Big Lots 2007 Annual Report Download - page 37

- 23 -
Individual Performance Evaluation
The CEO, the Committee and the outside directors do not rely solely on predetermined formulas when they
evaluate the performance of our executives. The individual performance of the executives is generally measured
against the following objective and subjective factors, although the factors considered may vary for each executive
and as dictated by business conditions:
• long-term strategic goals;
• short-term business goals;
• profit and revenue goals;
• improving operating margins;
• revenue growth versus the industry;
• earnings-per-share growth;
• continued optimization of organizational effectiveness and productivity;
• leadership and the development of talent; and
• fostering teamwork and other corporate values.
Our CEO, the Committee and the outside directors may each consider different factors and may value the same
factors differently. In selecting individual and corporate performance factors for each EMC member and measuring
an executive’s performance against those factors, our CEO, the Committee and the other outside directors also
consider the performance of our competitors and general economic and market conditions. None of the factors are
assigned a specific weight. Instead, our CEO, the Committee and the other outside directors recognize that the
relative importance of these factors may change in order to adapt our operations to specific business challenges
and to reflect the changing economic and marketplace conditions. So although the Committee and the other outside
directors consider our CEO’s recommendations, the Committee and the outside directors may not follow, and are
not bound by, our CEO’s recommendations on executive compensation.
Impact of Performance on Compensation
As illustrated by our executive compensation philosophy and objectives, we are committed to tying corporate
performance to a substantial portion of our executive compensation program. While we cannot control the market
price of our common shares, we strive to provide strong results that may lead to increased shareholder value.
Additionally, the Committee believes it is in our best interests and the best interests of our shareholders to require
that we achieve certain corporate performance metrics in order for EMC members to receive bonus and restricted
stock awards so that we can preserve the deductibility of such awards under Section 162(m) of the Internal Revenue
Code, as amended (“IRC”). As is illustrated by the performance metrics and goals described above, we believe that
performance and compensation are tightly tied.
Role of Management
Our CEO’s role in determining executive compensation is significant and it is discussed throughout this CD&A.
Additionally, our CEO and the Committee consult with management from our human resources, finance and
legal departments regarding the design and administration of our compensation programs, plans and awards for
executives and directors. These members of management provide advice regarding the competitive nature of
existing and proposed compensation programs and the impact of accounting rules, laws and regulations on existing
and proposed compensation programs. Management from our human resources, finance and legal departments
may also act pursuant to delegated authority to fulfill various functions in administering our employee benefit and
compensation plans. Such delegation is permitted by the Committee’s charter and each such plan. Those groups to
whom the Committee has delegated certain responsibilities are each required to periodically report their activities
to the Committee.
Our CEO and some of these members of management attend general meetings of the Committee, and the CEO
participates in the Committee’s discussions regarding the compensation of the other EMC members. However,
these individuals do not participate in executive sessions of the Committee or when executive compensation
determinations are made by the Committee and the other outside directors.