American Home Shield 2010 Annual Report Download - page 124

Table of Contents
Annual cash incentive, which is intended to motivate the executive to achieve short-term Company (and, where applicable, business unit)
performance goals;
Stock, RSUs and stock options to motivate executives to achieve long-term performance goals and to provide equity ownership of Holdings to
our executives to ensure goal alignment with Holdings' primary ownership group; and
Employee benefits and perquisites, which are intended to attract and retain qualified executives by ensuring that our compensation program is
competitive.
Each of these elements, discussed in more detail below, plays an integral role in our balancing of executive rewards over short- and long-term periods.
We believe the design of our executive compensation program creates alignment between performance achieved and compensation rewarded and motivates
achievement of both annual goals and sustainable long-term performance.
Determination of Executive Compensation
Pay Decision Process
The Company's Board establishes the compensation of our CEO. In determining the CEO's compensation, the Board considers the following factors:
(i) the operating and financial performance of the Company, (ii) the competitive market data provided by Aon Hewitt, our external compensation consultant,
as presented to the Board by our Senior Vice President, Human Resources, (iii) the Board's assessment of the CEO's individual performance, and
(iv) prevailing economic conditions. The CEO recommends compensation for the Company's other executive officers based on his assessment of each
executive officer's individual responsibility, individual and business unit performance, overall contribution, the competitive market data provided by Aon
Hewitt and prevailing economic conditions. The Board approves the compensation arrangements for each executive officer.
We believe that our executive compensation program must be attractive to compete in the market for executive talent and must support our growth
strategy. As a result of this focus, we rely on competitive pay practices and individual and business performance in determining the compensation of our
executives. In making these determinations, we also consider historical individual compensation levels, historical company payout levels for annual cash
incentives and the current privately held ownership structure of the Company. The executive compensation program and underlying philosophy are reviewed
at least annually to determine what, if any, modifications should be considered.
As part of our review of competitive pay practices, ServiceMaster engaged Aon Hewitt in 2010 to conduct a total market review to determine whether
executive officer total compensation opportunities were competitive. Companies used for the executive compensation pay comparison included a broad group
of companies similar in size to ServiceMaster. In consultation with Aon Hewitt, we developed a comparison group (the "Peer Group") consisting of more than
60 diversified or service, retail and manufacturing companies with revenues ranging from approximately one-half to two times our revenues. The decision to
set that range was made on Aon Hewitt's recommendation due to our diversified business model and the comparability of compensation levels within that
particular revenue range. Aon Hewitt performed a regression analysis to further refine estimated market values to reflect our revenue size. Companies in the
Peer Group may change on a year-to-year basis as a result of the availability of the companies' compensation data
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