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BOARD AND GOVERNANCE

 

 

 

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Board of Directors and Corporate Governance

Republic’s Board of Directors

Republic’s Board currently consists of 12 directors. The Board’s Nominating & Corporate Governance Committee (the “Governance Committee”) evaluated our director nominees in accordance with the Governance Committee’s charter and our Corporate Governance Guidelines and submitted the nominees to the full Board for approval. We believe that each of our director nominees is highly qualified and collectively, they represent an ideal mix of experience, wisdom, integrity, and ability to advance Republic’s strategy and serve the interests of all our stakeholders.

Independence independent insiders Tenure <4years 5-10years >10years Age Mix 46-55 56-65 66+ Ethnic Diversity Ethnically diverse Non-ethnically diverse Gender Diversity Men Women Skills distribution Executive (Active or retired chair, CEO or COO) Accounting Strategy Finance/Investments Marking sales Technology/Cyber Security Operations/Logistics HR/Talent ESG NO OF DIRECTORS 0 1 2 3 5 6 7 8 9 10 11 12 8 77 4 6 4 78 4 8

 

 

 

 

 

 

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Biographical Information Regarding Director Nominees

 

 

 

 

 

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Board of Directors and Corporate Governance Matters

We operate within a comprehensive corporate governance framework that defines responsibilities, sets high ethical standards of professional and personal conduct, and helps ensure compliance with these responsibilities and standards. The Board’s Corporate Governance Guidelines provide the framework for effective governance and are amended by the Board from time to time in response to changing laws, evolving best practices, and shareholder input.

Board Leadership Structure

We have a non-executive Chairman of the Board and a separate CEO. The Board believes that having a non-executive, independent director serving as the Chairman of the Board is in the best interests of Republic and its shareholders because it strengthens the Board’s independence and allows the CEO to focus his talents and attention on managing our business. The Chairman of the Board is also a valuable bridge between the Board and management and provides independent leadership to the Board.  Responsibilities of the role include:

The Chairman of the Board also has the authority to request access to any of our employees at any time.

Our Board has five standing committees — the Audit Committee, the Talent & Compensation Committee, the Finance Committee, the Governance Committee and the Sustainability & Corporate Responsibility Committee. Each committee consists solely of independent directors and has its own chair who is responsible for directing the committee’s work in fulfilling its responsibilities.

 

BOARD OF DIRECTORS Audit Committee 5 members All independent Talent & Compensation Committee 5 members All independent Governance Committee 5 members All independent Finance Committee 5 members All independent Sustainability & Corporate Responsibility Committee 5 members All independent

Board Meetings and Committees

Meeting Participation

The Board held five meetings during 2021. Each director attended at least 75% of the total number of Board meetings and the total number of meetings of all Board committees on which he or she served and held during his or her term of service. The non-employee directors met regularly in executive sessions during 2021.

Committee Composition

Each of the five standing committees — the Audit Committee, the Finance Committee, the Talent & Compensation Committee, the Governance Committee, and the Sustainability & Corporate Responsibility Committee — operates under a written charter adopted by the Board and reviews its charter at least annually. Messrs. Kadre and Vander Ark are not members of any of our standing committees. Information regarding each of the current standing committees as of the mailing date of this Proxy Statement appears in following chart.

 

 

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Board Refreshment

We are committed to maintaining a Board that has a balanced mix of skills and attributes, and we accomplish this through our active refreshment and director succession planning process. The addition of nine new directors since 2016 highlights our commitment to seek highly qualified candidates who will bring additional skills and perspectives to the Board.

Director Onboarding Process

Upon joining our Board, new directors are provided with a comprehensive orientation and participate in a formal onboarding process to facilitate their transition onto our Board. Our onboarding process familiarizes new directors with the Company’s business, strategic plans, governance program, Board policies, and the director’s responsibilities on assigned committees. New directors hold meetings with Republic’s senior leadership and key management representatives to learn about the Company. They also participate in site visits. Based on feedback received, we believe this onboarding program, coupled with participation in regular Board and committee meetings, provides new directors with a strong foundation in our Company’s business, and accelerates their ability to fully engage in Board discussions and decision-making. Additional training is also encouraged when a director assumes a leadership role as either our Chairman or as a committee chair.

Continuing Education

Our directors attend seminars and continuing education programs relating to corporate governance, audit, and compensation matters. In addition, site visits and external and in-house presentations are scheduled as part of the directors’ continuing education. Examples of continuing education programs attended by some of our directors in 2021 include G100 Network’s Board Excellence program, Harvard Business School executive education programs focused on governance and NACD webinars, among others.

Thoughtful Board Evaluation Process

We recognize that Board and committee evaluations play an important role in ensuring the effective functioning of our Board. Therefore, the Board and each of its committees conduct annual self-assessments, which are overseen by the Governance Committee and include written evaluation forms to assess their effectiveness. Periodically, we will employ the services of an external advisor to assist with the evaluation process. Regardless of whether an external advisor is involved in the evaluation process, the results of these assessments are compiled without attribution, into a single form and sent to the directors for a full Board assessment and to each committee member, for those committees on which they serve, to identify areas for future improvement. This feedback is also considered by the Governance Committee when searching for and evaluating potential future Board nominees to help ensure we are adding new directors with the proper mix of subject matter expertise and perspective consistent with the needs of our growing Company.

Director Succession Planning

The Board, through the Governance Committee, engages in formal Board succession planning/forward planning discussions at regular intervals throughout the year, in which it considers and evaluates director tenure and the skill sets of current directors. These discussions are supported by the formal evaluation process that identifies areas for improvement, including the need to add new members with unique expertise and experience that it believes will benefit our Company. These discussion topics are included as quarterly agenda items for the Governance Committee. The Governance Committee utilizes an executive search firm to identify potential director candidates and conducts interviews on an ongoing basis. The Board also established a mandatory director retirement age of 72 to promote continual refreshment and the addition of diverse perspectives.

 

 

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Our Board evaluation and succession planning processes are critical components of the Board’s commitment to and execution of its Board refreshment policy. The following graphic illustrates how these processes support our commitment to help ensure we have the right members on our Board:

 

Executive Succession Planning

The Board, through the Governance Committee, also regularly reviews the Company’s executive management succession plan to help ensure business continuity in the event a key executive departs from the Company. This evaluation includes a thorough discussion on the Company’s senior leadership structure with a focus on key executive positions and maintaining a diverse team of current and future executives. The Board’s committees also frequently discuss the talent pipeline, and individuals identified as potential future leaders are given exposure to Board members through formal presentations and informal meetings or events. More broadly, the Board, through the Talent & Compensation Committee, is regularly updated on key talent indicators for the overall workforce, and recruiting and development programs. Republic is also cognizant of the impact our overall compensation program has on our succession planning process and has designed our program accordingly. As an example, our Board’s election of Jon Vander Ark to succeed Donald W. Slager as CEO last year was result of the active engagement by the Board in a thoughtful and comprehensive multi-year CEO succession planning process.

Stock Ownership Guidelines and Anti-Hedging and Anti-Pledging Policies

Our Board believes that ownership of our stock by directors, executive officers, and certain other members of management is important to align their interests with our shareholders’ interests and to demonstrate their commitment to the investing public and our employees.

Our Corporate Governance Guidelines reflect the Board’s belief that directors should be shareholders and have a financial stake in Republic. To support that philosophy, we pay our non-employee directors a significant portion of their compensation in the form of RSUs. Our non-employee directors receive RSUs that either (1) do not distribute until the director’s termination of service on the Board or (2) distribute three years after their grant date. To further demonstrate the Board’s commitment to align itself with our shareholders, our Board’s equity ownership guideline requires each independent director to hold Republic stock or vested RSUs, or both, having a total value of $750,000 within five years from the date of the director’s first full annual grant. All of our independent directors who have been on the Board for at least five years meet this guideline.

We also maintain stock ownership guidelines for our executive officers and other members of management. The stock ownership guidelines for executive officers are: (1) CEO — five times salary; (2) President — four times salary; (3) Executive Officer EVP — three times salary; (4) Senior Vice President — two times salary; and (5) Vice President, Area President and Market Vice President – one times salary. Each member of management has a five-year period from the time of promotion or hire into a covered position to meet the applicable guideline, and interim progress is expected. Members of management may meet their requirement by holding Republic stock or vested Republic stock equivalents in the Deferred Compensation Plan (“DCP”), or both, having the requisite value, and by holding shares in the 401(k) plan.

Our insider trading policy prohibits all directors, officers and employees, and their immediate family members, from engaging in the following transactions relating to Republic securities or derivatives thereof: purchasing or selling puts or calls, short sales, placing standing orders (other than under approved 10b5-1 plans), engaging in short-term or “in-and-out” trading, and holding Republic securities or derivatives thereof in a margin account or pledging them.

 

 

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Director Nomination Procedures and Diversity Relating to Board Candidacy

The Governance Committee is responsible for soliciting recommendations for candidates for the Board, reviewing background information for such candidates, and making recommendations to the Board with respect to such candidates. In evaluating candidates, the Governance Committee considers, among other things, the following attributes:

With respect to diversity relating to Board candidacy, our Corporate Governance Guidelines state that directors will be selected in the context of assessing the Board’s needs at the time and with the objective of ensuring diversity in the background, experience, and viewpoints of Board members. To assist in promoting such diversity, the Governance Committee shall take reasonable steps to ensure that new Board nominees are properly drawn from a pool that includes diverse candidates. The Board and the Governance Committee will continue to assess the need to expand the breadth of experience, expertise, and viewpoints represented collectively by our directors and continue to seek top-quality candidates to fill any identified gaps.

Please also see “Shareholder Director Recommendation Policy” on page 28 for information regarding our policies for director candidates identified by shareholders.

Director Independence

Our common stock is listed on the New York Stock Exchange (“NYSE”), which requires that a majority of our Board be comprised of “independent directors” according to the NYSE’s independence standards. The Governance Committee considers the “per se” disqualifications from director independence under NYSE rules when assessing the independence of a current director or a nominee for director. In addition, our Board has adopted categorical standards that provide that certain relationships are not material relationships that would prevent a director’s independence. The Board reviews director independence and considers relationships between each of the directors and their immediate family members and Republic and its subsidiaries, both in the aggregate and individually. Mr. Vander Ark is not an “independent director” under the NYSE listing standards because he is an employee of Republic. The Board determined that the other 11 director nominees meet the NYSE standards for independence and the categorical standards adopted by our Board, and have no material relationships with us that impair their independence. In making its determination, the Board considered, in the case of Messrs. Larson and Handley, their status as chief investment officer and chief operating officer, respectively, to William H. Gates III, who is the beneficial owner of Cascade Investment, L.L.C., our largest shareholder. The Board also considered Mr. Collins’ membership on the board of directors of Four Seasons Hotels and Resorts as a representative of Cascade Investment, L.L.C.

Shareholder Engagement

We have a well-developed shareholder engagement program that emphasizes year-round shareholder engagement and direct communication with our Board. During 2021, we reached out to shareholders representing approximately 62% of shares outstanding, and engaged directly with shareholders representing approximately 49% of shares outstanding as well as one proxy advisor. Select meetings involved participation of an independent director. Key areas of discussion with shareholders over the past year included:

 

 

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Annual Meeting Analyze vote results Identify potential developments or enhancements in sustainability, corporate governance, executive compensation, and other matters Continue engaging with shareholder to discuss actions taken, including any enhancement to policies and practices sustainability, and other matters The Cycle of Shareholder Engagement

Engagement With shareholders Directors and management engage in discussions with shareholders to solicit feedback on current policies and practices Engagement topics include, sustainability, corporate governance, executive compensation and other matters Report to the board and executive management Review shareholder feedback and potential areas of development Evaluate and determine appropriate responses and enhancements to policies and practices, if needed Provide reports to the Board and applicable committees

Our Board and management team highly value these shareholder discussions and consider this feedback in Board deliberations and decisions. In these discussions, investors told us that they are pleased with the enhancements the Company has made to the sustainability, governance and compensation framework over the last several years. We received specific feedback that investors appreciated that our governance practices are fully aligned with Investor Stewardship Group’s corporate governance principles for U.S. listed companies, as noted on page 30.

Additional Board Policies

Shareholder Director Recommendation Policy

The Governance Committee will consider director candidates recommended by our shareholders unrelated to a recommendation under our proxy access bylaw provision, described below. A shareholder may propose a nominee to serve as a director before a meeting of shareholders by giving timely written notice and meeting the other requirements set forth in Section 2.12 of our Amended and Restated Bylaws (“Bylaws”).

The Governance Committee determines the eligibility of a proposed nominee to serve as a director, and may require additional information to determine such eligibility. Director candidates proposed by shareholders are evaluated on the same basis as all other director candidates. See “Director Nomination Procedures and Diversity Relating to Board Candidacy” on page 28. The Governance Committee may, in its discretion, interview any director candidate proposed by a shareholder.

Shareholders wishing to recommend director candidates for consideration by the Governance Committee may do so by sending the required information in writing to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. To consider a candidate for nomination at the 2023 annual meeting of shareholders, we must receive the shareholder’s written notice no earlier than January 16, 2023 and no later than February 15, 2023. Refer to our Bylaws for additional information and notice requirements.

In addition to satisfying the requirements of our bylaws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than the Board's nominees must also provide notice that sets forth the information required by Rule 14a-19 under Securities Exchange Act of 1934 (the “Exchange Act”).

Proxy Access Director Nominations

In addition to the right to recommend directors to the Governance Committee, qualifying shareholders also have the right to nominate and include director candidates in our proxy materials by giving adequate and timely notice to the Corporate Secretary pursuant to the procedures and requirements contained in our proxy access bylaw. Any shareholder or group of up to 20 shareholders who have maintained continuous qualifying ownership of at least 3% of the shares of our outstanding common stock for at least the previous three years are permitted to include up to 25% of the number of director nominees in our proxy materials for our annual meeting of shareholders, provided that the shareholders and nominees satisfy the requirements specified in our Bylaws. In order for such nominees to be included in our proxy statement and form of proxy, shareholders and nominees must submit a notice of proxy access nomination together with certain related information required by our Bylaws.

 

 

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Shareholders wishing to recommend director candidates using our proxy access bylaw may do so by sending the required information in writing to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. To provide adequate time to assess shareholder-nominated candidates, requests to include these candidates in our proxy materials for our 2023 annual meeting of shareholders must be delivered or mailed and received at our principal executive offices no earlier than October 30, 2022 and no later than November 29, 2022.

Director Resignation Policy

Republic is a Delaware corporation. Under Delaware law, if an incumbent director is not elected, that director remains in office until the director’s successor is duly elected and qualified or until the director’s death, resignation or retirement. To address this potential outcome, we have a director resignation policy in our Bylaws. Under this policy, the Board will nominate for further service on the Board only those incumbent candidates who tender, in advance, irrevocable resignations. Each irrevocable resignation is contingent on the failure to receive the required vote at any annual meeting at which the nominee is nominated for re-election and on Board acceptance of the resignation. The Governance Committee will recommend to the Board whether to accept or reject the tendered resignation. The Board will publicly disclose its decision within 90 days after certification of the election results. If the Board does not accept the resignation, the director will continue to serve until the next annual meeting and until his or her successor is duly elected, or until his or her earlier resignation or removal. If the Board accepts the resignation, then the Board, in its sole discretion, may fill any resulting vacancy or reduce the size of the Board.

Communications with the Board of Directors

Any shareholder or other interested party who wishes to communicate with the Board, a Board committee, the Chairman of the Board or the non-management directors (as a group or individually) may send correspondence to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. The Corporate Secretary will compile and submit such correspondence on a periodic basis to the entire Board or, if designated in the communication, to the appropriate Board committee, the Chairman of the Board or the non-management directors (as a group or the appropriate individual member(s)). The independent directors have approved this process.

Attendance at Annual Meetings Policy

We do not have a formal policy requiring our directors to attend the Annual Meeting. Both Mr. Slager and Mr. Vander Ark attended and Mr. Slager chaired our 2021 annual meeting of shareholders.

Additional Information Regarding Corporate Governance

Shareholders may obtain, free of charge, the current charters for the Audit Committee, Finance Committee, Talent & Compensation Committee, Governance Committee, and Sustainability & Corporate Responsibility Committee, as well as our Certificate of Incorporation, Bylaws, Corporate Governance Guidelines, Code of Ethics, Political Contributions Policy and Clawback Policy by written request to: Attention: Office of the Corporate Secretary, Republic Services, Inc., 18500 North Allied Way, Phoenix, Arizona 85054. These documents also are available on the “Investors” section of our website at www.RepublicServices.com.

 

 

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Investor Stewardship Group’s Corporate Governance Principles

The Investor Stewardship Group (“ISG”) sets forth certain corporate governance principles for U.S. listed companies. As described herein and set forth below, Republic’s corporate governance practices are in line with the ISG principles and we continue to monitor and implement developments in best practices that would enhance our governance model.

 

 

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Risk Oversight

We face a variety of risks, including credit and liquidity, operational, environmental, litigation, compliance, compensation and cyber security risks. Management, the Board and its committees, work together to manage these risks and the opportunities they create. Our management annually reports to the Board the results of its internal survey and analysis of enterprise risk management, and regularly discusses with the Board, and its committees, various operational and compliance risks, including pricing, recycled commodity prices, safety, talent, environmental, fleet and cyber risks. While management is responsible for the day-to-day risk management processes, the Board’s role is to ensure that:

Financial and Operational Risk Oversight

In accordance with NYSE requirements, our Audit Committee charter requires the Audit Committee to, among other things:

Our Audit Committee also oversees the Company’s management of cyber security risk. The Company has taken a number of steps to manage and mitigate our cyber security risk, including entering into an information security risk insurance policy and rolling out an information security training program to our employees.  Additionally, our cyber security program is aligned to the NIST cyber security framework and is audited against that framework on an annual basis by an independent third party.  At each quarterly meeting, the Audit Committee receives an update from management on our cyber security program and a detailed assessment. The results of the third-party audit are provided to our Board on an annual basis.

Our Audit, Finance and Talent & Compensation Committees meet at least quarterly and take various steps to assist the Board in fulfilling its financial risk oversight function. For example, each Audit Committee meeting typically includes a report by our Chief Legal Officer, who also serves as our Chief Ethics & Compliance Officer, and reports from our Vice President of Internal Audit and our Chief Accounting Officer. Before each committee meeting, our Vice President of Internal Audit provides the Audit Committee with a comprehensive report on internal audit matters, including testing of our internal controls over financial reporting. At the meeting, the Chief Legal Officer and the Vice President of Internal Audit make oral presentations and respond to questions from committee members. Further, the chair of the Audit Committee reviews, discusses with our Vice President of Internal Audit and concurs in a program for field audits. Under the program, each field audit includes a financial review as well as an operations review. Likewise, our Finance Committee regularly received reports from our CFO and Treasurer regarding the financial, credit and liquidity risks we face, including hedging programs. And, the Talent & Compensation Committee considers, evaluates, and addresses risks that may be raised by our compensation program.

In addition, the Audit Committee also routinely receives a report regarding our employee hotline, the AWARE Line. The AWARE Line is an integral part of our compliance program and provides a way for our employees to confidentially provide information regarding concerns they may have with respect to compliance with policies or ethical and legal requirements. Our Chief Accounting Officer regularly reports on management’s evaluation of the effectiveness of our disclosure controls and procedures. Finally, our Risk Management Department periodically briefs the Finance Committee or the Board on our insurance coverage programs and related risks.

 

 

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Sustainability Risk Oversight

Our Sustainability & Corporate Responsibility Committee meets at least quarterly and takes various steps to assist the Board in fulfilling its oversight responsibility with respect to risks and opportunities, including climate change, safety, environmental and reputational risks, and the practices by which these risks are managed and mitigated. Additional information about our Board and this Committee’s oversight of sustainability is discussed below.

 

Ethics and Compliance

At Republic, it is our responsibility to deliver results in the right way. This means every employee is expected to act with integrity and make the right choice in every situation. We lead by example and hold ourselves to the highest ethical standards and practices in all that we do. Our Code of Ethics applies to all of our directors, officers and employees and is an integral part of Republic’s ethics and compliance program. It serves as the cornerstone of our commitment to conduct business with the highest ethical and legal standards.

If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the Code of Ethics that applies to our CEO, Chief Financial Officer, Controller or Chief Accounting Officer, we will disclose the nature of such amendment or waiver in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”). The Code of Ethics can be viewed on the “Investors” section of our website at www.RepublicServices.com. The information contained on our website, and in all references to our website within this Proxy Statement, shall not be deemed incorporated by reference in this Proxy Statement or in any other filing we make under Exchange Act.

We also have a standalone Supplier Code of Business Ethics and Conduct ("Supplier Code"), which is applicable to our vendors, contractors, consultants, agents, representatives, brokers, and any other third party that provides us with goods and services. Our Supplier Code outlines our expectations with respect to our suppliers' conduct when they are doing business with, or on behalf of, Republic, with an emphasis on ethical, lawful conduct in every circumstance. Our Supplier Code underscores our commitment to conducting business ethically and lawfully across our entire supply chain.

Sustainability and Corporate Responsibility

In addition to being committed to our customers, employees, and shareholders, we are committed to the communities we serve and to the environment. We are partnering with our customers to create a more sustainable world.

Board and Committee Oversight of Sustainability

Our Board is directly involved in the oversight of Republic’s environmental and sustainability initiatives and conducts a comprehensive review of the Company’s sustainability performance on an annual basis. Republic’s commitment to corporate sustainability also led to the formation of a dedicated Sustainability & Corporate Responsibility Committee of the Board in 2015. This committee has oversight responsibility with respect to our sustainability performance, our corporate responsibilities, our role as a socially responsible organization, and risks and opportunities related to climate change, safety, environmental, and reputation. The Sustainability & Corporate Responsibility Committee is focused on reviewing the Company’s sustainability performance and progress toward sustainability strategic goals and objectives as well as providing guidance to management with respect to significant sustainability and corporate responsibility initiatives. In addition, our Talent & Compensation Committee assesses the performance criteria under our compensation program and, in partnership with the Sustainability & Corporate Responsibility Committee, monitors the results and considers our progress toward our goals when setting performance criteria under our compensation program.

Our Commitment to Safety

Safety always tops our list of Company priorities, and we believe the success of our safety program is directly dependent on our people: employees with strong operational know-how, attention to detail, leadership accountability and a consistent focus. We reinforce our Company’s safety culture through comprehensive safety management programs, which include our Focus Together foundational safety training program, new driver training programs, our non-negotiable absolutes and standards, as well as many other programs. As part of our continued commitment to the safety of our employees and communities, we included two specific safety goals in our 2030 sustainability goals under “Safety Amplified.”  For more information on these goals and our plans for how we will achieve them, please see our sustainability reporting available at

 

 

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RepublicServices.com/sustainability. Our sustainability reporting shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act unless expressly incorporated by reference.

Sustainability Focus

We are passionate about our role as responsible stewards of our nation’s waste, and we have been steadily building on our sustainability performance for several years. Our 2030 sustainability goals are designed to significantly benefit the environment and society while enhancing the foundation and profitability of our business for the long term. Our 2030 sustainability goals reaffirm our commitment to the elements of our sustainability platform: Safety, Talent, Climate Leadership and Communities. These elements support and enable our business strategy designed to generate profitable growth by sustainably managing our customers’ needs. When we manage these elements of our sustainability program, we believe we strengthen the foundation of our business for the long term and create value for all stakeholders.

 

Our 2030 Sustainability  Goals SAFETY TALENT COMMUNITIES Safety Amplified Incident Reduction Engaged Workforce Charitable Giving 0 <2.0 88% 20M Employee Fatalities Reduce our OSHA total Recordable Incident Rate (TRIR) to 2.0 or less by 2030 Achieve and maintain employee engagement scores at or above 88% by 2030 Positively impact 20 million people by 2030 CLIMATE LEADERSHIP Science-Based Target 35% Reduce absolute Scope 1 and 2 greenhouse gas emissions 35% by 2030 (2017 baseline year) Approved by SBTI1 Circular Economy 40% increase recovery and circularity of key materials by 40% on a combined basis by 2030 (2017 baseline year) Renewable Energy 50%Increase beneficial reuse of biogas by 50% by 2030 (2017 baseline year) 1.SBTI is a collaboration between CCP, the United Nations Global Compact (UNGC), World Resources Institute (WRI) and the world Fund for Nature (WWF)

We developed our 2030 sustainability goals through a comprehensive assessment that included an analysis of global trends, identification of business model dependencies and engagement with key stakeholders, including shareholders. In early 2022, we concluded our third sustainability materiality assessment, continuing our ongoing engagement with stakeholders and realigning our strategy in this ever-evolving world. Our sustainability materiality assessment was designed to identify the most relevant, or material, issues from a sustainability perspective, which is a broader standard than that used in our financial disclosures. This comprehensive assessment ensures that our ambitious platform is aligned with the topics that are most important to our business and stakeholders, as well as United Nations’ Sustainable Development Goals, which address critical global macrotrends. We continue on the pathway toward achieving our greenhouse gas reduction goal approved by the SBTi. Our 2021 sustainability report will be released later this year, incorporating refinements to our landfill emissions methodology that better reflect our investments in emissions control measures.

To further our progress towards our climate leadership goals, we are taking a leadership position in electric technology innovation for our fleet. This is a critical step toward reducing our environmental impact through lower fleet emissions, and we believe it will also improve our total cost of ownership while providing a competitive advantage in certain communities. We are partnering with multiple manufacturers to pilot electric powered recycling and solid waste trucks. As electric vehicle

 

 

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technology continues to develop, we intend to further deploy electrification to our fleet. In addition to fleet electrification, we are investing in organics diversion and the plastics value chain, and are partnering with developers on landfill gas to energy projects to reduce emissions and generate renewable energy.

Industry Leadership

We regularly review our environmental and social progress and performance to continue advancing our work. We were named to the North American Dow Jones Sustainability Index (“DJSI”) for a sixth consecutive year in 2021. The assessment that leads to placement on the DJSI is one of the world’s most rigorous and renowned corporate sustainability assessments. In addition, we received the CDP Climate Leadership score and we advanced to an “A” rating under MSCI, the first such rating among our peers. Our performance on these ESG ratings is in recognition of the Company’s commitment to sustainability, including our 2030 goals, increased disclosures and achievements. These achievements demonstrate our ability to connect financial performance with environmental and social performance, including addressing various risks and opportunities posed by climate change. Our ESG rankings also highlight Republic’s leadership in corporate governance, environmental, social and financial aspects of sustainability. We strive to remain at the forefront in our approach to sustainability issues, including climate change and have aligned our reporting to Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations. In 2022, we will be publishing an update to our inaugural TCFD Report, expanding our physical and transition risk disclosures and reflecting our commitment to addressing climate change. In 2021, we released our seventh Sustainability and GRI reports, and published our fourth annual SASB report. Finally, in 2021, we also published our EEO-1 workforce diversity data, key information related to environmental justice and CDP Climate Change response to bring critical disclosures more accessible to the public. All of our latest reports are available on our website at RepublicServices.com/sustainability.

Talent

We hold ourselves to the highest standards to ensure we are the company where the best people come to work and are engaged every day. We do this by combining meaningful experiences and programs that develop and motivate employees with attractive total rewards packages and maintaining an inclusive and diverse work environment. Our engagement and retention programs are designed to sustain our high engagement levels. Through learning and talent development programs, we focus on ensuring our employees have the skills necessary to be successful in their current roles through targeted onboarding and experiential learning. We also provide our employees the opportunity to learn new skills and advance within the organization through our Technical Institute, leadership training and development programs. Finally, we continually monitor and regularly measure the progress we have made in increasing the diversity of our workforce and creating an even more inclusive culture for our employees.

 

 

Engagement AND RETENTION PTOGTAMS Measure and drive engagement and actions Bi-annual ROAD-EO celebrating the best of the best LEARNING AND TALENT DEVLOPMENT Driver Training Center Supervisor Onboarding Sales Acceleration Program Republic Leadership Academy Leadership Trainee Program General Manager Acceleration Programs Republic Services Technical Institute INCLUSION AND DIVERSITY Recruiting partnerships with diverse organizations Company-wide discussions on inclusion & Diversity high potential leadership development programs for diverse professionals Business Resource Groups V.A.L.O.R. Women of Republic Black Employee Network UNIDOS

Employee Engagement

We believe an engaged workforce is key to our success. We measure employee engagement through third-party surveys, assessing employee sentiment on a variety of topics such as pride for the Company, job satisfaction and intention to stay. We have found that business units with a highly engaged workforce experience less turnover. We have also found that employees whose leaders are highly inclusive are more likely to speak up and share their perspective. In addition, we believe that engaged employees deliver better customer service and are more productive, which is directly tied to the success of our

 

 

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business. Our goal is to achieve and maintain employee engagement scores at or above 88% by 2030. Our employees completed two surveys in 2021. As of October 2021, our engagement score was 84% with 98% employee participation, reinforcing our commitment to ensuring every voice is heard. Employee engagement is a core part of our business strategy, which is why we compensate our General Managers on their employee engagement scores. This helps to ensure that our leaders are held accountable and rewarded for their efforts to drive a more engaged workforce.

Inclusion and Diversity

We are proud of the diversity of our frontline workforce, as it closely represents the demographics of the communities we serve. We are committed to improving diverse representation across all levels of the Company. Our commitment to inclusion and diversity starts at the top of our organization, as outlined in our Mission of Supporting an Inclusive Culture (MOSAIC), established in 2013, and supported by the MOSAIC Council. The MOSAIC Council consists of leaders from across the Company who serve as ambassadors and thought partners for inclusion and diversity. This enables us to continue to develop new strategies and activities that are tied to the needs of our employees, customers and business with the goal of creating an even more inclusive work environment and diverse workforce.

Our new values, launched in 2022, reinforce who we are today, and serve as an anchor for who we aspire to be. As an employer of people from all backgrounds, our core value of “human-centered” represents our commitment to embrace the unique potential and dignity of every person at Republic Services. We believe strongly that shared values unify us as a company and help to establish expectations for how our employees treat one another and should expect to be treated. We continue to focus on developing and maintaining leadership behaviors that drive mutual understanding, connectivity and empathy within our workforce, which we know helps drive inclusion in the workplace for our existing employees, and attract diverse talent to choose Republic as their future employer. Finally, we create opportunities for our employees to be part of communities that support their needs, and we offer this connectivity through our business resource groups, including Women of Republic, VALOR (Veterans, Advocacy, Learning, Outreach and Recruiting), the Black Employee Network and Unidos, which we launched in 2021.

We continue to receive national awards for our accomplishments in these areas and we aim to raise the bar even higher.

 

2021 TM  WORLD,S MOST ETHCAL COMPANIES www.ETHISPHSRE.COM Forbes 2021 THE BEST EMPOYERS ROR WOMEN POWERED BY STSTISTA Great place to work Certified AUG 2021-AUG 2022 USA TM 3BL MEDIA 100 CORPORATE CITIZENS 2021

Committed to Serve

The COVID-19 pandemic pressure tested the resiliency of our business model and our roles as providers of an essential service. The majority of our workforce remained in the field throughout the pandemic and the Company took swift and comprehensive action to help protect our employees and communities. At the height of the pandemic, we launched our Committed to Serve Initiative. Through Committed to Serve, we directed over $50 million to recognize the contributions of our 28,000 frontline employees, including $3 million donated to the Republic Services Charitable Foundation, more than $11 million in gift cards given to employees to support them and the local economy, $6 million spent at local restaurants to provide two weekly meals for employees and their families, and $31 million in Committed to Serve awards to our frontline employees.

Board Oversight of talent

We believe our comprehensive talent program adds long-term value to our business, differentiates us from our peers, and ensures an inclusive culture for our employees. Building an engaged workforce starts at the top, and we have demonstrated a commitment to diversity through the people who guide our Company – six of the twelve director nominees are women or racially or ethnically diverse. Our Board, our Talent & Compensation Committee and our other committees play a role in the active oversight of the Company’s talent program.

 

 

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Board Oversight of Talent our bord and committees are activity involves overseeing the Company,s talent management program. Inclusion and Diversity talent Development Employee well-being Ethics and Compliance safety Employee Engagement Talent Acquisition and Onboarding Compensation and Benefits

This is accomplished by focusing on eight key areas: safety, talent development, inclusion and diversity, employee engagement, ethics and compliance, talent acquisition and onboarding, employee wellbeing and compensation and benefits.

 

 

 

 

 

 

 

 

 

 

 

 

 

SUSTAINBILITY IN ACTION Jessica P. Clearing the way to connect with NATURE As a company whose goal is to be a leader in sustainable living, helping the environment is at the heart of our mission. Jessica P. and employees link her understand this connection and volunteer t make their community a better place to live through volunteering. Jessica, along with other Republic Service employees helped remove illegally dumped material at tule springs Fossil Beds National Monument in boulder City, Nevada, clearing the way for a new trail through the national park Republic services has been a longtime supporter of tule spring and has been able to make a difference thanks to Jessica and employees link her.

 

 

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Audit Committee Matters

Audit Committee Report

The following statement made by the Audit Committee shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act and shall not otherwise be deemed filed under either of these Acts.

Management is responsible for our internal controls, financial reporting processes, and compliance with laws and regulations and ethical business standards. Our independent registered public accounting firm is responsible for expressing an opinion as to the conformity of the consolidated financial statements with accounting principles generally accepted in the United States of America and for issuing its opinion on the effectiveness of our internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes on the Board’s behalf.

In this context, the Audit Committee has reviewed and discussed the audited financial statements with management and our independent registered public accounting firm (Ernst & Young LLP). The Audit Committee has discussed with Ernst & Young LLP the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.

In addition, the Audit Committee has received from Ernst & Young LLP the written disclosures required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, regarding the Company’s independent registered public accounting firm’s independence, and discussed with them their independence from the Company and management. The Audit Committee has also discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

Based on the Audit Committee’s review of the matters noted above and its discussions with Ernst & Young LLP and our management, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC.

 

Submitted by the Audit Committee as of March 13, 2022:

Jennifer M. Kirk (Chair)

Tomago Collins

Michael A. Duffy

Brian S. Tyler

Katharine B. Weymouth

Audit and Related Fees

Independent Registered Public Accounting Firm Fee Information

The following table discloses the fees for professional services provided by Ernst & Young LLP for the fiscal years ended December 31, 2021 and 2020:

 

 

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Pre-Approval Policies and Procedures

The Audit Committee’s policy is to pre-approve all audit services, audit-related services and other services permitted by law provided by our independent registered public accounting firm. In accordance with that policy, the Audit Committee annually pre-approves a list of specific services and categories of services, including audit, audit-related and other services, for the upcoming or current fiscal year, subject to specified cost levels. Any service that is not included in the pre-approved list of services must be separately approved by the Audit Committee. In addition, if fees for any service exceed the amount that has been pre-approved, then payment of additional fees for such service must be specifically approved by the Audit Committee before the performance of the service. From time to time, the Audit Committee may delegate fee approval authority to the Audit Committee chair. All of the services performed by Ernst & Young LLP in 2021 were pre-approved in accordance with the pre-approval policy adopted by the Audit Committee.

At each regularly scheduled Audit Committee meeting, management updates the Committee on the scope and anticipated cost of

(1) any service pre-approved by the chair since the last committee meeting and (2) the projected fees for each service or group of services being provided by our independent registered public accounting firm that exceed the amount that has been pre-approved.

Director Compensation

When establishing and reviewing our directors’ compensation, we consider the level of work and involvement the directors have with our business. We also consider compensation paid to directors in the marketplace generally and at our peer group companies (“Peer Group”). In 2021, we compensated our directors as follows:

Cash retainers are prorated if a director serves less than a full year in the applicable position. The annual grant of RSUs to a newly appointed, non-employee director is prorated to the number of days remaining in the year. We do not pay meeting fees for our Board or committee meetings but we reimburse our non-employee directors for their reasonable out-of-pocket costs and travel expenses in connection with their attendance at Board and committee meetings.

All RSUs granted to non-employee directors are fully vested upon grant. RSUs granted before 2012 will be settled upon the director’s termination of service from the Board. Beginning with grants in 2012, the RSUs are settled upon the earlier of the director’s termination of service from the Board or three years after they are granted, unless they are deferred into our Deferred Compensation Plan (DCP). RSUs are settled through the issuance of shares of our common stock. After any quarter in which dividends are distributed to shareholders, the non-employee directors receive additional RSUs with a value equal to the value of dividends they would have received had they owned the shares of stock underlying the RSUs on the dividend record date. The number of additional RSUs to be received by directors due to the declaration of dividends is based on the closing price of our stock on the dividend payment date.

All compensation paid by us during 2021 to our non-employee directors is detailed below. Mr. Vander Ark’s and Mr. Slager’s compensation is reflected in the executive compensation tables contained in this Proxy Statement, and neither of them received any additional compensation from us for their duties as a director.

 

 

 

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Director Compensation in 2021

 

 

Certain Relationships and Related Party Transactions

Our Related Party Transactions Policy stipulates that any transaction for which disclosure is required under Item 404 of Regulation S-K (an “S-K Transaction”) be approved by both our CEO and the Audit Committee. Generally speaking, an S-K Transaction is any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) in which Republic is a participant, the amount involved exceeds $120,000 in the aggregate, and a director, director nominee, executive officer, 5% shareholder, or immediate family member of any of the foregoing has a material interest in the transaction. The related party must disclose in writing to the Chief Legal Officer the material facts of the proposed S-K Transaction and the Chief Legal Officer (or designee) will then submit the written disclosure to the CEO and the Audit Committee for approval. If the proposed S-K Transaction involves the Chief Legal Officer, the written disclosure must be provided to the CEO. As part of its due diligence, the Audit Committee will review and determine, with the advice and assistance of such advisors as it deems appropriate, whether the S-K Transaction would present an improper conflict of interest. In making this determination, the Audit Committee may consider the following factors, among others: (1) whether the transaction terms are at least as favorable to us as those that could be obtained in a transaction between us and an unrelated party; (2) whether there are any compelling business reasons for us to enter into the transaction; and (3) whether the transaction would impair the independence of an otherwise independent director.

Entities Affiliated with Kim S. Pegula

Through several of the Company’s subsidiaries, the Company provides waste and/or recycling collection services to five facilities in which Ms. Pegula or her immediate family members have an ownership interest. In 2021, the Company received an aggregate of approximately $70,400 for services provided to these facilities. Ms. Pegula did not initiate or negotiate any of the arrangements we have with the affiliated entities, all of the business dealings were entered into in the ordinary course of business prior to Ms. Pegula assuming her role on our Board, and our arrangements with such entities are on terms no more favorable to them than terms that would be available to unaffiliated third parties under the same or similar circumstances.

 

 

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Security Ownership of the Board of Directors and Management

The following table shows certain information as of March 16, 2022, with respect to the beneficial ownership of common stock and RSUs by (1) our current directors, (2) each of the named executive officers, and (3) all of our current directors and all executive officers as a group. We have adjusted share amounts and percentages shown for each individual in the table to give effect to shares of common stock that are not outstanding but which the individual may acquire upon exercise of options exercisable within 60 days after March 16, 2022. However, we do not deem these shares to be outstanding for the purpose of computing the percentage of outstanding shares beneficially owned by any other individual listed on the table.

RSUs and PSUs are not considered common stock that is beneficially owned for SEC disclosure purposes. We have included RSUs in this table because they are similar to or track our common stock, they represent an investment risk in the performance of our common stock, they are settled through the issuance of shares of our common stock, and they receive dividend equivalents in the form of additional RSUs each time a dividend is paid on our common stock. The Board has considered the use of RSUs as opposed to common stock for directors and believes that RSUs align the directors with our shareholders’ long-term interests as much as common stock would.

 

 

 

 

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Sustainability in action David V. flipping the switch that Lights a city A name link apex isn,t one to be given out lightly. BY Definition, it only goes to the biggest and the best, which is why it.s the name of the landfill outside las vegas, which stands 500 feel tall and takes in up to 16 million pounds of waste per day. David V. relies on his decades of experience to ensure operations run smoothly at Apex, including one of the more intriguing aspects of the landfill, harnessing the waste to help power the city. Apex captures the methane created by the waste in the landfill and converts it into enough energy to power 11,000 homes.

 

 

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Security Ownership of Five Percent Shareholders

The following table shows certain information as of March 16, 2022, with respect to the beneficial ownership of common stock by each of our shareholders who we know is a beneficial owner of more than 5% of our outstanding common stock.

 

 

Delinquent Section 16(a) Reports

Based solely upon a review of (1) Forms 3 and 4 and amendments to each form furnished to us pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during our fiscal year ended December 31, 2021, (2) any Form 5’s and amendments to each form furnished to us with respect to such fiscal year, and (3) any written representations referred to us under subparagraph (b)(1) of Item 405 of Regulation S-K under the Exchange Act with respect to such fiscal year, no person who at any time during such fiscal year was a director, Section 16(a) officer or, to our knowledge, a beneficial owner of more than 10% of our common stock failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during such fiscal year.

 

 

 

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Executive Compensation

 

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CD&A Table of Contents

 

 

 

 

 

 

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This Compensation Discussion and Analysis (“CD&A”) provides a detailed description of our executive compensation program for 2021. This CD&A focuses on the compensation of the named executive officers listed in the Summary Compensation Table.

Executive Officers

Our executive officers serve at the Board’s pleasure and are subject to annual appointment by the Board. Our current executive officers are as follows:¹

 

 

 

 

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Executive Summary and Business Strategy

Republic is one of the largest providers of environmental services in the United States. As of December 31, 2021, we operated facilities in 41 states through 356 collection operations, 239 transfer stations, 198 active landfills, 71 recycling processing centers, 3 treatment, recovery and disposal facilities, 3 treatment, storage and disposal facilities (TSDFs), 6 saltwater disposal wells, and 7 deep injection wells. We were engaged in 77 landfill gas-to-energy and renewable energy projects and had post-closure responsibility for 124 closed landfills.

 

Business Strategy

We believe our products and services are valuable to our customers and essential for long-term sustainability. Our focus on and commitment to sustainability allows us to attract and retain the best talent, win more customers, increase loyalty, and ultimately drive increased revenue, profits, and cash flow, creating long-term shareholder value.

 

 

Foundational Elements

Our strategy is designed to generate profitable growth by partnering with customers to create a more sustainable world, and it is underpinned by three foundational elements – (1) market position, (2) operating model, and (3) our people and talent agenda.

 

Market Position – Our goal is to develop the best vertically integrated market position to enable us to build density and improve returns. We strive to have a number one or number two market position in each of the markets we serve. In addition to organic growth, we grow through acquisition of high-quality assets.

 

Operating Model – Our operating model allows us to deliver a consistent, high-quality service to all our customers through the Republic Way: One Way. Everywhere. Every day. The Republic Way is the key to harnessing the best of what we do as operators and translating that across all facets of our business. Key elements of our operating model are our matrix organization, fleet automation, compressed natural gas vehicles, fleet electrification and standardized maintenance.

 

People and Talent Agenda – Being human-centered is at the core of our robust people and talent agenda. Our 35,000 employees are a critical component in successfully executing our strategy and running our operations. We aspire to always be a company where the best people, with exceptional talents and diverse backgrounds, can thrive, and we foster a culture of caring where people feel respected, supported and encouraged to bring their best selves to work. We are dedicated to driving our people and talent agenda, which includes:  

•   representing the diversity of the communities we serve and sustaining a safe, inclusive and ethical culture;

•   maintaining a highly engaged workforce;

•   preparing talent through learning and development experiences; and

•   offering compensation and benefits that attract, retain and motivate the best workforce.

 

To effectively execute our strategic plan, we prioritize the development of and investment in capabilities that will differentiate us in the marketplace.

 

 

DIFFERENTIATING CAPABILITIES Customer Zeal Digital Sustainability Drive customer loyalty by offering differentiated products and services specifically designed to meet our customers’ needs Provide a consistent experience across our business while enabling customers to do business with us through more channels and with better access to information Provide customers with sustainable solutions that support a cleaner, safer and healthier world Improved customer retention to 95% in2021 RISE Tablets enabled over 1 million automated customer notifications Ambitios2030 sustainability goals

 

 

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2021 Business and Performance Highlights

During 2021, we continued to create value for our shareholders. Our performance reflects our continued progress on our strategic priorities. We continue to focus on executing our strategy designed to generate profitable growth by sustainably managing our customers’ needs, managing our cost structure, generating consistent earnings and free cash flow growth, improving return on invested capital, and increasing cash returns to our shareholders.

Highlights of the year include:

 

 

 

Adjusted eps adjusted free cash flow adjusted ebitda margin free cash flow conversion $4.50 $4.00 $3.00 $2.50 $3.30 $3.56 $4.17 2019 2020 2021 $1,600 $1,450 $1,300 $1,150 $1,000 $1,174 $1,236 $1,515 2019 2020 2021 30% 29% 28% 27% 26% 28.1% 29.4% 30% 2019 2020 2021 38% 40% 42% 44% 46% 40.6% 41.3% 44.8% 2019 2020 2021 3-year eps cagr of 11% 3year fcf cagr of 10% continued margin expansion continued fcf conversion improvement

See “Reconciliation of GAAP to Non-GAAP Financial Measures” in the Annex on page 98. For comparative purposes, prior year amounts have been reclassified to conform to current year presentation.

 

Focused Capital Allocation Strategy to Increase Shareholder Value Creation

Our balanced capital allocation practices prioritize reinvesting into the business and then returning cash to shareholders while maintaining an investment-grade credit rating.

 

 

Return of capital & accelerated m&a improved fcf business growth continue balanced approach to capital allocation accelerated m&A organic growth tuck-ins improved market vertical mix differentiating capabilities commitment to fcf conversion

 

 

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Performance Metrics

We believe the performance metrics we use for our executive compensation program are strongly aligned with shareholder interests and support our business strategy. For the past several years, our executive compensation program has used an EPS measure (“EPS Measure”) and a FCF measure (“FCF Measure”) as metrics for our annual cash incentive plan, and return on invested capital (“ROIC”), cash flow value creation (“CFVC”), and relative total shareholder return (“RTSR”) as metrics for our long-term incentive (“LTI”) plan. Our shareholders have told us that these metrics align well with their interests. The following graphic describes the performance metrics applied to both the annual incentive plan and LTI plan in 2021 as well as how they align with our strategic goals:

2021 Metrics and Alignment with Strategy⁽¹⁾

 

Annual cash incentive performance-based lti award eps measure 50% fcf measure 50% return on invested capital 40% cash flow value creation 40% relative total shareholder return 20% our annual incentive metrics are designed to encourage profitable growth and are widely accepted by the investment community as important performance. Our lti metrics are designed to grow our business with an emphasis on cash flow while maximizing investment returns and aligning interest between our executives and shareholders.

 

 

 

 

 

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Although the FCF Measure used for our annual incentive and the CFVC used for our LTIs may appear similar, the measures are distinct and support different objectives.

 

 

Please refer to the Annex on page 98 for details regarding the calculation of our actual results for 2019, 2020, and 2021 for the EPS Measure, FCF Measure, CFVC, and ROIC.

 

Setting Robust Performance Targets

We develop rigorous performance metrics on a bottom-up basis – reflecting both management initiatives and the impact of external factors. To align management incentives, our metrics and performance targets focus on factors that management can impact rather than on external factors not under management’s control or ability to mitigate.

The performance metrics used in the annual incentive plan and the PSUs (other than the RTSR metric used for the PSUs and weighted at 20%) are directly tied to management’s ability to increase shareholder value. In setting performance targets for the annual incentive plan and for the three-year PSU performance cycle, the Talent & Compensation Committee considers the macro-economic environment, industry-specific conditions, prior-year actual performance, tax conditions and changes in regulations and laws. The Talent & Compensation Committee also considers recent trends and developments in the business that are expected to impact financial results. It confirms that performance targets align with our published earnings guidance, which assures that they are transparent and reward management only if management is successful in achieving financial results that align with the expectations we communicate externally. Based on this due diligence, the Talent & Compensation Committee sets rigorous, but reasonable, performance goals for the business.

Despite the potential adverse impacts arising from the COVID-19 pandemic over the past two years, the Talent & Compensation Committee determined not to adjust the performance period, performance metrics or performance targets for the annual incentive plan or for any PSU performance cycle. Moreover, the Talent & Compensation Committee did not employ upward discretion to increase any annual incentive payments or PSU performance results to account for COVID-19 impacts. The Talent & Compensation Committee did believe it was important to provide incentive for our NEOs to achieve metrics that due to the pandemic were naturally more challenging to achieve than when they were originally set. The Talent & Compensation Committee determined the best option to do this was through a modestly higher 2021 PSU grant for our NEOs, while maintaining the highly rigorous CVFC and ROIC targets.

Progress towards our sustainability goals is included within each of our management initiatives.  As a result, there is a direct line from our ESG initiatives to our business results, our culture and strategy and thus, to our performance based executive compensation program. In addition, beginning in 2022, the annual incentives for senior executives including our NEOs may also be adjusted up or down by up to 10% based on the Company’s interim performance on safety, talent and climate leadership goals.

 

 

 

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The following table sets forth the process for setting rigorous performance targets that are aligned closely with shareholder value creation.

 

 

Engagement and retention program profitable revenue growth controllable operating expenses capita investment m&a (tuck-in) selected external factors volume/ macroeconomic environment cpi impact on pricing diesel/other commodity prices regulatory and tax law changes results eps free cash flow cash flow value creation roic esg value creation stock price appreciation shareholders return our compensation program is focused on achieving key financial result that support shareholders value creation

 

The following tables compare targeted metrics with actual outcomes for each performance measure in the 2019 through 2021 NEO compensation program.

 

 

 

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Annual cash incentive target actual EPS measure FCF measure ($M) 2020 2021 $3.53 $3.58 $3.76 $4.10 2020 2021 $1,146 $1,262 $1.385 $1,515 performance-based LTI award target actual cash flow value creation ($M) return on invested capital (3year avg.) relative total shareholders returns 2018-2020 $3,724 $3,578 2019-2021 $3,995 $3,823 2018-2020 8.5% 8.4% 2019-2021 8.8% 8.5% 2018-2020 56 TH 70 TH 2019-2021 56 TH 67 TH

 

Shareholder Engagement and Board Consideration of 2021 Shareholder Vote on Executive Compensation

Republic has an active shareholder outreach program and regularly engages with shareholders on a number of matters, including executive compensation, governance and sustainability. The Board continues to consider feedback received from shareholders on executive compensation when designing and reviewing our compensation program. The Board was pleased that our 2021 non-binding advisory vote on named executive officer compensation (“say-on-pay vote”) received support from 91.9% of the shares voted. Our shareholders, both via the say-on-pay vote at the 2021 Annual Meeting and in our engagement sessions, spoke favorably of our overall compensation program and of the changes we have previously made as a direct result of prior shareholder feedback.

This past year, following engagement discussions in which the topic of best practices around incorporation of ESG metrics into compensation was discussed, and deliberation among the Talent & Compensation Committee members, our Board added an ESG component to the Company’s annual incentive plan for 2022.  With the change, annual incentives for senior executives including our NEOs may be adjusted up or down by up to 10% based on the Company’s interim performance on safety, talent and climate leadership goals. The Board continues to seek shareholder input on our compensation program to ensure that it is well-designed to incentivize our management team to drive shareholder value.

 

 

 

 

 

 

 

 

 

 

 

Sustainability action Jeremy W. educating the next generation being a leader isn’t easy. It requires a commitment not just in how we operate, but how be involve the community it takes dedicated employees like Jeremy E., who met with more than 100 fourth grade students at the Gehrig academy of science and technology in lays vegas to teach them about the importance of recycling and sustainability. Knowledge and understanding are the keys to building a sustainable Future and republic services is committed to lead the way

 

 

 

 

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Key Compensation Governance Practices

The Talent & Compensation Committee independently governs the executive compensation program with the support of an independent compensation consultant and management. Our compensation program demonstrates strong governance through the following principles and characteristics:

 

 

 

 

 

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Executive Compensation Goals and Objectives

Our executive compensation philosophy and practices reflect our strong commitment to paying for performance — both short-term and long-term. A primary component of our people and talent agenda is to identify, recruit, place, develop and retain key management talent to help ensure that we have the highest caliber leadership. The Talent & Compensation Committee and the executive management team believe that a critical aspect of being able to successfully execute this strategy is maintaining a comprehensive, integrated and well-balanced executive compensation program. We believe such a program provides competitive and differentiated levels of pay based on corporate performance and aligns executives’ interests with shareholders’ interests.

EXECUTIVE COMPENSATION PROGRAM GOALS

 

ATTRACT AND RETAIN EXECUTIVES Attract and retain the highest caliber executives by providing compensation opportunities comparable to those offered by other companies with which we compete for business and talent We define performance as the achievement of results against our challenging internal financial targets and ESG goals, which take into account industry and market conditions. ACHIEVE BUSINESS GOALS Communicate, support and drive achievement of our business strategies and goals MOTIVATE PERFORMANCE Motivate strong performance from executive management in an incentive-driven culture by delivering greater rewards for superior performance and reduced for underperformance Our executive compensation program has an integrated focus on short-and long-term financial metrics and provides an effective framework by which progress against strategic goals may be appropriately measured and rewarded. The Talent & Compensation Committee continues to place great emphasis on performance indicators that executive management can influence or control, including profitability and sound financial management of our capital, to drive sustained shareholder value creation and reward executives when they are successful. REWARD ACHIEVEMENT Reward achievement of both short-term results and long-term shareholder value creation ALIGN INTERESTS Closely align executives’ interests with our shareholders’ interests and foster an equity-based ownership environment

Structural Alignment of Pay and Performance

In 2021, we compensated each NEO using three key forms of compensation: