American Home Shield 2011 Annual Report Download - page 146

Table of Contents
reimbursements) are paid to certain executives pursuant to our relocation policy and are based on standard market practices for executive level relocations.
Mr. Mullany is also provided with personal use of Company aircraft and certain spousal travel. We have established a policy regarding our CEO's
personal use of the Company aircraft (the "Aircraft Policy"). The Aircraft Policy provides that the CEO shall reimburse the Company for personal use of the
Company aircraft exceeding 50 hours annually. Any amount so reimbursed to the Company shall be applied to reduce the executive's taxable income arising
from the personal use. In addition to the personal usage allowed under the Aircraft Policy, Mr. Mullany is also eligible to receive up to $85,000 per year in
each of 2011 and 2012 to reimburse commuting expenses pending his relocation. Mr. Mullany may utilize commercial flights, private charter service or the
Company aircraft for his commuting travel. To the extent Mr. Mullany utilizes commercial flights or a private charter, the actual amount paid by the Company
on his behalf is applied toward his maximum commuting benefit of $85,000 per annum. If Mr. Mullany utilizes the Company aircraft for commuting
purposes, the amount applied toward his annual commuting benefit is calculated under the income imputation rules established by the IRS for personal use of
company aircraft. These rules require the cost of each flight to be estimated by applying published IRS per mile rates based on the size of the aircraft to the
total miles flown. Mr. Mullany did not exceed his $85,000 maximum commuting benefit in 2011, calculated in accordance with IRS income imputation rules.
This method of calculation has been affirmed by the Board.
Employment Arrangements
The Company generally executes an offer of employment prior to the time an executive joins the Company, which describes the basic terms of the
executive's employment, including his or her start date, starting salary and ABP bonus target and any signing bonus or equity awards granted at the
commencement of his or her employment. The terms of the executive's employment are thereafter based on sustained good performance rather than
contractual terms, and the Company's policies will apply as warranted. During 2011, the Company and Messrs. Cregg, Fallon and Coba executed employment
letters memorializing the terms of their offers of employment.
Under certain circumstances, the Company recognizes that special arrangements with respect to an executive's employment may be necessary or
desirable. In 2011, the Company entered into an employment agreement with Mr. Mullany setting forth the terms of his employment as CEO of
ServiceMaster. In addition, in connection with Mr. Fallon's hire, the Company and Mr. Fallon entered into a severance agreement setting forth certain
severance benefits to be received by Mr. Fallon upon a qualifying termination of employment. Please see the narrative following the Grants of Plan-Based
Awards table and the Potential Payments Upon Termination or Change in Control section for a description of the agreements with Messrs. Mullany and
Fallon.
Post-Termination Compensation
Holdings entered into a retirement agreement on September 8, 2010 with Mr. Spainhour in conjunction with the announcement of his plan to retire from
the Company. This agreement is described below under the Potential Payments Upon Termination or Change in Control heading in this Item 11. In connection
with Mr. Spainhour's retirement, Holdings extended the option exercise period on 525,000 options from three months to three years following his departure
date. This extension of the option exercise period was considered a stock option modification and resulted in additional stock compensation expense of
$546,684 in 2010. In addition, during 2011, Mr. Steve Martin received severance benefits in connection with his departure from the Company. Please see the
Potential Payments Upon Termination or Change in Control section in this Item 11 for further information regarding the benefits that Messrs. Spainhour and
Steve Martin are entitled to in connection with their respective departures.
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