Dollar General 2007 Annual Report Download - page 159

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Subsequent to the Merger, cash fees payable to our non-employee directors consist solely
of a $40,000 annual retainer fee, payable in quarterly installments. Directors also are entitled to
receive the expense reimbursements discussed above. Because the post-Merger directors served
on our Board for only a portion of fiscal 2007, those directors received one-third of the second
quarter retainer fee along with two full quarterly installments of the retainer fee.
Equity Compensation. Each non-employee director who served on our Board prior to
the Merger received 4,600 RSUs in fiscal 2007 pursuant to the automatic grant provisions of our
1998 Stock Incentive Plan. Each RSU represented the right to receive one share of Dollar
General common stock.
In accordance with the terms of our 1998 Stock Incentive Plan, we credited dividend
equivalents to the director’ s RSU account as additional RSUs whenever we declared a cash
dividend on our common stock. Directors did not have voting rights with respect to RSUs until
the underlying shares of common stock were issued. RSUs generally vested one year after the
grant date if the director was still serving on our Board. We did not, however, make payment on
vested RSUs until the director ceased to be a member of our Board. Under the terms of the 1998
Stock Incentive Plan, vesting of the RSUs accelerated upon termination of a director’ s Board
service due to a variety of reasons, including upon a change-in-control of Dollar General.
Because the Merger constituted a change-in-control under our 1998 Stock Incentive Plan, all
outstanding RSUs vested and were settled in cash in the Merger.
Prior to June 2, 2003, we also annually granted non-qualified stock options to our non-
employee directors under certain stock incentive plans. All of those options have since fully
vested and, pursuant to the Merger, were settled in cash (if in-the-money) or cancelled.
Immediately following the Merger, we ceased making equity grants to our non-employee
directors as part of director compensation.
Stock Ownership Guidelines. In fiscal 2007, as a publicly held company, we required
each non-employee director to own at least 13,000 shares of our common stock within three
years of joining our Board. RSUs and stock options counted towards that requirement. Because
we are now a privately held company, we no longer maintain those stock ownership guidelines.
Deferred Compensation Plan for Non-Employee Directors. Prior to the Merger, non-
employee directors could defer up to 100% of eligible compensation paid by us to them pursuant
to a voluntary nonqualified Deferred Compensation Plan for Non-Employee Directors. Eligible
compensation included the annual retainer(s), meeting fees, and any per diem compensation for
special assignments earned by a director for service to the Board. We credited the deferred
compensation to a liability account, which was then invested at the director’ s option in one or
more accounts that mirrored the performance of (a) funds selected by our Compensation
Committee or its delegate or (b) our common stock.
All deferred compensation pursuant to the Deferred Compensation Plan for Non-
Employee Directors was immediately due and payable as a result of the Merger, which
constituted a change-in-control of Dollar General under the terms of that Plan.