American Home Shield 2010 Annual Report Download - page 129

Table of Contents
employees, including our NEOs, in order to recognize outstanding performance or otherwise as Holdings may determine is in the best interest of the
Company. In 2010, Holdings amended the MSIP to allow for the award of RSUs. In connection with the amendment of the MSIP, RSUs that vest in equal
installments on the first three anniversaries of the grant date were awarded to each executive officer (among others), other than Mr. Spainhour, to promote
management continuity following the announcement of Mr. Spainhour's retirement. RSUs were awarded to the NEOs in the following amounts: 60,000 to
Messrs. Martin, McMullen and Norden and 65,000 to Mr. Donly.
The MSIP 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 and RSUs are made to our executive officers by Holdings rather than by the Company, they
are an integral part of the total rewards package provided to the executive officers. The costs of these transactions are borne by the Company and are reflected
in our financial statements.
We believe that the opportunity to purchase shares and to receive options to purchase shares and RSU awards of Holdings' stock encourages our
executive officers to focus on our long-term performance, thereby aligning their interests with the interests of Holdings' primary ownership group. 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 and RSU grants, the executive officers are encouraged to focus on sustained increases in stockholder value.
Specifically, we believe the granting of stock options and RSUs 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;
Maintain competitive levels of total compensation; and
Provide value for key executives enabling the Company to retain key leaders.
Each of our NEOs accepted the offer to purchase Holdings' shares of common stock and has already received his shares and a grant of options to
purchase additional shares. Each participating NEO purchased shares for cash and, in addition to cash purchases, Mr. McMullen elected to allocate his eligible
deferred compensation to DSUs, which represent the right to receive a share of Holdings common stock on the first to occur of (i) his termination of
employment, (ii) a fixed date selected by him or (iii) a change in control of Holdings.
Apart from the matching options described above, Holdings has also granted additional standalone options to each NEO. The number of shares offered to
and options granted to each NEO was determined based on position in the organization, scope of responsibility and size of business unit or function that the
NEO oversees. While Holdings may, in its discretion, offer additional shares or grant additional options to our executive officers, Holdings' practice to date
has been to offer each NEO only one opportunity to invest in Holdings' common stock and to receive options. The options held by the NEOs, along with the
RSUs, if any, are set forth in the Outstanding Equity Awards at Fiscal Year-End (2010) table below.
Retirement Benefits
Employees, including the NEOs, are generally eligible to participate in the ServiceMaster Profit Sharing and Retirement Plan (the "PSRP"). The PSRP is
a qualified 401(k) defined contribution plan. The Company provides for a matching contribution in the PSRP where employees receive a dollar-for-dollar
match on the first 1 percent of their contributions, then a $0.50-per-dollar match on
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