Big Lots 2008 Annual Report Download - page 38

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- 25 -
After calculating the financial measure and making the adjustments described in the preceding paragraph, the
Committee exercised negative discretion to reduce the amount of the fiscal 2008 bonuses by reducing the corporate
performance amount (to the amount reflected in the table below) to exclude certain accrual items that, under the
2006 Bonus Plan and the Committee’s approval in March 2008, would have otherwise increased the corporate
performance amount and resulting bonuses. The Committee opted to exclude the accrual items principally
because they were anticipated as part of the annual corporate operating plan upon which the financial measure
and corporate performance amounts were established for fiscal 2008, and the Committee did not believe that the
accrual items should have the effect of increasing fiscal 2008 bonus compensation. The Committee’s decision to
exercise negative discretion was not based on corporate or individual performance factors.
The following table reflects the payout percentage for each bonus level and the corporate performance amount
required to achieve the corresponding bonus level, with the results for fiscal 2008, calculated as described above
(including the Committee’s discretionary reduction discussed in the preceding paragraph), noted:
Bonus Level
and
2008 Results
Payout Percentage
(% of salary)
Corporate Performance
Amount
($)Mr. Fishman Mr. Cooper Mr. Waite Mr. Martin Mrs. Bachmann
No Bonus 0.0 0.0 0.0 0.0 0.0 0 – 233,179,999
Floor 50.0 30.0 37.5 30.0 30.0 233,180,000
Target 100.0 60.0 75.0 60.0 60.0 243,368,000
Stretch 200.0 120.0 150.0 120.0 120.0 260,347,000
2008 Results 196.1 117.7 147.1 117.7 117.7 259,690,619
Our fiscal 2008 performance was higher than the targeted expectations of the Board, the Committee and
management, thus a bonus was earned between the target and stretch levels. The primary aim in setting the
goals was to reward 2006 Bonus Plan participants while encouraging strong corporate earnings growth. As a
consequence of the fiscal 2008 bonus payments, total cash compensation paid to the named executive officers
for fiscal 2008 was at or above the median for our peer groups. We believe higher than market average total cash
compensation is appropriate in light of our fiscal 2008 performance and furthers our objectives to motivate our
executives and reward superior performance.
Equity for Fiscal 2008
All equity awards granted to the named executive officers in fiscal 2008 were made under the 2005 Incentive Plan
and are reflected in the Grants of Plan-Based Awards in Fiscal 2008 table. The fiscal 2008 equity compensation for
the named executive officers consisted of non-qualified stock options and restricted stock awards. The Committee
believes that the grant of a significant quantity of stock options and restricted stock to the named executive officers
further aligns their interests with the interests of our shareholders and provides us with a significant retention and
motivation tool. Accordingly, the named executive officers’ equity interests in our organization, through stock
options and restricted stock, comprise a substantial portion of their compensation. The Committee is not tied to any
particular process or formula to determine the size of the equity awards granted to the named executive officers.
Consequently, the Committee uses its discretion to grant equity awards and may consider the various factors
discussed below. In fiscal 2008, to determine the size of the equity awards for the named executive officers, the
Committee undertook the following process:
• The Committee reviewed a management-prepared projection of the estimated number of common
shares to be granted during fiscal 2008 to all recipients other than our CEO. As it related to the EMC
members other than our CEO, this projection was based on historical grant information, anticipated
future events, and our CEO’s evaluation of individual performance and recommendations. For example,
this projection included the common shares the Committee and management expected to need in order
to attract a new member of the EMC in fiscal 2008 to replace a member who had previously announced
his retirement.
• In executive session, the Committee evaluated and approved our CEO’s recommendations for equity
awards for the other EMC members and determined the equity award for our CEO. In each case, the
Committee made these determinations based on historical grant information and the Committee’s