American Home Shield 2011 Annual Report Download - page 137

Table of Contents
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
and our ability to attract and retain key executives. We believe the design of our executive compensation program creates alignment between performance
achieved and compensation awarded, 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. Historically, 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) the prevailing economic conditions. The CEO recommends to our Board compensation for the Company's other executive officers based on his
assessment of each executive officer's area of 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, we engaged Aon Hewitt in 2011 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 70
diversified or service, retail and manufacturing companies with revenues ranging from approximately one-third to two and one-half 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 statistically adjust 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 in surveys conducted by
Aon Hewitt. We continually review the Peer Group and may from time-to-time adjust the companies comprising the group to better reflect competitors in our
industry, companies with similar business models and companies that compete in our labor markets for talent. For 2011, the Peer Group consisted of the
following companies:
Peer Group
Abercrombie & Fitch Co.
ACCO Brands Corporation
Alberto-Culver Company
Andersen Corporation
Anixter International Inc.
Ann Inc.
AptarGroup, Inc.
AutoZone, Inc.
Avery Dennison Corporation
Big Lots, Inc.
Blockbuster Inc.
Brink's Home Security
Holdings, Inc.
CDW Corporation
Chipotle Mexican Grill, Inc.
Church & Dwight Company
The Clorox Company
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