Big Lots 2007 Annual Report Download - page 52

- 38 -
If the payments received by a named executive officer in connection with a change in control constitute an
“excess parachute payment” under Section 280G of the IRC, the named executive officer is reimbursed for any
excise tax imposed under Section 4999 of the IRC or, in the case of Mr. Fishman and Mr. Cooper, the executive’s
benefits under his employment agreement are reduced to the extent necessary to become one dollar less than the
amount that would generate such excise tax, if this reduction results in a larger after-tax amount as compared to
the excise tax reimbursement method applicable to all other named executive officers (“Excise Tax Benefit”). The
compensation payable on account of a change in control may be subject to the deductibility limitations of Sections
162(m) and 280G of the IRC.
Change in Control Described
Generally, pursuant to the named executive officers’ employment agreements, the 1996 Incentive Plan, the 2005
Incentive Plan, the 2006 Bonus Plan, the Supplemental Pension Plan, and the Supplemental Savings Plan, a “change
in control” (and a “change of control,” as such term is used interchangeably with “change in control” in certain
employment agreements and the 2006 Bonus Plan) is deemed to occur if:
• any person or group (as defined in Section 13(d) under the Exchange Act) becomes the beneficial owner,
or has the right to acquire, 20% or more (or actually acquires 35% or more, in the case of the 2006
Bonus Plan) of our outstanding voting securities;
• a majority of the Board is replaced within any two year (one year, in the case of the 2006 Bonus Plan)
period by directors not nominated and approved by a majority of the directors in office at the beginning
of such period (or their successors so nominated and approved), or a majority of the Board at any date
consists of persons not so nominated and approved; or
• our shareholders approve an agreement to merge or consolidate with an unrelated company or an
agreement to sell or otherwise dispose of all or substantially all of our assets to an unrelated company
(or, in the case of the 2006 Bonus Plan, a person or group acquires 40% or more of the gross fair market
value of our assets).
Notwithstanding the foregoing definition, pursuant to the named executive officers’ employment agreements
and the plans specified above, a change in control does not include any transaction, merger, consolidation or
reorganization in which we exchange, or offer to exchange, newly issued or treasury shares in an amount less than
50% of our then-outstanding voting securities for 51% or more of the outstanding voting securities of an unrelated
company or for all or substantially all of the assets of such unrelated company.
Pursuant to the employment agreements, a named executive officer’s termination in connection with a change
in control is generally deemed to occur if, during the applicable protection period (as discussed in the following
paragraph), we or any other party to the change in control (e.g., the unrelated acquirer or successor company):
• terminate the executive without cause;
• in the case of Mr. Fishman and Mr. Cooper, breach a term of the employment agreement; or
• in the case of Mr. Cooper, Mr. Waite, Mr. Martin and Ms. Bachmann, constructively terminate the
executive (i.e., a resignation results from the imposition of a material adverse change in the executive’s
duties, compensation or reporting relationships after our failure to cure such condition).
The protection period provided in the named executive officers’ employment agreements is two years following
a change in control. Additionally, Mr. Fishman’s protection period includes the six months preceding a change in
control, and Mr. Cooper’s protection period includes the three months preceding a change in control.