Waste Connections, Inc.

​

that date. Incentive compensation relating to financial reporting measures in earlier periods are subject to the prior compensation recoupment policy that was described in the Management Information Circular and Proxy Statement for our 2023 Annual Meeting of Shareholders.

We also maintain numerous risk mitigating provisions in our compensation arrangements for the NEOs, which are described under the heading “Compensation Risk Assessment.” Examples include the Compensation Committee’s ability to exercise negative discretion to reduce annual incentive awards to zero, PSU grants which require achievement of multiple pre-determined goals over a three-year period before vesting, anti-hedging/anti-pledging policies, and share ownership requirements.

Tax Deductibility Considerations

In establishing total compensation for our executive officers, the Compensation Committee considers the accounting treatment and tax treatment of its compensation decisions, including Section 162(m) of the IRC. Section 162(m) generally disallows an income tax deduction to publicly traded corporations for compensation in excess of $1,000,000 paid for any fiscal year to the Company’s “covered employees,” defined in Section 162(m) as the CEO, the Chief Financial Officer and the three most highly compensated executive officers, other than the CEO and Chief Financial Officer.

The Compensation Committee believes that the potential deductibility of the compensation payable under its incentive compensation plans and arrangements should be only one of a number of relevant factors taken into consideration in establishing those plans and arrangements for our executive officers and not the sole governing factor. For that reason, the Compensation Committee intends to structure its incentive compensation plans and arrangements in a manner which, acknowledging that a portion of those compensation payments may not be deductible under Section 162(m), assures appropriate levels of total compensation for our executive officers based on and aligned with the Company’s performance.

Severance and Change in Control Arrangements

The Compensation Committee believes that the Company’s current and historic successes are due in large part to the leadership, skills and performance of the NEOs, and that it is critical to maintain the stability of the Company by providing severance and change in control benefits in order to encourage NEO retention through a change in control. On February 13, 2012, a subsidiary of the Company implemented a Separation Benefits Plan, which was most recently restated on July 26, 2022, as discussed below on page 64, under which eligible officers of the Company, including our NEOs, may receive certain severance and change in control benefits (the “Separation Benefits Plan”).

CD&A Appendix —Calculation of Actual Results for 2022 PSU Financial Performance Measures

As discussed above, the 2022 PSUs were subject to a three-year performance period that ended December 31, 2024, with calculations made annually and prorated for the purpose of determining target achievement. The financial performance measures for the 2022 PSUs included: (i) adjusted free cash flow per share growth, and (ii) absolute improvement in ROIC. The calculation of our results for 2021 and 2024 for the adjusted free cash flow measure and the ROIC improvement measure are listed below.

ADJUSTED FREE CASH FLOW PER SHARE MEASURE (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

54 2025 Proxy • Waste Connections, Inc.

RETURN ON INVESTED CAPITAL MEASURE (IN MILLIONS, EXCEPT PERCENTAGES)

​

Non-GAAP measures, as reconciled in our Annual Reports on Form 10-K for the fiscal years ended December 31, 2021, and 2024.

​

(1)

Adjusted free cash flow per share measure defined as compound annual growth rate of adjusted free cash flow divided by total diluted shares outstanding during the three-year period ended December 31, 2024, as adjusted.

​

(2)

Reflects effective tax rates for the full years 2021 and 2024, respectively, as adjusted.

​

(3)

Average total capital defined during each period as the average outstanding debt less cash plus equity, adjusted to reflect the timing of incremental debt associated with acquisitions late in the year. Outstanding debt includes long-term debt and current year debt, and cash includes restricted cash.

​

(4)

ROIC measure defined as absolute increase in ROIC during the three-year period ended December 31, 2024, as adjusted.

​

2025 Proxy • Waste Connections, Inc.55