Big Lots 2011 Annual Report Download - page 70

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If the payments received by a named executive officer in connection with a change in control constitute an “excess
parachute payment” under Section 280G of the IRC, the named executive officer is entitled to reimbursement for
any excise tax imposed under Section 4999 of the IRC, or the executive’s benefits under his or her employment
agreement will be reduced to the extent necessary to become one dollar less than the amount that would generate
such excise tax, if this reduction results in a larger after-tax amount to the executive as compared to the excise tax
reimbursement method (“Excise Tax Benefit”). The compensation payable on account of a change in control may
be subject to the deductibility limitations of Sections 162(m) and 280G of the IRC.
Change in Control Described
Generally, pursuant to the 1996 LTIP, the 2005 LTIP, the Supplemental Savings Plan (as to amounts earned and
vested before January 1, 2005, including earnings attributable to such amounts) and Mr. Fishman’s retention
agreement, a change in control is deemed to occur if:
• any person or group (as defined in Section 13(d) under the Exchange Act) becomes the beneficial owner,
or has the right to acquire, 20% or more of our outstanding voting securities;
• a majority of the Board is replaced within any two-year period by directors not nominated and approved
by a majority of the directors in office at the beginning of such period (or their successors so nominated
and approved), or a majority of the Board at any date consists of persons not so nominated and
approved; or
• our shareholders approve an agreement to merge or consolidate with an unrelated company or an
agreement to sell or otherwise dispose of all or substantially all of our assets to an unrelated company.
Consistent with the provisions of Section 409A (“Section 409A”) of the IRC and the Treasury Regulations
promulgated thereunder, pursuant to our named executive officers’ employment agreements, the 2006 Bonus Plan
and the Supplemental Savings Plan (as to all amounts earned and vested on or after January 1, 2005), a change in
control is deemed to occur upon:
• the acquisition by any person or group (as defined under Section 409A) of our common shares that,
together with any of our common shares then held by such person or group, constitutes more than
50% of the total fair market value or voting power in our outstanding voting securities;
• the acquisition by any person or group, within any one year period, of 30% or more of our outstanding
voting securities;
• a majority of the Board is replaced during any one year period by directors whose appointment or
election is not endorsed by a majority of the directors in office prior to the date of such appointment or
election; or
• the acquisition by any person or group, within any one year period, of 40% or more of the total gross
fair market value of all of our assets, as measured immediately prior to such acquisition(s).
Notwithstanding the foregoing definitions, pursuant to our named executive officers’ employment agreements, the
1996 LTIP, the 2005 LTIP, the 2006 Bonus Plan and Mr. Fishman’s retention agreement, a change in control does
not include any transaction, merger, consolidation or reorganization in which we exchange, or offer to exchange,
newly issued or treasury shares in an amount less than 50% of our then-outstanding voting securities for 51% or
more of the outstanding voting securities of an unrelated company or for all or substantially all of the assets of such
unrelated company.
Pursuant to the employment agreements, a named executive officer’s termination in connection with a change in
control is generally deemed to occur if, during the applicable protection period (as discussed in the next paragraph),
we or any other party to the change in control (e.g., the unrelated acquirer or successor company):
• terminate the executive without cause;
• breach a term of the employment agreement; or