American Home Shield 2015 Annual Report Download - page 41

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granted under these plans and (ii) other equity based awards granted under the ServiceMaster Global Holdings, Inc. 2014 Omnibus
Incentive Plan (“Omnibus Incentive Plan”), including approximately 1.7 million shares of our common stock that have been sold in
the public market through the exercise of stock options as of February 19, 2016, are freely tradable under the Securities Act, unless
purchased by our affiliates. As of February 19, 2016, there were stock options outstanding to purchase a total of 3,584,716 shares of
our common stock and there were 480,649 shares of our common stock subject to restricted stock units. In addition, 7,481,708 and
965,698 shares of our common stock are reserved for future issuances under our Omnibus Incentive Plan and the ServiceMaster
Global Holdings, Inc. Employee Stock Purchase Plan (“Employee Stock Purchase Plan”), respectively.
On February 24, 2015, our board of directors approved and recommended for approval by our stockholders the Employee
Stock Purchase Plan, which became effective for offering periods commencing July 1, 2015. The Employee Stock Purchase Plan is
intended to qualify for the favorable tax treatment under Section 423 of the Code. Under the plan, eligible employees of the Company
may purchase common stock, subject to Internal Revenue Service limits, during pre specified offering periods at a discount
established by the Company not to exceed ten percent of the then current fair market value. On April 27, 2015, our stockholders
approved the Employee Stock Purchase Plan with a maximum of one million shares of common stock authorized for sale under the
plan. On November 3, 2015, we filed a registration statement on Form S-8 under the Securities Act to register the 1,000,000 shares of
common stock that may be issued under the Employee Stock Purchase Plan and, as a result, all shares of common stock acquired
under the Employee Stock Purchase Plan will be freely tradable under the Securities Act, unless purchased by our affiliates.
The remaining shares of our common stock outstanding as of February 19, 2016 are restricted securities within the meaning
of Rule 144 under the Securities Act, but are eligible for resale subject to applicable volume, means of sale, holding period and other
limitations of Rule 144 under the Securities Act or pursuant to an exception from registration under Rule 701 under the Securities Act.
In the future, we may issue additional shares of common stock or other equity or debt securities convertible into or
exercisable or exchangeable for shares of our common stock in connection with a financing, acquisition, litigation settlement or
employee arrangement or otherwise. Any of these issuances could result in substantial dilution to our existing stockholders and could
cause the trading price of our common stock to decline.
If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our
stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts
publish about us or our business. If one or more of the analysts that covers our common stock downgrades our stock or publishes
misleading or unfavorable research about our business, our stock price would likely decline. If one or more of the analysts ceases
coverage of our common stock or fails to publish reports on us regularly, demand for our common stock could decrease, which could
cause our common stock price or trading volume to decline.
Future offerings of debt or equity securities which would rank senior to our common stock may adversely affect the market price
of our common stock.
If, in the future, we decide to issue debt or equity securities that rank senior to our common stock, it is likely that such
securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally,
any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than
those of our common stock and may result in dilution to owners of our common stock. We and, indirectly, our stockholders, will bear
the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will
depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our
future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our
common stock and diluting the value of their stock holdings in us.
Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related rules
under the Sarbanes-Oxley Act of 2002, is expensive and time-consuming, and any delays or difficulties in satisfying these
obligations could have a material adverse effect on our future results of operations and our stock price.
Our initial public offering was completed on July 1, 2014. As a public company, we are subject to the reporting and corporate
governance requirements, under the listing standards of the NYSE and the Sarbanes-Oxley Act of 2002, that apply to issuers of listed
equity, which impose certain significant compliance costs and obligations upon us. The changes necessitated by being a publicly listed
company require a significant commitment of additional resources and management oversight which increase our operating costs.
Other expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor
relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and
listing fees, as well as other expenses. As a public company, we are required, among other things, to define and expand the roles and
the duties of our board of directors and its committees and institute more comprehensive compliance and investor relations functions.
Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC, the
NYSE or other regulatory authorities.
Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated by-laws could
discourage, delay or prevent a change of control of our company and may affect the trading price of our common stock.
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