25, Subsections (b) and (d) of the Miami -Dade County Code, as amended from time to time. The estimates shall take the place of actual weighing records, when the scales are inoperable.