American Home Shield 2007 Annual Report Download - page 84

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Effectiveness of Disclosure Controls and Procedures. ServiceMaster's Chairman and Chief Executive Officer, J. Patrick
Spainhour, and ServiceMaster's Vice Chairman and Chief Financial Officer, Ernest J. Mrozek, have evaluated ServiceMaster's
disclosure controls and procedures as of the end of the period covered by this Form 10-K. ServiceMaster's disclosure controls and
procedures include a roll-up of financial and non-financial reporting that is consolidated in the Downers Grove office of
ServiceMaster. The reporting process is designed to ensure that information required to be disclosed by ServiceMaster in the reports
that it files with or submits to the Securities and Exchange Commission is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and forms. Messrs. Spainhour and Mrozek have
concluded that both the design and operation of ServiceMaster's disclosure controls and procedures are effective.
See "Management's Report on Internal Control over Financial Reporting" in Item 8.
Changes in Internal Control over Financial Reporting. No change in ServiceMaster's internal control over financial reporting
occurred during the fourth quarter of 2006 that has materially affected, or is reasonably likely to materially affect, ServiceMaster's
internal control over financial reporting.
Management Certifications. In June 2006, the Company submitted to the New York Stock Exchange the Annual CEO
Certification required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual. The Company has also
filed, as exhibits to its Annual Report on Form 10-K for the year ended December 31, 2006, the certifications of its Chief Executive
Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.
ITEM 9B. OTHER INFORMATION
The following information is being provided pursuant to Item 5.02(e) of Form 8-K.
Entry into Separation Agreements. In October 2006, the Board of Directors of the Company approved a plan to consolidate the
Company's headquarters into its operations support center in Memphis, Tennessee and close its current headquarters in Downers
Grove, Illinois. The Company believes the consolidation of the Downers Grove support functions and positions with the operating
unit leadership in Memphis will improve the speed and effectiveness of communications and decision-making. The transition to
Memphis is targeted to be completed by November 2007.
In connection with the consolidation plan, the Company offered approximately 150 employees located in the Downers Grove office
the opportunity to accept a relocation agreement relating to an employee's relocation from the Downers Grove office to the
Memphis office or a separation agreement in the event the employee chose not to relocate. On February 26, 2007, the Company
entered into separation agreements (each a "Separation Agreement") approved by the Compensation and Leadership Development
Committee with each of Mitchell Engel, the Chief Marketing Officer, and Jim Kaput, Senior Vice President and General Counsel.
Mr. Engel's Separation Agreement provides that his separation date will be December 31, 2007. Mr. Kaput's Separation Agreement
provides that his separation date will be October 31, 2007. In exchange for Messrs. Engel's and Kaput's separate agreements not to
compete against the Company and not to solicit employees or customers of the Company for a period of two years after their
respective separation dates, Mr. Engel will receive an amount equal to two times his current base salary and target annual bonus, or
$1,784,000, and Mr. Kaput will receive an amount equal to two times his current base salary and target annual bonus, or
$1,700,000, in each case less applicable tax withholdings. In addition, Messrs. Engel and Kaput will receive a retention bonus equal
to $446,000 and $283,333, respectively, for performing services through their respective separation dates in connection with the
closure of the Downers Grove office and the consolidation of offices in Memphis. During 2007, Messrs. Engel and Kaput will each
participate in the Company's 2007 annual bonus plan and any other compensation plans of the Company other than any long-term
incentive plan. Messrs. Engel and Kaput will cease participation in compensation plans on their respective separation dates.
If Mr. Engel's employment with the Company is terminated by the Company without cause Mr. Engel would receive, subject to the
execution of a release by Mr. Engel, the amounts set forth above for Mr. Engel. If Mr. Kaput's employment with the Company is
terminated by the Company without cause Mr. Kaput would receive, subject to the execution of a release by Mr. Kaput, the
amounts set forth above for Mr. Kaput.
If Mr. Engel's employment with ServiceMaster is terminated for any reason other than by ServiceMaster without cause, Mr. Engel
will forfeit the amounts set forth above for Mr. Engel. If Mr. Kaput's employment with ServiceMaster is terminated for any reason
other than by ServiceMaster without cause, Mr. Kaput will forfeit the amounts set forth above for Mr. Kaput.
Shareholder Proposals. As set forth under "Shareholder Proposals and Other Business" in the Company's proxy statement dated
March 24, 2006 (the "2006 Proxy Statement") relating to the 2006 annual meeting of shareholders, the 2007 annual meeting of
shareholders is currently scheduled to be held on May 4, 2007. The 2006 Proxy Statement stated that a shareholder proposal or
nomination intended to be brought before the 2007 annual meeting must be delivered to the Corporate Secretary no later than the
close of business on February 18, 2007. The
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