Big Lots 2008 Annual Report Download - page 30

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- 17 -
• Align the interests of executives and shareholders through incentive-based executive compensation.
We pay bonuses to executives under the 2006 Bonus Plan only if we meet or exceed corporate
performance goals. Stock options awarded under the 2005 Incentive Plan are valuable only if the market
price of our common shares increases over the exercise price during the period in which the stock options
may be exercised. Restricted stock awarded under the 2005 Incentive Plan vests only if we achieve a
threshold corporate performance goal (i.e., the first trigger) and its value is determined by the market price
of our common shares. Accordingly, the realization and value of each of these elements of compensation
is dependent upon our performance and/or the appreciation in the value of our common shares.
In fiscal 2008, 79.1% of the total compensation earned by the named executive officers was derived
from incentive compensation in the form of bonuses (non-equity incentive plan compensation), stock
options and restricted stock, as each is reflected on the Summary Compensation Table. We believe
this demonstrates that our executive compensation program is closely aligned with the interests of
our shareholders. We do not apply a specific formula or set a specific percentage at which incentive
compensation is targeted or awarded for each named executive officer. Rather, the amount of total
compensation that may be earned by each named executive officer through these forms of incentive
compensation is subjectively determined based on each named executive officer’s level of responsibility
and potential impact on our operations and financial condition. The percentage of total compensation
that a named executive officer may earn through these forms of incentive compensation generally
increases as the executive’s level of responsibility and impact on our business increases.
Following the end of each fiscal year, we calculate and review each named executive officer’s annual
“at-risk incentive compensation” as a percentage of his or her annual “total executive compensation
awarded” to evaluate the effectiveness of our incentive compensation at meeting our objective of aligning
executive compensation with the interests of our shareholders. The calculation is computed as follows:
At-Risk
Incentive
Compensation
as a
Percentage of
Total
Executive
Compensation
Awarded
=
At-Risk
Incentive
Compensation
=
Grant date
fair value of
stock
awards
+Grant date fair value
of option awards +Maximum possible payout under
non-equity incentive plan awards
Total
Executive
Compensation
Awarded
=Salary +
Change in pension
value and
nonqualified
deferred
compensation
earnings
+All other
compensation +
At-Risk
Incentive
Compensation
The components of at-risk incentive compensation are the potential values to the named executive
officer upon award, as reflected in the Grants of Plan-Based Awards in Fiscal 2008 table following
this CD&A. The components of the total executive compensation awarded (other than at-risk incentive
compensation) are the amounts actually earned by the named executive officer, as reflected in the
Summary Compensation Table following this CD&A.
For fiscal 2008, the percentage of the total executive compensation awarded that was derived from at-
risk incentive compensation for each named executive officer was as follows:
Name
Fiscal 2008 At-Risk Incentive Compensation
as a Percentage of
Total Executive Compensation Awarded (%)
Mr. Fishman 87.8
Mr. Cooper 73.3
Mr. Waite 70.5
Mr. Martin 68.7
Mrs. Bachmann 73.3
All non-CEO named executive officers as a group 71.5
All named executive officers as a group 80.9