Big Lots 2008 Annual Report Download - page 37

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• Mr. Martin:
(i) Significant engagement in re-shaping our global sourcing efforts for merchandise;
(ii) Contribution through the merchandising department toward improving our fiscal 2007 inventory
turnover rate by approximately 3% over fiscal 2006; and
(iii) Improved initial mark-up of merchandise by 10 basis points over our fiscal 2007 corporate
operating plan.
• Mrs. Bachmann:
(i) Contribution through the merchandise planning and allocation departments toward improving
our fiscal 2007 inventory turnover rate by approximately 3% over fiscal 2006;
(ii) Successful launch and continued implementation of a new point-of-sale register system; and
(iii) Launch of the multiyear implementation of the SAP for Retail information technology system
that will replace our core merchandising and financial systems.
See the “Performance Evaluation” and “Comparative Compensation Data” sections of this CD&A for more
information regarding the impact that performance and the competitive market have on salary and other elements
of our executive compensation program.
Bonus for Fiscal 2008
The bonuses paid to the named executive officers under the 2006 Bonus Plan for fiscal 2008 are shown in the
“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. At its annual review
in March 2008, the Committee and the outside directors approved the financial measure, corporate performance
amounts and payout percentages for the fiscal 2008 bonuses.
For the fiscal 2008 bonuses, the Committee and the other outside directors selected operating profit as the financial
measure because they believe it is a strong indicator of our profitability, ongoing operating results and financial
condition. The Committee and other outside directors selected the corporate performance amounts based on the
annual corporate operating plan set by the Board. The corporate performance amounts were slightly below (for
the floor bonus), at (for the target bonus), and above (for the stretch bonus) the projected operating profit in our
annual corporate operating plan. They believe the selected amounts provided challenging, but reasonable, levels of
performance. The Committee and other outside directors believe the selected corporate performance amounts were
appropriate in light of our projected corporate operating plan for fiscal 2008 and our objective to promote sustained
profitability while providing objectives that motivate our executives. Because the outside directors consider
the specific circumstances that we expect to face in the coming fiscal year (e.g., year-over-year comparable
performance, general economic factors, and performance of the retail sector), the relationship between each of
the corporate performance amounts and between the corporate performance amounts and our annual corporate
operating plan may vary significantly from year to year.
The payout percentages for the named executive officers were made at the discretion of the Committee and the
other outside directors, subject to the minimum payout percentages established in each named executive officer’s
employment agreement. For fiscal 2008, the Committee and the other outside directors elected to increase the
bonus payout percentages over the prior fiscal year for Mr. Cooper and Mrs. Bachmann. This decision was
primarily driven by a review of comparative compensation data and the size, scope and importance of Mr. Cooper’s
and Mrs. Bachmann’s respective areas of responsibility.
In order to calculate bonuses under the 2006 Bonus Plan, we first calculate the financial measure for purposes of
our financial statements. Once calculated for purposes of our financial statements, it is adjusted, for purposes of
the bonus calculation, to remove the effect of events, transactions or accrual items set forth in the 2006 Bonus Plan
and approved by the Committee early each fiscal year. These adjustments may have the net effect of increasing
or decreasing the resulting corporate performance amount. Additionally, the Committee may exercise negative
discretion to cancel or decrease the bonuses earned (but not increase a bonus for a covered employee, as that term
is used within Section 162(m) of the Internal Revenue Code, as amended (“IRC”)). Accordingly, the resulting
corporate performance amount may differ from the financial measure (i.e., operating profit) amount reflected on
the financial statements included with our Form 10-K.