American Home Shield 2011 Annual Report Download - page 144

Table of Contents
typically supplement the NEOs stock awards with subsequent annual stock option awards. Holdings could, however, decide, from time to time, to grant
additional equity awards to certain key employees, including our NEOs, in order to recognize outstanding performance or otherwise as Holdings may
determine is in the best interest of the Company, such as Holdings did in 2011 for equity awards granted to Messrs. Brackett and David Martin (see below).
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 of Holdings' stock and grants of RSUs encourages our
executive officers to focus on our long-term performance, thereby aligning their interests with the interests of Holdings' stockholders. 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;
Maintain competitive levels of total compensation; and
Provide value for key executives enabling the Company to retain key leaders.
Consistent with our historical practices, Messrs. Mullany, Cregg, Fallon and Coba purchased shares and were awarded both stock options and RSUs in
conjunction with their offer of employment and subsequent beginning of service with the Company. Each of our NEOs accepted the offer to purchase
Holdings' shares of common stock and has already purchased shares and received a grant of options to purchase additional shares. Each participating NEO
purchased shares for cash.
Pursuant to the terms of his offer of employment, Mr. Mullany was granted matching options at a rate of five options per share purchased as a result of
negotiations during the hiring process and the matching options were considered important to the Company's ability to hire Mr. Mullany, given that he had
other employment opportunities available. Mr. Mullany was also awarded RSUs and Superperformance options based on his initial purchase of shares.
Mr. Mullany was also provided the opportunity to elect to purchase additional shares valued up to $1,100,000 in aggregate on the first and second
anniversaries of his hire date (February 22, 2012 and February 22, 2013) and receive five matching stock options for each share purchased, RSUs valued at
one-half the aggregate purchase price of any additional shares purchased, and Superperformance Options equal to one-tenth the number of additional
matching options granted. In addition, pursuant to the terms of his offer of employment, Mr. Coba has been provided an opportunity to purchase shares valued
up to $1 million and receive four matching options for each share purchased for a period of up to one year from his date of hire, but no later than the date of a
public offering. In 2011, Mr. Coba purchased $300,000 worth of shares leaving him with a remaining opportunity to purchase shares valued up to $700,000.
In 2011, Holdings granted additional equity awards to Messrs. Brackett and David Martin to recognize their increased responsibilities during 2011.
Mr. David Martin was awarded 20,000 stock options in May 2011 to recognize his appointment as the interim CFO. These options vest ratably over a four
year period and were granted with an exercise price equal to the fair market value of
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