GNC 2010 Annual Report Download - page 142

Table of Contents
5. Severance compensation. Our Chief Executive Officer and our other Named Executive Officers with employment agreements are
entitled to severance compensation, including:
• a payment based on the Named Executive Officer's base salary upon termination because of death or disability, termination
by us without cause, or termination by the Named Executive Officer for good reason;
• 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 the Named
Executive Officer was paying for health insurance premiums while employed for a period following the termination of the
Named Executive Officer's employment.
See "— Employment Agreements with our 2009 Named Executive Officers" and "—Potential Termination or Change-in-Control
Payments" for a discussion of the severance payments and benefits our Chief Executive Officer and the other Named Executive Officers may
be entitled to receive upon a termination of 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. 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.
Under the terms of the 2007 Stock Plan, the Compensation Committee of our Parent (the "Parent Compensation Committee") is
responsible for administering the 2007 Stock Plan and making any award determinations. The Parent Compensation Committee does not
delegate any function of the stock option grants. The Compensation Committee intends for stock option grants generally to be considered on an
annual basis, except for new hires, promotions, and special performance recognition. Awards are generally granted only after the release of
material information, such as quarterly or annual earnings, or 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. The Parent Compensation Committee has used a valuation methodology in which the fair market value of the common stock is based
on our business enterprise value and, in situations deemed appropriate by the Parent Compensation Committee, may be discounted to reflect
the lack of marketability associated with the common stock. 136