Dollar General 2007 Annual Report Download - page 131

129
incentives under our 2007 Plan. Under the 2007 Plan, (1) all time-vested options will vest and
become immediately exercisable as to 100% of the shares of common stock subject to such
options immediately prior to a change-in-control and (2) all performance–vested options will
vest and become immediately exercisable as to 100% of the shares of common stock subject to
such options immediately prior to a change-in-control if, as a result of the change–in-control,
(x) investment funds affiliated with KKR realize a specified internal rate of return on 100% of
their aggregate investment, directly or indirectly, in our equity securities (the “Sponsor Shares”)
and (y) the investment funds affiliated with KKR earn a specified cash return on 100% of the
Sponsor Shares; provided, however, that in the event that a change-in-control occurs in which
more than 50% but less than 100% of our common stock or other voting securities or the
common stock or other voting securities of Buck Holdings, L.P. is sold or otherwise disposed of,
then the performance-vested options will become vested up to the same percentage of Sponsor
Shares on which investment funds affiliated with KKR achieve a specified internal rate of return
on their aggregate investment and earn a specified return on their Sponsor Shares. The Merger
constituted a change-in-control for purposes of our pre-Merger plans and arrangements.
Deductibility of NEO Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to
public companies for compensation over $1 million paid in any fiscal year to an NEO that is not
performance-based compensation. We believe that compensation paid in 2007 associated with
stock options under our 1998 Stock Incentive Plan would generally be fully deductible for
federal income tax purposes. However, in certain situations (such as time-vested RSUs) the
Compensation Committee approved compensation that did not meet these requirements in order
to ensure competitive levels of total compensation for our NEOs. Because our common stock is
no longer publicly traded, the Board did not consider Section 162(m) with respect to 2007
compensation paid after the Merger.
Compensation Committee Report
Our Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on
such review and discussions, the Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this document.
This report has been furnished by:
• Michael M. Calbert, Chairman
• Raj Agrawal
• Adrian Jones
The Compensation Committee Report is deemed furnished, not filed, in this document
and will not be deemed to be incorporated by reference into any filing under the Securities Act or
the Exchange Act as a result of furnishing the Compensation Committee Report in this manner.