Big Lots 2008 Annual Report Download - page 53

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Effective January 1, 1993, the annual retirement benefit payable upon retirement under the Pension Plan and the
Supplemental Pension Plan was, and continues to be, equal to 1% of the average annual compensation during
the participant’s highest compensated five consecutive year period of employment with Big Lots multiplied by
the years of service up to a maximum of 25 (“Normal Retirement Pension”), with participation and benefits
being limited in and for any single year to one plan (not both plans) based on the participant’s status as a highly
compensated employee, as defined in the IRC. This benefit is payable when a participant reaches the normal
retirement age of 65; however, the Pension Plan and Supplemental Pension Plan provide the option to retire early
(generally at age 55) or to continue employment beyond the normal retirement age.
Under the Pension Plan and the Supplemental Pension Plan, a participant who has reached the age of 55 and has
at least five years of service with us can elect to retire early and receive a reduced monthly pension commencing
on the date of the participant’s early termination. Alternatively, a participant who has reached the age of 65
can elect to continue employment with us and continue participation in either the Pension Plan or Supplemental
Pension Plan until the participant retires, at which point the participant shall receive his Normal Retirement
Pension. Participants who terminate employment due to a disability are entitled to a pension amount equal to the
actuarially-determined present value of the Normal Retirement Pension. The spouse of a participant who dies
before retirement is entitled to receive an amount equal to the actuarially-determined present value of the Normal
Retirement Pension reduced for the period of time that the participant’s death or 25th anniversary of employment,
if later, precedes the normal retirement age. A participant who terminates employment for any reason other than
death or retirement may receive a reduced pension amount determined based on the number of years the participant
worked for Big Lots.
Normally, a participant will receive a monthly payment from the Pension Plan upon reaching the normal age of
retirement (or earlier if the participant elects the early retirement option). Alternatively, a participant may elect to
receive a lump sum payment of the entire actuarial equivalent of the participant’s accrued retirement pension or a
reduced pension payable over a fixed number of months or elect the purchase of an annuity contract equivalent in
value to the actuarial equivalent of the participant’s accrued retirement pension. Under the Supplemental Pension
Plan, upon reaching the normal retirement age (or earlier if the participant elects the early retirement option) or
upon a change in control, a participant will receive a lump sum payment of the entire actuarial equivalent of the
participant’s retirement pension accrued thereunder.
For purposes of calculating benefits under the Pension Plan, compensation is defined to include the monthly
equivalent of the total cash remuneration paid for services rendered during a plan year prior to salary reductions
pursuant to Sections 401(k) or 125 of the IRC, including bonuses, incentive compensation, severance pay, disability
payments and other forms of irregular payments. The table below illustrates the amount of annual benefits payable
at age 65 to a person with the specified five year average compensation and years of service under the Pension Plan
combined with the Supplemental Pension Plan.
Final
Average
Compensation
Years of Service
10 15 20 25
$100,000 $10,000 $15,000 $20,000 $25,000
$125,000 $12,500 $18,750 $25,000 $31,250
$150,000 $15,000 $22,500 $30,000 $37,500
$175,000 $17,500 $26,250 $35,000 $43,750
$200,000 $20,000 $30,000 $40,000 $50,000
$225,000 $21,800 $32,700 $43,600 $54,500
The maximum annual benefit payable under the Pension Plan is restricted by the IRC ($185,000 for calendar
year 2008). At January 31, 2009, the maximum five year average compensation taken into account for benefit
calculation purposes was $218,000. The compensation taken into account for benefit calculation purposes is limited
by law ($230,000 for calendar year 2008), and is subject to statutory increases and cost-of-living adjustments in
future years. Income recognized as a result of the exercise of stock options and the vesting of restricted stock is
disregarded in computing benefits under the Pension Plan. A participant may elect whether the benefits are paid in
the form of a single life annuity, a joint and survivor annuity or as a lump sum upon reaching the normal retirement
age of 65.