Big Lots 2012 Annual Report Download - page 43

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discussed in more detail below in the “Role of Management” and “Independent Compensation Consultant” sections
of this CD&A, the Committee consults with management and may engage independent compensation consultants
to take advantage of their specialized expertise.
The process of evaluating our executives begins at our Board meeting in the second quarter of the fiscal year
before the fiscal year in which compensation adjustments will be made (e.g., in May 2011 for adjustments made in
fiscal 2012) and continues quarterly through updates that our CEO delivers to the outside directors to keep them
apprised of the performance of each other EMC member. At our Committee and Board meetings in the first quarter
of the fiscal year for which compensation is being set (e.g., in February 2012 for fiscal 2012 compensation), our
CEO provides the Committee and the other outside directors with a thorough performance evaluation of each other
EMC member and presents his recommendations for their compensation. The Committee also conducts executive
sessions to evaluate our CEO’s performance, with the most detailed evaluation including all outside directors
during our first quarter Board meeting. See the “Performance Evaluation” section of this CD&A for a discussion of
the factors considered by our CEO, the Committee and the other outside directors when evaluating performance.
At its February 2012 meeting, the Committee:
x reviewed and discussed the continued appropriateness of our executive compensation program,
including its underlying philosophy, objectives and policies;
x reviewed and discussed our CEO’s performance, contributions and value to our business;
x reviewed and discussed our CEO’s performance evaluations and compensation recommendations for the
other EMC members;
x reviewed and discussed the comparative compensation data that it received through surveys conducted
by independent compensation consultants and analyzed by management;
x analyzed the total compensation earned by each EMC member during the immediately preceding two
fiscal years;
x analyzed the potential payments to each EMC member upon termination of employment and change in
control events;
x considered the parameters on executive compensation awards established by the terms of the
shareholder-approved plans under which bonus and equity compensation may be awarded and the
employment agreements between us and each EMC member;
x prepared its recommendation on the compensation of each EMC member for fiscal 2012;
x determined that a bonus was not payable under the 2006 Bonus Plan as a result of corporate
performance in fiscal 2011; and
x determined that the corporate performance amount for Mr. Fishman’s fiscal 2011 performance-based
restricted stock award was achieved, and, for the other named executive officers, the second trigger for
their fiscal 2010 restricted stock awards and the first trigger for their fiscal 2011 restricted stock awards
were achieved as a result of corporate performance in fiscal 2011.
The Committee then shared its recommendations on the EMC members’ compensation, including the underlying
data and analysis, with the other outside directors for their consideration and approval. The Committee’s
recommendations were, with respect to the EMC members other than the CEO, consistent with the CEO’s
recommendations. At the March 2012 Board meeting, the outside directors discussed with the Committee
the form, amount of, and rationale for the recommended compensation and, consistent with the Committee’s
recommendations, finalized the compensation awards for the EMC members.
Except where we discuss the specifics of a named executive officer’s fiscal 2012 compensation, the evaluation and
establishment of our named executive officers’ fiscal 2012 compensation was substantially similar. Based on their
review of each element of executive compensation separately and in the aggregate, the Committee and the other
outside directors determined that our named executive officers’ compensation for fiscal 2012 was reasonable and
not excessive and was consistent with our executive compensation philosophy and objectives.