Use these links to rapidly review the document
TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
SERVICEMASTER GLOBAL HOLDINGS, INC. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
(4) | Proposed maximum aggregate value of transaction: | |||
(5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
SERVICEMASTER GLOBAL HOLDINGS, INC.
860 Ridge Lake Blvd.150 Peabody Place
Memphis, TN 3812038103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2016APRIL 30, 2019
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ServiceMaster Global Holdings, Inc. will be held at the Omni Scottsdale Resort & Spa at Montelucia,Marriott Milwaukee West Hotel, located at 4949 East Lincoln Drive, Scottsdale, AZ 85253,W 231 N 1600 Corporate Court, Waukesha, WI 53186, on Tuesday, May 3, 2016,April 30, 2019, at 1:2:00 p.m., local time, (please note that the Phoenix metropolitan area does not observe Daylight Saving Time), for the following purposes:
The foregoing items of business are more fully described in the proxy statement accompanying this notice.
Only stockholders of record at the close of business on March 7, 20162019 are entitled to notice of, and to vote at, the Annual Meeting of Stockholders or any adjournment or postponement thereof. This notice and the accompanying proxy statement are first being mailed to stockholders on or about March 21, 2016.2019.
By Order of the Board of Directors,
James T. LuckeMichael C. Bisignano
Senior Vice President, General Counsel and Secretary
March 21, 20162019
Whether or not you plan to attend the annual meeting, please vote by Internet or telephone at your earliest convenience or complete, sign, date and return the proxy card so that your shares will be represented at the meeting. You may choose to attend the meeting and personally cast your votes even if you vote by Internet or telephone or fill out and return a proxy card by mail. If you choose to attend the meeting in person, you may revoke your proxy and personally cast your votes at the meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 3, 2016:APRIL 30, 2019:
The proxy statement and the 20152018 annual report are available, free of charge, at http://www.proxyvote.com.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 3, 2016April 30, 2019
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING | 1 | |||
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | 6 | |||
EXECUTIVE OFFICERS | ||||
EXECUTIVE COMPENSATION | 19 | |||
—COMPENSATION DISCUSSION AND ANALYSIS | 19 | |||
—COMPENSATION COMMITTEE REPORT | ||||
—EXECUTIVE COMPENSATION TABLES | ||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | ||||
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | ||||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | ||||
REPORT OF THE AUDIT COMMITTEE | ||||
PROPOSAL 1: ELECTION OF DIRECTORS | ||||
PROPOSAL 2: NON-BINDING ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | ||||
PROPOSAL 3: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
OTHER BUSINESS |
i
SERVICEMASTER GLOBAL HOLDINGS, INC.
860 Ridge Lake Blvd.150 Peabody Place
Memphis, TN 3812038103
PROXY STATEMENT
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING
What are the proxy materials?
The accompanying proxy is delivered and solicited on behalf of the board of directors of ServiceMaster Global Holdings, Inc., a Delaware corporation (referred to as "ServiceMaster," the "Company," "we," "us," or "our"), in connection with the 2019 Annual Meeting of Stockholders (the "Annual Meeting") to be held at Omni Scottsdale Resort & Spa at Montelucia,the Marriott Milwaukee West Hotel, located at 4949 East Lincoln Drive, Scottsdale, AZ 85253,W 231 N 1600 Corporate Court, Waukesha, WI 53186, on Tuesday, May 3, 2016,April 30, 2019, at 1:2:00 p.m., local time (please note that the Phoenix metropolitan area does not observe Daylight Saving Time).time. We are first sending this proxy statement and the accompanying form of proxy to stockholders on or about March 21, 2016.2019. As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this proxy statement. This proxy statement includes information that we are required to provide to you under U.S. Securities and Exchange Commission ("SEC") rules and is designed to assist you in voting your shares. The proxy materials include our proxy statement for the Annual Meeting, our 2018 annual report to stockholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2015,2018, and the proxy card or a voting instruction card for the Annual Meeting.
All stockholders and beneficial owners may access the proxy materials, free of charge, at www.proxyvote.com as well as the Company's website—or on our website, at www.servicemaster.com. If you would like to receive a paper copy of our proxy materials, at nofree of charge, please write to ServiceMaster Global Holdings, Inc., c/o Secretary, 860 Ridge Lake Blvd.,150 Peabody Place, Memphis, TN 38120.38103.
What items of business will be voted on at the Annual Meeting?
The items of business scheduled to be voted on at the Annual Meeting are:
• | Proposal 1: | The election of the three nominees named in the proxy statement as Class II directors for a term expiring at the | ||
• | Proposal 2: | A non-binding advisory vote approving executive compensation. | ||
• | Proposal 3: | The ratification of Deloitte & Touche LLP ("Deloitte") as the Company's independent registered public accounting firm for the year ending December 31, | ||
• | To transact such other business as may properly come before the Annual Meeting |
How does the board of directors recommend I vote on these proposals?
• | Proposal 1: | "FOR" | ||
• | Proposal 2: | "FOR" the non-binding advisory vote approving executive compensation. |
• | ||||
Proposal 3: | "FOR" the ratification of Deloitte |
At the discretion of the proxy holders, either FOR or AGAINST, any other matter or business that may properly come before the Annual Meeting.
As of the date hereof, our board of directors is not aware of any other such matter or business to be transacted at our Annual Meeting. If other matters requiring a vote of the stockholders arise, the persons designated as proxies will vote the shares of common stock of the Company, par value $0.01 per share, represented by the proxies in accordance with their judgment on those matters.
Who is entitled to vote at the Annual Meeting?
The record date for stockholders entitled to notice of, and to vote at, the Annual Meeting is March 7, 2016.2019. At the close of business on that date, we had 135,655,451136,057,181 shares of common stock outstanding and entitled to be voted at the Annual Meeting held by 13two stockholders of record.record and approximately 34,000 beneficial stockholders. A quorum is required for our stockholders to conduct business at the Annual Meeting. The presence in person or by proxy of the holders of record of a majority of the shares of common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Each outstanding share of common stock is entitled to one vote. Dissenters' rights are not applicable to any of the matters being voted upon ofat the Annual Meeting.
By granting a proxy, you authorize the persons named in the proxy to represent you and vote your shares at the Annual Meeting. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting.
Registered Stockholders. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A. ("Computershare"), you are considered the stockholder of record with respect to those shares, and the proxy materials were provided to you directly by us. As a stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card in one of the manners listed on the proxy card or to vote in person at the Annual Meeting.
Beneficial Stockholders. If your shares are held in a stock brokerage account or by a broker, bank, trustee or other nominee, you are considered the beneficial owner of shares held in "street name"name," and the proxy materials were forwarded to you by your broker, bank, trustee or other nominee, who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote your shares using the methods prescribed by your broker, bank, trustee or other nominee on the voting instruction card you received with the proxy materials. Beneficial owners are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you follow your broker's, bank's, trustee's or other nominee's procedures for obtaining a legal proxy.
What votes are required to approve each of the proposals?
Proposal 1, the nominees for Class II director will be elected by a pluralitymajority of the votes cast with respect to such director nominee's election. On October 28, 2016, the board of directors amended and restated the outstanding shares of our common stock present in person or represented by proxy at the Annual Meeting and entitledCompany's by-laws to vote onprovide for the election of directors whichby a majority of the votes cast, except in the case of contested elections. The "majority of votes cast" means that the three nominees receiving the highest number of affirmativeshares voted "for" a director nominee must exceed the number of votes will be elected.cast "against" that director nominee's election. In accordance with our amended and restated by-laws, stockholders do not have the right to cumulate their votes for the election of directors.
Proposal 2, the non-binding advisory vote approving executive compensation, will be determined by the affirmative vote of the holders of at least a majority of the outstanding shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote. As an advisory vote, this proposal is not binding. However, our board of directors and Compensation Committee will consider the outcome of the vote when making future compensation decisions for our executive officers.
Proposal 3, the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016,2019, will be determined by the affirmative vote of the holders of at least a majority of the outstanding shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote. The Audit Committee has sole and direct responsibility for the appointment, retention, termination, compensation, evaluation and oversight of the work of any independent registered public accounting firm engaged by the Company. The Audit Committee has already appointed Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2019. In the event of a negative vote on the ratification, the Audit Committee may reconsider its appointment of Deloitte & Touche LLP for 2016;2019; however, the Audit Committee will consider the outcome of the vote for fiscal 2016 and when making appointments of our independent registered public accounting firm in future years. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company's and the stockholders' best interests.
How are broker non-votes and abstentions counted?
The presence of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting, either in person or by proxy, will constitute a quorum. Shares of common stock represented by proxies at the meeting, including broker non-votes and those that are marked "WITHHOLD AUTHORITY" or "ABSTAIN" will be counted as shares present for purposes of establishing a quorum. Brokers or nominees holding shares for a beneficial owner may only vote on routine matters on behalf of a beneficial owner that does not provide voting instructions for their shares. A broker non-vote occurs when a broker or nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and, therefore, does not vote on a non-routine matter. Because broker non-votes are not voted affirmatively or negatively, they will have no effect on the approval of any of the proposals, except where brokers may exercise their discretion on routine matters. AAbstention and broker non-vote occurs when a broker or nominee holding shares for a beneficial ownernon-votes shall not be counted as votes on one proposal, but does not vote on another proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner. Neither withholding authority to votecast with respect to one or more nominees nor a broker non-vote will have an effect on the outcome of thedirector nominee's election of directors in Proposal 1. As to Proposals 2 and 3, shares represented by proxies that are marked "ABSTAIN" will have the effect of a vote against the proposal, while a broker non-vote will not have an effect on the outcome of any proposal other than Proposal 3. Only the ratification of the selection of Deloitte as our independent registered public accounting firm in Proposal 3 is considered a routine matter. Your broker will therefore not have discretion to vote on the "non-routine" matters set forth in Proposals 1 and 2 absent direction from you. It is, therefore, important that you vote your shares.
What happens if a director nominee does not get a majority vote?
Following certification of the stockholder vote in an uncontested election, any incumbent director who did not receive a majority of the votes cast for his or her election shall promptly tender his or her resignation, contingent upon acceptance of such resignation by the board, to the Chairman of the board. The Chairman of the board shall inform the Nominating and Corporate Governance Committee of such tender of resignation, and the Nominating and Corporate Governance Committee shall consider such resignation and recommend to the board of directors whether to accept the tendered resignation or reject it or whether any other action should be taken. In deciding upon its recommendation, the Nominating and Corporate Governance Committee shall consider all relevant
factors, including without limitation the qualifications of the director who has tendered his or her resignation and the director's contribution to the Company and the board. The board will act on the recommendation of the Nominating and Corporate Governance Committee no later than 90 days after the certification of the stockholder vote and disclose the decision by filing a Form 8-K with the SEC. The board shall consider the factors considered by the Nominating and Corporate Governance Committee and such additional information and factors that the board deems relevant.
Can I vote in person at the Annual Meeting?
For stockholders with shares registered in the name of a brokerage firm or bank or other similar organization, you will need to obtain a legal proxy from the broker, bank, trustee or other nominee that holds your shares before you can vote your shares in person at the Annual Meeting. For stockholders with shares registered directly in their names with Computershare, you may vote your shares in person at the Annual Meeting.
What do I need to do to attend the Annual Meeting in person?
Space for the Annual Meeting is limited and admission will be granted on a first-come, first-served basis. Stockholders should be prepared to present (1) valid government photo identification, such as a driver's license or passport; and (2) beneficial stockholders holding their shares through a broker, bank, trustee or other nominee will need to bring proof of beneficial ownership as of March 7, 2016,2019, the record date, such as their most recent account statement reflecting their stock ownership prior to March 7, 2016,2019, a copy of the voting instruction card provided by their broker, bank, trustee or other nominee or similar evidence of ownership.
Can I vote by telephone or Internet?
Stockholders of record with shares registered directly in their names with Computershare will be able to vote using the telephone and Internet. For beneficial stockholders with shares registered in the name of a broker, bank, trustee or other nominee, a number of brokerage firms and banks are participating in a program that offers telephone and Internet voting options. Stockholders should refer to the voting instruction card provided by their broker, bank, trustee or other nominee for instructions on the voting methods they offer. Registered stockholders with shares registered directly in their names with Computershare will also be able to vote using the telephone and Internet. If your shares are held in an account at a broker, bank, trustee or other nominee participating in this program or registered directly in your name with Computershare, you may vote those shares by calling the telephone number specified on your proxy or accessing the Internet website address specified on your proxy instead of completing and signing the proxy itself. The giving of such a telephonic or Internet proxy will not affect your right to vote in person should you decide to attend the Annual Meeting. The telephone and Internet voting procedures are designed to authenticate stockholders' identities, to allow stockholders to give their voting instructions and to confirm that stockholders' instructions have been recorded properly. If you vote by the Internettelephone or by telephone,the Internet, you do not need to send in a proxy card or votevoting instruction form. The deadline for Internettelephone and telephoneInternet voting will be 11:59 p.m., Eastern Time, on May 2, 2016.April 29, 2018.
How will my proxy be voted?
The proxy accompanying this proxy statement is solicited on behalf of our board of directors for use at the Annual Meeting. Stockholders who received a proxy by mail and choose to vote by mail are requested to complete, date and sign the accompanying proxy and promptly return it in the envelope provided. All signed, returned proxies that are not revoked will be voted in accordance with the instructions contained therein.
Proxies will be voted as specified by the stockholders. Unless contrary instructions are specified by the stockholder on the proxy card, if the accompanying proxy card is executed and returned (and not
revoked) before the Annual Meeting, the shares of the common stock of the Company represented thereby will be voted "FOR" election of the nominees listed in this Proxy Statement as directors of the Company, "FOR" the proposal regarding advisory vote approving executive compensation and "FOR" the ratification of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the year ending December 31, 2016.2019. A stockholder's submission of a signed proxy will not affect his or her right to attend and to vote in person at the Annual Meeting. Stockholders who execute a proxy may revoke it at any time before it is voted at the Annual Meeting by (i) filing a written revocation with the Secretary of the Company, (ii) executing a proxy bearing a later date or by changing your vote via the Internet at a later date or (iii) attending and voting in person at the Annual Meeting.
How do I change or revoke my proxy?
Any person signing a proxy in the form accompanying this proxy statement has the power to revoke it prior to the Annual Meeting or at the Annual Meeting prior to the vote pursuant to the proxy. A proxy may be revoked by a writing delivered to us stating that the proxy is revoked, by a subsequent proxy that is signed by the person who signed the earlier proxy and is delivered before or at the Annual Meeting, by voting again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted) or by attendance at the Annual Meeting and voting in person. Please note, however, that if a stockholder's shares are held of record by a broker, bank, trustee or other nominee and that stockholder wishes to vote in person at the Annual Meeting, the stockholder must bring a legal proxy to the Annual Meeting.
Who will count and certify the votes?
Representatives of Broadridge Investor Communication Solutions, Inc. ("Broadridge") and the staff of our corporate secretary and investor relations offices will count the votes and certify the election results. The results will be publicly filed with the SEC on a Form 8-K within four business days after the Annual Meeting.
How can I make a proposal or make a nomination for director for next year's annual meeting?
You may present proposals for action at a future meeting or submit nominations for election of directors only if you comply with the requirements of the proxy rules established by the SEC and our amended and restated by-laws, as applicable. In order for a stockholder proposal or nomination for director to be considered for inclusion in our proxy statement and form of proxy relating to our annual meeting of stockholders to be held in 2017,2020, the proposal or nomination must be received by us at our principal executive offices no later than November 21, 2016.22, 2019. Stockholders wishing to bring a proposal or nominate a director at the annual meeting to be held in 20172020 (but not include it in our proxy materials) must provide written notice of such proposal to our Secretary at our principal executive offices between January 4, 20161, 2020 and February 3, 2017January 31, 2020 and comply with the other provisions of our amended and restated by-laws.
Who pays for the cost of proxy preparation and solicitation?
The accompanying proxy is solicited by our board of directors. We have also retained the firm of Georgeson to aid in the solicitation of brokers, banks, institutional and other stockholders for a fee of approximately $10,000, plus reimbursement of expenses. Broadridge will also assist us in the distribution of proxy materials and provide voting and tabulation services for the Annual Meeting. All costs of the solicitation of proxies will be borne by us. We pay for the cost of proxy preparation and solicitation, including the reasonable charges and expenses of brokerage firms, banks, trusts or nominees for forwarding proxy materials to street name holders. We are soliciting proxies primarily by mail. In addition, our directors, officers and employees may solicit proxies by telephone or other means of communication personally. Our directors, officers and employees will receive no additional compensation for these services other than their regular compensation.
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Structure and Director Independence
Our board of directors is currently composed of eightseven directors. Our amended and restated certificate of incorporation provides for a classified board of directors, with members of each class serving staggered three-year terms. We currently have threetwo directors in Class I, three directors in Class II and two directors in Class III. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The terms of directors in Classes I, II and III end at the annual meetings in 2016, 20172019, 2020 and 20182021, as indicated below. Although elected to serve until the 2018 Annual Meeting, David H. Wasserman has informed the Company's board of directors that he intends to resign as a member of the board of directors in advance of the 2016 Annual Meeting of Stockholders. Mr. Wasserman was appointed to the board as a designee of investment funds managed by, or affiliated with, Clayton, Dubilier & Rice, LLC ("CD&R"). In addition, at the board of directors meeting scheduled to be held on May 3, 2016, Mr. Krenicki intends to resign as non-executive Chairman, and the board of directors has indicated that Mark E. Tomkins will be appointed to serve as our new non-executive Chairman as of such date. Mr. Krenicki will continue to serve as a member of the board of directors. Mr. Krenicki was appointed to the board of directors and as Chairman as a designee of investment funds managed by, or affiliated with, CD&R. Mr. Wasserman's intent to resign as a member of the board of directors and Mr. Krenicki's intent to resign as non-executive Chairman signal another step forward in the Company transitioning to the board of directors, and committees of the board, being led by independent directors.
Director | Class | |
---|---|---|
John B. Corness | Class I—Expiring 2021 Annual Meeting | |
Class I—Expiring 2021 Annual Meeting | ||
Laurie Ann Goldman | Class II—Expiring | |
Class II—Expiring | ||
Class II—Expiring | ||
Class III—Expiring | ||
Mark E. | Class III—Expiring | |
*
At each annual meeting of stockholders, the successors of the directors whose term expires at that meeting are elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. The board of directors is therefore asking you to elect the three nominees for director whose term expires at the Annual Meeting. Richard P. Fox, Laurie Ann Goldman, Steven B. Hochhauser and Thomas C. Tiller, Jr.,Nikhil M. Varty, our Class II directors, have been nominated for reelection at the Annual Meeting. See "Proposal 1—Election of Directors" below.
The number of members on our board of directors may be fixed by resolution adopted from time to time by the board of directors. Any vacancies or newly created directorships may be filled only by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director. Each director shall hold office until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal. During 2015, Ms. Goldman and Messrs. Tiller and Tomkins were2018, Mr. Hochhauser was added as a new membersmember of the board of directors. In addition,connection with the spin-off of the American Home Shield business ("AHS") on October 1, 2018, on September 30, 2018, Peter L. Cella, William C. Cobb and Richard P. Fox resigned as members of our board of directors and were appointed to serve on the board of directors of frontdoor, inc., the parent company of AHS ("Frontdoor").
Curtis D. Hecht was also added to the board in 2015, but unexpectedly passed away soon after his appointment. Sarah Kim and Darren M. Friedman served as members of the board of directors during 2015 as designees of CD&R and StepStone Group LP ("StepStone"), respectively. Affiliates of the private equity funds managed by CD&R and StepStone (collectively, the "Equity Sponsors") owned stock in the Company from 2007 until November 2015. After consummation of the November 2015 secondary offering, Ms. Kim and Mr. Friedman resigned from the board of directors on November 16, 2015.
Set forth below is biographical information as well as background information relating to each nominee's and continuing director's business experience, qualifications, attributes and skills and why the board of directors and Nominating and Corporate Governance Committee believe each individual is a valuable member of the board of directors. The persons who have been nominated for election and are to be voted upon at the Annual Meeting are listed first, with continuing directors following thereafter. The respective age of each individual below is as of March 21, 2016.2019.
Nominees for Election to the Board of Directors in 20162019
Class II—Nominees Whose Term Expires in 2019
Name | Age | Principal Occupation and Other Information | |||
---|---|---|---|---|---|
| |||||
Laurie Ann Goldman |
| ||||
Steven B. Hochhauser | 57 | Mr. Hochhauser has served as one of our directors since May 2018. Mr. Hochhauser, served as interim president of our American Home Shield business prior to its spin-off from March until May 2018. He has been a private investor since 2011. Since 2016, he has served as chairman of Ascensus Specialties LLC, a privatly held specialty chemicals company, and served as chief executive officer of Ascensus Specialties from 2016 until 2017. From 2012 until 2016 he was the lead director of Novolex, a privately held paper and plastic packaging company, and from 2013 until 2015, he was on the board of Argotec LLC, a privately held specialty plastic and films company. He is the former chairman and chief executive officer of Johns Manville. Mr. Hochhauser has held various executive positions at Ingersoll Rand, Honeywell and United Technologies. Mr. Hochhauser's knowledge of strategic planning and business operations, along with his leadership experience and prior board experience, qualify him to serve on our board of directors. |
Name | Age | Principal Occupation and Other Information | |||
---|---|---|---|---|---|
| 54 | Mr. | |||
|
Continuing Members of the Board of Directors
Class III—Directors Whose Term Expires in 20172020
Name | Age | Principal Occupation and Other Information | |||
---|---|---|---|---|---|
| Mr. | ||||
Mark E. Tomkins | Mr. Tomkins has served as one of our directors since June |
Class I—Nominees Whose Term Expires in 20182021
Name | Age | Principal Occupation and Other Information | |||
---|---|---|---|---|---|
John | Mr. | ||||
Stephen J. Sedita | Mr. Sedita has served as one of our directors since December 2013. From 2008 until he retired in 2011, Mr. Sedita served as the |
|
|
Director Independence
Our board of directors has determined, after considering all of the relevant facts and circumstances, that Ms. Goldman and Messrs. Fox, Tiller,Corness, Gursahaney, Hochhauser, Tomkins and Sedita are "independent" as defined under New York Stock Exchange ("NYSE") listing standards. In making its determination of director independence, our board of directors considers the NYSE listing standards. This meansstandards and all relevant facts and circumstances, including ensuring that nonethe following categories of the independent directors has anyrelationships between a director and our Company are evaluated:
No director qualifies as "independent" unless the board of directors affirmatively determines that the director has no material relationship with us, eitherour Company or our subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with us.our Company or any of our subsidiaries). Our board of directors assesses on a regular basis, and at least annually, the independence of directors and, based on the recommendation of the Nominating and Corporate Governance Committee, makes a determination as to which members are independent. To assist the board of directors in making its independence assessment, each year members of our board of directors complete responses to a questionnaire, which requires disclosure of each director's and his or her immediate family's relationships to the Company, as well as any potential conflicts of interest and other matters. From March until May 2018, Mr. Hochhauser served as interim president of AHS prior to its spin-off and received payments totaling $250,000 for such service. The Board determined, after considering all of the relevant facts and circumstances, that Mr. Hochhauser was independent as defined under NYSE listing standards. Other than Mr. Hochhauser's payment for serving as interim president of AHS, there were no related-party or conflicts of interest transactions between the Company and any of our independent directors that require disclosure under SEC rules.
Board Leadership Structure
Our board of directors is currently led by our non-executive Chairman, Mr. Krenicki. At the board of directors meeting scheduled to be held on May 3, 2016, Mr. Krenicki intends to resign as non-executive Chairman, and the board of directors has indicated that Mark E. Tomkins will be appointed to serve as our new non-executive Chairman as of such date. Mr. Krenicki will continue to serve as a member of the board of directors. Mr. Krenicki was appointed to the board of directors and as Chairman as a designee of investment funds managed by, or affiliated with, CD&R. Mr. Krenicki's resignation as Chairman will signal another step forward in the Company transitioning to the board of directors, and committees of the board, being led by independent directors.
Tomkins. As stated in our Corporate Governance Guidelines, the board has no policy with respect to the separation of the offices of Chairman of the Board and CEO. The board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and CEO in any way that is in the best interests of the company at a given point in time. The board believes this governance structure currently promotes a balance between the board's independent authority to oversee our business and the CEO and his management team who manage the business on a day-to-day basis. If the board chooses to combine the offices of Chairman and CEO in the future, a lead director will be appointed annually by the independent directors. The board expects to periodically review its leadership structure to ensure that it continues to meet our needs.
Meetings of the Board of Directors and Attendance at the Annual Meeting
Our board of directors held 1315 meetings during the fiscal year ended December 31, 2015.2018. Each of our incumbent directors attended at least 75%75 percent of the total number of meetings of the board and any committees of which he or she was a member in 2015.2018. Directors are encouraged to attend our annual meetings. All of the directors serving on the board at the time attended the 20152018 Annual Meeting.Meeting, except for Ms. Goldman who could not attend due to a conflicting family event.
Executive Sessions
Executive sessions, which are meetings of the non-management members of the board ofindependent directors, are regularly scheduled throughout the year. In addition, at least once a year,Since Mr. Tomkins' appointment as non-executive Chairman in May 2016, he has presided over the independent directors are afforded the opportunity to meet in a private session that excludes management and non-independent directors. At each of these meetings, the non-management and independent directors in attendance, as applicable, will determine which member will preside at such session.executive sessions. The committees of the board, as described more fully below, also meet regularly in executive session.
Corporate Governance Guidelines
Our board of directors has adopted Corporate Governance Guidelines to address significant corporate governance issues. A copy of these guidelines is available on our website atwww.servicemaster.com/company/about/corporate-governance. These guidelines provide a framework for our corporate governance initiatives and cover topics including, but not limited to, director qualification and responsibilities, board composition, director compensation and management and succession planning. The Nominating and Corporate Governance Committee is responsible for overseeing and reviewing the guidelines and reporting and recommending to our board of directors any changes to the guidelines.
Code of Conduct and Financial Code of Ethics
We have a Financial Code of Ethics that applies to the CEO, CFO and Controller, or persons performing similar functions, and other designated officers and associates,employees, including the primary financial officer of each of our business units and the Treasurer. We also have a Code of Conduct that applies to all of our directors, officers and associates.employees. The Financial Code of Ethics and Code of Conduct each address matters such as conflicts of interest, confidentiality, fair dealing and compliance with laws and regulations. The Financial Code of Ethics and the Code of Conduct is available without charge on our website atwww.servicemaster.com/company/about/corporate-governance.
We will promptly disclose any substantive changes in or waiver of, together with reasons for any waiver of, either of these codes granted to our executive officers, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, and our directors, by posting such information on our website atwww.servicemaster.com/company/about/corporate-governance.
TableComplaints Regarding Accounting, Internal Accounting Controls and Auditing Matters
In accordance with the Sarbanes-Oxley Act, our Audit Committee has adopted procedures for the receipt, retention and treatment of Contentscomplaints regarding accounting controls or auditing matters and to allow for the confidential, anonymous submission by employees and others of concerns regarding questionable accounting or auditing matters.
Board Committees
Our board of directors maintains an Audit Committee, a Compensation Committee, an Environmental, Health and Safety Committee and a Nominating and Corporate Governance Committee. Under the SEC and NYSE rules, eachEach of these committees is comprised entirely of independent directors. Below is a brief description of our committees. The following table shows the currentcommittee members as of each committeeDecember 31, 2018, and the number of meetings held during 2015.2018.
Director | Audit | Compensation | Nominating & Corporate Governance | | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
John Krenicki, Jr. | |||||||||||||
Richard P. Fox | X | * | X | ||||||||||
Robert J. Gillette(1) | |||||||||||||
Laurie Ann Goldman | X | ||||||||||||
Stephen J. Sedita | X | X | |||||||||||
Thomas C. Tiller, Jr. | X | * | X | ||||||||||
Mark E. Tomkins | X | X | * | ||||||||||
David H. Wasserman | |||||||||||||
Number of Meetings | 6 | 5 | 4 |
Director | Audit | Compensation | Nominating & Corporate Governance | Environmental, Health & Safety | ||||
---|---|---|---|---|---|---|---|---|
John B. Corness | X | X* | X | X | ||||
Laurie Ann Goldman | X | X | X | X | ||||
Naren K. Gursahaney | X | X | X* | X | ||||
Steven B. Hochhauser | X | X | X | X | ||||
Stephen J. Sedita | X | X | X | X* | ||||
Mark E. Tomkins | X* | X | X | X | ||||
Nikhil M. Varty(1) | ||||||||
Number of Meetings in 2018 | 9 | 6 | 3 | 4 |
Audit Committee
Our audit committeeAudit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications and independence of our independent registered public accounting firm, the effectiveness of our internal control over financial reporting and the performance of our internal audit function and
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.
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.
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
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
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.
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.
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.
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.
Name of Director | Cash Fees(1) | Stock Awards(2) | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Richard P. Fox | $ | 85,000 | $ | 100,000 | $ | 185,000 | ||||
Darren M. Friedman(3) | $ | 70,000 | $ | 100,000 | $ | 170,000 | ||||
Laurie Ann Goldman. | $ | 4,755 | $ | 38,800 | $ | 43,555 | ||||
Curtis D. Hecht | $ | 17,500 | $ | 82,200 | $ | 99,700 | ||||
Sarah Kim(4) | $ | 70,000 | $ | 100,000 | $ | 170,000 | ||||
John Krenicki, Jr.(4) | $ | 80,000 | $ | 100,000 | $ | 180,000 | ||||
Mark E. Tomkins | $ | 39,425 | $ | 88,500 | $ | 127,925 | ||||
Thomas C. Tiller, Jr. | $ | 47,500 | $ | 100,000 | $ | 147,500 | ||||
Stephen J. Sedita | $ | 70,000 | $ | 100,000 | $ | 170,000 | ||||
David H. Wasserman(4) | $ | 80,000 | $ | 100,000 | $ | 180,000 |
Name of Director(1) | | Fees Earned or Paid in Cash(2) | | Stock Awards(3) | | All Other Compensation(4) | | Total | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter L. Cella | | | $ | 60,000 | | | $ | 120,000 | | | | | $ | 180,000 | | ||
William C. Cobb | | | $ | 38,242 | | | $ | 125,291 | | | | | $ | 163,533 | | ||
John B. Corness | | | $ | 100,000 | | | $ | 120,000 | | | $ | 25,000 | (5) | | $ | 245,000 | |
Jerri L. DeVard(1) | | | $ | 20,000 | | | | | | | $ | 20,000 | | ||||
Richard P. Fox | | | $ | 75,000 | | | $ | 120,000 | | | | | $ | 195,000 | | ||
Naren K. Gursahaney | | | $ | 82,500 | | | $ | 120,000 | | | $ | 1,112 | | | $ | 203,612 | |
Laurie Ann Goldman | | | $ | 80,000 | | | $ | 120,000 | | | | | $ | 200,000 | | ||
Steven B. Hochhauser | | | $ | 46,594 | | | $ | 107,537 | | | $ | 250,934 | (6) | | $ | 405,065 | |
Mark E. Tomkins | | | $ | 142,500 | (2) | | $ | 220,000 | (3) | | $ | 844 | | | $ | 363,344 | |
Stephen J. Sedita | | | $ | 90,000 | | | $ | 120,000 | | | | | $ | 210,000 | |
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.
The following table sets forth information about our executive officers as of March 14, 2016.21, 2019.
Name | Age | Present Positions | First Became an Officer | ||||||
---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | 56 | Chief Executive Officer & Director | 2013 | ||||||
Alan J. M. Haughie | 52 | Senior Vice President & Chief Financial Officer | 2013 | ||||||
William J. Derwin | 47 | President, Terminix | 2013 | ||||||
Timothy M. Haynes | 49 | President, American Home Shield | 2013 | ||||||
Susan K. Hunsberger | 53 | Senior Vice President, Human Resources | 2014 | ||||||
James T. Lucke | 55 | Senior Vice President, General Counsel & Secretary | 2013 | ||||||
Mary Kay Wegner | 48 | Senior Vice President, Service and Operations, Terminix | 2013 | ||||||
Martin Wick | 41 | President, Franchise Services Group | 2015 |
Name | Age | Present Positions | First Became an Executive Officer | ||||||
---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | 54 | Chief Executive Officer & Director | 2017 | ||||||
Anthony D. DiLucente | 60 | Senior Vice President & Chief Financial Officer | 2017 | ||||||
Michael C. Bisignano | 47 | Senior Vice President, General Counsel & Secretary | 2018 | ||||||
David M. Dart | 49 | Senior Vice President, Human Resources | 2018 | ||||||
Pratip Dastidar | 56 | Senior Vice President & Chief Transformation Officer | 2018 | ||||||
Dion Persson | 58 | Senior Vice President, Business Development | 2018 | ||||||
Matthew J. Stevenson | 41 | President, Terminix Residential | 2018 | ||||||
Mary Kay Wegner | 51 | President, ServiceMaster Brands | 2013 |
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.
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.
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
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:
Highlights
Company Structure
Business Performance
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.
Metric | Performance | Achievement | |||||
---|---|---|---|---|---|---|---|
Adjusted | $ | $ | (1) | ||||
Revenue | $ | $ | |||||
|
| Closing Stock Price on 12/31/2014 | Closing Stock Price on 12/31/2015 | Percent Increase | | ||||
---|---|---|---|---|---|---|---|---|
$26.77 | $39.24 | 46.6% |
Management Structure
Compensation Decisions
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.
Objectives of Our Compensation Program
Our compensation plans for executive officers (including the NEOs) are designed to:
Elements of Executive Compensation, including for NEOs
To meet these objectives, our executive compensation program consists of the following:
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
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.
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.
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:
ABM Industries Incorporated | Rollins, Inc. | |
Service Corporation International | ||
Chemed Corporation | Spectrum Brands Holdings, Inc. | |
Cintas Corporation | The Scotts Miracle Grow Company | |
Realogy Holdings Corp. | Waste Connections, Inc. | |
Rentokil Initial plc | Weight Watchers International, Inc. | |
Republic Services, Inc. |
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
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.
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:
Key operational strategies that have enhanced the Company's ability to deliver solid performance on a consistent basis have been implemented including:
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.
The following table sets forth information regarding the 20152018 base salaries for our NEOs.
20152018 Base Salary Table
Named Executive Officer | Base Salary as of January 1, 2015 ($) | Base Salary as of December 31, 2015 ($) | Aggregate Increase % | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | 1,100,000 | 1,100,000 | 0 | % | ||||||
Alan J. M. Haughie(1) | 550,000 | 575,000 | 4.5 | % | ||||||
Timothy M. Haynes(2) | 365,000 | 425,000 | 16.4 | % | ||||||
Mary Kay Wegner(1) | 330,000 | 350,000 | 6.1 | % | ||||||
Martin Wick(3) | 325,000 | 350,000 | 7.7 | % |
Named Executive Officer | Base Salary as of January 1, 2018 ($) | Base Salary as of December 31, 2018 ($) | Aggregate Increase % | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Nikhil M Varty | 1,000,000 | 1,000,000 | 0 | % | ||||||
Anthony D. DiLucente(1) | 500,000 | 517,500 | 3.5 | % | ||||||
Dion Persson(2) | 400,000 | 450,000 | 12.5 | % | ||||||
Matthew J. Stevenson(3) | 375,000 | 450,000 | 20.0 | % | ||||||
Mary Kay Wegner | 425,000 | 425,000 | 0 | % | ||||||
Rexford J. Tibbens | (4) | (4) | (4) |
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:
Named Executive Officer | Target Bonus as a Percent of Salary | |||
---|---|---|---|---|
| 100% | |||
Anthony D. DiLucente | ||||
| ||||
| ||||
Mary Kay Wegner | ||||
|
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:
Adjusted EBITDA and revenue as well as the change in net working capital and capital expendituresachievement metrics are included in the financial statements in the Company's Annual Reportdiscussed above on Form 10-K for the year ended December 31, 2015.page 20.
The performance measures above were selected as the most appropriate measures upon which to determine annual bonuses because they are the primary metrics that management believes build value in the Company. Additionally, these measures were selected to incentivize profitable growth, and cash flow generation to meet debt obligations and fund investments for future growth.with a focus on enhancing the customer experience as measured by customer retention rate. All of the opportunity for payment under the ABPAIP to our NEOs is based on these performance measures. For 2015, the Compensation Committee used its negative discretion under the EABP to award annual bonuses similar to what would have been earned under the ABP.measures and individual performance.
Payments under the ABPAIP were also subject to the achievement of a minimum level of performance on the AOPAdjusted EBITDA financial measure ("AOPAdjusted EBITDA Threshold"). In order to earn any payment under the ABP,AIP, the AOPAdjusted EBITDA Threshold had to be achieved at the corporate consolidated or, where applicable, business unit levels. The Adjusted EBITDA Threshold was exceeded by the Corporate organization, Terminix and ServiceMaster Brands, but was not met by AHS. 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. As noted above, due to changes in the tax law the company has terminated the EABP. The corporate consolidated AOPAdjusted EBITDA Threshold and business unit AOPAdjusted EBITDA Thresholds applicable to the NEOs are set forth in the table below:
NEO | Performance Measure | AOP Threshold ($ in 000s) | AOP Actual ($ in 000s) | ||||||
---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | ServiceMaster AOP | 556,000 | 600,000 | ||||||
Alan J. M. Haughie | ServiceMaster AOP | 556,000 | 600,000 | ||||||
Timothy M. Haynes | ServiceMaster AOP | 556,000 | 600,000 | ||||||
Mary Kay Wegner | ServiceMaster AOP | 556,000 | 600,000 | ||||||
Martin Wick | Franchise Services Group AOP | 77,000 | 86,000 |
NEO | Performance Measure | Adjusted EBITDA Threshold ($ in 000s) | Adjusted EBITDA Actual ($ in 000s) | |||
---|---|---|---|---|---|---|
Nikhil M. Varty | ServiceMaster Adjusted EBITDA | 616,000 | 622,000 | |||
Anthony D. DiLucente | ServiceMaster Adjusted EBITDA | 616,000 | 622,000 | |||
Dion Persson | ServiceMaster Adjusted EBITDA | 616,000 | 622,000 | |||
Matthew J. Stevenson | Terminix Adjusted EBITDA | 325,000 | 333,000 | |||
Mary Kay Wegner | ServiceMaster Brands Adjusted EBITDA | 84,000 | 89,000 | |||
Rexford J. Tibbens | American Home Shield Adjusted EBITDA | (1) | (1) |
Performance Targets and Weightings
Performance targets are established by the Compensation Committee towardin the beginningfirst quarter of each year and are based on expected performance in accordance with our, and where applicable, the
business unit's, approved business plan for the year. In the event we and, where applicable, the business unit, achieve the performance targets specified in the table above, payout under the ABPAIP would be 100%100 percent of a specified percentage of the executive's base salary. InPerformance below the event wetarget goal would result in below target payouts and where applicable, the business unit do not achieve the performance targets, a lesser bonus mayabove target goals would pay above target and be earned if we and, where applicable, the business unit meet or exceed the threshold amounts for the performance targets, which are generally equal to the previous year's results achieved for the applicable performance measure. In the event we exceed the performance targets, the amount of the bonus will increase accordingly with the maximum bonus payablesubject to any executive officer represented by the calculated bonus undercap based on the EABP. The components and weightings of the performance measures are reviewed and determined annually by the Compensation Committee to reflect Company strategy. The Compensation Committee also considers an evaluation of the individual performance for each executive officer and may adjust the formulaic bonus calculation based on its evaluation, again subject to the maximum limits set under the EABP.EABP for 2018.
The tables below provide information regarding the 2015 ABP2018 AIP for our participating NEOs, including the performance goals, the weight assigned to each performance goal and the payout as a percentage of the target bonus if the threshold or target performance goal is met. The performance goals and relative weightings reflect the Compensation Committee's objective of ensuring that a substantial amount of each NEO's total compensation is tied to applicable overall corporate and
business unit performance. Although Mr. Haynes assumed the leadership of American Home Shield in September 2015, his 2015 bonus was measured only on ServiceMaster corporate performance, as well as his individual performance.
2015 ABP2018 AIP Weighting, Threshold and Target Performance Goals
NEO | Target Bonus as a % of Salary | Organizational Weighting | Performance Weighting | Threshold ($ in 000s) | Target ($ in 000s) | % of Target Performance for Threshold Payout | % Payout with Threshold Performance | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | 100% | 50% ServiceMaster AOP | 556,000 | 620,000 | 90% | 38% | ||||||||||
Alan J. M. Haughie | 70% | 100% ServiceMaster | 30% ServiceMaster Revenue | 2,455,000 | 2,601,000 | 94% | 66% | |||||||||
Timothy M. Haynes | 65% | 20% ServiceMaster Cash Flow | 525,000 | 559,000 | 94% | 64% | ||||||||||
Mary Kay Wegner | 60% | |||||||||||||||
Martin Wick | 65% | 100% Franchise Services Group | 50% Franchise Services Group AOP | 77,000 | 86,000 | 90% | 37% | |||||||||
50% Franchise Services Group Revenue | 251,000 | 268,000 | 94% | 62% |
NEO | Target Bonus as a % of Salary | Organizational Weighting | Performance Weighting | Threshold ($ in 000s, except Customer Count) | Target ($ in 000s, except Customer Count) | % of Target Performance for Threshold Payout | % Payout with Threshold Performance | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | 100% | 100% ServiceMaster | 40% ServiceMaster Adjusted EBITDA | 616,043 | 653,529 | 94% | 50% | |||||||||
Anthony D. DiLucente | 70% | 40% ServiceMaster Revenue | 2,654,703 | 2,854,370 | 93% | 50% | ||||||||||
Dion Persson | 60% | 20% ServiceMaster Customer Count | (1) | (1) | 25% | 50% | ||||||||||
40% Terminix Adjusted EBITDA | 325,029 | 345,230 | 94% | 50% | ||||||||||||
Matthew J. Stevenson | 65% | 100% Terminix | 40% Terminix Revenue | 1,541,484 | 1,641,789 | 94% | 50% | |||||||||
20% Terminix Customer Count | 59 bps | (2) | 235 bps | (2) | 98% | 50% | ||||||||||
50% ServiceMaster Brands Adjusted EBITDA | 84,185 | 84,185 | 100% | 100% | ||||||||||||
Mary Kay Wegner | 65% | 100% ServiceMaster Brands | 40% ServiceMaster Brands Revenue | 212,256 | 231,941 | 92% | 50% | |||||||||
10% Merry Maids NPS | 25 bps | (2) | 100 bps | (2) | 98% | 50% | ||||||||||
40% American Home Shield Adjusted EBITDA | 206,607 | 223,893 | 92% | 50% | ||||||||||||
Rexford J. Tibbens(3) | 100% | 100% American Home Shield | 40% American Home Shield Revenue | 899,438 | 978,740 | 92% | 50% | |||||||||
20% American Home Shield Customer Count | 214 bps | (2) | 857 bps | (2) | 92% | 50% |
The "% of Target Performance for Threshold Payout" is equal to threshold performance (which is generally equal to the prior year's actual performance) divided by the current year's target goal. The payout levels for performance above threshold are generally based on a 6:10:1 ratio—for every one percent of achievement above threshold performance levels, the plan pays out sixten additional percentage points of the targeted payout. We believe the 6:10:1 ratio to be an effective motivator to improveprovide significant rewards for exceptional performance. The customer count metric is measured and rewarded using a different scale than the 10:1 ratio. The customer count metric is based on the basis point change year over year as defined in the prior year's results.annual operating plan. Threshold is set at 25 percent of the target change and will determine a payout of 25 percent of that portion of the total payout. The 2015 ABPscale increases to a 100 percent payout at target and 150 percent at the stretch target, with interpolation between achievement and payout levels. The 2018 AIP target payout opportunity for each participating NEO was based on our review of Peer Group and survey data and the importance of the NEO's position relative to our overall financial success.
2015 ABP2018 AIP Performance
NEO | % of ServiceMaster Target Adjusted EBITDA Attained | % of ServiceMaster Target Revenue Attained | % of ServiceMaster Customer Retention Attained | Business Unit | % of Business Unit Target Adjusted EBITDA Attained | % of Business Unit Target Revenue Attained | % of Business Unit Target Customer Retention Attained | % of Target Bonus Earned | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | 95 | % | 101 | % | Corporate | N/A | N/A | N/A | 94 | % | ||||||||||||||
Anthony D. DiLucente | 95 | % | 101 | % | Corporate | N/A | N/A | N/A | 94 | % | ||||||||||||||
Dion Persson | 95 | % | 101 | % | Corporate | N/A | N/A | N/A | 94 | % | ||||||||||||||
Matthew J. Stevenson | N/A | N/A | N/A | Terminix | 96 | % | 101 | % | 99 | % | 95 | % | ||||||||||||
Mary Kay Wegner | N/A | N/A | N/A | ServiceMaster Brands | 106 | % | 105 | % | 100 | % | 150 | % | ||||||||||||
Rexford J. Tibbens(1) | N/A | N/A | N/A | American Home Shield | 85 | % | 100 | % | 99 | % | 0 | % |
2018 AIP Payments
NEO | % of ServiceMaster Target AOP Attained | % of ServiceMaster Target Revenue Attained | % of ServiceMaster Target Cash Flow Attained | Business Unit | % of Business Unit Target AOP Attained | % of Business Unit Target Revenue Attained | % of Business Unit Target Cash Flow Attained | % of Target Bonus Earned | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | 97 | % | 100 | % | 104 | % | Corporate | N/A | N/A | N/A | 95 | % | ||||||||||||
Alan J. M. Haughie | 97 | % | 100 | % | 104 | % | Corporate | N/A | N/A | N/A | 95 | % | ||||||||||||
Timothy M. Haynes(1) | 97 | % | 100 | % | 104 | % | Corporate | N/A | N/A | N/A | 95 | % | ||||||||||||
Mary Kay Wegner | 97 | % | 100 | % | 104 | % | Corporate | N/A | N/A | N/A | 95 | % | ||||||||||||
Martin Wick(2) | N/A | N/A | N/A | Franchise Services Group | 100 | % | 93 | % | N/A | 50 | % |
NEO | % of Salary Paid at Target Performance | Year-End Base Salary ($) | Target Award Opportunity ($) | Actual % of Target Awarded | Total Bonus Earned ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty(1) | 100% | 1,000,000 | 1,000,000 | 89% | 890,000 | |||||||||
Anthony D. DiLucente(2) | 70% | 517,500 | 362,250 | 116% | 419,123 | |||||||||
Dion Persson(3) | 60% | 450,000 | 270,000 | 111% | 300,375 | |||||||||
Matthew J. Stevenson(4) | 65% | 450,000 | 292,500 | 105% | 305,663 | |||||||||
Mary Kay Wegner(5) | 65% | 425,000 | 276,250 | 104% | 288,405 | |||||||||
Rexford J. Tibbens(6) | 100% | 800,000 | 300,000 | 100% | 300,000 |
2015 ABP Payments
NEO | % of Salary Paid at Target Performance | Base Salary ($) | Actual % of Target Awarded | Total Bonus Earned ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | 100 | % | 1,100,000 | 95 | % | 1,045,000 | |||||||
Alan J. M. Haughie | 70 | % | 575,000 | 95 | % | 382,400 | |||||||
Timothy M. Haynes | 65 | % | 425,000 | 97 | % | 252,300 | |||||||
Mary Kay Wegner | 60 | % | 350,000 | 95 | % | 199,500 | |||||||
Martin Wick | 65 | % | 350,000 | 88 | % | 176,700 |
Retention Award
We have periodically approved cash retention awards to enhance our ability to retain key management. A retention award for Mr. Haynes was approved in May 2013date prior to him becoming an executive officerthe spin-off of AHS. His prorated salary paid for the Company. The intent of the awardperiod from his hire on May 15, 2018 through September 30, 2018 was to ensure continuity within the IT function leadership. The award paid out in two $100,000 installments in 2014 and 2015, respectively.
Long-Term Equity Incentive PlansAwards
Our long-term equity incentive plans wereare designed to retain key executives and to align the interests of our executives with the achievement of sustainable long-term growth and performance. For 2015, our NEOs were participants under our long-term incentive plans. For 2016, the Compensation Committee approved long-term incentive awards comprised of a mix of stock options and performance share units ("PSUs") for executive officers2018, to provide a long-term incentive component to the pay mix of executive officers.
MSIP
officers, the Compensation Committee approved LTI awards comprised of both stock options and RSUs with each award having an equivalent grant date value (50 percent of total grant value delivered through stock options and 50 percent delivered through RSUs). Prior to our initial public offering2018, the Company used an equity mix of 50 percent options and 50 percent PSUs. For 2018, the Compensation Committee decided to replace PSUs with RSUs on a one-time basis due to the complexities in June 2014,determining longer term financial goals given the Amendedprojected spin-off of AHS later in 2018. In 2019, the Compensation Committee returned to 50 percent PSUs combined with 30 percent options and Restated ServiceMaster Global Holdings, Inc. Stock Incentive Plan ("MSIP") provided certain key associates (including all20 percent RSUs.
The Compensation Committee periodically reviews the equity holdings of executive officers of the Company to ensure there are appropriate levels of ownership and incentive and retention value. The Compensation Committee also reviews competitive market practice regarding the awarding of LTI awards and, following its assessment during 2018 of our NEOs)executives' stock holdings and future long-term incentive opportunity, the Compensation Committee approved a LTI strategy and subsequently approved awards for the NEOs. The 2018 equity awards are comprised of both stock options and RSUs, with equivalent grant date value. The specific size and value of the opportunity (1)awards are detailed in the Summary Compensation and the Grants of Plan Based Award tables below. The Compensation Committee approved a RSU award in October 2018 to investMr. Persson to recognize his efforts leading activities for the spin-off of AHS and for his leadership in sharesdeveloping the Company's long-term and merger and acquisition strategy. Additionally, Mr. Tibbens received two grants of ourRSUs, 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 February 18, 2021. 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, 2010, February 18, 2021 and February 18, 2022. These grants of RSUs and stock options were converted to RSUs and stock options in Frontdoor stock effective October 1, 2018. The terms and conditions of the grants remained the same as the original grants prior to the conversion.
Stock options awarded are nonqualified stock options with vesting generally in equal installments on the first four anniversaries of the grant date. The exercise price of the stock options is the fair market value of the Company's common stock via actual share purchases and (2) to receive RSUs and options to purchase shares of our common stock. We believe that the opportunity for executive officers to purchase shares by making a significant monetary investmentas defined in the Company encourages their focus on long-term performance, thereby aligning their interests with the interests of our stockholders. All equity awards granted subsequent to the initial public offering were made under the provisions of the Omnibus Incentive Plan, which became effective on June 26, 2014Plan. Stock option awards granted in February 2019, and the Amended and Restated 2014 Omnibus Incentive Plan ("Omnibus Incentive Plan"), which was approved by stockholders at the 2015 Annual Meeting. No further awards will be made under the MSIP, but awards previously granted under the MSIP, including to the NEOs, are still outstanding.
For each share of common stock purchased by an NEO under the MSIP, we granted such NEO up to four matching options to purchase shares of our common stock, or "Matching Options," except in the case of Mr. Gillette, where we granted five and one half Matching Options for each share purchased. Prior to our initial public offering, we had also awarded RSUs under the MSIP to both newly hired executives and longer tenured NEOs. Each RSU represents a right to receive a share of common stock in the future, ifwill vest in equal installments on the first three anniversaries of the grant date.
The RSU awards will generally vest in three equal installments on the first three anniversaries of the grant date. Effective July 31, 2018, PSUs previously granted to certain executive officers of the Company on February 22, 2016 and whenFebruary 20, 2017 were cancelled by the RSU vests. Vesting of RSUs is subject to the executive's continued employment.Compensation Committee
of the Board of Directors due to the complexities of adjusting such awards as a consequence of the planned spin-off of the AHS business and because the awards were tracking below payout threshold at the time of cancellation. The purchase of shares under the MSIP allowed executive officers voluntarily agreed to havethe cancellation of these awards. The awards were cancelled for Mr. DiLucente and Ms. Wegner.
Double Trigger Vesting Upon Change In Control
The Company has adopted "double trigger" vesting acceleration in the event of a stakechange in control of the Company, effective for all equity awards granted on or after April 23, 2018. This "double trigger" vesting acceleration provision was already included in our performance by puttingstock option agreements, but the Compensation Committee's action includes this provision in all other stock awards. If the Compensation Committee reasonably determines prior to a change in control that an employee would receive an "Alternative Award" meeting the requirements of the Omnibus Incentive Plan; provided, however, that if within two years following a change in control, the employee's employment is involuntarily (other than for cause) terminated or the employee resigns with good reason, at a time when any portion of the Alternative Award is unvested, the unvested portion of such Alternative Award shall immediately vest in full and such employee shall be provided with either cash or marketable stock equal to the fair market value of the stock subject to the Alternative Award on the date of termination.
On the October 1, 2018 effective date of the spin-off of AHS, LTI awards were adjusted to reflect the spin-off of AHS. All stock option grants were adjusted and concentrated in the company of employment immediately post-spin. Both the number of options and the exercise price, were adjusted to provide equivalent in-the-money value post-spin as existed immediately pre-spin. Holders of outstanding RSU awards were provided an election to concentrate their own financial resourcesRSU awards into their company of employment post-spin or to receive RSUs in Frontdoor at risk. Additionally, throughthe distribution rate of one Frontdoor RSU for each two ServiceMaster RSUs. Messrs. Varty, DiLucente and Stevenson elected to concentrate their RSUs into ServiceMaster RSUs, and consequently, their respective RSU awards, including the number of RSUs were adjusted to provide value equivalent to the pre-spin value. Mr. Persson and Ms. Wegner elected to receive RSUs of Frontdoor as well as maintaining their original number of RSUs in ServiceMaster, consistent with the terms of their existing RSU agreements. Mr. Tibbens' RSUs were concentrated into RSUs in Frontdoor as he holds the position of President and CEO of Frontdoor. All awards listed in the Summary Compensation, Grants of Plan Based Awards (2018), Outstanding Equity Awards at Fiscal Year End (2018), and Option Exercises and Stock Vested (2018) tables reflect the applicable adjustments related to the spin-off of Frontdoor to stock option and RSU grants underawards. All awards, whether in ServiceMaster or Frontdoor retained the MSIPsame terms and nowconditions, including the Omnibus Incentivevesting terms, as the original ServiceMaster awards. Individual awards are detailed in the Grants of Plan the executive officers are encouraged to focus on sustained increases in stockholder value. Specifically, we believe the granting of stock options and RSUs, both time vested and performance based, assists us to:Based Awards table below.
Omnibus Incentive Plan
In connection with our initial public offering, ourOur board of directors adopted and our stockholders approved the Omnibus Incentive Plan.Plan in 2015. Our directors, officers, associatesemployees and consultants are eligible to receive awards under the Omnibus Incentive Plan. Awards under the Omnibus Incentive Plan may be made in the form of stock options, which may be either incentive stock options or non-qualified stock options; stock purchase rights; restricted stock; RSUs; performance RSUs; performance shares; performance units;PSUs; stock appreciation rights or "SARs"("SARs"); dividend equivalents; deferred share units; and other stock-based awards.
The Compensation Committee periodically reviews the equity holdings of executive officers of the Company to ensure there are appropriate levels of ownership and incentive and retention value. As a result of the Committee's review on February 24, 2015, the Compensation Committee considered the amount of equity holdings for each executive officer and based on their findings that the current equity holdings of Mr. Haynes and Ms. Wegner were not sufficient to ensure retention and approved awards under the Omnibus Incentive Plan for Mr. Haynes and Ms. Wegner in the form of 15,000 RSUs for each officer to enhance the Company's ability to retain these officers. The RSUs granted to Mr. Haynes and Ms. Wegner vest in three equal installments on the first three anniversaries of the grant date, subject to their continued employment with us. The Compensation Committee also approved an award of 7,250 RSUs for Mr. Haynes in September 2015 to recognize his change in responsibilities as he assumed the position of President, American Home Shield. Additionally, the Compensation Committee implemented annual long-term incentive awards for those below the executive officer level. Mr. Wick received both stock options (14,100 options) and RSUs (5,100 RSUs) in February 2015 as part of the annual award program prior to his appointment as an executive officer. He received an additional RSU award (2,900 RSUs) in September 2015 to recognize his promotion to executive officer and directly reporting to the CEO.
A total of 7,443,4355,817,681 shares of our common stock remained available for issuance under the Omnibus Incentive Plan as of December 31, 2015.2018. This figure represented approximately fivefour percent of the shares of our common stock that were outstanding as of December 31, 2015.2018. During any period that Section 162(m) of the Internal Revenue Code is applicable to us, (1) the maximum number of stock options, SARs or other awards based solely on the increase in the value of common stock that a participant may receive in any year is 2,000,000; (2) a participant may receive a maximum of 1,000,000
performance shares, shares of performance-based restricted stock and performance-based RSUs in any year; and (3) the maximum value of performance units granted to a participant during any year may not exceed $10,000,000.
We will continue to consider the award of long-term incentivesLTI awards under the Omnibus Incentive Plan on an ongoing basis to certain key associates,employees, including our NEOs, in order to recognize outstanding performance, enhance retention, assumption of additional responsibilities, enhance retention or otherwise as the Compensation Committee may determine is in our best interest.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan ("ESPP") was approved by stockholders at the 2015 Annual Meeting in April 2015. A total of 1,000,000 shares was authorized by stockholders for issuance under the ESPP. Purchases under the ESPP were suspended in 2018 due to the pending spin-off of Frontdoor.
UnderThe Compensation Committee amended the ESPP in February 2019 to allow for more frequent purchase periods and to change the allowed 10 percent discount to a company match of 10 percent of employee contributions. The authorized number of shares remaining in the ESPP (843,584) was not changed. The expiration date of the plan eligible employees of the Company may purchase common stock, subject to IRS limits, during pre-specified offering periods at a discount established by the Compensation Committee of 10% of the then-current fair market value.
The Company has established consecutive six-month offering periods, which commenced on July 1, 2015, during which stock may be purchasedwas not changed from April 27, 2025. We expect purchases under the ESPP. A second offeringamended ESPP period commenced on January 1, 2016.
During 2015, Mr. Wick was the only NEO to participatebegin in the Plan, and he acquired 236 shares on December 31, 2015 at a 10% discount from the fair market value.July 2019.
Retirement Benefits
Associates,Employees, including the NEOs, are generally eligible to participate in the ServiceMaster Profit Sharing and Retirement Plan, as amended and restated, as it may be further amended from time to time or the "PSRP."(the "PSRP"). The PSRP is a tax qualified 401(k) defined contribution plan under which we may make discretionary matching contributions. Historically, we have provided for a matching contribution in the PSRP where associatesemployees receive a dollar for dollar match on the first 1%one percent of their contributions, and then a $0.50 per dollar match on the next 2%two percent to 6%six percent contributed. Company matching contributions for the NEOs are set forth below in the All Other Compensation table.
We also maintain the ServiceMaster Deferred Compensation Plan, as amended and restated, as it may be further amended from time to time or the "DCP,"(the "DCP"), which is a non-qualified deferred compensation plan designed to afford certain highly compensated associatesemployees (including the NEOs, executive officers and certain other associates)employees) the opportunity to defer additional amounts of compensation on a pre-tax basis. Messrs. DiLucente and Stevenson contributed to the DCP during 2018.
Employee Benefits and Executive Perquisites
We offer a variety of health and welfare programs to all eligible associates,employees, including the NEOs. The NEOs are eligible for the same health and welfare benefit programs on the same basis as the rest of our associates,employees, including medical and dental care coverage, life insurance coverage and short and long-term disability.
We limit the use of perquisites as a method of compensation and provide executive officers with only those perquisites that we believe are reasonable and consistent with our compensation goal of enabling us to attract and retain superior executives for key positions. The perquisites provided to our NEOs are memberships in social and professional clubs.
Mr. Gillette is alsoVarty's employment agreement provided with personal usefor corporate housing through July 2018 and the reimbursement of ourreasonable weekly commuting expenses between Detroit, Michigan and Memphis, Tennessee through July 2018.
Our aircraft and certain spousal travel as describedpolicy was amended in his employment agreement. TheOctober 2018 to require the approval of the Chairman of the board of directors to approve personal use of the companyCompany aircraft benefit in Mr. Gillette's employment agreement provides that we will bearby the full cost of up to 100 flight hours of the executive's personal use of our aircraft per calendar year, including the cost of landing fees, but excluding any taxes imputedCEO. Prior to the executive.
Our aircraftamendment to the policy provides thatin October the CEO shallwas required to reimburse us for personal use of the company aircraft exceeding 100 hours annually. Any amount so reimbursed to us would be applied to reduce the executive's taxable income arising from the personal use. If our CEO utilizes our aircraft for commuting purposes,non-business reasons, the amount, applied toward his annual commuting benefitincluded as All Other Compensation on the Summary Compensation Table below, is generally 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. This method of calculation was affirmed by the Compensation Committee.
ThePrior to the amendment to the policy in October, the CEO maycould approve the personal use of the company aircraft by other executive officers and directors as needed. During 2015, Messrs. Haughie, Haynes and Wick utilized2018, Mr. Tibbens was authorized to use the company aircraft for spousal travelor a limited basis in conjunction with his hiring and move from Seattle, Washington to a Company-sponsored function upon approval by the CEO. Mr. Haughie and his spouse also used the company aircraft for other personal use upon the approval of the CEO.Memphis, Tennessee.
Employment Arrangements
We or an affiliate, generally providesprovide an executive with an offer letter prior to the time an executivehe or she joins the Company. The offer letter generally describes the basic terms of the executive's employment, including his or her start date, starting salary, ABPAIP bonus target, special bonuses (if any), relocation benefits, severance benefits (if any), sign-on bonus (if any) and equity awards granted in connection with 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 our policies will apply as warranted. Under certain circumstances, we recognize that special arrangements with respect to an executive's employment may be necessary or desirable. In 2013,July 2017, we entered into an employment agreement with Mr. GilletteVarty setting forth the terms of his employment as our CEO and we entered into severance agreements with Mr. Haughie setting forth certain severance benefits to be received by Mr. Haughie upon a qualifying termination of employment.CEO. Please see the narrative following the table in "—Grants"Grants of Plan Based Awards (2014)(2018)" and the "—Potential Payments Upon Termination or Change in Control" section for a description of the agreements with Messrs. GilletteVarty, Persson, Stevenson and Haughie.Tibbens.
Post TerminationPost-Termination Compensation
Messrs. HaynesDiLucente, Persson and WickStevenson and Ms. Wegner are covered under our standard severance policy or practice as in effect at the time employment is terminated. The standard severance policy and the terms of the post termination arrangements between us and the other NEOs are described in detail below under the "—Potential Payments Upon Termination or Change in Control" section.
20162019 Long-Term Incentive Awards
On February 22, 2016,In the first quarter of 2019, the Compensation Committee approved the grant of the equity awards set forth in the table below to our NEOs.NEOs (weighted 50 percent PSUs, 30 percent stock options and 20 percent RSUs). The PSUs have a performance period of three years, 2019 through 2021, based on the achievement of cumulative adjusted earnings per share and cumulative revenue goals, with a modifier based on total shareholder return ("TSR") relative to companies in our peer group. Any payout earned under the PSU award will be settled in the first quarter of 2022. The stock options are scheduled to vest and become exercisable in four equal annual installments on the first fourthree anniversaries of the grant date, subject to the NEO's continued employment with the Company. The RSUs will vest in equal installments on the first three anniversaries of the grant date. After granting stock options have an exercise priceand RSUs in 2018 due to the complexity of $39.59 per share. The PSUs have a three-year performance cycle from January 1, 2016 through December 31, 2018, where the Company's cumulative adjusted earnings per share goals will needthen expected spin-off of AHS, the Compensation Committee decided to be achieved for suchreturn to the use of PSUs to vest. PSUs may be earned at threshold, target and maximum payouts (and at points in between threshold and maximum) depending on the level of adjusted earnings per share achieved. If at least the threshold level is achieved, the vested shares would be paid out in the first quarter of 2019. If the threshold level is not achieved as of December 31, 2018, the PSUs will be forfeited.ensure executive officers alignment with specific
Named Executive Officer | Number of Stock Options | Target Number of PSUs | |||||
---|---|---|---|---|---|---|---|
Robert J. Gillette | 141,753 | 48,624 | |||||
Alan J. M. Haughie | 36,819 | 12,630 | |||||
Timothy M. Haynes | 27,615 | 9,473 | |||||
Mary Kay Wegner | 16,569 | 5,684 | |||||
Martin Wick | 25,774 | 8,841 |
performance goals that are expected to deliver increased shareholder value, while also providing significant reward opportunity for the executive officer.
Named Executive Officer | Number of PSUs | Number of Stock Options | Number of RSUs | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | 49,951 | 100,756 | 19,981 | |||||||
Anthony D. DiLucente | 11,302 | 22,796 | 4,521 | |||||||
Dion Persson | 7,493 | 15,114 | 2,998 | |||||||
Matthew J. Stevenson | 8,742 | 17,633 | 3,497 | |||||||
Mary Kay Wegner | 7,493 | 15,114 | 2,998 |
The Company's Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed it with management and, based on such review and discussions, has recommended to the board of directors that the Compensation Discussion and Analysis should be included in this Proxy Statement.
Thomas C. Tiller, Jr.John B. Corness (Chair)
Laurie Ann Goldman
Naren K. Gursahaney
Steven B. Hochhauser
Stephen J. Sedita
Mark E. Tomkins
This Compensation Committee Report is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
Summary Compensation Table
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | 2015 | 1,100,000 | 0 | 0 | 0 | 1,045,000 | 126,078 | 2,271,078 | |||||||||||||||||
Chief Executive Officer | 2014 | 1,100,000 | 0 | 0 | 4,083,750 | 1,287,000 | 87,617 | 6,558,367 | |||||||||||||||||
2013 | 592,308 | 1,596,712 | 3,000,000 | 4,087,875 | 12,623 | 108,945 | 9,398,463 | ||||||||||||||||||
Alan J. Haughie | 2015 | 564,583 | 0 | 0 | 0 | 382,400 | 26,501 | 973,484 | |||||||||||||||||
Chief Financial Officer | 2014 | 550,000 | 0 | 0 | 0 | 451,000 | 98,822 | (4) | 1,099,822 | ||||||||||||||||
2013 | 140,417 | 600,000 | 750,000 | 998,899 | 0 | 112,919 | 2,602,235 | ||||||||||||||||||
Timothy M. Haynes | 2015 | 380,000 | 100,000 | (5) | 732,588 | 0 | 252,300 | 14,277 | 1,479,165 | ||||||||||||||||
President, American Home Shield | |||||||||||||||||||||||||
Mary Kay Wegner | 2015 | 335,000 | 0 | 482,100 | 0 | 199,500 | 338 | 1,016,938 | |||||||||||||||||
Senior Vice President, Service and Operations, Terminix | |||||||||||||||||||||||||
Martin Wick | 2015 | 331,250 | 0 | 264,109 | 165,252 | 176,700 | 12,492 | 949,803 | |||||||||||||||||
President, Franchise Services Group |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | 2018 | 1,000,000 | 1,750,038 | 1,750,002 | 890,000 | 136,769 | 5,526,809 | ||||||||||||||||||
Chief Executive Officer | 2017 | 431,818 | 431,818 | 2,000,007 | 1,250,005 | — | 42,966 | 4,156,614 | |||||||||||||||||
Anthony D. DiLucente | 2018 | 513,125 | 450,018 | 450,016 | 419,123 | 10,336 | 1,842,618 | ||||||||||||||||||
Senior Vice President and Chief Financial Officer | 2017 | 446,354 | 1,100,045 | 373,443 | 350,000 | 30,787 | 2,300,629 | ||||||||||||||||||
Dion Persson | 2018 | 408,333 | 850,032 | 450,016 | 300,375 | 52,207 | 2,060,963 | ||||||||||||||||||
Senior Vice President, Business Development | |||||||||||||||||||||||||
Matthew J. Stevenson | 2018 | 431,250 | 400,040 | 400,008 | 305,663 | 44,019 | 1,580,980 | ||||||||||||||||||
President, Terminix Residential | |||||||||||||||||||||||||
Mary Kay Wegner | 2018 | 425,000 | 400,040 | 400,008 | 288,405 | 14,031 | 1,527,484 | ||||||||||||||||||
President, ServiceMaster Brands | 2017 | 425,000 | 800,061 | 350,101 | 415,000 | 9,788 | 1,999,950 | ||||||||||||||||||
2016 | 396,250 | — | 475,058 | 225,007 | 172,000 | 8,155 | 1,276,470 | ||||||||||||||||||
Rexford J. Tibbens | 2018 | 300,000 | 300,000 | (4) | 1,625,068 | (5) | 1,625,022 | (5) | — | 73,213 | 3,923,303 | ||||||||||||||
President and CEO, frontdoor, inc. |
All Other Compensation (2015)(2018)
Named Executive Officer | Perquisites and Other Personal Benefits ($) | Company Paid Life Insurance Premiums ($) | Company Contributions to PSRP ($)(1) | Tax Payment(s) ($)(2) | Total ($) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert J Gillette | 116,465 | (3)(7) | 338 | 9,275 | 0 | 126,078 | ||||||||||
Alan J Haughie | 14,561 | (4)(7) | 338 | 9,275 | 2,327 | 26,501 | ||||||||||
Timothy M. Haynes | 3,979 | (5)(7) | 338 | 9,275 | 685 | 14,277 | ||||||||||
Mary Kay Wegner | 0 | 338 | 0 | 0 | 338 | |||||||||||
Martin Wick | 3,979 | (6)(7) | 338 | 7,490 | 685 | 12,492 |
Named Executive Officer | Perquisites and Other Personal Benefits ($) | Relocation Expenses ($) | Company Paid Life Insurance Premiums ($) | Company Contributions to PSRP ($)(1) | Tax Payment(s) ($)(2) | Total ($) | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | 17,530 | (3)(9) | 66,276 | 338 | 9,625 | 43,000 | 136,769 | ||||||||||||
Anthony D. DiLucente | 226 | (4) | — | 338 | 9,625 | 147 | 10,336 | ||||||||||||
Dion Persson | 605 | (5) | 24,870 | 338 | 9,625 | 16,769 | 52,207 | ||||||||||||
Matthew J. Stevenson | 3,538 | (6) | 17,125 | 324 | 9,625 | 13,407 | 44,019 | ||||||||||||
Mary Kay Wegner | 2,538 | (7) | — | 338 | 9,625 | 1,530 | 14,031 | ||||||||||||
Rexford J. Tibbens | 12,164 | (8)(9) | 30,040 | 56 | 2,000 | 28,953 | 73,213 |
Grants of Plan Based Awards (2015)(2018)
The amounts listed in the table below in the column entitled Estimated Future Payouts Under Non-Equity Incentive Plan Awards represent the potential 20152018 earnings under the ABP,AIP, which is a non-equity incentive plan. The threshold amount is the minimum earned amount if threshold
performance is attained for all performance measures. The maximum payout under the plan is the amount calculated under the EABP. For 2015,2018, the maximum is $6,220,000.$6.22 million. As noted above, the Compensation Committee terminated the EABP on February 18, 2019. Additional information is discussed in "—Compensation"Compensation Discussion and Analysis—Annual BonusIncentive Plan" above. All stock option and RSU awards listed reflect the adjustment resulting from the spin-off of AHS. Additional detail is provided in "Compensation Discussion and Analysis—Long-Term Equity Awards" above.
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | | | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | All Other Stock Awards: Number of Shares of Stock (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | | |||||||||||||||||||
| | Grant Date Fair Value of Stock and Option Awards(4) | ||||||||||||||||||||||
Named Executive Officer | Grant Date | Threshold ($) | Target ($) | Maximum ($)(1) | ||||||||||||||||||||
Robert J. Gillette | N/A | 567,600 | 1,100,000 | 6,220,000 | ||||||||||||||||||||
Alan J. Haughie | N/A | 207,690 | 402,500 | 6,220,000 | ||||||||||||||||||||
Timothy M. Haynes | N/A | 134,344 | 260,356 | 6,220,000 | ||||||||||||||||||||
2/24/2015 | 15,000 | (5) | 482,100 | |||||||||||||||||||||
9/22/2015 | 7,250 | (6) | 250,488 | |||||||||||||||||||||
Mary Kay Wegner | N/A | 108,360 | 210,000 | 6,220,000 | ||||||||||||||||||||
2/24/2015 | 15,000 | (7) | 482,100 | |||||||||||||||||||||
Martin Wick | N/A | 99,654 | 201,322 | 6,220,000 | ||||||||||||||||||||
2/24/2015 | 5,100 | (8) | 14,100 | (9) | 32.14 | 329,166 | ||||||||||||||||||
9/22/2015 | 2,900 | (10) | 100,195 |
| | | | | | All Other Option Awards: Number of Securities Underlying Options (#)(3)(4) | | | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock (#)(2)(3) | | | |||||||||||||||||||
| | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(8) | |||||||||||||||||||||
Named Executive Officer | Grant Date | Threshold ($) | Target ($) | Maximum ($)(1) | ||||||||||||||||||||
Nikhil M. Varty | N/A | 500,000 | 1,000,000 | 6,220,000 | ||||||||||||||||||||
2/18/2018 | 47,216 | 1,750,038 | ||||||||||||||||||||||
2/18/2018 | 145,459 | 37.07 | 1,750,002 | |||||||||||||||||||||
Anthony D. DiLucente | N/A | 181,125 | 362,250 | 6,220,000 | ||||||||||||||||||||
2/18/2018 | 12,141 | 450,018 | ||||||||||||||||||||||
2/18/2018 | 37,405 | 37.07 | 450,016 | |||||||||||||||||||||
Dion Persson | N/A | 135,000 | 270,000 | 6,220,000 | ||||||||||||||||||||
2/18/2018 | 8,221 | (5) | 450,018 | |||||||||||||||||||||
2/18/2018 | 37,359 | 37.07 | 450,016 | |||||||||||||||||||||
10/23/2018 | 9,046 | 400,014 | ||||||||||||||||||||||
Matthew J. Stevenson | N/A | 146,250 | 292,500 | 6,220,000 | ||||||||||||||||||||
2/18/2018 | 10,793 | 400,040 | ||||||||||||||||||||||
2/18/2018 | 33,248 | 37.07 | 400,008 | |||||||||||||||||||||
Mary Kay Wegner | N/A | 138,125 | 276,250 | 6,220,000 | ||||||||||||||||||||
2/18/2018 | 7,308 | (5) | 400,040 | |||||||||||||||||||||
2/18/2018 | 33,248 | 37.07 | 400,008 | |||||||||||||||||||||
Rexford J. Tibbens | N/A | N/A | 300,000 | 6,220,000 | ||||||||||||||||||||
5/15/2018 | 16,369 | (6)(7) | 625,031 | |||||||||||||||||||||
5/15/2018 | 87,122 | (6) | 38.19 | 1,000,008 | ||||||||||||||||||||
5/15/2018 | 26,191 | (6) | 1,000,038 | |||||||||||||||||||||
5/15/2018 | 54,452 | (6)(7) | 38.19 | 625,014 |
Employment Arrangements
Employment Agreement with Mr. GilletteVarty
On June 17, 2013,July 26, 2017, we announced that Robert J. GilletteNikhil M. Varty had been elected to serve as our CEO pursuant to an employment agreement with us. Mr. Gillette'sVarty's employment agreement is initially for a term of three years subject to automatic one year renewals thereafter, absent termination notice by either party. Under his employment agreement, Mr. GilletteVarty received an initial annual base salary of $1.1$1 million and a target annual incentive bonus opportunity of 100 percent of his base salary. Mr. Gillette'sVarty's employment agreement also entitles himprovides for corporate housing through the first anniversary of his hire date and the reimbursement of reasonable weekly commuting expenses between Detroit, Michigan and Memphis, Tennessee through the first anniversary of his hire date. Mr. Varty's employment agreement provides for annual long-term equity awards with a grant value equal to an automobile allowance350 percent of $15,000 per yearhis base salary for 2018 and personal use of the company aircraft for up to 100 flight hours (50 for 2013).2019. Mr. Gillette'sVarty's employment agreement also provides for severance benefits as described below under "—Potential"Potential Payments Upon Termination or Change in Control." A failure by us to renew the agreement will constitute a termination of Mr. Gillette'sVarty's employment without cause for purposes of his severance benefits.
Table of ContentsEmployment Agreement with Mr. Tibbens
In connection with his commencementOn May 15, 2018, Mr. Tibbens was hired as the President and CEO of employment, Mr. Gillette purchased $1.5 million of our common stock. In connection with his initial investment, Mr. Gillette received 262,500 RSUs, which vest at a rate of one third per year on eachAHS in anticipation of the first three anniversariesspin-off of their grant dates. Additionally,AHS pursuant to an employment agreement. Mr. Tibbens' employment agreement is initially for each sharea term of common stock he purchased, he received five andfour years subject to automatic one half Matching Options with an exercise price equal to the fair market value of a share of common stock at the time of the option grant. Mr. Gillette's Matching Options vest at a rate of one fourth per year on each of the first four anniversaries of the grant date. Based on Mr. Gillette's initial equity investment (and subsequent adjustments for corporate transactions), he acquired 131,250 shares of our common stock and was granted 721,875 Matching Options.
Pursuant to the terms ofrenewals thereafter, absent termination notice by either party. Under his employment agreement, Mr. Gillette madeTibbens received an initial annual base salary of $800,000 and a second investmenttarget annual incentive bonus opportunity of $1,500,000 in our common stock and was granted Matching Options at a rate of five and one half options per share purchased on March 18, 2014. Based on Mr. Gillette's investment, he acquired 125,000 shares of our common stock and was granted 687,500 Matching Options.
Should Mr. Gillette's employment terminate for cause, all vested and unvested options will be canceled, along with all unvested RSUs. In the case of Mr. Gillette's termination other than for cause and other than by reason100 percent of his death or disability, unvested optionsbase salary. Mr. Tibbens' employment agreement also provides for severance benefits, which have not been executed as he continues as the President and RSUs will be canceled. Upon termination by reasonCEO of death or disability, Mr. Gillette's unvested options will fully vest. In addition, ifFrontdoor, a publicly traded company, following the death or disability occurs prior to his RSUs having fully vested, a pro rata portionspin-off of the RSUs that would have vested in the year of termination will vest. Mr. Gillette or his estate will retain the right to exercise any vested options for up to 12 months following termination for death, disability, or retirement, and for three months following termination for all other reasons (except for termination for cause). Under the award agreements, if Mr. Gillette's employment is terminated by us without cause or Mr. Gillette resigns with good reason, in either case, when we are party to an agreement that, if consummated, would result in a change in control or such termination was otherwise connected to such an agreement, and in each case such change in control is consummated, Mr. Gillette will receive a cash payment equal to the value of his forfeited awards.AHS.
Equity Awards
As noted in the Compensation Discussion and Analysis, during 2015,on February 18, 2018, the Compensation Committee approved the grant of the equity awards set forth in the table below to our NEOs. The stock options are scheduled to vest and become exercisable in equal annual installments on the first four anniversaries of the grant date, subject to the NEO's continued employment with the Company. The stock options awarded on February 18, 2018 have an exercise price of $37.07 per share. The Compensation Committee also approved RSUs that vest in equal annual installments on the first three anniversaries of the grant date, subject to the NEO's continue employment with the Company. The Compensation Committee approved stock options and RSUs for Mr. HaynesTibbens as part of his employment agreement. These awards were approved with a grant date of May 15, 2018. The stock options awarded to Mr. Tibbens are scheduled to vest and Ms. Wegnerbecome exercisable in equal annual installments on the first four anniversaries of the grant date for one grant, with a second stock option grant vesting and becoming exercisable in equal installments beginning on February 18, 2019 and the next three anniversaries of the February 18 initial vest date, subject to his continued employment with the Company. The stock options awarded on May 15, 2018 have an exercise price based on a Frontdoor stock price of $38.19 per share. Mr. Tibbens also received two RSU awards. Mr. Haynes received two separate RSU awards, oneThe first will vest in February 2015 to enhanceequal installments on the Company's ability to retain himfirst three anniversaries of the grant date, and the second award will vest in September 2015 to recognize his promotion tothree equal annual installments beginning on February 18, 2019 and the positionnext two anniversaries of President, American Home Shield. Ms. Wegner's RSU award was granted inthe February 2015 to enhance the Company's ability to retain her.18 initial vest date. Mr. Wick received both RSUs and stock options as a participant in the Company's annual awards of long-term incentives. HePersson also received an additional RSU award on October 23,
2018 to recognize his efforts leading activities for the spin-off of AHS and for his leadership in developing the Company's long-term and merger and acquisition strategy.
Named Executive Officer | Number of Stock Options | Number of RSUs | |||||
---|---|---|---|---|---|---|---|
Nikhil M. Varty | 145,459 | 47,216 | |||||
Anthony D. DiLucente | 37,405 | 12,141 | |||||
Dion Persson(1) | 37,359 | 17,267 | |||||
Matthew J. Stevenson | 33,248 | 10,793 | |||||
Mary Kay Wegner(1) | 33,248 | 7,308 | |||||
Rexford J. Tibbens(2) | 141,574 | 42,560 |
All stock options, restricted shares and RSUs currently held by the NEOs are shown in the table in "—Outstanding"Outstanding Equity Awards at Fiscal Year End (2015)(2018)" table below.
The MSIP or Omnibus Incentive Plan and an employee stock option agreement govern each option award and provide, among other things, that the options vest in equal annual installments over a periodon the first four anniversaries of four years from the date of grant dates, subject to continued employment through each applicable vesting date. The MSIP or Omnibus Incentive Plan and an RSU award agreement govern each RSU award and provide, among other things, that the RSUs generally vest in equal annual installments over a periodon the first three anniversaries of three years from the date of grant dates, subject to continued employment through each applicable vesting date. Holders of RSUs have no rights as stockholders, including voting rights. Holders of RSUs are, however, entitled to dividend equivalents if a dividend is declared on our common stock. For more information on the MSIP, see "—Compensation Discussion and Analysis—Long-Term Equity Incentive Plans" above. See "—Potential"Potential Payments Upon Termination or Change in Control" below for information regarding the cancellation or acceleration of vesting of stock options and RSUs upon certain terminations of employment or a change in control.
Outstanding Equity Awards at Fiscal Year End (2015)(2018)
| | Option Awards | Stock Awards | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Named Executive Officer | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#)(2) | Market Value of Units of Stock That Have Not Vested ($)(3) | |||||||||||||||||
Robert J. Gillette | 9/13/2013 | 360,938 | 360,937 | 11.43 | 9/13/2023 | 87,500 | 3,433,500 | ||||||||||||||||||
3/18/2014 | 171,875 | 515,625 | 12.00 | 3/18/2024 | |||||||||||||||||||||
Alan J. Haughie | 9/16/2013 | 21,875 | 858,375 | ||||||||||||||||||||||
12/11/2013 | 84,000 | 84,000 | 12.00 | 12/11/2023 | |||||||||||||||||||||
Timothy M. Haynes | 3/21/2012 | 9,374 | 3,124 | 16.01 | 3/21/2022 | ||||||||||||||||||||
8/28/2013 | 8,750 | 8,750 | 11.43 | 8/28/2023 | 833 | 32,687 | |||||||||||||||||||
12/2/2013 | 10,208 | 400,562 | |||||||||||||||||||||||
3/18/2014 | 8,334 | 24,999 | 12.00 | 3/18/2024 | |||||||||||||||||||||
2/24/2015 | 15,000 | 588,600 | |||||||||||||||||||||||
9/22/2015 | 7,250 | 284,490 | |||||||||||||||||||||||
Mary Kay Wegner | 5/28/2010 | 8,750 | 11.43 | 5/28/2020 | |||||||||||||||||||||
9/13/2013 | 13,126 | 13,124 | 11.43 | 9/13/2023 | |||||||||||||||||||||
2/24/2015 | 15,000 | 588,600 | |||||||||||||||||||||||
Martin Wick | 12/2/2009 | 17,500 | 11.43 | 12/2/2019 | |||||||||||||||||||||
2/25/2014 | 6,666 | 261,574 | |||||||||||||||||||||||
3/18/2014 | 5,000 | 15,000 | 12.00 | 3/18/2024 | |||||||||||||||||||||
2/24/2015 | 14,100 | 32.14 | 2/24/2025 | 5,100 | 200,124 | ||||||||||||||||||||
9/22/2015 | 2,900 | 113,796 |
| | Option Awards | Stock Awards | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Named Executive Officer | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#)(2) | Market Value of Units of Stock That Have Not Vested ($)(3) | |||||||||||||||
Nikhil M. Varty | 7/26/2017 | 37,012 | 111,037 | 28.56 | 7/26/2027 | — | ||||||||||||||||
2/18/2018 | 0 | 145,459 | 37.07 | 2/18/2028 | 47,216 | 1,734,716 | ||||||||||||||||
Anthony D. DiLucente | 1/24/2017 | — | — | — | — | 6,558 | 240,941 | |||||||||||||||
2/20/2017 | 11,208 | 33,624 | 26.01 | 2/20/2027 | ||||||||||||||||||
2/18/2018 | 0 | 37,405 | 37.07 | 2/18/2028 | 12,141 | 446,060 | ||||||||||||||||
Dion Persson | 2/18/2018 | 0 | 37,359 | 37.07 | 2/18/2028 | 8,221 | (4) | 302,040 | ||||||||||||||
10/22/2018 | — | — | — | — | 9,046 | 332,350 | ||||||||||||||||
Matthew J. Stevenson | 10/23/2017 | — | — | — | — | 6,890 | 253,139 | |||||||||||||||
2/18/2018 | 0 | 33,248 | 37.07 | 2/18/2028 | 10,793 | 396,535 | ||||||||||||||||
Mary Kay Wegner | 2/22/2016 | 6,119 | 12,237 | 26.81 | 2/22/2026 | — | — | |||||||||||||||
11/29/2016 | 2,151 | (4) | 79,028 | |||||||||||||||||||
2/20/2017 | 10,508 | 31,522 | 26.01 | 2/20/2027 | — | — | ||||||||||||||||
2/18/2018 | 0 | 33,248 | 37.07 | 2/18/2028 | 7,308 | (4) | 268,496 | |||||||||||||||
Rexford J. Tibbens | 5/15/2018 | 0 | 87,122 | (5) | 38.19 | 5/15/2028 | 26,191 | (5) | 696,943 | |||||||||||||
5/15/2018 | 0 | 54,452 | (5) | 38.19 | 5/15/2028 | 16,369 | (5) | 435,579 |
Option Exercises and Stock Vested (2015)(2018)
| Option Awards | Stock Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Named Executive Officer | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | |||||||||
Robert J. Gillette | 0 | 0 | 87,500 | 3,037,125 | |||||||||
Alan J. M. Haughie | 0 | 0 | 21,875 | 770,875 | |||||||||
Timothy M. Haynes | 0 | 0 | 11,041 | 420,873 | |||||||||
Mary Kay Wegner | 0 | 0 | 0 | 0 | |||||||||
Martin Wick | 0 | 0 | 3,334 | 109,122 |
| Option Awards | Stock Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Named Executive Officer | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | |||||||||
Nikhil M. Varty | — | — | 70,028 | 2,917,191 | |||||||||
Anthony D. DiLucente | — | — | 19,038 | 781,780 | |||||||||
Dion Persson(3) | — | — | 8,482 | 356,244 | |||||||||
Matthew J. Stevenson | — | — | 3,455 | 151,821 | |||||||||
Mary Kay Wegner(3) | — | — | 19,612 | 788,793 | |||||||||
Rexford J. Tibbens | — | — | — | — |
Nonqualified Deferred Compensation Plans
No NEOsThe table below sets forth information regarding the NEO's deferred compensation. Messrs. DiLucente and Stevenson participated in the DCP during 20152018. Details are listed on the following table.
Nonqualified Deferred Compensation (2018)
Named Executive Officer | Executive Contributions in Last FY ($)(1) | Company Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | — | — | — | — | — | |||||||||||
Anthony D. DiLucente | 278,125 | — | (14,595 | ) | — | 538,766 | ||||||||||
Dion Persson | — | — | — | — | — | |||||||||||
Matthew J. Stevenson | 54,844 | — | (2,600 | ) | — | 63,936 | ||||||||||
Mary Kay Wegner | — | — | — | — | — | |||||||||||
Rexford J. Tibbens | — | — | — | — | — |
Deferred Compensation Programs
The DCP is a nonqualified deferred compensation plan designed to afford certain highly compensated employees the opportunity to defer up to 75 percent of their compensation on a pre-tax basis. Deferred amounts are credited with earnings or losses based on the rate of return of mutual funds selected by the participants in the DCP. The Company, in its sole discretion, may make matching contributions, based on the amounts that are deferred by employees pursuant to the DCP, but did not choose to make matching contributions for 2018. Distributions are paid at the time elected by the participant in accordance with the DCP.
The DCP is not currently funded by the Company, and participants have an unsecured contractual commitment from any prior year.the Company to pay the amounts due under the DCP. All plan assets are held in trust and are considered general assets of the Company. When such payments are due, the cash will be distributed from the DCP's trust.
Potential Payments Upon Termination or Change in Control
Severance Benefits for NEOs
Unless modified by separate agreement, and except as described below, upon a termination of employment for any reason, we have no obligation to pay any prospective amounts or provide any benefits to our NEOs. Our obligations will consist of those obligations accrued at the date of termination, including payment of earned salary, vacation, reimbursement of expenses and obligations that may otherwise be payable in the event of death or disability.
For the purpose of the following discussion, "cause" means a material breach by the executive of the duties and responsibilities of the executive (other than as a result of incapacity due to physical or mental illness) that is demonstrably willful and deliberate on the executive's part, committed in bad faith or without reasonable belief that such breach is in our best interests and not remedied in a reasonable period of time after receipt of written notice from us specifying such breach; or the commission by the executive of a felony or misdemeanor involving any act of fraud, embezzlement or dishonesty or any other intentional misconduct by the executive that materially and adversely affects our business affairs or reputation. The NEOs' agreements described below also include in the definition of "cause": any failure by the executive to cooperate with any investigation or inquiry into the executive's business practices, whether internal or external, including, but not limited to, the executive's refusal to be deposed or to provide testimony at any trial or inquiry.
Upon each executive's retirement, death or disability, we will pay to the executive (or his or her executors or legal representatives, to the extent applicable) the annual bonus earned for the fiscal year immediately preceding the date of termination to the extent not previously paid; plus if the date of termination is after June 30 of a fiscal year, a prorated bonus through his date of termination (determined based on the target bonus, in the event of retirement or death, or actual accomplishment, in the event of disability).
Mr. GilletteVarty
Mr. Gillette'sVarty's employment agreement provides that if we were to terminate Mr. Gillette'sVarty's employment without cause, or Mr. GilletteVarty terminates his employment for good reason, he would receive: (1) continued payment of his monthly base salary for 24 months following the date of termination; (2) reimbursement of COBRA premiums paid by him for 18 months following the date of termination (and reimbursement of COBRA premiums for up to an additional 6 months following the end of the original 18 month period to the extent that Mr. GilletteVarty and his dependents have not obtained coverage from a subsequent employer); (3) the annual bonus earned for the fiscal year immediately preceding the date of termination to the extent not previously paid; (4) a prorated bonus through his date of
termination; and (5) an amount equal to two times his average annual bonus paid or payable to Mr. GilletteVarty with respect to the two fiscal years immediately preceding the date of termination or, if Mr. GilletteVarty has not received an annual bonus for either or both of those fiscal years immediately preceding the date of termination, with such average to be calculated using his target annual bonus for such year or years, as applicable. Payments of Mr. Gillette'sVarty's severance benefits are subject to Mr. Gillette'sVarty signing a general release of claims. Mr. GilletteVarty is also subject to covenants not to compete or solicit for two years following termination and an indefinite covenant not to disclose confidential information. Upon Mr. Gillette'sVarty's retirement, death or disability, we shall pay to Mr. GilletteVarty (or his executors or legal representatives)representatives, to the extent applicable) the annual bonus earned for the fiscal year
immediately preceding the date of termination to the extent not previously paid, plus a prorated bonus through his date of termination. The treatment of equity awards granted to Mr. Varty is described below under the "MSIP and Omnibus Incentive Plan" section.
Mr. HaughieTibbens
We entered into a severanceMr. Tibbens' employment agreement with Mr. Haughie upon his hire that provides that if we were to terminate Mr. Haughie's employment without cause, or if he were to terminate his employment for good reason, he wouldwill receive: (1) continued payment of his monthly base salary, at the rate in effect immediately prior to the Date of Termination, for 12 months following the Date of Termination; provided that such payment period shall be for 24 months following the date of termination; (2) an amount equal to the executive's then current year's annual bonus at target; (3)termination if the date of termination is after June 30prior to January 1, 2020; (2) a lump sum payment equal to Mr. Tibbens' target bonus; (3) to the extent not already vested by their terms on or prior to such date of a fiscal year, a prorated bonus throughtermination, the Sign-On RSUs will become immediately vested on the date of termination; and (4) an amount equal to 12 times the executive's monthly costannual bonus earned for health care continuation coverage for those eligible plans in place immediately prior to termination.the 2018 fiscal year.
Severance Arrangements with Other NEOs
We have not historically offered severance agreements or change in control agreements to newly hired executive officers; however, the Compensation Committee periodically reassesses the need to offer these types of arrangements as part of maintaining competitive executive compensation packagesofficers. Messrs. DiLucente, Persson and has included a severance agreement for Mr. Haughie, where the agreement was needed to hire the executive. Messrs. Haynes and WickStevenson and Ms. Wegner are covered under our standard severance practices and guidelines. As an officer who reports directly to our CEO, he or she is eligible to receive severance if terminated without cause (as defined in "—Potential"Potential Payments Upon Termination or Change in Control—Severance Benefits for NEOs"). Under our practice for executive officers as in effect as of December 31, 2015,2018, in the event of such termination, an amount equal to one times base salary plus target bonus for the year of termination is paid out generally in monthly installments over a period of 12 to 18 months, and, if termination occurs after June 30 of a year, a prorated portion of the bonus earned under the ABP,AIP would be payable to the terminated executive at the same time as annual bonuses are paid to other executives for the applicable year, subject to execution of a general release and observing covenants not to compete, solicit, nor disclose confidential information. The Compensation Committee adopted severance guidelines in July 2018 that provide for enhanced severance payments to executive officers in the event of a change in control and subsequent termination from the acquiring company within 24 months of the change in control, a "double trigger provision." The guidelines provide for the payment of two times annual salary and target bonus upon the termination following a change in control.
MSIP and Omnibus Incentive Plan
If an executive's employment is terminated by us for "cause" (as defined in the MSIP and Omnibus Incentive Plan) all options (vested and unvested), unvested RSUs, unvested restricted stock and unvested performance RSUs are immediately cancelled.
If an executive's employment is terminated by us without "cause" or if the executive voluntarily terminates his employment for any reason, all unvested options, RSUs and RSUsPSUs immediately terminate. Upon such a termination, the executive may exercise vested options before the first to occur of (1) the three month anniversary of the executive's termination of employment, (2) the expiration of
the options' normal term, after which date such options are cancelled or (3) the cancellation of the options in the event of a change in control in exchange for a cash payment.
If an executive's employment terminates by reason of death or disability, all unvested options will vest, and all options will remain exercisable until the first to occur of (1) the one year anniversary of the executive's date of termination, (2) the expiration of the options' normal term, after which date such options are cancelled or (3) the cancellation of the options in the event of a change in control in exchange for a cash payment. RSUs will vest as to the number of RSUs that would have vested on the next anniversary of the grant date (assuming the executive's employment had continued through such anniversary) multiplied by a fraction, the numerator of which is the number of days elapsed since (x) the grant date, if the termination due to death or disability occurs on or prior to the first anniversary of the grant date, or (y) the most recent prior anniversary of the grant date, if the
termination due to death or disability occurs after the first anniversary of the grant date, and the denominator of which was 365 for 2015.2018.
The stock option agreements provide that all then outstanding options (whether vested or unvested) will be cancelled in exchange for a cash payment if we experience a "change in control" (as defined in the MSIP and the Omnibus Incentive Plan), unless the board of directors reasonably determines in good faith that options with substantially equivalent or better terms are substituted for the existing options. Upon a change in control, all RSUs will become vested. For stock option and RSU awards granted April 23, 2018 and later, no cancellation, acceleration of vesting or other payment shall occur with respect to any RSU in connection with a change in control occurring prior to the third anniversary of the grant date, all RSUsif the administrator reasonably determines prior to the change in control that the executive shall receive an "alternative award" meeting the requirements of the plan; provided, however, that if within two years following a change in control, the executive's employment is involuntarily terminated (other than for cause) or the executive resigns with good reason, at a time when any portion of the alternative award is unvested, the unvested portion of such alternative award shall immediately vest in full and such executive shall be provided with either cash or marketable stock equal to the fair market value of the stock subject to the alternative award on the date of termination. Notwithstanding the plan terms, certain legacy RSU grant agreements provide for accelerated vesting on a change in control occurring prior to vesting.
Mr. Varty's equity awards (granted in connection with his employment agreement and any other awards granted to Mr. Varty under the Omnibus Incentive Plan) will become vested.also vest if he is terminated without cause or resigns for good reason, within 24 months following the signing of a definitive agreement, which if consummated, would result in a change in control.
The Compensation Committee also has the discretion to accelerate the vesting of options orand RSUs at any time and from time to time.
Payment Upon Retirement, Death, Disability, Qualifying Termination, or Change in Control as of December 31, 20152018
The following table sets forth information regarding the value of payments and other benefits payable by us to each of the NEOs employed by us as of December 31, 20152018 in the event of retirement, death, disability, qualifying termination (a termination which qualifies an NEO for severance payments under his employment agreement or offer letter or our general severance policy) or change in control. Except as otherwise noted below, the amounts shown assume termination or change in control effective as of December 31, 20152018 and a fair market value of our common stock on December 31, 20152018 of $39.24$36.74 per share.
Potential Payments Upon Retirement, Death, Disability, Qualifying Termination or Change in Control (2015)(2018)
Named Executive Officer | Event | Base Salary and Target Bonus ($)(1) | Payment of Current Year Bonus ($) | Acceleration of Vesting of Stock Options ($)(2) | Acceleration of Vesting of RSUs ($)(2) | Health & Welfare ($)(3) | Total Payments ($) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert J. Gillette | Retirement | 0 | 1,045,000 | 0 | 0 | 0 | 1,045,000 | ||||||||||||||
Death | 0 | 1,100,000 | 24,083,283 | 1,025,341 | 0 | 26,208,624 | |||||||||||||||
Disability | 0 | 1,045,000 | 24,083,283 | 1,025,341 | 0 | 26,153,624 | |||||||||||||||
Qualifying Termination | 4,400,000 | 1,045,000 | 0 | 0 | 0 | 5,445,000 | |||||||||||||||
Change in Control | 0 | 0 | 24,083,283 | 3,433,500 | 0 | 27,516,783 | |||||||||||||||
Alan J. Haughie | Retirement | 0 | 382,400 | 0 | 0 | 0 | 382,400 | ||||||||||||||
Death | 0 | 402,500 | 2,288,160 | 249,292 | 0 | 2,947,015 | |||||||||||||||
Disability | 0 | 382,400 | 2,288,160 | 249,292 | 0 | 2,926,915 | |||||||||||||||
Qualifying Termination | 977,500 | 382,400 | 0 | 0 | 21,538 | 1,381,438 | |||||||||||||||
Change in Control | 0 | 0 | 2,288,160 | 858,375 | 0 | 3,146,535 | |||||||||||||||
Timothy M. Haynes | Retirement | 0 | 252,300 | 0 | 0 | 0 | 252,300 | ||||||||||||||
Death | 0 | 260,356 | 996,881 | 235,636 | 0 | 1,492,873 | |||||||||||||||
Disability | 0 | 252,300 | 996,881 | 235,636 | 0 | 1,484,817 | |||||||||||||||
Qualifying Termination | 701,250 | 252,300 | 0 | 0 | 0 | 953,550 | |||||||||||||||
Change in Control | 0 | 0 | 996,881 | 1,306,339 | 0 | 2,303,220 | |||||||||||||||
Mary Kay Wegner | Retirement | 0 | 199,500 | 0 | 0 | 0 | 199,500 | ||||||||||||||
Death | 0 | 210,000 | 364,978 | 166,652 | 0 | 741,631 | |||||||||||||||
Disability | 0 | 199,500 | 364,978 | 166,652 | 0 | 731,131 | |||||||||||||||
Qualifying Termination | 560,000 | 199,500 | 0 | 0 | 0 | 759,500 | |||||||||||||||
Change in Control | 0 | 0 | 364,978 | 588,600 | 0 | 953,578 | |||||||||||||||
Martin Wick | Retirement | 0 | 176,700 | 0 | 0 | 0 | 176,700 | ||||||||||||||
Death | 0 | 201,322 | 508,710 | 177,796 | 0 | 887,828 | |||||||||||||||
Disability | 0 | 176,700 | 508,710 | 177,796 | 0 | 863,206 | |||||||||||||||
Qualifying Termination | 577,500 | 176,700 | 0 | 0 | 0 | 754,200 | |||||||||||||||
Change in Control | 0 | 0 | 508,710 | 575,494 | 0 | 1,084,204 |
Named Executive Officer | Event | Base Salary and Target Bonus ($)(1) | Payment of Current Year Bonus ($) | Acceleration of Vesting of Stock Options ($)(2) | Acceleration of Vesting of RSUs/Performance RSUs/PSUs ($)(2) | Health & Welfare ($)(3) | Total Payments ($) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nikhil M. Varty | Retirement | — | 890,000 | — | — | — | 890,000 | ||||||||||||||
Death | — | 1,000,000 | 908,283 | 502,196 | — | 2,410,479 | |||||||||||||||
Disability | — | 890,000 | 908,283 | 502,196 | — | 2,300,479 | |||||||||||||||
Qualifying Termination | 4,000,000 | 890,000 | — | — | 65,091 | 4,955,091 | |||||||||||||||
Change in Control | 4,000,000 | 890,000 | 908,283 | 1,734,716 | — | 7,532,999 | |||||||||||||||
Anthony D. DiLucente | Retirement | — | 419,123 | — | — | — | 419,123 | ||||||||||||||
Death | — | 362,250 | 360,786 | 242,013 | — | 965,049 | |||||||||||||||
Disability | — | 419,123 | 360,786 | 242,013 | — | 1,021,922 | |||||||||||||||
Qualifying Termination | 879,750 | 419,123 | — | — | 1,298,873 | ||||||||||||||||
Change in Control | 1,759,500 | 419,123 | 360,786 | 687,001 | — | 3,226,410 | |||||||||||||||
Dion Persson | Retirement | — | 300,375 | — | — | — | 300,375 | ||||||||||||||
Death | — | 270,000 | 0 | 108,989 | — | 378,989 | |||||||||||||||
Disability | — | 300,375 | 0 | 108,989 | — | 409,364 | |||||||||||||||
Qualifying Termination | 720,000 | 300,375 | — | — | — | 1,020,375 | |||||||||||||||
Change in Control | 1,440,000 | 300,375 | 0 | 634,390 | — | 2,374,765 | |||||||||||||||
Matthew J. Stevenson | Retirement | — | 305,663 | — | — | — | 305,663 | ||||||||||||||
Death | — | 292,500 | 0 | 139,069 | — | 431,569 | |||||||||||||||
Disability | — | 305,663 | 0 | 139,069 | — | 444,732 | |||||||||||||||
Qualifying Termination | 742,500 | 305,663 | — | — | — | 1,048,163 | |||||||||||||||
Change in Control | 1,485,000 | 305,663 | 0 | 649,673 | — | 2,440,336 | |||||||||||||||
Mary Kay Wegner | Retirement | — | 288,405 | — | — | — | 288,405 | ||||||||||||||
Death | — | 276,250 | 459,744 | 84,874 | — | 820,868 | |||||||||||||||
Disability | — | 288,405 | 459,744 | 84,874 | — | 833,023 | |||||||||||||||
Qualifying Termination | 701,250 | 288,405 | — | — | — | 989,655 | |||||||||||||||
Change in Control | 1,402,500 | 288,405 | 459,744 | 347,524 | — | 2,498,173 | |||||||||||||||
Rexford J. Tibbens | (4) | (4) | (4) | (4) | (4) | (4) | (4) |
CEO Pay Ratio
To determine the CEO pay ratio, we included our global population as of December 31, 2018. We used actual compensation data from the Company's human resource systems for employees in the United States and target compensation for employees outside the United States. We annualized pay for employees, including part-time employees, who commenced work in 2018. Pay for part-time employees who commenced work in 2018 was annualized only to the extent of the part-time hours they would have worked during 2018. We determined our median employee based on this data. We calculated the median base salary and determined that person's total compensation was $47,907 in 2018. Our CEO's annual compensation for 2018 was $5,526,809, including the grant date value of equity awards. As a result, the ratio of CEO pay to median employee pay for 2018 was 115:1.
The SEC's pay ratio disclosure rules permit the use of estimates, assumptions and adjustments, and the SEC has acknowledged that pay ratio disclosures may involve a degree of imprecision. The resulting pay ratio as calculated in a manner consistent with SEC rules and we believe it constitutes a reasonable estimate. However, as contemplated by SEC rules, we relied on methods and assumptions that we determined to be appropriate for calculating the pay ratio at ServiceMaster. Other companies will use methods and assumptions that differ from the ones we chose but are appropriate for their circumstances. It may therefore be difficult, for this and other reasons, to compare our reported pay ratio to pay ratios reported by other companies.
Equity Compensation Plan Information
The following table contains information, as of December 31, 2015,2018, about the amount of our common shares to be issued upon the exercise of outstanding options, RSUs and RSUsDSEs granted under the MSIP and the Omnibus Incentive Plan.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | Weighted Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in first column)(2) | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | | Weighted Average Exercise Price of Outstanding Options | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in first column)(2) | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by stockholders | 4,168,021 | $ | 14.16 | 8,409,133 | | 1,882,794 | | $ 29.34 | | 6,661,265 | ||||||
Equity compensation plans not approved by stockholders | — | — | — | | — | | — | | — | |||||||
| | | | | | | | | | | | | | | | |
Total | 4,168,021 | $ | 14.16 | 8,409,133 | | 1,882,794 | | $ 29.34 | | 6,661,265 | ||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 7, 20162019 with respect to the ownership of our common stock by:
The amounts and percentages of shares beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person's ownership percentage, but not for purposes of computing any other person's percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
Percentage computations are based on 135,655,451136,057,181 shares of our common stock outstanding as of March 7, 2016.2019.
Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock. Addresses for the beneficial owners are set forth in the footnotes to the table.
Name of Beneficial Owner | Shares Beneficially Owned | Percent | |||||
---|---|---|---|---|---|---|---|
FMR LLC(1) | 13,624,260 | 10.0 | |||||
The Vanguard Group(2) | 8,719,638 | 6.4 | |||||
Janus Capital Management LLC(3) | 8,442,240 | 6.2 | |||||
T. Rowe Price Associates, Inc.(4) | 8,111,816 | 6.0 | |||||
Wells Fargo & Company(5) | 7,996,927 | 5.9 | |||||
John Krenicki, Jr.(6) | 63,492 | * | |||||
Richard P. Fox(7)(8) | 7,865 | * | |||||
Laurie Ann Goldman(7)(8) | 994 | * | |||||
Stephen J. Sedita(7)(8) | 7,865 | * | |||||
Thomas C. Tiller, Jr.(7)(8) | 2,865 | * | |||||
Mark E. Tomkins(7)(8) | 2,622 | * | |||||
David H. Wasserman(6) | 0 | — | |||||
Robert J. Gillette(7)(9) | 1,098,928 | * | |||||
Alan J. M. Haughie(7)(9) | 156,886 | * | |||||
Timothy M. Haynes(7)(9) | 56,722 | * | |||||
Mary Kay Wegner(7)(9) | 24,341 | * | |||||
Martin Wick(7)(9) | 43,797 | * | |||||
All current directors and executive officers as a group (15 persons)(9) | 1,956,399 | 1.4 |
Name of Beneficial Owner | Shares Beneficially Owned | Percent | |||
---|---|---|---|---|---|
T. Rowe Price Associates, Inc.(1) | 17,255,484 | 12.7 | |||
Janus Henderson Group plc(2) | 15,378,109 | 11.3 | |||
Eaton Vance Management(3) | 12,733,355 | 9.4 | |||
The Vanguard Group(4) | 11,859,575 | 8.7 | |||
The Growth Fund of America(5) | 7,572,514 | 5.6 | |||
Mark E. Tomkins(6)(7) | 17,398 | * | |||
John B. Corness(6)(7) | 8,296 | * | |||
Laurie Ann Goldman(6)(7) | 7,299 | * | |||
Naren K. Gursahaney(6)(7) | 6,452 | * | |||
Steven B. Hochhauser(6)(7) | 3,279 | * | |||
Stephen J. Sedita(6)(7) | 16,809 | * | |||
Nikhil M. Varty(6)(8) | 125,847 | * | |||
Anthony D. DiLucente (6)(8) | 47,512 | * | |||
Dion Persson(6)(8) | 15,936 | * | |||
Matthew J. Stevenson(6)(8) | 10,396 | * | |||
Mary Kay Wegner(6)(8) | 53,192 | * | |||
All current directors and executive officers as a group (14 persons)(8) | 310,514 | * |
Neither FMR LLC nor Abigail P. Johnson hasand proceeds from the sole power to vote or direct the votingsale of, the shares owned directly by the various investment companies registered under the Investment Company Act ("Fidelity Funds") advised by Fidelity Management & Research Company ("FMR Co"), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds' Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. The address for each of FMR LLC and Ms. Johnson is 245 Summer Street, Boston, MA 02210.
securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities, is vested in the individual and institutional clients which Price Associates serves as investment adviser. Any and all discretionary authority which has been delegated to Price Associates may be revoked in whole or in part at any time.
Except as may be indicated if this is a joint filing with one of the registered investment companies sponsored by Price Associates which it also serves as investment adviser ("T. Rowe Price Funds"), not more than five percent of the class of such securities is owned by any one client subject to the investment advice of Price Associates. With respect to securities owned by any one of the T. Rowe Price Funds, only the custodian for each of such Funds, has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. No other person is known to have such right, except that the shareholders of each such Fund participate proportionately in any dividends and distributions so paid.
T. Rowe Price Associates, Inc. is a Maryland corporation. The principal business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
As a result of its role as investment adviser or sub-adviser to the Managed Portfolios, Janus Capital may be deemed to be the beneficial owner of 8,113,24014,808,945 shares of ServiceMaster common stock held by such Managed Portfolios. However, Janus Capital does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
As a result of its role as investment adviser or sub-adviser to the Managed Portfolios, INTECHJCIL may be deemed to be the beneficial owner of 329,000191,189 shares of ServiceMaster common stock held by such Managed Portfolios. However, INTECHJCIL does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights. As a result of its role as investment adviser or sub-adviser to the Managed Portfolios, Intech may be deemed to be the beneficial owner of 377,975 shares of ServiceMaster common stock held by such Managed Portfolios. However, Intech does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
Janus Capital Management LLCHenderson Group plc is a Delaware limited liabilityJersey, Channel Islands company with an address of 151 Detroit Street, Denver, CO 80206.201 Bishopsgate EC2M 3AE, United Kingdom.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than ten10 percent of the Company's common stock, to file with the SEC reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company and to furnish such reports to the Company. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2015,2018, all Section 16(a) filing requirements applicable to directors, executive officers and greater than ten10 percent beneficial owners were complied with by such persons.persons, except that Mr. Stevenson inadvertently filed a Form 4 one day late in 2018 due to the demands of his business travel schedule.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures for Related Person Transactions
Our board of directors has approved written policies and procedures with respect to the review and approval of certain transactions between us and a "Related Person," or a "Related Person Transaction," which we refer to as our "Related Person Transaction Policy." Pursuant to the terms of the Related Person Transaction Policy, the board of directors must review and decide whether to approve or ratify any Related Person Transaction. Any Related Person Transaction is required to be reported to our legal department, and the legal department will then determine whether it should be submitted to our Audit Committee for consideration.
For the purposes of the Related Person Transaction Policy, a "Related Person Transaction" is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we (including any of our subsidiaries) were, are or will be a participant and the amount involved exceeds $120,000 and in which any Related Person had, has or will have a direct or indirect interest.
A "Related Person," as defined in the Related Person Transaction Policy, means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of ServiceMaster or a nominee to become a director of ServiceMaster; any person who is known to be the beneficial owner of more than five percent of our common stock; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than five percent beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than five percent beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owner in which such person has a beneficial ownership interest of ten10 percent or more.
Table From March until May 2018, Mr. Hochhauser served as interim president of Contents
On November 23, 2015,AHS prior to its spin-off and received payments totaling $250,000 for such service. The Board determined, after considering all of the relevant facts and circumstances, that Mr. Hochhauser was independent as defined under NYSE listing standards. Other than Mr. Hochhauser's payment for serving as interim president of AHS, there were no related-party or conflicts of interest transactions between the Company hired Stephanie Lucke as Senior Directorand any of marketing. Mrs. Lucke is the spouse of James T. Lucke, Senior Vice President, General Counsel and Secretary, and her hiring constituted a Related Person Transaction, which was approved by the Audit Committee. In her new position, Mrs. Lucke will be paid a salary of $180,000 per year and have a target bonus of 30%. She was not eligible for a bonus for 2015.our independent directors that require disclosure under SEC rules.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors. The indemnification agreements provide our directors with contractual rights to the indemnification and expense advancement rights.
We have entered into indemnification agreements with CD&R, StepStone, JPMorgan Chase Funding Inc. ("JPMorgan") and Ridgemont Partners Secondary Fund I, L.P., or their affiliates, pursuant to which we have agreed to indemnify such equity sponsors, and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising outTable of performance of consulting agreements that were terminated in 2014 in connection with our initial public offering, and certain other claims and liabilities, including liabilities arising out of financing arrangements and securities offerings.
Financing Arrangements with Related PartiesContents
Affiliates of JPMorgan (which was one of our equity sponsors) have provided investment banking and commercial banking services to the Company and its equity sponsors, including our initial public offering in 2014 and three secondary offerings in 2015, for which they have received customary fees and commissions. These parties have acted as agents and lenders to us under the Credit Facilities, as an issuing bank under our Revolving Credit Facility, for which they received customary fees, commissions, expenses or other compensation.
The principal purpose of the Audit Committee is to assist the board of directors in its general oversight of our accounting practices, system of internal controls, audit processes and financial reporting processes. The Audit Committee is responsible for appointingthe appointment, retention, termination, compensation, evaluation and retainingoversight of our independent registered public accounting firm and approving the audit and non-audit services to be provided by the independent registered public accounting firm. The Audit Committee's function is more fully described in its charter.charter, and a description of its oversight responsibilities is set forth below in Proposal 3.
Our management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared in accordance with generally accepted accounting principles and for establishing and maintaining adequate internal controls over financial reporting. Deloitte, & Touche LLP, our independent registered public accounting firm for 2015,2018, was responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB") and to issue a report as a result of such audits. The Audit Committee serves as a focal point for communication among the board of directors and its committees, the independent registered public accounting firm, management and our internal audit function, as the respective duties of such groups, or their constituent members, relate to our financial accounting and reporting and to its internal controls.
The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 20152018 with management and with Deloitte & Touche LLP.Deloitte. These audited financial statements are included in our Annual Report on Form 10-K for the year ended December 31, 2015.
Table of Contents2018.
The Audit Committee has also discussed with Deloitte & Touche LLP the matters required to be discussed by Auditing Standard No. 16 adopted by the Public Company Accounting Oversight Board (United States)PCAOB regarding "Communications with Audit Committees." The Audit Committee also reviewed and discussed with management, the internal auditors and the independent registered public accounting firm, management's report, and the independent registered public accounting firm's attestation, on internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
The Audit Committee also has received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding Deloitte & Touche LLP'sDeloitte's communications with the Audit Committee concerning independence and has discussed with Deloitte and Touche LLP its independence from us.
Based on the review and discussions described above, the Audit Committee recommended to the board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 20152018 for filing with the SEC.
The Audit Committee
Richard P. FoxMark E. Tomkins (Chair)
John B. Corness
Laurie Ann Goldman
Naren K. Gursahaney
Steven B. Hochhauser
Stephen J. SeditaMark E. Tomkins
This Report of the Audit Committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
PROPOSAL 1: ELECTION OF DIRECTORS
The following individuals, all of whom are currently serving on our board of directors, are nominated for election this year as Class II directors:
If elected, each of these individuals will serve as a Class II director until the 20192022 Annual Meeting of Stockholders and until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal. In the event that any nominee for any reason is unable to serve, or for good cause will not serve, the proxies will be voted for such substitute nominee as our board of directors may determine. We are not aware of any nominee who will be unable to serve, or for good cause will not serve, as a Class II director.
The relevant experiences, qualifications, attributes or skills of each nominee that led our board of directors to recommend the above persons as a nominee for director are described above in the section entitled "The Board of Directors and Corporate Governance."
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE CLASS II NOMINEES LISTED ABOVE.
PROPOSAL 2: NON-BINDING ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, (the "Dodd-Frank Act"), and in accordance with Section 14A of the Exchange Act, the Company's stockholders are entitled to approve, on an advisory basis, the compensation of our named executive officers.NEOs. This non-binding advisory vote, commonly known as a "Say on Pay""Say-on-Pay" vote, gives our stockholders the opportunity to express their views on our named executive officers'NEOs' compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officersNEOs and the philosophy, policies and practices described in this proxy statement. At the 20152018 Annual Meeting, stockholders approved the 2015 Say on Pay2018 Say-on-Pay vote and alsoat the 2015 Annual Meeting approved the advisory vote on the frequency of Say on PaySay-on-Pay vote for every year. As such, we expect to present a Say on PaySay-on-Pay vote to stockholders each year.
As described in the "Compensation Discussion and Analysis" section of this proxy statement (the "CD&A"), the Compensation Committee is tasked with the implementation of our executive compensation philosophy, and the core of that philosophy has been, and continues to be, to pay our executives based on our performance. In particular, the Compensation Committee strives to (i) attract and retain highly motivated, qualified and experienced executives, (ii) focus the attention of the named executive officersNEOs on the strategic, operational and financial performance of the Company and (iii) encourage the named executive officersNEOs to meet long-term performance objectives and increase stockholder value. To do so, the Compensation Committee uses a combination of short-near- and long-term incentive compensation to motivate and reward executives who have the ability to significantly influence our long-term financial success and who are responsible for effectively managing our operations in a way that maximizes stockholder value. It is always the intention of the Compensation Committee that our executive officers be compensated competitively with the market and consistently with our business strategy, sound corporate governance principles and stockholder interests and concerns. We believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our stockholders and that the total compensation package provided to our named executive officersNEOs are reasonable and not excessive.
For these reasons, the board of directors is asking stockholders to vote "FOR" the following resolution:
"RESOLVED, that the compensation paid to the Company's named executive officers,NEOs, as disclosed pursuant to the rules of the Securities and Exchange Commission,SEC, including the Compensation Discussion and Analysis,CD&A, compensation tables and narrative discussion, is hereby APPROVED."
As you consider this Proposal 2, we urge you to read the CD&A section of this proxy statement for additional details on executive compensation, including the more detailed information about our compensation philosophy and objectives and the past compensation of our named executive officers,NEOs, and to review the tabular disclosures regarding named executive officerNEO compensation together with the accompanying narrative disclosures in the "Executive Compensation" section of this proxy statement.
As an advisory vote, Proposal 2 is not binding on our board of directors or the Compensation Committee, will not overrule any decisions made by our board of directors or the Compensation Committee or require our board of directors or the Compensation Committee to take any specific action. Although the vote is non-binding, our board of directors and the Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the vote when making future compensation decisions for our named executive officers.NEOs.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" NON-BINDING ADVISORY APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL 3: RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the board of directors has selected Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016,2019 and recommends that the stockholders vote for ratification of such selection. Prior to appointing Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016,2019, the Audit Committee reviewed the performance of Deloitte & Touche LLP and made inquiries of management regarding Deloitte & Touche LLP'sDeloitte's performance. The Audit Committee has sole and direct responsibility for the appointment, retention, termination, compensation, evaluation and oversight of the work of any independent registered public accounting firm engaged by the Company. In the event of a negative vote on the ratification, the Audit Committee may reconsider its appointment of Deloitte & Touche LLP for 2016;2019; however, the Audit Committee will consider the outcome of the vote for fiscal 2016 and when making appointments of our independent registered public accounting firm in future years. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company's and the stockholders' best interests.
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement, if they desire to do so, and to respond to appropriate questions from those attending the meeting.
Evaluation and Oversight Responsibilities
The Audit FeesCommittee evaluates the selection of the independent registered public accounting firm each year. In determining whether to reappoint Deloitte as our independent registered public accounting firm, the Audit Committee considers a number of factors, including:
Considered together, these factors enable the Audit Committee to evaluate whether the selection of Deloitte as the Company's independent registered public accounting firm, and the retention of Deloitte to perform other services, will contribute to, and enhance, audit quality. Based on its evaluation, the Audit Committee believes that the continued retention of Deloitte to serve as the Company's independent registered public accounting firm is in the best interest of our stockholders.
Review and Assessment of Audit and Related FeesServices
The Audit Committee has sole and direct responsibility for assessing the overall value, both quality and cost, of the annual audit and related services provided by Deloitte. They actively monitor the engagement through all phases of the process, including approving audit fees and other related fees and assessing overall value delivered. Each year Deloitte makes a proposal of services to be performed and the fees related to such services. The Audit Committee, along with management, engages Deloitte in a negotiation of such fees, consistent with the value of a quality audit. Our Audit Committee members are experienced in the accounting industry and sit on other boards and audit committees, which provides them with competitive insight that allows them to assess the total value derived from the annual audit and related services.
The following table presents, for 20152018 and 2014,2017, fees for professional services rendered by Deloitte & Touche LLP for the audit of our annual financial statements, audit-related services, tax services and all other services. In accordance with the SEC's definitions and rules, "audit fees" are fees we paid Deloitte & Touche LLP for professional services for the audit of our Consolidated Financial Statements included in our Annual Report on Form 10-K, review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by Deloitte & Touche LLP in connection with statutory and regulatory filings or engagements; "audit-related fees" are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements; "tax fees"
are fees for tax compliance, tax advice and tax planning; and "all other fees" are fees for any products and services provided by Deloitte & Touche LLP not included in the first three categories.
| 2015 | 2014 | 2018 | 2017 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 3,057,500 | $ | 3,526,000 | $ | 2,732,700 | $ | 3,030,500 | ||||||
Audit-Related Fees(2) | $ | 58,500 | $ | 117,854 | $ | 298,000 | $ | 1,530,000 | ||||||
Tax Fees(3) | $ | 152,595 | $ | 329,162 | $ | 276,000 | $ | 121,952 | ||||||
All Other Fees | — | — |
Pre-Approval Policies and Procedures
In accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee charter provides that the Audit Committee of the board of directors has the sole authority and responsibility to pre-approve all audit services, audit- related tax services and other permitted services to be performed for the
Company by its independent auditors and the related fees. Pursuant to its charter and in compliance with rules of the SEC and Public Company Accounting Oversight Board ("PCAOB"),PCAOB, the Audit Committee has established a pre-approval policy that requires the pre-approval of all services to be performed by the independent auditors. The independent auditors may be considered for other services not specifically approved as audit services or audit-related services and tax services so long as the services are not prohibited by SEC or PCAOB rules and would not otherwise impair the independence of the independent auditor.
All of the services performed by Deloitte & Touche LLP during the year ended December 31, 20152018 and 20142017 were approved in advance by the Audit Committee pursuant to the pre-approval policy.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016.2019.
The board does not know of any matters which will be brought before the Annual Meeting other than those specifically set forth in the notice of meeting. If any other matters are properly introduced at the meeting for consideration, including, among other things, consideration of a motion to adjourn the meeting to another time or place, the individuals named in the accompanying proxy will have discretion to vote in accordance with their best judgment, unless otherwise restricted by law.
A list of stockholders entitled to be present and vote at the Annual Meeting will be available at the Company's offices at 860 Ridge Lake Blvd.,150 Peabody Place, Memphis, TN 38120,38103, for inspection by the stockholders during regular business hours from March 7, 2016,2019 to the date of the Annual Meeting. The list also will be available during the Annual Meeting for inspection by stockholders who are present.
Whether or not you expect to attend the Annual Meeting, if you received a proxy card or voting instruction card and choose to vote by mail, please complete, date and sign and promptly return the accompanying proxycard in the provided postage-paid envelope, or vote via the Internet or by telephone, so that your shares may be represented at the Annual Meeting.
By Order of the Board of Directors, | ||
| ||
Senior Vice President, General Counsel and Secretary |
March 21, 20162019
SERVICEMASTER GLOBAL HOLDINGS, INC.
150 Peabody Place
Memphis, TN 38103
|
|
| |
| |
|
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 04/29/2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. SERVICEMASTER GLOBAL HOLDINGS, INC. 150 Peabody Place MEMPHIS, TN 38103 VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 04/29/2019. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees For 0 0 0 For 0 0 Against 0 0 0 Against 0 0 Abstain 0 0 0 Abstain 0 0 1A Laurie Ann Goldman 1B Steven B. Hochhauser 1C Nikhil M. Varty The Board of Directors recommends you vote FOR proposals 2. and 3.. 2. To hold a non-binding advisory vote approving executive compensation. 3. To ratify the selection of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the year ending December 31, 2019. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 0 For address change/comments, mark here. (see reverse for instructions) Please indicate if you plan to attend this meeting Yes 0 No 0 Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000405772_1 R1.0.1.18
|
|
|
| ||||||||||||||||||
|
|
| |||||||||||||||||||
| |||||||||||||||||||||
|
|
| |||||||||||||||||||
| |||||||||||||||||||||
| |||||||||||||||||||||
|
|
| |||||||||||||||||||
|
|
|
| ||||||||||||||||||
|
|
|
| ||||||||||||||||||
|
|
|
| ||||||||||||||||||
|
|
|
| ||||||||||||||||||
|
|
| |||||||||||||||||||
| |||||||||||||||||||||
ADMISSION TICKET
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com . SERVICEMASTER GLOBAL HOLDINGS, INC. Annual Meeting of Shareholders April 30, 2019 2:00 PM local time This proxy is solicited by the Board of Directors The shareholder(s) hereby appoints Anthony D. DiLucente and Michael C. Bisignano, or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of SERVICEMASTER GLOBAL HOLDINGS, INC. that the shareholder(s) is/are entitled to vote at the Annual Meeting of shareholder(s) to be held at Marriott Milwaukee West Hotel, located at W 231 N 1600 Corporate Court, Waukesha, WI 53186 on April 30, 2019 at 2:00 PM, local time, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000405772_2 R1.0.1.18
|