EXHIBIT 99.3
COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE CHARTER
The ServiceMaster Company
(as adopted by the Board of Directors July 19, 2002, revised January 30, 2004)
The Board of Directors of the Company has considered and approved this Charter
in order to set forth the purpose, membership requirements, duties and
responsibilities of the Compensation and Leadership Development Committee.
Purpose and Responsibilities
The purpose and responsibilities of the Committee are to (1) have direct
responsibility to review and approve corporate goals and objectives relevant to
CEO compensation, evaluate the CEO's performance in light of the CEO's
competencies, corporate goals and objectives and potential, and determine and
approve the CEO's compensation level based on such evaluation and (2) prepare an
annual report on executive compensation for inclusion in the Company's proxy
statement.
Number of Members and Independence Requirements
The members of the Committee are nominated and appointed as provided in the
Bylaws and Charter of the Governance and Nominating Committee. The Committee
shall have at least three directors. After considering the recommendation of the
Governance and Nominating Committee, the Board will designate one person to
serve as Chairman of the Committee.
In accordance with the New York Stock Exchange listing standards, no Committee
member may:
(1) have a material relationship with the Company (as affirmatively
determined by the Board), either directly or indirectly as a partner,
shareholder or officer of an organization that has a relationship with
the Company; provided, that a director will not be considered to have
a material relationship with the Company if (i) the director is a
partner, principal, counsel or advisor to, shareholder, director or
officer of another company that does business with the Company and the
annual sales to, or purchases from, the Company are less than 1% of
the annual revenues of the other company and the director does not
receive any compensation (paid, deferred or otherwise) as a direct
result of such business with the Company and (ii) the director is an
officer, director or trustee of a charitable organization, and the
Company's discretionary charitable contributions to the organization
are less than 1% (and no more than $50,000) of that organization's
total annual charitable receipts (the Company's automatic matching of
employee charitable contributions will not be included in the amount
of the Company's contributions for this purpose); provided, further,
that a director will be considered to have a material relationship
with the Company if the director is an officer of another company that
is not a charitable organization and any of the Company's present
executives serves on that other company's board of directors;
(2) be an employee, or have an immediate family member who is an executive
officer, of the Company;
(3) receive, or have an immediate family member who receives, more than
$100,000 per year in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service);
(4) be affiliated with or employed by, or have an immediate family member
who is affiliated with or employed in a professional capacity by, a
present or former internal or external auditor of the Company;
(5) be employed, or have an immediate family member who is employed, as an
executive officer of another company where any of the Company's
present executives serve on that other company's compensation
committee; or
(6) be an executive officer or an employee, or have an immediate family
member who is an executive officer, of a company that makes payments
to, or receives payments from, the Company for property or services in
an amount which, in any single fiscal year, exceeds the greater of $1
million, or 2% of such other company's consolidated gross revenues.
An immediate family member includes a director's spouse, parents, children,
siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and
sisters-in-law and anyone (other than domestic employees) who shares the
director's home.
No Committee member will be considered independent until a period of three years
(or any shorter period provided under the New York Stock Exchange listing
standards) has elapsed from the end of the relationships described in
subsections (2)-(6) above.
The Company will disclose in its proxy statement the Board's determinations
regarding the independence of each Committee member.
Membership Criteria under Internal Revenue Service & Securities Law Regulations
Each member of the Committee should be an "outside director" within the meaning
of Internal Revenue Service regulations and a "non-employee director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934.
Meetings
The Committee will meet at least four times annually, or more frequently as
circumstances may warrant. Generally, and as appropriate, the Committee will
meet with, and receive reports from management. The Committee may hold executive
sessions without management to discuss any matters that the Committee believes
should be discussed privately.
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Duties
The Committee has the following duties:
1. establish the overall compensation structure and executive
compensation philosophy and principles of the Company;
2. review and approve the corporate goals and objectives of the CEO,
including base salary, annual bonus, stock options, restricted stock
and other compensation arrangements;
3. evaluate annually the performance in light of the CEO's competencies,
corporate goals and objectives and potential and determine and approve
the CEO's compensation level based on such evaluation; in determining
the long-term incentive component of CEO compensation, the Committee
may consider (i) the Company's performance and relative shareholder
return, (ii) the value of similar incentive awards to CEOs at
comparable companies and (iii) the awards given to the Company's CEO
in past years;
4. review and approve the compensation of the Company's executive
officers;
5. make recommendations to the Board with respect to non-CEO and
non-executive officer compensation plans, incentive compensation plans
and equity-based compensation plans;
6. recommend to the Board compensation policies and programs for the
compensation of members of the Board who are not employees of the
Company;
7. conduct such other reviews of leadership development strategy, people
development strategy and succession plans as the Committee from time
to time determines;
8. conduct reviews of high potential individuals, succession planning and
the diversity of the Company's management team;
9. approve change in control agreements for officers;
10. recommend to the Board the appointment of Corporate Officers;
11. adopt rules and guidelines and otherwise administer the Company's
health and welfare plans and compensation plans, including, without
limitation, its annual incentive bonus plan, long-term performance
award plan, stock option plans, employee stock purchase plans, 401(k)
plan and deferred compensation plans;
12. approve members of the Equity Plans Administrative Committee or other
similar committee designated for the purpose of overseeing the
administration of certain equity plans;
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13. approve members of the Benefits Committee or other similar committee
designated for the purpose of overseeing the administration of health
and welfare plans;
14. engage independent counsel and other advisers, as it determines
necessary or appropriate to carry out its duties;
15. the Committee has sole authority to retain and terminate any
compensation consultant hired to assist in the evaluation of director,
CEO or senior executive compensation, including sole authority to
approve the firm's fees and other retention terms;
16. evaluate the Committee's performance at least annually;
17. make regular reports to the Board regarding its activities;
18. determine through its Chairman the agenda of its meetings;
19. periodically review the adequacy of this Charter and submit this
Charter to the Board for its approval; and
20. perform any other activities consistent with this Charter, the
Company's Bylaws and applicable laws as the Committee or Board deems
necessary or appropriate.
The Committee shall have the authority to delegate any of its responsibilities
to subcommittees as the Committee deems appropriate.
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