GNC 2008 Annual Report Download - page 132

Table of Contents
first or second fiscal quarters are required to be filed or otherwise provided to noteholders and (ii) the date our Form 10-K is required to
be filed or otherwise provided to noteholders;
• awards may be granted to new employees on the last day of the first month of employment;
• awards may be granted to new members of the Company Board or the board of directors of our Parent (the "Parent Board") on the last
day of the month in which the new member is elected or appointed; and
• awards may be granted at other times if the circumstances of the grant are evidenced and no action is taken with respect to the date of
the grant that would constitute, or create the appearance of, a manipulation of the award exercise price.
The Parent Compensation Committee sets the exercise price per share for stock option grants at an amount greater than or equal to the fair
market value per share of our common stock. However, our ultimate parent company's common stock has not been and is not publicly traded.
Since the Merger, the Compensation Committee has used a valuation methodology in which the fair market value of the common stock is
based on our business enterprise value, as adjusted to reflect our estimated excess cash and the fair market value of our debt.
The exercise price of the stock options granted on the closing date of the Merger was based on the purchase price per share in connection
with all of the equity contributions to fund a portion of the acquisition, which the Parent Board determined to be the best measure of the
common stock's fair market value as of that date.
The Parent Compensation Committee does not delegate any function of the stock option grants, other than common administrative functions
that are delegated to the Chief Legal Officer such as providing award agreements based on the standard form and receiving notices of award
exercises from award holders. The Named Executive Officers are not treated differently from other employees under the Stock Option
Administration Policy.
Under the terms of the 2007 Stock Plan, the Compensation Committee is responsible for administering the 2007 Stock Plan and making any
award determinations.
How We Chose Amounts and/or Formulas for Each Element
Base Salary. The Compensation Committee intends to set the base salary for our Named Executive Officers at a level to attract and retain a
strong motivated leadership team, but not so high that it creates a negative perception with our employees generally, noteholders, or
stockholders. Each Named Executive Officer's current and prior compensation is considered in setting future compensation. In addition, we
review the compensation practices of other companies. Base salary amounts are determined by complexity and level of position as well as
market comparisons.
Each year, we perform a market analysis with respect to the compensation of all of our Named Executive Officers. Although we do not use
compensation consultants, we participate in various surveys and use the survey data for market comparisons. Currently, we use surveys with
both base salary and other short-term compensation data, including incentive compensation and fringe benefits, that are available from Mercer
Human Resource Consulting LLC, Western Management Group, and Watson Wyatt Worldwide in the specialty retail and non-durable
manufacturing categories. In addition to focusing our analysis on the specific executive positions, we break down the survey information based
on corporate and/or average store revenue and geographic location of comparable companies to ensure that
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