American Home Shield 2011 Annual Report Download - page 143

Table of Contents
highest level of increase in EBIT in the Company's recent history. The Board approved a discretionary bonus of $200,000 for Mr. Brackett to recognize his
leadership of both the Terminix and TruGreen businesses beginning in May 2011 following the departure of the former President of TruGreen to early
December 2011 when he was appointed the President of TruGreen and Mr. Fallon was hired and appointed as President of Terminix. These discretionary
bonuses were in addition to the payments under the ABP described above. These bonuses are included in the Summary Compensation Table in the "Bonus"
Column.
Sign-On Bonuses
The Company has included sign-on bonuses for newly hired executives as a part of the new hire compensation offer. The sign-on bonus is generally
intended to compensate the executive for the lost value of existing compensation arrangements at the executive's prior employer or as otherwise negotiated.
The sign-on bonus also is used to provide a compensation offer that differentiates our offer of employment and serves to attract the executive who frequently
has other available opportunities. The Company paid sign-on bonuses to Messrs. Mullany, Cregg, Coba and Fallon as part of their new hire offers. These sign-
on bonuses were paid in cash amounts of $1,750,000 for Mr. Mullany, $100,000 for Mr. Cregg and $400,000 for Mr. Coba. In lieu of a cash sign-on bonus,
Mr. Fallon received a RSU award with a grant date fair value of $100,000, with such RSUs vesting one-third per year on the first, second and third
anniversaries of the grant date. The sign-on bonus for Mr. Mullany was subject to repayment provisions if Mr. Mullany voluntarily terminated his
employment without good reason prior to February 22, 2012. The sign-on bonus for Mr. Cregg is subject to a prorata repayment provision if he terminates
employment from the Company prior to the first anniversary of his hire date. The sign-on bonus for Mr. Coba is subject to a prorata repayment provision if he
terminates employment with the Company prior to the second anniversary of his hiring date.
Long-Term Incentive Plan
Our long-term equity incentive plan is designed to retain key executives and to align the interests of our executives with the achievement of sustainable
long-term growth and performance. For 2011, our NEOs participated in the MSIP.
MSIP
The MSIP provides certain key employees of ServiceMaster (including all of our NEOs) with the opportunity to invest in shares of Holdings' common
stock, receive RSUs and to receive options to purchase shares of Holdings' common stock. For each share of common stock or DSU acquired by an NEO,
Holdings granted such NEO up to four matching options to purchase shares of Holdings' common stock, except in the case of Mr. Mullany, where Holdings
granted five matching options. In addition, Mr. Mullany also received RSUs valued at one-half the aggregate purchase price of the shares purchased and
Superperformance Options equal to one-tenth the number of additional matching options granted. Superperformance Options will vest (i) before a public
offering if the fair market value of the common stock, as determined by the Holdings' Compensation Committee, is at least $25 per share, and (ii) after a
public offering if the closing price of the common stock on the principal exchange on which it is traded equals or exceeds $25 per share for 20 consecutive
trading days. Holdings has also awarded RSUs to both newly hired executives and longer-tenured NEOs. Unlike equity awards at publicly traded companies,
these investment opportunities are not available to the general public and present an employment reward opportunity as well as subjecting the executive
officer to liquidity risks and transfer restrictions. Generally, our policy has been to provide this opportunity to invest and receive options at one time only,
either shortly after the closing of the acquisition of ServiceMaster in 2007 or upon hire or promotion, if later. We do not
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