Big Lots 2008 Annual Report Download - page 40

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- 27 -
stock is generally greater on a per share basis than the expense to us associated with stock options; and
(c) Committee and the other outside directors believe stock options also provide a strong incentive to
increase shareholder value, because stock options provide value to the executive only if the market price
of our common shares increases.
The financial measure applied to the restricted stock awards granted in fiscal 2008 was the greater of (i) earnings
per common share – diluted from continuing operations and (ii) earnings per common share – diluted from
continuing operations before extraordinary item and/or cumulative effect of a change in accounting principle (as
the case may be). If neither of these amounts appear on the consolidated statement of operations included in our
Form 10-K for the applicable fiscal year, then the financial measure to be used is the greater of (iii) earnings per
common share – diluted and (iv) earnings per common share – diluted before extraordinary item and/or cumulative
effect of a change in accounting principle (as the case may be) as it appears in the Form 10-K for the applicable
fiscal year. After each financial measure is calculated for purposes of our financial statements, it is adjusted, for
purposes of the restricted stock award calculations, to remove the effect of any gain or loss as a result of litigation
or lawsuit settlement that is specifically disclosed, reported or otherwise appears in our periodic filings with the
SEC or our annual report to shareholders. These financial measures were selected because the Committee and the
other outside directors believe they provide a good indication of our profitability, ongoing operating results and
financial condition.
The first trigger for the fiscal 2008 restricted stock awards is $0.25 under the applicable financial measure. The
second trigger for the fiscal 2008 restricted stock awards is $2.03 under the applicable financial measure. While
the first trigger was met (under the earnings per common share – diluted from continuing operations financial
measure) for the fiscal 2008 restricted stock awards, the second trigger was not met in fiscal 2008. Having met the
first trigger, if the named executive officer remains employed by us, the restricted stock will vest upon the earliest
of: (i) the first trading day after we file with the SEC our Annual Report on Form 10-K for the year in which the
second trigger is met; (ii) the opening of our first trading window that is five years after the grant date; and (iii) the
death or disability of the named executive officer, in which case 20% of the award will vest for each consecutive
year of employment completed from the grant date to the date of death or disability. The restricted stock will be
forfeited if the named executive officer’s employment with us terminates prior to vesting (except as described
above in the case of death or disability).
When the Committee and the other outside directors approved the financial measures and corporate performance
amount applicable to the second trigger in March 2008, they believed those measures and the amount represented
strong, but reasonable, levels of performance that would be a challenge to achieve. The Committee and the other
outside directors believe the selected corporate performance amount was appropriate in light of our projected
multi-year operating plan and our objectives to motivate our executives, reward superior performance and align the
interests of our executives and shareholders.
Performance Evaluation
Our CEO, the Committee and the outside directors do not rely solely on predetermined formulas when they
evaluate corporate performance or individual performance. Performance is generally measured against the
following objective and subjective factors, although the factors considered may vary for each executive and as
dictated by business conditions:
• long-term strategic goals;
• short-term business goals;
• profit and revenue goals;
• expense goals;
• improving operating margins;
• revenue growth versus the industry;
• earnings-per-share growth;
• continued optimization of organizational effectiveness and productivity;