Dollar General 2007 Annual Report Download - page 129

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the development of a store strategic growth plan. Because the Committee was satisfied with
Mr. Perdue’ s overall performance, he was eligible for a 2007 salary increase.
The Committee also reviewed Hewitt’ s benchmarking data, as described above, and
considered certain provisions contained in the Merger Agreement limiting the aggregate
employee base salary increase pool to no more than 3%. Hewitt’ s data showed that Mr. Perdue’ s
existing base salary with a 3% increase would continue to approximate market median, and the
Committee determined that Mr. Perdue would receive a 3% base salary increase for 2007.
The process followed in determining Mr. Perdue’ s 2007 Teamshare structure and 2007
long-term incentives was substantially similar to that described above regarding other NEOs,
except that the ultimate decisions were made by the independent directors of the Board upon
Committee recommendation. In addition, the Board and the Committee were contractually bound
by the target (100%) and maximum (200%) Teamshare payout percentages contained in Mr.
Perdue’ s employment agreement approved prior to 2007.
With respect to Mr. Perdue’ s long-term incentive compensation, the Committee chose to
use the same 50%/50% options/RSUs allocation of economic value as it used for other NEOs in
2007. Hewitt’ s benchmarking data indicated that the amounts to be granted to Mr. Perdue would
approximate the 75th percentile of our market comparator group, keeping his total direct
compensation near the same percentile. In connection with the Merger, Mr. Perdue’ s outstanding
equity awards became fully vested and were settled in cash in the same manner described for the
other NEOs.
Mr. Perdue resigned from Dollar General effective July 6, 2007. We treated the
resignation as one for “good reason” after a change-in-control under his employment agreement.
He executed a release and became entitled to certain severance payments and benefits which are
triggered by such a resignation under his employment agreement, subject to his continued
compliance with certain terms (including restrictive covenants) of the employment agreement.
He was also entitled to payments under his defined benefit supplemental executive retirement
plan and the CDP.
Compensation of Mr. Dreiling
Mr. Dreiling entered into a five-year employment agreement to become CEO and a
member of our Board effective January 21, 2008. Key compensatory provisions of the
agreement include:
• Annual base salary of $1,000,000.
• Annual bonus payout range of 50% (threshold), 100% (target) and 200% (maximum)
of base salary based upon EBITDA performance. Mr. Dreiling is eligible to earn a
prorated 2007 bonus for the number of days worked in fiscal 2007. For 2008, Mr.
Dreiling is guaranteed to earn at least a threshold level bonus.
• A signing bonus of $2,000,000.
• Equity grants consisting of 890,000 shares of restricted stock and options to purchase
2.5 million shares of Dollar General at $5 per share (the fair market value on the grant