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independent registered public accounting firm. Our audit committeeAudit Committee reviews and assesses the qualitative aspects of our financial reporting, our processes to manage business and financial risks, and our compliance with significant applicable legal, ethical and regulatory requirements. Our audit committeeAudit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The charter of our Audit Committee is available without charge on our website atwww.servicemaster.com/company/about/corporate-governance.

        The current members of our Audit Committee are Messrs. FoxTomkins (Chair), Corness, Gursahaney, Hochhauser and Sedita and Tomkins.Ms. Goldman. Our board of directors has designated each of Messrs. Fox,Tomkins, Gursahaney and Sedita and Tomkins as "audit committee financial experts," and each member of the three membersAudit Committee has been determined to be "financially literate" under the NYSE rules. Our board of directors has also determined that Messrs. Fox, Sedita and Tomkins areeach member of the Audit Committee is "independent" as defined under NYSE and Exchange Act rules and regulations. The charter of our Audit Committee states that no director may serve on the Audit Committee if such director simultaneously serves on the audit committee of more than three public companies (including the Company), unless the board of directors determines that such simultaneous service would not impair the ability of such director to effectively serve on the Audit Committee. Mr. Fox serves on four public company audit committees, including the Company's, and in 2015 the board of directors determined that his simultaneous service on those committees would not impair Mr. Fox's ability to effectively serve on the Company's Audit Committee.

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Compensation Committee

        Our Compensation Committee is responsible, among its other duties and responsibilities, for reviewing and approving all forms of compensation to be provided to, and employment agreements with, the executive officers and directors of our company and its subsidiaries (including the CEO), establishing the general compensation policies of our company and its subsidiaries and reviewing, approving and overseeing the administration of the employee benefits plans of our company and its subsidiaries. Our Compensation Committee also periodically reviews management development and succession plans. The charter of our Compensation Committee is available without charge on our website atwww.servicemaster.com/company/about/corporate-governance.

        The current members of our Compensation Committee are Messrs. TillerCorness (Chair), Gursahaney, Hochhauser, Sedita and SeditaTomkins and Ms. Goldman. Our board of directors determined that each member of the Compensation Committee is "independent" as defined under NYSE listing standards. The Compensation Committee has the authority to retain compensation consultants, outside counsel and other advisers. During 2015,2018, the committee engaged Semler Brossy Consulting Group, LLC ("Semler Brossy") to advise it on executive compensation program-design matters and to prepare market studies of the competitiveness of components of the company's compensation program for its senior executive officers, including the named executive officers and non- employeenon-employee directors. Semler Brossy is a global professional services company. The Compensation Committee performed an assessment of Semler Brossy's independence to determine whether the consultant is independent, taking into account Semler Brossy's executive compensation consulting protocols to ensure consultant independence and other relevant factors. Based on that assessment, the Compensation Committee determined that the firm's work has not raised any conflict of interest and the firm is independent.

Nominating and Corporate Governance Committee

        Our Nominating and Corporate Governance Committee is responsible, among its other duties and responsibilities, for identifying and recommending candidates to the board of directors for election to our board of directors, reviewing the composition of the board of directors and its committees, developing and recommending to the board of directors corporate governance guidelines that are applicable to us and overseeing board of directors evaluations. The charter of our Nominating and Corporate Governance Committee is available without charge on our website atwww.servicemaster.com/company/about/corporate-governance.

        The current members of our Nominating and Corporate Governance Committee are Messrs. TomkinsGursahaney (Chair), FoxCorness, Hochhauser, Sedita and Tiller.Tomkins and Ms. Goldman. Our board of directors determined that each member of the Nominating and Corporate Governance Committee is "independent" as defined under NYSE listing standards.

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Environmental, Health and Safety Committee

        Our Environmental, Health and Safety Committee is responsible, among its other duties and responsibilities, for reviewing the status of the Company's policies and practices concerning environmental, health and safety matters, including processes to manage environmental, health and safety risk and ensure compliance with applicable laws and regulations; reviewing and monitoring the Company's environmental, health and safety risk assessments, performance, strategies, training and resources; and providing input to the Company on the management of current and emerging environmental, health and safety regulations and issues. The charter of our Environmental, Health and Safety Committee is available without charge on our website at www.servicemaster.com/company/about/corporate-governance.

        The current members of our Environmental, Health and Safety Committee are Messrs. Sedita (Chair), Corness, Gursahaney, Hochhauser and Tomkins and Ms. Goldman. Our board of directors determined that each member of the Environmental, Health and Safety Committee is "independent" as defined under NYSE listing standards.

Compensation Committee Interlocks and Insider Participation

        The membersMessrs. Corness, Cella, Cobb, Gursahaney, Hochhauser, Sedita and Tomkins and Ms. Goldman served on the Compensation Committee in 2018. During 2018, Mr. Hochhauser served as interim president of AHS prior to its spin-off from March until May 2018. He was appointed to the board of directors in May 2018 and as a member of the Compensation Committee currently are Messrs. Tiller (Chair) and Sedita and Ms. Goldman. For a part of 2014, Ms. Kim served on our Compensation Committee. Mr. Wasserman also served on our Compensation Committee during 2014 and for a part of 2015. Mr. Krenicki served on our Compensation Committee during all of 2014 and 2015. Messrs. Krenicki and Wasserman and Ms. Kim are principals of CD&R. Mr. Krenicki assumed the role of Interim CEO from April 12, 2013 through June 16, 2013 following the resignation of our former CEO and prior to the hiring of Mr. Gillette.in October 2018. No other member of the Compensation Committee was at any time during 2014 or 2015 an officer or employee of ServiceMaster or any of our subsidiaries nor iswas any such person a former officer of ServiceMaster or any one of our subsidiaries.

Table For 2018, there were no related-party or conflicts of Contentsinterest transactions between the Company and any of our Compensation Committee members that require disclosure under SEC rules.

Selection of Nominees for Election to the Board

        Our Corporate Governance Guidelines provide that the Nominating and Corporate Governance Committee will identify and select, or recommend that the board select, board candidates who the Nominating and Corporate Governance Committee believes are qualified and suitable to become members of the board consistent with the criteria for selection of new directors adopted from time to time by the board. The Nominating and Corporate Governance Committee considers the board's current composition, including expertise, diversity and balance of inside, outside and independent directors, and considers the general qualifications of the potential nominees, such as: integrity and honesty; the ability to exercise sound, mature and independent business judgment in the best interests of the stockholders as a whole; a background and experience with healthcare, operations, finance or marketing or other fields which will complement the talents of the other board members; factors that promote diversity of views and experience such as gender, race, national origin, age and sexual orientation; willingness and capability to take the time to actively participate in board and committee meetings and related activities; ability to work professionally and effectively with other board members and the Company's management; availability to remain on the board long enough to make an effective contribution; satisfaction of applicable independence standards; and absence of material relationships with competitors or other third parties that could present realistic possibilities of conflict of interest or legal issues.

        In identifying candidates for election to the board of directors, the Nominating and Corporate Governance Committee considers nominees recommended by directors, stockholders and other sources. The Nominating and Corporate Governance Committee reviews each candidate's qualifications, including whether a candidate possesses any of the specific qualities and skills desirable in certain members of the board of directors. Evaluations of candidates generally involve a review of background

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materials, internal discussions and interviews with selected candidates as appropriate. Upon selection of a qualified candidate, the Nominating and Corporate Governance Committee would recommend the candidate for consideration by the full board of directors. The Nominating and Corporate Governance Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.

        The Nominating and Corporate Governance Committee will consider director candidates proposed by stockholders on the same basis as recommendations from other sources. Any stockholder who wishes to recommend a prospective candidate for the board of directors for consideration by the Nominating and Corporate Governance Committee may do so by submitting the name and qualifications of the prospective candidate in writing to the following address: ServiceMaster Global Holdings, Inc., c/o Secretary, 860 Ridge Lake Blvd.,150 Peabody Place, Memphis, TN 38120.38103. Any such submission should also describe the experience, qualifications, attributes and skills that make the prospective candidate a suitable nominee for the board of directors. Our amended and restated by-laws set forth the requirements for direct nomination by a stockholder of persons for election to the board of directors.

Stockholder Engagement

        We expect all of our directors to attend our annual meetings of stockholders and be available to answer questions from stockholders at the meetings. Between meetings, we expect our CEO and our Senior Vice President and Chief Financial Officer, to engage with stockholders on a regular basis at industry and financial conferences, road shows and one-on-one meetings. Mr. Tomkins, our non-executive Chairman, is also available to meet with stockholders on matters that they believe are better addressed by an independent director.

Communications with the Board

        Any stockholder or interested party who wishes to communicate with our board of directors as a whole, the independent directors, our Chairman or any individual member of the board or any committee of the board may write to or email the Company at: ServiceMaster Global Holdings, Inc., c/o Assistant Secretary, 860 Ridge Lake Blvd.,150 Peabody Place, Memphis, TN 3812038103 or Board_of_Directors@servicemaster.com.

        The board has designated the Company's Assistant Secretary as its agent to receive and review written communications addressed to the board, any of its committees, or any board member or group of members. The Assistant Secretary may communicate with the sender for any clarification. In addition, the Assistant Secretary will promptly forward to the chair of the Audit Committee and the Company's General Counsel any communication alleging legal, ethical or compliance issues by management or any other matter deemed by the Assistant Secretary to be potentially material to the

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Company. As an initial matter, the Assistant Secretary will determine whether the communication is a proper communication for the board. The Assistant Secretary will not forward to the board, any committee or any director communications of a personal nature or not related to the duties and responsibilities of the board, including, without limitation, junk mail and mass mailings, business solicitations, routine customer service complaints, new product or service suggestions, opinion survey polls or any other communications deemed by the Assistant Secretary to be immaterial to the Company.

        Separately, the Audit Committee has established a whistleblower policy for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by associatesemployees of the Company of concerns regarding questionable accounting or auditing matters.

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Risk Oversight

        Our board of directors as a whole has responsibility for overseeing our risk management. The board of directors exercises this oversight responsibility directly and through its committees. The oversight responsibility of the board of directors and its committees is informed by reports from our management team and from our internal audit department that are designed to provide visibility to the board of directors about the identification and assessment of key risks and our risk mitigation strategies. The full board of directors has primary responsibility for evaluating strategic and operational risk management and succession planning. Our Audit Committee has the responsibility for overseeing our major financial and accounting risk exposures and the steps our management has taken to monitor and control these exposures, including policies and procedures for assessing and managing risk, including oversight on compliance related to legal and regulatory exposure, and meets regularly with our chief legal and compliance officers. Our Compensation Committee evaluates risks arising from our compensation policies and practices, as more fully described below. The Audit Committee and Compensation Committee provide reports to the full board of directors regarding these and other matters.

Compensation Risk Assessment

        The Compensation Committee assessed our compensation policies and practices to evaluate whether they create risks that are reasonably likely to have a material adverse effect on the Company. Based on its assessment, the Compensation Committee concluded that the Company's compensation policies and practices do not create incentives to take risks that are reasonably likely to have a material adverse effect on the Company. We believe we have allocated our compensation among base salary, short-term incentives and long-term equity in such a way as to not encourage excessive risk taking.

Director Compensation

2018 Cash and Equity Retainers

        Members of the board of directors who are not employed by us are entitled to receive an annual retainer of $170,000, $70,000$200,000, of which $80,000 is payable in cash in quarterly installments and the other $100,000$120,000 payable in restrictedstock. Effective as of March 22, 2018, the equity awards will consist of a grant of shares of common stock as ofon the date of the annual stockholders' meeting and vesting onAnnual Meeting, or the earlierdate of the next annual stockholders' meeting or the first anniversary following the grant date, subjectdirector's appointment to continued service on the board of directors. The restricteddirectors if thereafter. Each director may elect to defer the receipt of the shares of common stock becomes fully vested onas Deferred Stock Equivalents ("DSEs") to a change in control (as definedpoint in the future, including the time at which the individual is no longer a member of the board, subject to the terms of the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan) or on a termination of the director's services due to death or Disability (as defined in the OmnibusPlan (the "Omnibus Incentive Plan)Plan"). In addition any independent chairperson ofto the Audit Committeeamounts described above, the non-executive Chairman will receive an additional annual cash retainer of $15,000.$50,000 and an extra $100,000 award of stock. The chairpersons of the CompensationAudit Committee and the Nominating and Corporate GovernanceCompensation Committee will each receive an additional annual cash retainer of $10,000.

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        Each of our directors who is employed by or affiliated with$20,000, and the CD&R or StepStone assigned allchairpersons of the compensationNominating and Corporate Governance Committee and the director received for his or her services as a director to the fund he or she is affiliated with or its affiliates.Environmental, Health and Safety Committee will each receive an additional annual cash retainer of $10,000. All of our directors were reimbursed for reasonable expenses incurred in connection with attending board of directors meetings and committee meetings.

        As part of its annual review of director compensation, the Compensation Committee asked our independent compensation consultant to review our pay practices relative to peers. We found that pay levels for our directors and non-executive Chairman are in-line with peer medians and we continue to believe that our compensation structure properly rewards our non-employee directors.

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20152018 Director Compensation Table

        This table shows the compensation that each non-employee director received for his or her board and committee chair service.service in 2018. Amounts reflect partial year board service for Ms. GoldmanMessrs. Cella, Cobb, Fox and Messrs. Hecht, Tiller and Tomkins. The amount of fees payable to Messrs. Friedman, Krenicki and WassermanHochhauser and Ms. Kim are reflected in the table below next to their names; however, as indicted, such amounts were assigned to CD&R and StepStone, as applicable.DeVard.

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Stock Ownership Guidelines for Directors

        The board of directors has adopted stock ownership guidelines for members of the board of directors and for executive officers of the Company. The board believes that setting these ownership guidelines will enhance directors' and executive officers' alignment with other stockholders. The Compensation Committee will reviewreviews director and executive officer stock ownership levels on an annual basis.

Board of Directors The guidelines for executive officers are discussed below in the Compensation Discussion and Analysis.

        Members of the board of directors are expected to hold stock valued at five times the annual cash retainer. The annual cash retainer is currently set at $70,000,$80,000, resulting in a current expectation to hold stock valued at $350,000. The members of the board of directors who are employed by or affiliated with CD&R are not subject to the ownership guidelines as their cash and stock retainers have been assigned to CD&R.$400,000. Directors will have a period of five years from February 2015 or their appointment to the board, whichever is later, to meet the ownership guidelines. All directors subject to the stock ownership guidelines are on track to meet their stock ownership level within the five-year period.

Executive Officers

        The guidelines for executive officers are based on a multiple of annual base salary with the CEO expected to own stock valued at six times his annual salary and other executive officers expected to own stock valued at three times their respective annual salaries.

        Shares included in the ownership guideline calculation include shares owned by the executive, unvested restricted stock units ("RSUs") and 25% of the in-the-money value of vested options.

        Executive officers covered under these guidelines have a period of five years from February 2015 or their designation as an executive officer, whichever is later, to meet the ownership guidelines. Each of our executive officers either already meets his or her stock ownership guideline or is on track to meet his or her stock ownership guideline within the five-year period.

Certain Securities Transactions

Short Selling

        Our board of directors has adopted a policy that prohibits our directors, and executive officers and all other employees from short sales and transactions in puts and calls of the Company's securities. Short sales of securities of the Company evidence an expectation on the part of the seller that such securities will decline in value and signal to the market an absence of confidence in the short-term prospects of the Company. Short sales may also reduce the seller's incentive to improve the performance of the Company.

Pledges and Hedges

        In addition, the adopted policy strongly discouragesprohibits any of our directors, and executive officers and all other employees from engaging in hedging transactions in the Company's securities. Certain forms of hedging or monetization transactions (such as zero-cost collars and forward sale contracts) allow a person to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential appreciation in the stock. These transactions allow the person to continue to own the stock, but without the full risks and rewards of ownership. When that occurs, the person may no longer have the same objectives as the Company's other stockholders.

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EXECUTIVE OFFICERS

        The following table sets forth information about our executive officers as of March 14, 2016.21, 2019.

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        Robert J. GilletteNikhil M. Varty has served as ServiceMaster's Chief Executive Officer and as one of our directorsa director since June 2013.July 2017. From October 20112012 until May 2013,2016, Mr. Gillette was the owner of a company which acquired and developed residential real estate properties. From October 2009 until October 2011, heVarty served as president of the chief executive officerAmericas and global vice president of First Solar,mergers & acquisitions at WABCO Holdings Inc., a manufacturerleading global supplier of thin film photovoltaic solar moduleselectronic, mechanical, electro-mechanical and solar power plants.aerodynamic products for the major manufacturers of commercial trucks, buses, trailers and passenger cars. From January 2005 to September 2009,through 2012, Mr. GilletteVarty served as thevice president and chief executive officer of Honeywell International, Inc.'s aerospace division, a provider of aerospace electronic systems, integrated avionics, engines and servicesbusiness unit leader for the aerospace industry.WABCO's compression & braking business unit in Brussels, Belgium.

        Alan J. M. HaughieAnthony D. DiLucente has served as ServiceMaster's Senior Vice President and Chief Financial Officer since September 2013.February 25, 2017. Mr. DiLucente joined ServiceMaster as Senior Vice President on January 17, 2017. From July 2010April 2011 until September 2013, Mr. HaughieJanuary 2017, he served as seniorexecutive vice president and chief financial officer of Federal-Mogul Corporation,HDT Global, a global suppliercomprehensive provider of original equipmentmobility solutions for military and aftermarket products for automotive, light commercial, heavy-dutygovernment applications. He previously held financial leadership positions with Sun Capital Partners, Inc., Masonite Inc., Johns Manville and off-highway vehicles, as well as power generation, aerospace, marine, rail and industrial equipment. From 2005 until June 2010, heHoneywell International, Inc. Mr. DiLucente served as executive vice president controller and chief accountingfinancial officer of Federal-Mogul Corporation, having joined Federal-MogulMasonite Inc. when on March 16, 2009 Masonite Inc. filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code and made a similar filing in 1994 while serving in various roles until 2005.Canada.

        William J. Derwin has served as President of Terminix since November 2013. From 2002 until October 2013, Mr. Derwin worked at Otis Elevator, serving most recently as its vice president global field operations. During his tenure at Otis Elevator he served in various other executive roles including group director UK and Ireland, vice president North and South America field operations, and vice president greater New York region. Otis Elevator is a division of United Technologies Corporation, a company which provides a broad range of high technology products and support services to the aerospace and building systems industries.

Timothy M. Haynes has served as President, American Home Shield since September 2015. Mr. Haynes joined ServiceMaster in January 2012 and previously served as Senior Vice President and Chief Information Officer from December 2013 until September 2015 and also served as Vice President of Information Technology for the American Home Shield, ServiceMaster Clean and Merry Maids business units. From February 2006 until January 2012, Mr. Haynes served in a variety of Information Technology executive leadership roles for Nissan Motor Limited and Nissan Americas.

Susan K. Hunsberger has served as Senior Vice President, Human Resources since January 2014. From February 2010 until December 2013 she served as senior vice president, human resources, for the global business solutions (GBS) group of Connecticut-based Nielsen Holdings N.V., a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. From November 1997 until February 2010, Ms. Hunsberger served in a variety of human resources leadership positions at GE Aviation, a division of General Electric Company.

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James T. LuckeMichael C. Bisignano has served as Senior Vice President, General Counsel and Secretary since September 2013.October 2018. From May 20072015 until May 2013,2018, Mr. LuckeBisignano served as executive vice president, general counsel and secretary of Mohawk Industries,CA Technologies, a leading global technology company. From 2010 until 2015, he served as senior vice president, general counsel and corporate secretary for Blackboard Inc., a multinational technology company. He previously held positions at Online Resources Corporation, Arbros Communications and with the law firm Milbank, Tweed, Hadley & McCoy.

David M. Dart has served as Senior Vice President, Human Resources since August 2018. From 2016 until 2018, he served as senior vice president and chief human resources officer of Veritas Technologies, a global enterprise software company. From 2014 until 2016 he served vice president of human resources for the specialty materials division of Celanese. Previously, he held positions at Ecolab, Bissell, ConAgra Foods and Amgen.

Pratip Dastidar has served as Senior Vice President and Chief Transformation Officer since December 2017. From 2015 until 2017, he led process innovation that helped operational scale-up at Salesforce.com. He previously held positions at HP, Amazon, Applied Materials, WABCO, United Technologies Carrier and Honeywell Aerospace.

Dion Persson has served as Senior Vice President, Business Development since September 2017. From 2011 until 2016 he served as vice president of strategy and analytics for Ingersoll Rand, a leading global provider of products, services and solutions. Mr. Persson has also held leadership roles at Johns Manville, a Berkshire Hathaway company, including senior vice president and general counsel, head of human resources and business leader for the company's global fiberglass business.

Matthew J. Stevenson has served as President, Terminix Residential since October 2017. From March 2016 until October 2017, he served as president and general manager of Meritor WABCO, a joint venture between Meritor, Inc. and WABCO Holdings Inc. focused on the application and delivery of WABCO's braking and safety systems, electronic suspension control and air management products. From 2013 until 2016, Mr. Stevenson served in a variety of executive sales, marketing and operations roles at Bridgestone Americas, Inc., the largest tire producer of floor covering products for residential and commercial applications.in the world.

        Mary Kay Wegner has served as President, ServiceMaster Brands (formerly Runyan) hasour Franchise Services Group) since November 2016. From February 2016 until November 2016, she served as Senior Vice President, Service and Operations, Terminix since February 2016.Terminix. Ms. Wegner joined ServiceMaster in April 2010 and served as Senior Vice President, Supply Management from July 2013 until February 2016, and as Vice President, Fleet from April 2010 until July 2013. In her new role, Ms. Wegner will continue to oversee the supply management function. From March 2009 until April 2010, Ms. Wegner served as the executive in charge of North American fleet operations for Coca-Cola Enterprises, where she was responsible for policy, process and operational performance across the United States and Canada.

Martin Wick

has served as President, Franchise Services Group since October 2014. He was designated as an executive officerTable of the Company in September 2015 when he began reporting directly to our CEO. Mr. Wick joined ServiceMaster in May 2009 and previously served as served as Vice President of Operations for American Home Shield from June 2012 until October 2014 and prior to that served in various other leadership positions within American Home Shield and our corporate function.Contents

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        This section describes the material elements of our 20152018 executive compensation program and the principles underlying our executive compensation policies and decisions. In addition, in this section, we provide information regarding the compensation paid to each individual who served in the capacity as principal executive officer (CEO) or principal financial officer (CFO) during 20152018 and the three most highly compensated executive officers (other than the CEO and CFO) who were serving as such as of the end of our most recent fiscal year, collectively referred to as our Named Executive Officers or "NEOs."("NEOs"). We have also included compensation data for one former executive officer, who, by virtue of his compensation, would have been designated as a NEO. This former executive officer is the President and Chief Executive officer of Frontdoor, which was spun out of ServiceMaster into a separate, publicly traded company on October 1, 2018. For fiscal 20152018 our NEOs are as follows:

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Robert J. Gillette,Nikhil M. Varty, Chief Executive Officer;



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Alan J. M. Haughie,Anthony D. DiLucente, Senior Vice President and Chief Financial Officer;



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Timothy M. Haynes,Dion Persson, Senior Vice President, American Home Shield;Business Development;



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Matthew J. Stevenson, President, Terminix Residential;



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Mary Kay Wegner, Senior Vice President, Service and Operations, Terminix;ServiceMaster Brands; and



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Martin Wick,Rexford J. Tibbens, President Franchise Services Group.and Chief Executive Officer, Frontdoor.

Highlights

Company Structure

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The Company completed a successful spin-off of Frontdoor as a separate, publicly traded company on October 1, 2018.



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We launched an independent Terminix Commercial business and acquired companies, including Copesan and Cooper giving the Company a stronger presence in the commercial, urban and national accounts markets.



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The Franchise Services Group was renamed ServiceMaster Brands, reflecting an enhanced focus on potential and growth.



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The Company's transformation office has facilitated the partnership with salesforce.com to implement a new operating system platform. This partnership is expected to improve customer experience, empower frontline employees and deliver significant growth.

Business Performance

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The financial performance of the Company demonstrated improvement over the prior year Adjusted EBITDA and revenue. However, financial performance in 2018 did not fully meet the target in 2015objectives for adjusted operating performance, was at target for revenue, and exceeded target for cash flow, resulting in bonus payments slightly below target for our NEOs. Please see the narrativeAdjusted EBITDA in the "—Annual Bonus Plan" section below for more detailed informationIncentive Plan. Details of the financial performance of the Company are available in Item 8 of the Company's Annual Report on this subject. The Company

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provided a strong returnForm 10-K for its stockholders as evidenced by the 46.6% appreciationyear ended December 31, 2018 ("2018 Form 10-K"). Please see the narrative in our stock price during 2015.the "Annual Incentive Plan" section below for more detailed information on this subject.

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After accounting for the impact of the Frontdoor stock dividend paid on October 1, 2018 (valued at $20.75 per share), the Company's stock price increased by 7.1 percent during 2018.

Management Structure

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Changes were made to our leadership structure during 2015.2018. Mr. Haynes moved from his positionTibbens was hired in May 2018 to lead AHS as it was being spun-off into a separate, publicly traded company. Mr. Stevenson previously led the Terminix business, but as the Company launched and separated the residential and commercial customer focus. Mr. Stevenson is now primarily focused on the growth and service capabilities of Terminix Residential. Other executive appointments included the hiring of Messers. Bisignano as Senior Vice President, General Counsel and Chief Information Officer to his new roleSecretary and Dart as Senior Vice President, American Home Shield. Mr. Wick, as President, Franchise Services Group, now reports directly to Mr. GilletteHuman Resources. Messrs. Dastidar, Persson and wasStevenson were designated as an executive officerofficers in September 2015.2018.

Compensation Decisions

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Base salaries of the NEOs were increased on a selective basis. In 2015,2018, adjustments were made to salaries for Mr. Haughie (4.5% increase 20 months followingDiLucente (3.5 percent increase) to better align his hire),salary with internal peers and external benchmarks, Mr. Haynes (16.4% increasePersson (12.5 percent increase) to recognize his new position as President, American Home Shield), Ms. Wegner (6.1% increase 21 months following her most recent increase)significant role in the spin-off of Frontdoor and his ongoing role with the strategic focus and merger and acquisition activities of the Company, and Mr. Wick (7.7% increaseStevenson (20 percent increase) to recognizereflect his change in reportingleadership of the Company's largest business and to the CEO andbetter align his designation as an executive officer).salary with internal peers.



•

In 2015,The Compensation Committee reviewed the Company had not yet implemented an annual long-termtarget bonus opportunities for each of the NEOs and made no changes during 2018.



•

Long-term incentive program for executive officers. However,("LTI") awards were granted to NEOs comprised of nonqualified stock options and restricted stock units ("RSUs") in 2018 with approximately equal grant date values. For 2018, the Compensation Committee did make long-term incentive awardsdecided to executive officersreplace Performance Share Units ("PSUs") with RSUs on a selectiveone-year basis due to enhance their retentionthe complexities in determining longer term financial goals within the context of the spin-off of AHS. Annual LTI grants approved during 2018 were consistent with target levels and to recognize additional responsibilities. As such, RSUs were awarded to Messrs. Haynes (22,250 RSUs) and Wick (2,900 RSUs) to recognize their increased responsibilities and to enhance the Company's ability to retain them and to Ms. Wegner (15,000 RSUs) to enhance the Company's ability to retain her. Additionally, theprior year awards. The Compensation Committee implemented annual long-term incentive awards for those belowhas returned to the executive officer level. Mr. Wick received both stock options (14,100 options) and RSUs (5,100 RSUs) in February 2015use of PSUs as part of the annual2019 LTI Program.



•

The board of directors approved LTI awards for Mr. Tibbens upon his hire as CEO of AHS. Mr. Tibbens was hired with the intent that he become the President and CEO of Frontdoor after the spin-off from ServiceMaster. The LTI awards were intended to ensure a successful spin-off of AHS and were granted at competitive levels for a CEO of a company with a size and business focus similar to AHS. On May 15, 2018, Mr. Tibbens received two grants of RSUs, one that vests in equal installments on the first three anniversaries of the grant and the other that has vested or will vest in equal installments on February 18, 2019, February 18, 2020 and

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February 18, 2021. On May 15, 2018 he also received two stock option grants, one that vests in equal installments on the first four anniversaries of the grant and the other that has vested or will vest in equal installments on February 18, 2019, February 18, 2020, February 18, 2021 and February 18, 2022. These awards were converted to stock options and RSUs in Frontdoor as of October 1, 2018, the date of the spin-off of AHS.

•

The Compensation Committee approved an RSU award program priorin October 2018 to Mr. Persson to recognize his designation as an executive officer.efforts leading activities for the spin-off of Frontdoor since he joined the Company in September 2017 and for his leadership in developing the Company's long-term and merger and acquisition strategy.

Objectives of Our Compensation Program

        Our compensation plans for executive officers (including the NEOs) are designed to:

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Attract, motivate and retain highly qualified executives;



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Reward successful performance by the executives and us by linking a significant portion of compensation to financial and business results;



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Align our executives' long-term interests with those of our stockholders through meaningful share ownership; and



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Appropriately balance long-term and short-termnear-term incentive compensation so that short-termnear-term performance is not emphasized at the expense of long-term value creation.

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Elements of Executive Compensation, including for NEOs

        To meet these objectives, our executive compensation program consists of the following:

•

Base salary, which is intended to attract and retain highly qualified executives and to recognize individual performance by the executive;



•

Annual cash incentive, which is intended to motivate each executive to achieve short-term companynear-term Company (and, where applicable, business unit) performance goals while contributing to the attainment of long-term business objectives and special bonusobjectives;



•

One-time awards (either cash or equity) for retention, promotion or extraordinary performance purposes from time to time;



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GrantsLong-term equity incentives, which are intended to align executives' incentives with stockholder interests;



•

For 2018, LTI was delivered through a mix of stock options and RSUs due to the complexities related to the spin-off of AHS;



•

For 2019, LTI was delivered through a mix of stock options, RSUs and stock options to motivate executives to achieve long-term performance goals and to provide equity ownership of our common stock to our executives to ensure goal alignment with our stockholders. In general,PSUs as described in the RSUs and stock options granted are time-vested equity awards; however, the Compensation Committee has granted performance-based RSUs and stock options on occasion. During 2015, the Compensation Committee had not yet implemented a long-term incentive plan for executive officers, leaving cash compensation as the primary compensation vehicle;Long-Term Equity Awards section later in this document; and



•

Employee benefits, including retirement benefits, health and welfare benefits, perquisites, new hire bonusbonuses and relocation benefits, which are intended to attract and retain qualified executives by ensuring that our benefit programs are competitive.

        The Compensation Committee determined a target mix of compensation delivered through the three core elements of base salary, annual cash incentive and LTI awards described above based on competitive market data and internal equity, ensuring that the total compensation is heavily weighted to performance-based elements. The target mix of compensation elements for Mr. Varty, the CEO, and an average mix for other NEOs are pictured below. The Other NEO Compensation Mix chart does not

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include compensation data for Mr. Tibbens as he was specifically hired to be the CEO of Frontdoor, with the mix of his compensation targeted at a CEO-level position.

Each of these elements, discussed in more detail below, plays an integral role in our balancing of executive rewards over short-near- 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.

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Determination of Executive Compensation

Pay Decision Process

        The role of our Compensation Committee is to assist our board of directors in the discharge of its responsibilities relating to our executive compensation program. Our Compensation Committee is responsible for establishing, administering and monitoring our policies governing the compensation for our executive officers, including determining base salaries and short-termnear-term and long-term incentiveLTI awards.

        The Compensation Committee determines the CEO's compensation and reports and discusses the approved compensation with the board of directors. Historically, in determining the CEO's compensation, the Compensation Committee has considered the following factors: (1) our operating and financial performance, (2) the competitive market data provided by Semler Brossy, Consulting Group, LLC, or "Semler Brossy," our external compensation consultant, as presented to the Compensation Committee by our Senior Vice President, Human Resources in collaboration with Semler Brossy, (3) the assessment by the Compensation Committee of the CEO's individual performance with subsequent discussion with the full board of directors and (4) prevailing economic conditions. The CEO has historically recommended to the Compensation Committee compensation for the 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 Semler Brossy and prevailing economic conditions. All aspects of compensation for our executive officers, including for the CEO, in fiscal year 20152018 were determinedapproved by the Compensation Committee, and the Compensation Committee providesperforms all functions described in this Compensation Discussion and Analysis as provided for in its charter. The Compensation Committee also took into account the stockholder approval of the executive compensation program at the 2015 Annual Meeting of Stockholders.

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        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 compensation determinations, we also consider historical individual compensation levels and historical company payout levels for annual cash incentives. The executive compensation program and underlying philosophy are reviewed at least annually by our Compensation Committee to determine what, if any, modifications should be considered.

Compensation Risk Assessment

        Management has assessed the Company's compensation plans and practices to evaluate whether they create risks that are reasonably likely to have a material adverse effect on the Company. Based on its assessment, management has concluded that the Company's compensation policies and practices do not create incentives to take risks that are reasonably likely to have a material adverse effect on the Company. We believe we have allocated our compensation among base salary, near-term incentives and LTI awards in such a way as to not encourage excessive risk taking. Management's assessment of the plans was reviewed with the Compensation Committee.

Clawback Policy

        The board of directors has approved and implemented a clawback policy that provides the Compensation Committee with the discretion to clawbackclaw back performance-based compensation in the event of a restatement of Company financial statements or misconduct. This policy was approved by the Board in February 2016 and will bebecame effective on a prospective basis.

        In 2015,Stock Ownership Guidelines for Executive Officers

        The board of directors has adopted stock ownership guidelines for executive officers of the Compensation Committee reviewed and confirmed the groupCompany. The board believes that setting these ownership guidelines will enhance executive officers'

Table of peer companies, or "Peer Group," to which we compare our NEOs' compensation.Contents

alignment with other stockholders. The Compensation Committee approved a list of 13 companies as our Peer Group. These companieswill review executive officer stock ownership levels on an annual basis.

        The ownership guidelines for executive officers are generally 0.3 to 3.0 times our revenue size, based on 2014 revenue figures.a multiple of annual base salary with the CEO expected to own stock valued at six times his annual salary and other executive officers expected to own stock valued at three times their respective annual salaries. Until an executive officer meets these stock ownership guidelines, each executive officer is required to retain 50 percent of the shares obtained, net of the strike price and taxes, upon the exercise of stock options and vestings of other equity awards that are granted on or after February 18, 2018. Shares included in the ownership guideline calculation include shares owned by the executive, unvested RSUs and 25 percent of the in-the-money value of vested options.

        The peer companies are generally from the service industry where they have a distributed business model.Say-on-Pay

        The Compensation Committee also consideredconsiders the growth ratesadvisory vote from stockholders on executive compensation as an important input into the determination of the companies when selecting this groupcompensation program structure. The approval of companies. We have periodically reviewed the Peer Groupexecutive compensation program by more than 95 percent of the votes cast by stockholders in 2018 provides a further endorsement of our executive compensation program. The most significant change to the compensation structure during 2018 was the grant of RSUs, rather than PSUs, due to the complexities in determining longer-term financial goals within the context of the spin-off and may from timefinancial separation of AHS. The annual grant of these LTI awards enables the Company to time adjustdeliver compensation that is competitive with the companies comprising the group to better reflect competitors inexternal market, while aligning executives' interests with those of our industry, companies with similar business models and companies that compete in our labor markets for talent.stockholders. The Compensation Committee added Rentokil Initial plcwill continue to consider stockholder feedback as part of its decision-making process consistent with the Peer Group for 2015. Rentokil is a United Kingdom based company that provides pest control services and is expanding in the United States and has become a competitor in the markets served by Terminix. Due to the competition for pest services, theCompany's pay-for-performance philosophy. The Compensation Committee determined that Rentokil met the profile of appropriate companies for compensationgranted PSUs in 2019 in conjunction with stock options and business comparisons. For 2015, the Peer Group consisted of the following companies:RSUs to focus on Company performance and building shareholder value.

Peer Group

        In 2018, the Compensation Committee conducted their annual review of the peer group. After the review, the Committee removed one company and added one company to the existing peer group, to which we compare our NEOs' compensation. The Compensation Committee approved a list of 13 companies as our Peer Group. These companies are generally 0.3 to 3.0 times our revenue size, based on 2017 revenue figures.

        The peer companies are generally from the service industry and have a distributed business model. The Compensation Committee also considered the growth rates of the companies when selecting this group of companies. We review our Peer Group and may from time to time adjust the companies comprising the group to better reflect competitors in the industries in which we compete, companies with similar business models and companies that compete in our labor markets for talent. For 2018, the ADT Corporation was deleted from the group due to its being taken private at that time and Central Garden and Pet Company was added to our Peer Group, which consists of the following companies:

        As part of our review of competitive pay practices, we engaged Semler Brossy in 20152018 to conduct a market review to determine whether executive officer total compensation opportunities were

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competitive. In determining 20152018 executive compensation, the Compensation Committee relied on the Peer Group data provided by Semler Brossy for positions reported in the peer companies' respective proxy statements provided by Semler Brossy.statements. A general survey of competitive market data for positions which were not reported in Peer Group proxy statements was provided by Aon Hewitt and was adjusted to mirror general market merit increases, as identified in market salary increase surveys sponsored by compensation consulting organizations. The survey data reflects companies in general industries with revenue sizes between $1 billion and $5 billion. The positions for which survey data was the primary source of competitive information include business unit presidents and the heads of the Marketing and Strategy, Human Resources, Supply ManagementLegal, Business Development and Information Technology functions. The Compensation Committee then evaluated base pay and annual bonuses for our executives as discussed below. Differences in total compensation generally reflect the relevant experience, expertise, tenure and performance of the individual executive officer within his or her role.

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CEO Performance

        In determining compensation actions forThe Company negotiated salary, 2018 bonus and equity awards with Mr. Gillette, the Compensation Committee placed heavy emphasis on the financial performanceVarty as part of his agreement to join the Company as set forthCEO in July 2017. The Compensation Committee confirmed the Company's Annual Reportsalary, annual bonus and LTI awards detailed in Mr. Varty's employment agreement and reviewed performance for 2018, with a focus on Form 10-K in 2015,actions taken to ensure a successful spin-off of AHS, highlighted by:

(1)

A 6%An eight percent increase in Revenue;revenue;



(2)

A 12%six percent increase in Adjusted EBITDA;



(3)

A 31% increase in Free Cash Flow;The successful spin-off of Frontdoor as an independent, publicly traded company; and



(4)

A reduction inThe launch of an independent Terminix Commercial business with acquisitions supporting the Company's debtgrowth of over $250 million.that business.

        Key operational strategies that have enhanced the Company's ability to deliver solid performance on a consistent basis have been implemented including:

(1)

Growthand key initiatives have been undertaken in new services driven by innovation at Terminix;



(2)

Continued development of a direct-to-consumer channel at American Home Shield;2018, which should bear positive results in the future. The Compensation Committee did not adjust Mr. Varty's compensation package, but was pleased with Mr. Varty's performance in 2018 and



(3)

Cost rationalization and supply chain benefits.

        Mr. Gillette has also continued to champion a culture change within the Company begun in 2014, by emphasizing key behaviors that all associates should strive for in personal career development and which will lead to a better customer experience with the Company's productsinitiatives launched and services. These key behaviors are taken into consideration duringhis vision for the performance assessment of each associate of the Company.

        Based on the foregoing, and Mr. Gillette's strong leadership and individual performance, the Compensation Committee determined that Mr. Gillette generally met expectations for 2015 and was instrumental in driving the success of the Company and creating value for investors.

Base Salary

        The Compensation Committee annually reviews the base salaries of our executive officers. The Compensation Committee may take into account numerous factors when making its determination including the NEO's experience relative to industry peers, competitive market data, time in his or her position, individual performance, future potential and leadership qualities.

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        The following table sets forth information regarding the 20152018 base salaries for our NEOs.

20152018 Base Salary Table

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Annual BonusIncentive Plan

        Stockholders of the Company approved the Executive Annual Bonus Plan ("EABP") at the 2015 Annual Meeting of Stockholders. This plan provides for a maximum bonus that can be paid to any executive officer equal to one percent of Adjusted EBITDA. This plan is intended to qualify annual bonuses that are paid to our executives as performance-based compensation under the provisions of Internal Revenue Code ("Code") Section 162(m). The Compensation Committee may exercise its discretion to reduce the awards and exercises this discretion under the Annual Bonus Plan described below. Based on the Company's achievement of Adjusted EBITDA of $622 million (as set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2015), each executive officer would earn an annual bonus of $6,220,000, prior to the Compensation Committee exercising its discretion to reduce the awards.

        The Company administers the Annual BonusIncentive Plan or "ABP,"("AIP"), our annual cash incentive program, which is designed to reward the achievement of specific pre-set financial results measured over one fiscal year or(or, as applicable, a portion of a fiscal yearyear) subject to the maximum amounts derived under the EABP.Executive Annual Bonus Plan ("EABP"). Stockholders of the Company approved the EABP at the 2015 Annual Meeting of Stockholders, providing for a maximum bonus that can be paid to any executive officer equal to one percent of Adjusted EBITDA. The Tax Cuts and Jobs Act of 2017 eliminated deductions under Section 162(m) of the Code rendering the EABP ineffective for its intended purpose. Although in place for the 2018 fiscal year, the Compensation Committee terminated the EABP effective as of February 18, 2019. For 2015,2018, the ABPAIP was measured over the 20152018 calendar year results. Each participant iswas assigned an annual incentive target expressed as a percentage of base salary. For the NEOs, these targets ranged from 60 percent of base salary to 100 percent of base salary. The specific target bonus for each NEO is listed in the table below:

Performance Measures

        To encourage our executive officers to focus on short-termnear-term Company (and, where applicable, business unit) goals and financial performance, incentives under the ABPAIP are based on our performance with respect to the following measures and an individual performance evaluation, as determined by the Compensation Committee, at both a corporate consolidated and, where applicable, a business unit level:

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Adjusted operating performance, or "AOP," which for 2015 was equal to Adjusted EBITDA, except that, in calculating payouts under the ABP, the Compensation Committee exercised its discretion, due to financial and non-financial performance factors, to modestly reduce the achievement under this metric for the corporate results and to slightly increase the results for the Franchise Services Group, to reflect the impact of the Merry Maids branch conversions;