Big Lots 2011 Annual Report Download - page 41

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As a result of the 2011 say-on-pay vote, the Committee directed our management to extend invitations to discuss
our executive compensation program to 14 shareholders representing the beneficial ownership of nearly half of our
common shares (as of December 31, 2011) in order to solicit their feedback and answer their questions regarding
our executive compensation program. Four of those shareholders elected to schedule calls with us in response to
our invitation. The reason most often cited by the shareholders who declined our invitation was that they had no
outstanding concerns or questions regarding our executive compensation program. The shareholders who chose to
participate in calls summarized their criteria for determining their say-on-pay votes and did not suggest specific
changes to our executive compensation program.
The Committee was briefed on the feedback received during management’s calls with shareholders. The
Committee considered the shareholder votes as well as shareholder feedback and it:
• approved the holding of annual shareholder advisory votes on our executive compensation program,
consistent with the outcome of the shareholder vote on the frequency of such votes at the 2011 Annual
Meeting of Shareholders – with the say-on-pay vote proposal for 2012 presented to shareholders in this
Proxy Statement; and
• determined that the 2012 LTIP, as presented in this Proxy Statement for approval at the Annual
Meeting, would significantly differ from the 2005 LTIP in that the 2012 LTIP does not contain an
evergreen provision.
The Committee will continue to carefully consider feedback from our shareholders. In addition, the Committee
engaged Towers Watson, an independent compensation consultant, to present an overview of executive
compensation trends that may be important to our shareholders and to advise the Committee on all principal
aspects of executive compensation for fiscal 2012. The Committee’s consideration of feedback from shareholders,
along with market information and analyses provided by the independent compensation consultant, have influenced
a number of changes to our executive compensation program over the past several years, including the elimination
of Section 280G tax gross-up payments in employment agreements with newly hired and newly promoted executive
officers. The Committee will also continue to design our executive compensation program guided by our executive
compensation philosophy and core principles as described in this CD&A.
Philosophy and Objectives of our Executive Compensation Program
We believe it is important to provide competitive compensation to attract and retain talented executives to lead
our business. We also believe an executive compensation program should encourage high levels of corporate and
individual performance by motivating executives to continually improve our business in order to promote sustained
profitability and enhanced shareholder value. This philosophy drives our executive compensation program.
Consistent with our philosophy, each of our named executive officer’s total compensation varies based on his or
her performance, leadership, responsibilities, experience and the achievement of financial and business goals. To
better ensure that our executive compensation program advances the interests of our shareholders, the value of
bonus opportunities and equity awards under the program depends upon our financial performance and/or the price
of our common shares. As a named executive officer’s level of responsibility and the potential impact that a named
executive officer could have on our operations and financial condition increase, the percentage of our named
executive officer’s compensation that is at risk through bonus and equity incentive compensation also increases.
The Board and the Committee periodically review our executive compensation philosophy and consider factors that
may influence a change in our executive compensation philosophy. Consistent with our executive compensation
philosophy, the Committee has identified the following key objectives for our executive compensation program:
• Attract and retain executives by paying them amounts and offering them elements of compensation that
are competitive with and comparable to those paid and offered by most companies in our peer groups.
We believe a key factor in attracting and retaining qualified executives is to provide total compensation
that is competitive with the total compensation paid by companies in our compensation “peer groups”
discussed in the “Comparative Compensation Data” section of this CD&A. In addition, we believe
most executives who consider changing their employer expect to receive amounts and elements of
compensation that are comparable to those offered by most companies in our peer groups and/or their
current employer. Accordingly, we generally do not structure our executive compensation program to
be competitive with the programs of companies outside of our peer groups (although we may do so to