PERFORMANCE SHARE UNIT AWARD AGREEMENT
This Performance Share Unit Award Agreement ("Agreement") is entered into effective as of
________________ the "Grant Date"), by and between Waste Management, Inc., a Delaware corporation
(together with its Subsidiaries and Affiliates, the "Company"), and_____________________ (the "Employee"),
pursuant to the Waste Management, Inc. 2004 Stock Incentive Plan (the "Plan"). Employee and the Company
agree to execute such further instruments and to take such further action as may reasonably be necessary to carry
out the intent of this Agreement.
1. Grant. In accordance with the terms of the Plan, the Company hereby grants to the Employee a Performance
Share Unit Award (the "Award") subject to the terms and conditions set forth herein. Performance Share Units
are notational units of measurement denominated in shares of common stock of Waste Management, Inc., $.01
par value, ("Common Stock"), subject to the conditions and restrictions on transferability set forth below and in
2. Performance Vesting Requirement.
(a) The "Performance Period" for this Award shall be the 36-month period commencing on _______________
and ending on _________________. The Award shall be subject to performance vesting requirements based
upon the achievement of the Performance Target specified below, subject to certification of the degree of
achievement of such Performance Target by the Committee pursuant to Section 7 of the Plan.
(b) The measurement tool for determining level of achievement shall be the average Return on Invested Capital
("ROIC") for the 36-month period beginning _______________ and ending _________________. ROIC is
defined to mean (i) the Company's average "as reported" Net Operating Profit After Taxes ("NOPAT") for the
Performance Period, divided by (ii) the Company's average Invested Capital for the Performance Period. For
purposes of this Agreement, the average ROIC for the Performance Period will be calculated using the following