Big Lots 2011 Annual Report Download - page 51

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Salary for Fiscal 2011
The salaries paid to our named executive officers for fiscal 2011 are shown in the “Salary” column of the
Summary Compensation Table. During its annual review of executive compensation in March 2011, the Committee
considered our fiscal 2010 performance during a very difficult environment nationwide for retailers. The
Committee and the other outside directors believed that our outstanding performance and growth in fiscal 2010
was a direct result of our named executive officers’ individual performances, as discussed in the “Performance
Evaluation” section of this CD&A. The Committee and other outside directors evaluated Mr. Fishman’s fiscal
2010 salary and agreed it was competitive when compared to other salaries of the CEOs of the companies in
our peer group and agreed to keep Mr. Fishman’s salary at the same level in fiscal 2011. The Committee and the
other outside directors also approved the following fiscal 2011 salaries for our other named executive officers:
Mr. Cooper: $535,000; Ms. Bachmann: $535,000; Mr. Haubiel: $440,000; and Mr. Martin: $575,000. These
annualized salaries became effective on March 20, 2011.
Bonus for Fiscal 2011
The bonuses paid to our named executive officers under the 2006 Bonus Plan for fiscal 2011 are shown in the
“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. At its annual review
in March 2011, the Committee and other outside directors approved the financial measure, corporate performance
amounts and payout percentages for the fiscal 2011 bonuses.
The Committee and the other outside directors selected operating profit as the financial measure for the fiscal 2011
bonuses because they believe it is a strong indicator of our profitability, ongoing operating results and financial
condition. The Committee and other outside directors selected the corporate performance amounts based on the
annual corporate operating plan set by the Board. The corporate performance amounts were set slightly below (for
the floor bonus), at (for the target bonus), and above (for the stretch bonus) the projected operating profit in our
annual corporate operating plan. The Committee and other outside directors believe the selected amounts provided
challenging, but reasonable, levels of performance that were appropriate in light of our projected corporate
operating plan for fiscal 2011, the then-current uncertainty regarding the general economic conditions in the United
States, and our objective to promote sustained profitability while providing objectives that motivate our executives.
Because the Committee and the other outside directors consider the specific circumstances that we expect to face
in the coming fiscal year (e.g., year-over-year comparable performance, general economic factors and performance
of the retail sector), the relationship between each of the corporate performance amounts and between the corporate
performance amounts and our annual corporate operating plan may vary significantly from year to year.
The payout percentages for our named executive officers for fiscal 2011 were made at the discretion of the
Committee and the other outside directors, subject to the minimum payout percentages established in each named
executive officer’s employment agreement. The Committee and other outside directors elected to maintain the
bonus payout percentages for our named executive officers for fiscal 2011 at the same levels as in fiscal 2010. This
decision was primarily driven by the belief that those bonus payout percentages were appropriate for fiscal 2011 to
accomplish our executive compensation objectives.
In order to calculate bonuses under the 2006 Bonus Plan, we first calculate the financial measure for purposes
of our financial statements. Once calculated for purposes of our financial statements, we adjust the measure for
purposes of the bonus calculation, to remove the effect of events, transactions or accrual items set forth in the 2006
Bonus Plan and approved by the Committee early in each fiscal year when the corporate performance amount and
bonus payout percentages are established. These adjustments may have the net effect of increasing or decreasing
the resulting corporate performance amount. Additionally, the Committee may exercise negative discretion to
cancel or decrease the bonuses earned (but not increase a bonus for a covered employee, as that term is used within
Section 162(m) of the IRC). Accordingly, the resulting corporate performance amount may differ from the financial
measure (i.e., operating profit) amount reflected in the financial statements included with our Form 10-K.
After calculating the financial measure and making the adjustments described in the preceding paragraph, the
Committee exercised negative discretion to reduce the resulting fiscal 2011 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 2011, would have otherwise increased the corporate performance amount.
The Committee opted to make the downward adjustment by excluding the accrual items principally because they
were anticipated as part of the annual corporate operating plan upon which the financial measure and corporate