Dollar General 2004 Annual Report Download - page 53

Dollar General Corporation 51
with 10 or more “years of service” or upon termination
of employment due to death or “total and permanent
disability” or upon a “change in control,” all as defined
in the plan. Compensation expense for these plans was
approximately $0.6 million in 2004, $0.5 million in 2003
and $0.2 million in 2002.
Beginning September 2000, the supplemental retirement
plan and compensation deferral plan assets are invested
at the option of the participant in either an account that
mirrors the performance of a fund or funds selected by
the Compensation Committee of the Company’s Board
of Directors or its delegate (the “Mutual Fund Options”)
or in an account which mirrors the performance of the
Company’s common stock (the “Common Stock
Option”). Pursuant to a provision in the November 1,
2004 amendment that was effective January 1, 2005,
investments in the Common Stock Option cannot be
subsequently diversified and investments in the Mutual
Fund Options cannot be subsequently transferred into
the Common Stock Option.
In accordance with a participant’s election, a participant’s
compensation deferral plan and supplemental retirement
plan account balances will be paid in cash by (a) lump
sum, (b) monthly installments over a 5, 10 or 15-year
period or (c) a combination of lump sum and installments.
The vested amount will be payable at the time designated
by the plan upon the participant’s termination of employ-
ment or retirement, except that participants may elect to
receive an in-service lump sum distribution of vested
amounts credited to the compensation deferral account,
provided that the date of distribution is a date that is no
sooner than five years after the end of the year in which
amounts are deferred. In addition, a participant who is an
employee may request to receive an “unforeseeable
emergency hardship” in-service lump sum distribution of
vested amounts credited to his compensation deferral
account. Effective January 1, 2005 for active participants,
account balances deemed to be invested in the Mutual
Fund Options are payable in cash and account balances
deemed to be invested in the Common Stock Option are
payable in shares of Dollar General common stock and
cash in lieu of fractional shares. Prior to January 1, 2005,
all account balances were payable in cash.
The Mutual Funds Options are stated at fair market value,
which is based on quoted market prices, and are included
in Other current assets. In accordance with EITF 97-14,
“Accounting for Deferred Compensation Arrangements
Where Amounts Earned Are Held in a Rabbi Trust and
Invested,” the Company’s stock is recorded at historical
cost and included in Other shareholders’ equity. The
deferred compensation liability related to the Company
stock for active plan participants was reclassified to
stockholders’ equity and subsequent changes to the fair
value of the obligation will not be recognized, in accor-
dance with the provisions of EITF 97-14. The deferred
compensation liability related to the Mutual Funds
Options is recorded at the fair value of the investments
held in the trust and is included in Accrued expenses and
other in the consolidated balance sheets.
During 2003, the Company established two supplemental
executive retirement plans, each with one executive par-
ticipant. During 2004, one of these plans was terminated
in connection with the termination of that participant’s
employment. The Company accounts for the remaining
plan in accordance with SFAS No. 87, “Employers’
Accounting for Pensions”, as amended by SFAS
No. 132, “Employers’ Disclosures about Pensions and
Other Postretirement Benefits”, and supplemented by
SFAS No. 130, “Reporting Comprehensive Income,”
but has not included additional disclosures due to
their immateriality.
Non-employee directors may defer all or a part of any
fees normally paid by the Company to them pursuant to
a voluntary non-qualified compensation deferral plan.
The compensation eligible for deferral includes the annual
retainer, meeting and other fees, as well as any per diem
compensation for special assignments, earned by a
director for his or her service to the Company’s Board
of Directors or one of its committees. The compensation
deferred is credited to a liability account, which is then
invested at the option of the director in either an account
that mirrors the performance of a fund selected by the
Compensation Committee (the “Mutual Fund Options”),
or in an account which mirrors the performance of
the Company’s common stock (the “Common Stock
Option”). In accordance with a director’s election, the
deferred compensation will be paid in a lump sum or in
monthly installments over a 5, 10 or 15-year period, or a
combination of both, at the time designated by the plan
upon a director’s resignation or termination from the
Board. However, a director may request to receive an
“unforeseeable emergency hardship” in-service lump