GNC 2008 Annual Report Download - page 131

Table of Contents
• a prorated payment of annual incentive compensation for the year in which employment is terminated if a bonus would have
been payable had the Named Executive Officer been employed at the end of the year; and
• reimbursement of the cost of continuation coverage under COBRA to the extent it exceeds the amount they were paying for
health insurance premiums while employed for a period following the termination of their employment.
See "— Employment Agreements and Severance Compensation — Chief Executive Officer Compensation" for a discussion of the
severance payments and benefits our Chief Executive Officer may be entitled to receive upon a termination of his employment. It is
contemplated that the new employment agreements we enter into with our other Named Executive Officers will provide for severance
payments and benefits upon a termination of their employment.
We believe that a competitive executive compensation program is needed in order both to attract and retain qualified Named Executive
Officers.
Stock Awards
All of our employees, and the employees of direct and indirect subsidiaries and other affiliates, including our Named Executive Officers, are
eligible for awards of stock options, restricted stock, and/or other stock-based awards under the GNC Acquisition Holdings Inc. 2007 Stock
Incentive Plan (the "2007 Stock Plan"), which are intended to recognize and incentivize performance. The 2007 Stock Plan was established in
2007 in connection with the Merger and grants were made to certain employees, including all of the current Named Executive Officers, on the
closing date of the Merger to purchase shares of our Parent's Class A common stock. No awards of restricted stock or other stock-based
awards have been made under the 2007 Stock Plan. We believe that through a broad-based plan the economic interests of our employees,
including our Named Executive Officers, are more closely aligned to ownership interests.
Prior to the Merger, Named Executive Officers, other employees, and non-employee directors received grants of stock options under stock
plans maintained by GNC Parent Corporation, our parent company at the time. All of the outstanding GNC Parent Corporation stock options,
which became fully vested and exercisable in connection with the Merger, were canceled as of the closing and each of the former optionholders
received consideration equal to the number of option shares that were canceled multiplied by the merger consideration per share, less the
aggregate exercise price of the canceled options and applicable withholding.
The Parent Compensation Committee intends for stock option grants generally to be considered on an annual basis, except for new hires,
promotions, and special performance recognition. On August 15, 2007, the Compensation Committee together with the Parent Compensation
Committee jointly adopted a Stock Option Administration Policy in order to document best corporate governance practices and procedures for
granting and issuing stock options at appropriate times commensurate with the public disclosure and release of the Company's financial
information. The policy provides, among other things, that:
• annual awards will be granted on the earlier of the date material information is released with respect to our Parent's earnings or the
date our Form 10-Q for the third fiscal quarter is required to be filed or otherwise provided to noteholders;
• other awards may be made on the earlier of the date material information is released with respect to our Parent's earnings or any of
the following dates: (i) the date our Form 10-Q for the 127