American Home Shield 2010 Annual Report Download - page 127

Table of Contents
applicable, the business unit achieve the performance targets, payout under the Annual Bonus Plan would be 100 percent of a specified percentage of the
executive's base salary. In the event the Company and, where applicable, the business unit do not achieve the performance targets, a lesser bonus may be
earned if the Company and, where applicable, the business unit meet or exceed the threshold amounts for the performance targets, which are generally equal
to the previous year's results achieved for the applicable performance measure. In the event the Company exceeds the performance targets, the amount of the
bonus will increase accordingly. There is no maximum payout under the Annual Bonus Plan on the theory that we pay for performance and our executives
should receive additional compensation when we exceed our performance goals. The weightings of the performance measures are reviewed and determined
annually to reflect Company strategy.
The tables below provide information regarding the 2010 Annual Bonus Plan for our NEOs, including the performance goals and the weight assigned to
each, the thresholds required for minimum payout, and the payout as a percentage of the target bonus if the threshold or target performance is met. The
performance goals and relative weighting reflect the Board's objective of ensuring that a substantial amount of each NEO's total compensation is tied to
Company and, where applicable, business unit performance.
2010 Annual Bonus Plan Weighting, Threshold and Target Performance Goals
Named
Executive
Officer
Organizational
Weighting
Performance
Weighting
Threshold
($ in 000s)
Target
($ in 000s)
% of Target
Performance for
Threshold Payout
% Payout With
Threshold
Performance
J. Patrick
Spainhour
100%
ServiceMaster
50%
ServiceMaster
ACOP $ 555,612 $ 595,855 93.2% 59.5%
Steven J.
Martin
30%
ServiceMaster
Revenue $3,235,512 $3,349,328 96.6% 79.6%
Greerson G.
McMullen
20%
ServiceMaster
Cash Flow $ 454,093 $ 474,285 95.7% 74.5%
Jed L.
Norden
Stephen M.
Donly
30%
ServiceMaster
30%
ServiceMaster
ACOP $ 555,612 $ 595,855 93.2% 59.5%
70% TruGreen
LawnCare
30% TruGreen
LawnCare
ACOP $ 189,286 $ 214,476 88.3% 29.5%
30% TruGreen
LawnCare
Revenue $1,048,936 $1,094,085 95.9% 75.2%
10% TruGreen
LawnCare
Cash Flow $ 158,039 $ 168,919 93.6% 61.4%
The "% of Target Performance for Threshold Payout" is equal to threshold performance (which is generally equal to the prior year's actual performance)
divided by the current year's target goal. The payout levels for performance between threshold and target are based on a 6:1 ratio—for every one percent of
achievement above threshold performance levels, the plan pays out six additional percentage points of the targeted payout. The Board has found the 6:1 ratio
to be an effective motivator to improve over the prior year's results. The payout scale above target is a 4:1 ratio—for every one percent of achievement above
target, the plan pays out an additional four percentage points of the targeted payout. The payout scale below target is based on a somewhat higher ratio to
underscore the importance of achieving target performance and to provide a more material penalty for every percentage point performance is below target.
The payout scale above target is increased to a 6:1 ratio for all performance measures if the plan's revenue target is achieved. This provision increasing the
above target payout scale is intended to emphasize the importance of achieving the Company's revenue target in 2010.
The 2010 Annual Bonus Plan target payout opportunity for each NEO (see table below) was based on our review of Peer Group data and the importance
of the NEO's position relative to the overall financial success of the Company. The following table sets forth information regarding the 2010 performance
under the Annual Bonus Plan, including the percentage of performance target attained and the percentage of target bonus earned.
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