Big Lots 2011 Annual Report Download - page 45

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The Committee reviews each element at least annually. Individual and corporate performance directly impacts
the elements and amount of compensation paid to our named executive officers. For instance, a named executive
officer’s failure to meet individual goals may lead to a reduction in his or her compensation, a failure to receive
equity awards, or the termination of his or her employment. Conversely, excellent corporate performance may lead
to greater bonus payouts and, possibly, to the achievement of financial goals that accelerate restricted stock vesting.
The Committee and the other outside directors also have discretion, subject to the limitations contained in our
bonus and equity plans and the executives’ employment agreements, in setting named executive officers’ salary,
bonus opportunities and equity awards.
• Salary
Salary is cash compensation and is established annually for each named executive officer. A minimum
salary for each named executive officer is set forth in his or her respective employment agreement, as
described below in the “Elements of In-Service Executive Compensation – Employment Agreements”
section of this CD&A. Salary adjustments are subjectively determined and are not formally tied
to specific performance criteria. The Committee has not adopted any specific schedule of salary
increases and makes adjustments to our named executive officers’ respective salaries without regard to
adjustments in the salaries of other executives.
• Bonus
Each named executive officer has the opportunity to earn an annual cash bonus under the 2006 Bonus
Plan. Bonus payouts correspond to a percentage of each named executive officer’s salary (“payout
percentage”) and are based on whether we achieve certain corporate performance amounts under one or
more financial measures. The corporate performance amounts and financial measures are set annually
at the discretion of the Committee and the other outside directors in connection with the Board’s
approval of our annual corporate operating plan, subject to the terms of the 2006 Bonus Plan and our
named executive officers’ employment agreements.
The lowest level at which we will pay a bonus under the 2006 Bonus Plan is referred to as the “floor.”
A bonus is not paid under the 2006 Bonus Plan if we do not achieve at least the corporate performance
amount that earns a floor bonus. The level at which we generally plan our performance and the
associated payout under the 2006 Bonus Plan is referred to as the “target.” The maximum level at which
we will pay a bonus under the 2006 Bonus Plan is referred to as the “stretch.” If our performance in
a fiscal year exceeds the minimum corporate performance amount that earns a floor bonus, there is a
corresponding increase in the amount of the bonus (up to a maximum at the stretch bonus level). Bonuses
paid to our named executive officers under the 2006 Bonus Plan are considered “Non-Equity Incentive
Plan Compensation” in the Summary Compensation Table. See the “Bonus and Equity Plans” disclosure
that follows the Summary Compensation Table for more information concerning the 2006 Bonus Plan.
• Equity
All equity awards granted to our named executive officers since January 1, 2006 have been issued under
the 2005 LTIP. Although the 2005 LTIP allows us to issue various types of equity awards, we have
granted only stock options and restricted stock under the 2005 LTIP. The stock options vest based on
the passage of time or, if earlier, upon the executive’s death or disability (provided such event occurs
at least six months after the grant date). The restricted stock awarded to Mr. Fishman pursuant to his
retention agreement vests based on the achievement of a corporate financial goal. The restricted stock
awarded to the other named executive officers vests based on the achievement of the first trigger and
then the achievement of the second trigger, the passage of time, or the executive’s death or disability.
See the “Bonus and Equity Plans” disclosure that follows the Summary Compensation Table for more
information concerning the 2005 LTIP and the terms under which we have granted equity awards.
• Personal Benefits and Perquisites
The following are the personal benefits and perquisites that are generally provided only to employees
at or above the vice president level: (1) coverage under the Big Lots Executive Benefit Plan (“Executive
Benefit Plan”); (2) enhanced long-term disability insurance coverage; and (3) use of an automobile or
payment of an automobile allowance. Mr. Fishman is also permitted to make limited non-business use