American Home Shield 2008 Annual Report Download - page 144

Table of Contents
Long Term Incentive Plans
Our long-term incentive plans are designed to retain valuable executives and to align the interest of our executives with the achievement of sustainable
long-term growth and performance. We have two incentive plans in place: the LTIP and the MSIP.
LTIP
In 2007, the Company's then-standing Compensation Committee approved the LTIP, which replaced the Company's equity-based compensation plan that
was suspended due to the then-pending acquisition of the Company. The goal of the LTIP was to link compensation of key employees to the achievement of
performance goals established by the Compensation Committee relating to consolidated pre-tax income and revenue of the Company and its subsidiaries over
a three-year performance period beginning January 1, 2007, and ending December 31, 2009. Individual grant levels were based on an evaluation of historical
compensation levels, taking into consideration internal compensation equity and start date, where relevant, and were delivered in the form of units with a
target cash value of $100 per unit. No additional LTIP grants were made in 2008. Any payments under the LTIP are to be made by March 15, 2010.
MSIP
The MSIP provides certain key employees of ServiceMaster with the opportunity to invest in shares of Holdings common stock and to receive options to
purchase shares of Holdings common stock. Our executive officers are eligible to participate in the MSIP, but actual investment opportunities provided to any
executive officer or the executive officers as a group are entirely at the discretion of Holdings. Although the investment opportunities and grants of stock
options are not made to our executive officers by us, we consider these investment opportunities and grants of options to be an important part of our overall
executive officer compensation program. The costs of these transactions are borne by us and are reflected in our financial statements. Accordingly, we factor
these transactions into our evaluation of each executive officer's overall compensation when making executive officer compensation decisions.
We believe that the opportunity to purchase shares and to receive options to purchase shares of Holdings' stock encourages our executive officers to
focus on our long-term performance, thereby aligning their interests with the interests of the other Holdings stockholders. The purchase of shares under the
MSIP allows executive officers to increase their stake in the Company's performance by putting their own financial resources "at risk." Additionally, through
stock option grants, the executive officers are encouraged to focus on sustained increases in stockholder value. Specifically, we believe the granting of stock
options assists the Company to:
enhance the link between the creation of stockholder value and long-term executive incentive compensation;
provide an opportunity for increased equity ownership by executives; and
maintain competitive levels of total compensation.
Each of our Named Executive Officers, with the exception of Ms. Goettel, participated in Holdings' offering of shares of common stock and grant of
options to purchase additional shares, which closed on December 19, 2007. Each participating Named Executive Officer purchased shares for cash and, in
addition to cash purchases, each of Messrs. McMullen, Brackett and Isakson elected to allocate eligible deferred compensation to deferred share units, which
represent the right to receive a share on the first to occur of (i) such Named Executive Officer's termination of employment, (ii) a fixed date selected by such
Named Executive Officer, and (iii) a change of control of Holdings. For each share of common stock and deferred share unit acquired by a
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