American Home Shield 2008 Annual Report Download - page 105

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 10. Commitments and Contingencies (Continued)
have a material effect on the Company's business, financial condition, annual results of operations or cash flows.
Note 11. Related Party Transactions
In connection with the Transactions, the Company paid the Equity Sponsors and certain affiliates thereof approximately $80 million in fees and expenses
for financial and transaction structuring advice and analysis as well as assistance with due diligence investigations and debt financing negotiations. The
amount has been included in the purchase price of the Merger. Also in connection with the Transactions, the Company entered into the Consulting Agreement
with CD&R under which CD&R provides the Company with on-going consulting and management advisory services in exchange for an annual management
fee of $2 million. This fee is payable quarterly. The Company recorded a management fee of $2 million for the year ended December 31, 2008 and
$0.9 million for the Successor period from July 25, 2007 to December 31, 2007. The Consulting Agreement also provides that CD&R may receive future fees
in connection with certain subsequent financing and acquisition or disposition transactions.
The Company was advised by Holdings that, during the year ended December 31, 2008, Holdings completed open market purchases of $54.0 million in
face value of our Permanent Notes for a cost of $16.9 million. The debt acquired by Holdings has not been retired, and the Company has continued to pay
interest in accordance with the terms of the debt. Interest accrued by the Company and payable to Holdings as of December 31, 2008 amounted to
$0.4 million. There were no interest payments by the Company to Holdings in 2008.
The Company was advised by Holdings that during January 2009, Holdings completed additional open market purchases of $11.0 million in face value
of our Permanent Notes for a cost of $4.5 million.
Note 12. Employee Benefit Plans
Effective January 2, 2007, the Company approved a new long-term incentive plan (the "LTIP") designed to reward certain employees based on the
accumulated three year Company financial performance against pre-tax income and revenue goals. Pursuant to the LTIP, the awards will be paid out in cash at
the end of a three year performance period. The costs of the awards are recognized over the performance period and are included in selling and administrative
expense in the consolidated statements of operations. Compensation expense related to the LTIP was $1.7 million for the year ended December 31, 2008,
$1.5 million for the Successor period from July 25, 2007 to December 31, 2007 and $1.9 million for the Predecessor period from January 1, 2007 to July 24,
2007.
Discretionary contributions to qualified profit sharing and non-qualified deferred compensation plans were made in the amount of $14.0 million for the
year ended December 31, 2008, $3.5 million for the Successor period from July 25, 2007 to December 31, 2007, $5.8 million for the Predecessor period from
January 1, 2007 to July 24, 2007 and $10.2 million for the year ended December 31, 2006. Under the Employee Share Purchase Plan, the Company
contributed $0.2 million for the Predecessor period from January 1, 2007 to July 24, 2007 and $0.9 million for the year ended December 31, 2006. These
funds defrayed part of the cost of the shares purchased by employees. The Employee Share Purchase Plan was terminated in conjunction with the Merger.
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