The other corporate oÇcers with responsibility for our operations have an average of over 23 years of
management experience in the solid waste industry. Our Ñve regional vice presidents and our 23 area
presidents have an average of 24 years of experience in the industry.
In addition, Harris W. Hudson, who has served as our Vice Chairman since our initial public
oÅering, has over 40 years of experience in the solid waste industry, including 11 years with Waste
Management and 19 years with private waste collection companies.
‚ Decentralized Management Structure. We maintain a relatively small corporate headquarters staÅ,
relying on a decentralized management structure to minimize administrative overhead costs and to
manage our day-to-day operations more eÇciently. Our local management has extensive industry
experience in growing, operating and managing solid waste companies and has substantial experience
in their local geographic markets. In early 2001, we added a sales, maintenance and operations
manager to each of our regional management teams, which previously consisted of a regional vice
president and a regional controller. We believe that strengthening our regional management teams
allows us to more eÅectively and eÇciently drive our company's initiatives and helps ensure
consistency throughout our organization. Our regional management teams and our area presidents have
extensive authority, responsibility and autonomy for operations within their respective geographic
markets. Compensation for regional and area management teams is primarily based on the improve-
ment in operating income produced and the free cash Öow and return on invested capital generated in
each manager's geographic area of responsibility. In addition, through long-term incentive programs,
including stock options, we believe we have one of the lowest turnover levels in the industry for our
local management teams. As a result of retaining experienced managers with extensive knowledge of
and involvement in their local communities, we are proactive in anticipating our customers' needs and
adjusting to changes in our markets. We also seek to implement the best practices of our various
regions and areas throughout our operations to improve operating margins.
‚ Integrated Operations. We seek to achieve a high rate of internalization by controlling waste streams
from the point of collection through disposal. We expect that our fully integrated markets generally will
have a lower cost of operations and more favorable cash Öows than our non-integrated markets.
Through acquisitions and other market development activities, we create market-speciÑc, integrated
operations typically consisting of one or more collection companies, transfer stations and landÑlls. We
consider acquiring companies that own or operate landÑlls with signiÑcant permitted disposal capacity
and appropriate levels of waste volume. We also seek to acquire solid waste collection companies in
markets in which we own or operate landÑlls. In addition, we generate internal growth in our disposal
operations by developing new landÑlls and expanding our existing landÑlls from time to time in markets
in which we have signiÑcant collection operations or in markets that we determine lack suÇcient
disposal capacity. During the three months ended December 31, 2004, approximately 54% of the total
volume of waste that we collected was disposed of at landÑlls we own or operate. In a number of our
larger markets, we and our competitors are required to take waste to government-controlled disposal
facilities. This provides us with an opportunity to eÅectively compete in these markets without
investing in landÑll capacity. Because we do not have landÑll facilities or government-controlled
disposal facilities for all markets in which we provide collection services, we believe that through
landÑll and transfer station acquisitions and development we have the opportunity to increase our waste