GNC 2011 Annual Report Download - page 138

Table of Contents
periods, would cause us competitive harm by disclosing to competitors a key element of our internal projections.
The Compensation Committee sets the EBITDA target at a level it believes is both challenging and achievable. By establishing a target that is
challenging, the Compensation Committee believes that performance of our employees, and therefore our performance, is maximized. By setting a target that
is also achievable, the Compensation Committee believes that employees remain motivated to perform at the high level required to achieve the target. In
setting and determining the difficulty of achieving these targets, the Compensation Committee considers primarily recent performance under the incentive
plans, our internal projections and the assumptions on which our projections are based, including prevailing and expected general economic conditions. While
we have experienced success in meeting the established EBITDA targets, the Compensation Committee may determine in a particular year that, based upon
factors other than financial performance, the awarding of full or partial bonuses is appropriate. The EBITDA target under the 2011 Incentive Plan represents
an increase of 16.1% over the EBITDA target under the 2010 Incentive Plan, which represented an increase of 15.8% over the EBITDA target under the 2009
Incentive Plan. Each of these increases exceeded the increase in actual EBITDA achieved in the preceding year. Based primarily on the fact that achieving the
EBITDA target under the 2011 Incentive Plan requires us to achieve EBITDA growth in excess of that which we achieved in 2010, the Compensation
Committee believes that achieving 100% or more of budgeted EBITDA established in the 2011 Incentive Plan, while possible to achieve for our Named
Executive Officers, will present a significant challenge.
The Compensation Committee may, in its discretion, amend the foregoing levels on an individual basis if it determines that competitive considerations
and/or circumstances require us to make exceptions to the foregoing levels to retain qualified executives.
Generally, an annual performance bonus is payable only if the Named Executive Officer is employed by us on the date payment is made.
Stock Options. We believe that equity-based awards are an important factor in aligning the long-term financial interests of our Named Executive
Officers and stockholders. The Compensation Committee continually evaluates the use of equity-based awards and intends to continue to use such awards in
the future as part of designing and administering our compensation program. See " — Stock Awards" above for more information regarding our stock option
grants.
We follow a practice of granting equity incentives in the form of stock options in order to grant awards that contain both substantial incentive and
retention characteristics. These awards are designed to provide emphasis on providing significant incentives for continuing growth in stockholder value.
Historically, stock options have generally been granted to qualifying new employees on the commencement of their employment and to existing employees
following a significant change in job responsibilities or to recognize special performance. The Compensation Committee has granted options in such amounts
as it believes are commensurate with each Named Executive Officer's position and responsibilities and sufficient to align the long-term financial interests of
our Named Executive Officers with our Parent's stockholders. Stock options generally are subject to vesting in equal annual installments on the first five
anniversaries of the date of grant and have a term of ten years. However, stock options granted to our Chief Executive Officer are subject to vesting in equal
annual installments on the first four anniversaries of the date of grant and have a term of ten years. With respect to stock options granted to our President, 20%
vest upon each of the first and second anniversaries of the date of grant, 30% vest upon each of the third and fourth anniversaries of the date of grant, and all
of such stock options have a term of ten years. Also, in connection with the commencement of his employment, Mr. Berg was granted certain options to
purchase (i) 37,250 shares of our Parent's Class A common stock pursuant to the
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