Dollar General 2007 Annual Report Download - page 124

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The Committee directed that our Teamshare 2007 EBITDA performance measure be
computed using numbers from our issued financial statements, adjusted to exclude:
• consulting, accounting, legal, valuation, banking, filing, disclosure and similar costs,
fees and expenses directly related to the consideration, negotiation, approval and
consummation of the Merger and related financing and any related litigation or
settlement of any related litigation;
• costs and expenses constituting severance payments and benefits incurred during the
12 month period following the date of shareholder approval of the Merger; and
• the impact of any unplanned items of a non-recurring or extraordinary nature.
The Committee then set the potential Teamshare payout range for the NEOs, other than
Mr. Perdue and Mr. Dreiling (see “Compensation of Mr. Perdue” and “Compensation of Mr.
Dreiling” below) and Mr. Beré (see below), at the following base salary percentages: 32.5%
(threshold), 65% (target), and 130% (maximum). In determining this range, the Committee
reviewed Hewitt’ s benchmarking information regarding competitive target incentives for
comparable positions in our market comparator group. This analysis showed that our existing
target salary payout percentages generally exceeded the market median, but that our total direct
compensation would remain at or slightly above the market median because our long-term
incentive compensation remains significantly below the market median. The Committee also
continued to rely on Hewitt’ s prior year benchmarking data which indicated that the typical
practice was to set the threshold payout percentage at half of the target and the maximum payout
percentage at twice the target. Accordingly, the Committee made no changes to the potential
payout range for those NEOs from the prior year.
Mr. Beré assumed the position of Interim CEO upon Mr. Perdue’ s resignation on July 6,
2007. At that time, the Board set Mr. Beré’ s potential Teamshare payout percentages at 35%
(threshold), 140% (target) and 280% (maximum) of base salary upon achievement of EBITDA-
based performance levels of $630 million (threshold), $700 million (target), and $770 million
(maximum). Mr. Beré’ s performance target level, as well as the calculation of the related
EBITDA-based performance metric, were chosen to match the level used for vesting purposes
for the performance-based options (discussed below under “Long-Term Incentive Program”)
granted to the NEOs on July 6, 2007. Threshold and maximum performance levels were set at
90% and 110% of the target level. Mr. Beré’ s fiscal 2007 bonus opportunity was not based on a
prorated graduated scale for performance between the threshold and target and the target and
maximum levels.
(b) 2007 Teamshare Results. Mr. Dreiling, with Mr. Beré’ s input, reviewed the 2007
individual performance of each NEO, including a review of performance versus goals
established earlier in 2007. Because Mr. Dreiling determined that each NEO performed
satisfactorily overall in 2007, as a threshold matter each NEO was eligible to receive a 2007
Teamshare payout to the extent we achieved the relevant EBITDA performance target. In March
2008, our new Compensation Committee approved an EBITDA calculation for this purpose
between the “target” and “maximum” performance levels. Accordingly, each NEO received a