SERV ServiceMaster Global Holdings Inc

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.           )

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Soliciting Material under §240.14a-12

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Terminix Global Holdings, Inc.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1)
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Sincerely,

Brett T. Ponton
Chief Executive Officer

 

PROXY SUMMARY

The accompanying proxy is delivered and solicited on behalf of the board of directors of Terminix Global Holdings, Inc., a Delaware corporation (referred to as “Terminix,” the “Company,” “we,” “us,” or “our”), in connection with the 2022 Annual Meeting of Stockholders (the “Annual Meeting”). This summary highlights selected information contained in this proxy statement. Please read the entire proxy statement carefully before voting your shares.

​	Our People	​	​
​	We are committed to fostering a culture and workplace where all teammates are treated with respect and given an opportunity to contribute to our success.	​	​

​	Our Service	​	​
​	We provide industry-leading essential pest management services to more than 50,000 homes and businesses every day.	​	​

​	Our Community	​	​
​	We live and work in the same communities as our customers, and we extend our support to these communities through giving, serving and protecting the places and people they care about the most.	​	​

 

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Our Current Board Overview

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The following table provides summary information about each director nominee and other directors continuing in office. See pages 8 to 12 for more information.

M = Member       C = Chair

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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 a description of why the board of directors and Nominating and Corporate Governance Committee believe each individual is a valuable member of the board of directors. The directors who have been nominated for election and are to be voted on at the Annual Meeting are listed first, with continuing directors following thereafter. The respective age of each individual below is as of April 8, 2022.

Steven B. Hochhauser

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Class III—Nominee For A One-Year Term

Ms. Sebastian was appointed to the board in July 2021 and is standing for election this year as this is the first opportunity stockholders have to vote on her candidacy; Mr. Terrill also joined the board in July 2021 and slated for election by the stockholders this year as he was designated as a Class II director at the time he was appointed to the board. If elected, Ms. Sebastian will serve as a Class III director until the 2023 Annual Meeting of Stockholders, at which time she may (subject to the Nominating and Corporate Governance Committee’s evaluation) be nominated for an additional three-year term with the other Class IIIdirectors.

Naren K. Gursahaney

Brett T. Ponton

DIRECTOR INDEPENDENCE

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No director qualifies as “independent” unless the board of directors affirmatively determines that the director has no material relationship with our Company or our subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with 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. In 2021, there were no related-party or conflicts of interest transactions between the Company and any of our independent directors that require disclosure under U.S. Securities and Exchange Commission (“SEC”) rules.

BOARD LEADERSHIP STRUCTURE

Our board of directors is currently led by our Chairman of the Board, Mr. Gursahaney. 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. The board expects to periodically review its leadership structure to ensure that it continues to meet our needs. The Chairman of the Board has authority to call meetings of the independent directors, and if requested by stockholders, ensure that he or she is available for consultation and direct communication with the stockholders.

MEETINGS OF THE BOARD OF DIRECTORS AND ATTENDANCE AT THE ANNUAL MEETING

Our board of directors held 18 meetings during the fiscal year ended December 31, 2021. Each of our incumbent directors attended at least 83 percent of the total number of meetings of the board and any committees of which he or she was a member in 2021. Directors are encouraged to attend our annual meetings. All of the directors serving on the board at the time attended the 2021 Annual Meeting.

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CORPORATE GOVERNANCE GUIDELINES

Our board of directors has adopted Corporate Governance Guidelines to address significant corporate governance issues. 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 teammates, 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 teammates. 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.

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 at www.corporate.terminix.com/responsibility/index.html.

ENVIRONMENTAL, SOCIAL, SAFETY AND TEAMMATE MATTERS

Our customers have come to trust us during some of the most important moments of their lives, protecting them from the effects of pests and termites, so they can live hassle-free lives. Our frontline serves our customers with passion because they care deeply about the work they do and the relationships they have built.

We aspire to deliver an unparalleled customer experience. We believe through outstanding service, we have the power to impact and improve lives and drive growth in our businesses. This core belief is at the heart of how we are shaping our future, working with teammates and franchise associates, and re-imagining our customer journeys to deliver memorable experiences to our customers at every touch point.

Listening to our teammates in the field and instilling their learnings in our processes and systems allows us to remove obstacles from their paths, enabling them to deliver an unmatched customer experience. Enhancing benefits, optimizing work hours, improving pay-for-performance structures and creating career paths tailored to deserving teammates’ aspirations demonstrates our deep care for them in their quest to deliver outstanding service. We are creating a workplace that respects creativity, initiative, diversity of thought and cultural inclusion by recognizing talent and perseverance at every level. We have increased our community outreach because service and care are at the heart of our business. Credibility is extremely important. We have significantly improved our ability to deliver on our commitments to our customers, teammates, partners, stockholders and other stakeholders.

Human Capital Management

Terminix employs approximately 10,000 teammates in the United States and 1,700 teammates outside the United States in Europe, Canada and Central America. As a leader in the pest management industry, we recognize that our teammates are our most important asset in the delivery of the services we provide to customers. Since we deliver services in various communities around the world, it is important that our Teammate base reflect the values and customers of those communities we serve. In this regard, we are committed to fostering a safe, inclusive, and equitable workplace that attracts and retains exceptional talent, enabling us to better serve to our customers.

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Five key areas in which we focus our efforts include:

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Teammate Safety

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Inclusion, Diversity and Equity

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Training and Development

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Teammate Retention

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Competitive Compensation and Benefits

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Teammate Safety

At Terminix, safety is a core value. We maintain strong safety programs focused on continuously improving the safety and wellbeing of our communities, teammates and customers we serve. We maintain a safety first always culture grounded in striving for zero teammate injuries and illnesses, while operating and delivering our services responsibly and sustainably, and eliminating workplace incidents, risks and hazards. We review and monitor our performance regularly with a goal to continually reduce recordable incidents. During 2021, our recordable incident rate declined more than 15 percent compared to fiscal 2020.

During the global novel coronavirus pandemic (“COVID-19” or “pandemic”), and continuing throughout 2021, our focus on workplace safety enabled us to preserve business continuity without sacrificing our commitment to keep our teammates, workplace visitors and customers safe.

Terminix was designated an essential business early in the COVID-19 pandemic. Since the onset of the pandemic, we have taken an integrated approach to helping our teammates manage their work and personal responsibilities, with the priority on teammate wellbeing, health and safety. Terminix has worked with suppliers to ensure our teammates have the appropriate personal protection equipment to allow them to continue to serve our customers in a safe manner, protecting both the customer and the teammate. The Company has consistently evaluated and evolved its COVID-19 protocols to align with the most current health recommendations so as to minimize exposure to the virus.

Inclusion, Diversity and Equity

At Terminix, we believe inclusion inspires results. Perspectives from a diverse workforce can provide key insights into selling into diverse communities, providing numerous avenues for the growth of the business and improved customer satisfaction.

The Company has created a Culture, Inclusion and Diversity Advisory Team (“Advisory Team”) with a mission to foster actions that create an inclusive work environment valuing the contributions and perspectives of all teammates. The goal of the Advisory Team is to advance a workforce that builds and advocates for gender, race, age, language, cultural background, education, work experience, ethnicity, sexual orientation, physical ability, as well as the religious and cultural views of members of Terminix. The Advisory Team is representative of Terminix teammates chosen to help engage in ongoing evaluation of Terminix’s internal business practices and advise the Terminix leadership team on driving a culture of inclusion, diversity and equity.

The Advisory Team is committed to promoting and advancing this important work through five distinct subcommittees that drive diversity, equity and inclusion goals across core business streams:

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Corporate Responsibility

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Culture

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Inclusion

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Supplier Diversity

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Talent and Equity

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As of December 31, 2021, our workforce in the U.S consisted of 60 percent white and 40 percent minority representation. Also, our workforce was 81 percent male and 18 percent female, with one percent undeclared. Terminix is committed to improving the levels of both racial and gender representation to better reflect the communities in which we operate. We have long-established, teammate-driven Business Resource Groups, which provide opportunities for education, community partnerships, cultural awareness and career development.

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Training and Development

We have made investments to our human resources organization and structure that centralized and standardized hiring and training practices. We have also introduced tools to help our branch managers manage labor more efficiently, and we continue to invest in attracting, developing and retaining talent. Our front-line teammates also receive on-the-job training to ensure we are executing for our customers. Our online training platforms provide our teammates with access to a multitude of training courses, videos, reference material and other tools.

As part of encouraging internal development, we engage in regular discussions around succession planning and talent development at all levels of our Company. Our board of directors has frequent contact with business leaders within the organization and participates actively in the succession planning process. Our Senior Vice President of Human Resources reports directly to the CEO and works with management to evaluate internal talent for future leadership positions within the organization on an ongoing basis. In evaluating potential acquisitions, an important consideration is the quality of the management team of the target company and our ability to ensure such management team will remain with the Company as needed if we acquire the business.

Teammate Retention

Our experience has demonstrated that the retention of well-trained, high-performing teammates results in higher customer retention and improved financial results. Terminix has made significant investments in the hiring and training of teammates, especially those who are the Company’s face to the customer. Turnover rates for pest technicians tend to be higher in the first year of employment with a reduced rate beyond the first year. Consequently, Terminix has made investments in the recruiting, onboarding and training of new teammates to enhance their ability to deliver quality service to our customers and to keep them engaged in the Terminix business. In 2021, teammate retention and experience continued to be a focus for the Company. The Company made strategic investments, such as the Terminix Way, that includes the development of enhanced Standard Operating Procedures, training paths, and technology for frontline teammates that will improve consistency from branch-to-branch and teammate-to-teammate, and begin to provide well-defined career paths for our teammates.

Competitive Compensation and Benefits

Terminix is committed to investing in our workforce by providing competitive compensation and benefit programs.

Compensation programs include base salary and variable compensation programs such as annual bonus, production plans, sales commissions, spot bonus and stock awards. The variable compensation programs are performance based, with the actual amount earned depending on the performance of the Company and the teammate.

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Comprehensive health and dental coverage is offered to teammates.

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A 401(k) savings plan with a Company match is offered that allows teammates to save for their future.

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Parental leaves are provided to all new parents of both genders for births and adoptions.

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Other insurance benefits are also offered, including Company-paid and supplemental teammate-paid life insurance, long-term disability and accidental death and disability coverage.

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An Employee Stock Purchase Plan, where teammates can purchase stock in the Company to participate in the success of the Company, is also offered to teammates. This plan has been suspended as of December 31, 2021 due to the expected merger with Rentokil.

We have a Corporate Sustainability Report that discusses the values, goals and objectives we strive for each day and the impact we are making for our customers and stakeholders that is available on our corporate website.

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COMPENSATION COMMITTEE

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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 CFO to engage with stockholders on a regular basis at industry and financial conferences, road shows and one-on-one meetings. Mr. Gursahaney, our non-executive Chairman, is also available to meet with stockholders on matters that they believe are better addressed by an independent director.

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 teammates of the Company of concerns regarding questionable accounting or auditing matters.

RISK OVERSIGHT

​	​	Audit Committee	​	​
​	​	This 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, oversight on compliance related to legal, information technology (i.e., cybersecurity) and regulatory exposure and meeting regularly with our chief legal and compliance officers.	​	​

​	​	Compensation Committee	​	​
​	​	This Committee evaluates risks arising from our compensation policies and practices, as more fully described below.	​	​

​	​	Nominating and Corporate Governance	​	​
​	​	This Committee ensures compliance with our governance guidelines and addresses significant issues raised by stockholders.	​	​

​	​	Environmental, Health and Safety Committee	​	​
​	​	This Committee has responsibility for overseeing 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. These committees provide reports to the full board of directors regarding these and other matters.	​	​

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This section describes the material elements of our 2021 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 2021 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 (“NEOs”). For fiscal 2021, our NEOs are as follows:

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Objectives of Our Compensation Program

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

​	Attract	​	​
​	Attract, motivate and retain highly qualified executives	​	​

​	Align	​	​
​	Align our executives’ long-term interests with those of our stockholders through meaningful share ownership	​	​

​	Balance	​	​
​	Appropriately balance long-term and near-term incentive compensation so that near-term performance is not emphasized at the expense of long-term value creation	​	​

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

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. Ponton, our CEO, and an average mix for other NEOs are pictured below.

 

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Each of these elements, discussed in more detail below, plays an integral role in our balancing of executive rewards over 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 CEO recommends to the Compensation Committee compensation for the other executive officers based on his assessment of each executive officer’s area of responsibility, individual and Company performance, overall contribution, the competitive market data provided by Pearl Meyer and prevailing economic conditions. All aspects of compensation for our executive officers, including for the CEO, in fiscal year 2021 were approved by the Compensation Committee, and the Compensation Committee performs all functions described in this Compensation Discussion and Analysis as provided for in its charter.

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.

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Compensation Consultant Independence

The Compensation Committee has the authority to retain compensation consultants, outside counsel and other advisers. During 2021, the committee engaged Pearl Meyer 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-employee directors. Pearl Meyer is a global professional services company. The Compensation Committee performed an assessment of Pearl Meyer’s independence to determine whether the consultant is independent, taking into account executive compensation consulting protocols from Pearl Meyer to ensure consultant independence and other relevant factors. Based on that assessment, the Compensation Committee determined that Pearl Meyer’s work has not raised any conflict of interest and the firm is independent.

Compensation Risk Assessment

Pearl Meyer was engaged to assess 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. Pearl Meyer’s assessment of our compensations plans and programs was reviewed with the Compensation Committee and, based on its assessment, the Compensation Committee 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.

Clawback Policy

The board of directors has approved and implemented a clawback policy that provides the Compensation Committee with the discretion to claw back performance-based compensation in the event of a restatement of Company financial statements or misconduct.

Stock Ownership Guidelines for Executive Officers

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

The ownership 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. 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.

Say-on-Pay

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Peer Group

The Compensation Committee conducted its annual review of our Peer Group which was considered as an element in the determination of compensation of our executive officers for 2021. After the review, the Compensation Committee made no changes to the Peer Group as it was determined that the current group of companies aligned with our business model and growth rates relative to our growth and confirmed the list of 18 companies as our Peer Group. These companies are generally 0.3 to 3.0 times our revenue size, based on 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. The Compensation Committee reviews 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. Our Peer Group consists of the following companies:

As part of our review of competitive pay practices, we engaged Pearl Meyer to conduct a market review to determine whether executive officer total compensation opportunities were competitive. In determining 2021 executive compensation, the Compensation Committee relied on the Peer Group data provided by Pearl Meyer for positions reported in the peer companies’ respective proxy statements. A general survey of competitive market data for positions which were not reported in Peer Group proxy statements was provided by third-party survey sources and was adjusted to mirror general market merit increases, as identified in market salary increase surveys sponsored by compensation consulting organizations. The survey data reflected companies in general industries with revenue sizes between $500 million and $2 billion. The positions for which survey data was the primary source of competitive information included the heads of Human Resources, 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

The Compensation Committee reviewed the performance of Mr. Ponton for 2021, with a focus on actions taken to grow the Company profitably. The Compensation Committee was satisfied with the performance of Mr. Ponton during 2021, although acknowledged that the Company fell short of its financial objectives and, as such, approved an annual incentive payout below target levels, in part due to:

(1)

A four percent increase in revenue;

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(2)

A 12 percent increase in Adjusted EBITDA; and

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(3)

Falling short on customer retention goals.

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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 2021 base salaries for our NEOs.

(1)

Ms. Richardson was hired on July 6, 2021 with a salary of $410,000, consistent with her offer of employment.

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(2)

Mr. DiLucente retired from the Company on March 31, 2021.

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(3)

Mr. Persson’s salary was adjusted to $260,000 July 6, 2021 as he left the position as Interim General Counsel and Secretary. His salary was restored to his prior level of $450,000 as of December 16, 2021 as a result of his leadership in the proposed merger of Terminix and Rentokil.

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(4)

Ms. Scott resigned from the Company on September 30, 2021.

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Annual Incentive Plan

The Company administers the 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, as applicable, a portion of a fiscal year). For 2021, the AIP was measured over the 2021 calendar year results. Each participant was 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:

(1)

Mr. DiLucente was not eligible to participate in the 2021 AIP as he retired from the Company on March 31, 2021.

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(2)

Ms. Scott was not eligible to participate in the 2021 AIP as she resigned from the Company on September 30, 2021.

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Performance Measures

To encourage our executive officers to focus on near-term goals and financial performance, incentives under the AIP are based on our performance with respect to the following measures and an individual performance evaluation, as determined by the Compensation Committee, at a consolidated level:

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Revenue;

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Adjusted EBITDA; and

​

•

Customer retention (Residential and Commercial).

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Revenue and Adjusted EBITDA achievement metrics are discussed above.

The performance measures above were selected as the most appropriate measures upon which to determine annual bonuses, because these are the primary metrics that management believes build value in the Company. Additionally, these measures were selected to incentivize profitable growth, with a focus on enhancing the customer experience as measured by customer retention rate. All of the opportunity for payment under the AIP to our NEOs is based on these performance measures and individual performance.

Payments under the AIP were also subject to the achievement of a minimum level of performance on the Adjusted EBITDA financial measure (“Adjusted EBITDA Threshold”). In order to earn any payment under the AIP, the Adjusted EBITDA Threshold had to be achieved at the corporate consolidated level. The Adjusted EBITDA Thresholds applicable to the NEOs are set forth in the table below:

Performance Targets and Weightings

Performance targets are established by the Compensation Committee in the first quarter of each year and are based on expected performance in accordance with our approved business plan for the year. In the event the Company achieves the performance targets specified in the table above, payout under the AIP would be 100 percent of a specified percentage of the executive’s base salary. Performance below the target goal would result in below target payouts and performance above target goals would pay above target and be subject to the plan-based cap of 200 percent of target for financial performance. 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 for 2021.

The tables below provide information regarding the 2021 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 consolidated performance.

2021 AIP Weighting, Threshold and Target Performance Goals

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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 between threshold and target are generally based on a 6:1 ratio—for every one percent of achievement above threshold performance levels, the plan pays out six additional percentage points of the targeted payout. The payout levels for performance above target to maximum are generally based on a 10:1 ratio—for every one percent of achievement above threshold performance levels, the plan pays out ten additional percentage points of the targeted payout. We believe the 10:1 ratio to be an effective motivator to provide significant rewards for exceptional performance. The 2021 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

(1)

Bonus calculations are weighted fully on Company results.

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(2)

Mr. DiLucente was not eligible to participate in the 2021 AIP as he retired from the Company on March 31, 2021.

​

(3)

Ms. Scott was not eligible to participate in the 2021 AIP as she resigned from the Company on September 30, 2021.

​

(1)

Ms. Richardson was hired on July 6, 2021 and received a prorated bonus for 2021. She received a bonus higher than target taking into consideration her significant effort in the execution of the Merger Agreement with Rentokil.

​

(2)

Mr. DiLucente was not eligible to participate in the 2021 AIP since he retired from the Company on March 31, 2021.

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(3)

Mr. Persson received a bonus higher than target based on his efforts and leadership in the execution of the Merger Agreement with Rentokil.

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(4)

Ms. Scott was not eligible to participate in the 2021 AIP since she resigned from the Company on September 30, 2021.

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Long-Term Equity Awards

Our long-term equity incentive plans are designed to retain key executives and to align the interests of our executives with the achievement of sustainable long-term growth and performance. For 2021, to provide a long-term incentive component to the pay mix of executive officers, the Compensation Committee approved LTI awards comprised of PSUs, stock options and 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 2021 assessment of our executives’ stock holdings and future long-term incentive opportunity, the Compensation Committee approved awards for the NEOs. The 2021 equity awards are comprised of PSUs, stock options and RSUs, with grant date values equal to 50 percent for PSUs, 30 percent for stock options and 20 percent for RSUs. The specific size and value of the awards are detailed in the Summary Compensation and the Grants of Plan Based Award tables below.

PSU awards will be earned based on the Company’s attainment of certain levels of cumulative adjusted EPS and cumulative revenue, then modified up or down based on relative total stockholder return (“TSR”) for the Company relative to the TSR of the companies in our Peer Group. The performance period for which the number of PSUs earned will be a three-year period from January 1, 2021 through December 31, 2023. Executive officers may earn a maximum of 200 percent of the target award with a potential 20 percent upward adjustment if the Company’s TSR is in the highest quartile of TSR relative to the Peer Group for an absolute maximum payout of 220 percent of the target number of PSUs.

Stock options awarded are nonqualified stock options with vesting generally in equal installments on the first three anniversaries of the grant date. The exercise price of the stock options is the fair market value of the Company’s common stock as defined in the Omnibus Incentive Plan. The RSU awards will generally vest in three equal installments on the first three anniversaries of the grant date.

On September 15, 2020, we granted retention RSUs with a fair value of $1 million to Ms. Scott. The RSUs (24,589) vested on September 15, 2021 (the first anniversary of the grant date) in accordance with their terms.

Double Trigger Vesting Upon Change In Control

The Company has adopted “double trigger” vesting acceleration in the event of a change 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 stock option agreements, but the Compensation Committee included this provision in all other stock award agreements, and provides as follows: if the Compensation Committee reasonably determines prior to a change in control that a teammate would, in connection with the change in control, receive an “Alternative Award” meeting the requirements of the Omnibus Incentive Plan (i.e., an equity-based award in the post-closing company), then if within two years following the change in control, the teammate’s employment is involuntarily (other than for cause) terminated or the teammate resigns with “good reason” ​(each as such terms are defined in the Omnibus Incentive Plan), at a time when any portion of the Alternative Award is unvested, the unvested portion of such Alternative

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Award would immediately vest in full and such teammate would 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.

Omnibus Incentive Plan

Our board of directors adopted and our stockholders approved the Omnibus Incentive Plan in 2015. Our directors, officers, teammates 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; PSUs; stock appreciation rights (“SARs”); dividend equivalents; deferred share units; and other stock-based awards.

A total of 4,705,308 shares of our common stock remained available for issuance under the Omnibus Incentive Plan as of December 31, 2021. This figure represented less than four percent of the shares of our common stock that were outstanding as of December 31, 2021. The Omnibus Incentive Plan provides that (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 LTI awards under the Omnibus Incentive Plan on an ongoing basis to certain key teammates, including our NEOs, in order to recognize outstanding performance, 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. The 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 teammate contributions. The authorized number of shares of common stock remaining in the ESPP was not changed. The expiration date of the ESPP was not changed from April 27, 2025. Our executive officers are prohibited from participating in the ESPP. As of December 31, 2021, 741,120 shares of common stock remained available for purchase under the ESPP. The ESPP was suspended on December 31, 2021 due to the expected merger with Rentokil.

Retirement Benefits

Teammates, including the NEOs, are generally eligible to participate in the Terminix Profit Sharing and Retirement Plan, as amended and restated and, as it may be further amended from time to time (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 teammates receive a dollar for dollar match on the first one percent of their contributions, and then a $0.50 per dollar match on the next two percent to six percent contributed. Company matching contributions for the NEOs are set forth below in the All Other Compensation table.

We also maintain the Terminix Deferred Compensation Plan, as amended and restated, as it may be further amended from time to time (the “DCP”), which is a non-qualified deferred compensation plan designed to afford certain highly compensated teammates (including the NEOs, executive officers and certain other teammates) the opportunity to defer additional amounts of compensation on a pre-tax basis. No executive officer contributed to the DCP during 2021.

Terminate Benefits and Executive Perquisites

We offer a variety of health and welfare programs to all eligible teammates, including the NEOs. The NEOs are eligible for the same health and welfare benefit programs on the same basis as the rest of our teammates, 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.

Employment Arrangements

We generally provide an executive with an offer letter prior to the time he 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, AIP 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

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special arrangements with respect to an executive’s employment may be necessary or desirable. We entered into an agreement with Mr. DiLucente setting forth the terms of his continued service until his retirement in March 2021. On September 11, 2021, we entered into an employment agreement with Mr. Ponton setting forth the terms of his employment as our CEO (the “Ponton Employment Agreement”). Please see the narrative below under “Executive Compensation Matters” for a description of this agreement, Please also see the narrative following the table in “Grants of Plan Based Awards (2021)” and the “—Potential Payments Upon Termination or Change in Control” section for a description of the agreements with our NEOs.

Post-Termination Compensation

Messrs. Riesbeck, Dart and Persson and Ms. Richardson are covered under our standard severance policy or practice as in effect at the time their employment is terminated. The standard severance policy was enhanced in consideration of the announced merger with Rentokil. Mr. Ponton is also entitled certain severance payments and benefits under a qualifiying termination of employment under the Ponton Employment Agreement. The standard severance policy and the terms of the post termination arrangements between us and the NEOs are described in detail below under the “—Potential Payments Upon Termination or Change in Control” section.

Executive Compensation Matters

CEO Employment Agreement

The Ponton Employment Agreement provides Mr. Ponton with the following compensation: (1) an annual base salary of $975,000; (2) a target annual bonus opportunity under the Company’s AIP equal to 100 percent of his annual base salary; (3) a make-whole bonus of $520,000 to compensate Mr. Ponton for the loss of his annual bonus at his previous company; (4) a grant of 5,194 RSUs (a grant date value equal to $211,240); (5) a grant of 22,142 options to purchase Company common stock that have an exercise price of $40.67 per share (a grant date value equal to $316,852) and (6) a grant of 12,985 PSUs (a grant date value equal to $528,100) that are earned based on the Company’s performance during the period 2020-2022. The RSUs and the options shall vest in equal installments on the first three anniversaries of the grant date. The 2020 equity awards for Mr. Ponton were based on a pro-rated equity grant on his start date equal to approximately 33 percent of his annual equity award value in the same form and subject to the same vesting criteria applicable to the 2020 equity grants made to other senior executives (i.e., 50 percent PSUs, 30 percent stock options and 20 percent RSUs), valued at approximately $1,056,192. Mr. Ponton received a grant of equity awards of approximately $3.2 million in March 2021.

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2022 Executive Compensation Due to Pending Rentokil Transaction

As previously disclosed, Terminix plans to combine with Rentokil bringing together two complementary businesses to create the global leader in pest control and hygiene & wellbeing, and the leader in the pest control business in North America, the world’s largest pest control market. The transaction will combine two leading brands with a long cultural heritage, outstanding talent and strong focus on people, customers and ESG. Upon completion, the combined company will have approximately 57,000 colleagues serving 4.9 million customers around the world from 790 locations. The enlarged business will have a strong platform for growth, particularly in North America, and an attractive financial profile to support future growth, including through acquisitions and continued investment in innovation and technology.

The transaction is expected to create significant value, enhance long-term growth potential, be highly cash generative and present a compelling industrial logic, supported by:

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increased scale and leadership in the global pest control market;

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substantially increased scale in North America, providing an enlarged platform for profitable growth;

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a complementary and synergistic portfolio combination; and