Big Lots 2007 Annual Report Download - page 31

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at the discretion of the Committee and the other outside directors in connection with the Board’s
approval of our annual corporate operating plan, subject to the terms of the 2006 Bonus Plan and the
named executive officers’ employment agreements.
The lowest level at which we will pay a bonus under the 2006 Bonus Plan is referred to as the “floor.”
The level at which we target our performance and the payout under the 2006 Bonus Plan is referred to
as the “target.” The maximum level at which we will pay a bonus under the 2006 Bonus Plan is referred
to as the “stretch.” If our performance in a fiscal year exceeds the minimum corporate performance
amount that earns a floor bonus, there is a corresponding increase in the amount of the bonus (up to a
maximum at the stretch bonus level). However, a bonus is not paid under the 2006 Bonus Plan if we do
not achieve at least the minimum corporate performance amount. Bonuses paid to the named executive
officers under the 2006 Bonus Plan are considered “Non-Equity Incentive Plan Compensation” in the
Summary Compensation Table. See the “Bonus and Equity Plans” disclosure that follows the Summary
Compensation Table for more information concerning the 2006 Bonus Plan.
• Equity
All equity awards granted to the named executive officers since January 1, 2006 have been issued under
the 2005 Incentive Plan. Although the 2005 Incentive Plan allows various types of equity awards to be
issued, we have granted only stock options and restricted stock under the 2005 Incentive Plan. The stock
options vest based on the passage of time. The restricted stock vests based on the achievement of the
first trigger and then the achievement of the second trigger, the passage of time, or the executive’s death
or disability. See the “Bonus and Equity Plans” disclosure that follows the Summary Compensation
Table for more information concerning the 2005 Incentive Plan and the terms under which we have
made equity awards.
• Personal Benefits/Perquisites
While it is possible that other personal benefits and perquisites may be offered to named executive
officers during the course of the year, the following are the personal benefits and perquisites that are
generally provided only to employees at or above the vice president level: (i) coverage under the Big
Lots Executive Benefit Plan (“Executive Benefit Plan”); (ii) enhanced long-term disability insurance
coverage; and (iii) use of an automobile or payment of an automobile allowance. We believe that these
personal benefits and perquisites, though immaterial to us in amount, are an important element of total
compensation provided to our executives because of the value our executives place on these benefits
and the convenience of having these benefits when faced with the demands of their positions. The
Committee evaluates and determines the personal benefits and perquisites received by named executive
officers during its annual review of the named executive officers’ total compensation.
We offer most full-time employees medical and dental benefits under the Big Lots Associate Benefit
Plan (“Benefit Plan”). We also offer the named executive officers the opportunity to participate in the
Executive Benefit Plan, which reimburses executives for health-related costs incurred but not covered
under the Benefit Plan, up to an annual maximum reimbursement of $40,000 per family. Amounts
received by named executive officers under the Executive Benefit Plan are treated as taxable income,
and we reimburse each executive the approximate amount of his or her income tax liability relating to
the benefits received under the Executive Benefit Plan.
We also offer short-term disability coverage to most employees and long-term disability coverage to
all salaried employees. For the named executive officers, the benefits provided under the long-term
disability plan are greater than for employees below the level of vice president. Under the long-term
disability coverage, a named executive officer may receive 67% of his or her monthly salary, up to
$25,000 per month, until the executive is no longer disabled or turns age 65, whichever occurs earlier.
We also pay the premiums for this long-term disability coverage and the amount necessary to hold the
named executive officer harmless from the income taxes resulting from such premium payments.
All employees at or above the level of vice president have the option of the use of an automobile or
accepting a monthly allowance. The value of the automobile and the amount of the allowance varies
based on the employee’s level.