Big Lots 2008 Annual Report Download - page 35

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- 22 -
defined contribution plan (“Supplemental Savings Plan”). We believe that the Savings Plan and Supplemental
Savings Plan are generally commensurate with the retirement plans provided by companies in our peer groups, and
that providing these plans allows us to better attract and retain qualified executives. Participation in the Pension
Plan and Supplemental Pension Plan, which we do not believe are material elements of our executive compensation
program, is limited to certain employees whose hire date precedes April 1, 1994. Mr. Waite is the only named
executive officer eligible to participate in the Pension Plan or Supplemental Pension Plan. See the narrative
disclosure accompanying the Pension Benefits and Nonqualified Deferred Compensation tables following this
CD&A for a discussion of our retirement plans.
Our Executive Compensation Program for Fiscal 2008
The Committee takes the lead in establishing executive compensation annually, but seeks approval of
compensation decisions from the other outside directors. The Committee believes having all outside directors
approve executive compensation is consistent with best practices in corporate governance. The Committee also
requests from our CEO performance evaluations and recommendations on the compensation of the other executives
because of his direct knowledge of each other executive’s performance and contributions. Additionally, as
discussed in more detail below in the “Role of Management” and “Independent Compensation Consultant” sections
of this CD&A, the Committee consults with management and may engage independent compensation consultants
to take advantage of their specialized expertise.
The process of evaluating our executives begins at our Board meeting in the second quarter of the fiscal year before
compensation adjustments will be made (e.g., in May 2007 for adjustments made in fiscal 2008) and continues
quarterly with updates that our CEO delivers to the outside directors to keep them apprised of the performance of
each other EMC member. At our Committee and Board meetings in the first quarter of the fiscal year for which
compensation is being set (e.g., in March 2008 for fiscal 2008 compensation), our CEO provides the Committee
and the other outside directors with a thorough performance evaluation of each other EMC member and presents
his recommendations for their compensation. The Committee also conducts executive sessions to discuss our
CEO’s performance, with the most detailed evaluation including all outside directors during our first quarter Board
meeting. See the “Performance Evaluation” section of this CD&A for a discussion of the factors considered by our
CEO, the Committee and the other outside directors when evaluating performance.
At its March 2008 meeting, the Committee:
• reviewed and discussed the continued appropriateness of our executive compensation program,
including its underlying philosophy, objectives and policies;
• reviewed and discussed our CEO’s performance, contributions and value to our business;
• reviewed and discussed our CEO’s performance evaluations and compensation recommendations for the
other EMC members;
• reviewed and discussed the comparative compensation data that it received through research and
surveys conducted by independent compensation consultants;
• analyzed the total compensation earned by each EMC member during the immediately preceding two
fiscal years;
• analyzed the potential payments to each EMC member upon termination of employment and change in
control events;
• considered the parameters on executive compensation awards established by the terms of the
shareholder-approved plans under which bonus and equity compensation may be awarded and the
employment agreements between us and each EMC member;
• prepared its recommendation on the compensation of each EMC member for fiscal 2008;
• determined that a bonus was payable under the 2006 Bonus Plan as a result of corporate performance in
fiscal 2007; and
• determined that the first trigger for the fiscal 2007 restricted stock awards was achieved as a result of
corporate performance in fiscal 2007.