Dollar General 2007 Annual Report Download - page 94

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Merger, account balances deemed to be invested in the Common Stock Option were payable in
shares of Dollar General common stock and cash in lieu of fractional shares.
As a result of the Merger, the CDP/SERP Plan liabilities were fully funded into an
irrevocable rabbi trust. All account balances deemed to be invested in the Common Stock
Option were liquidated at a value of $22.00 per share and the proceeds were transferred to an
existing Mutual Fund Option within the Plan.
Asset balances in the Mutual Funds Option are stated at fair market value, which is based
on quoted market prices. The current portion of these balances is included in Prepaid expenses
and other current assets and the long term portion is included in Other assets, net in the
consolidated balance sheets. 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 was recorded at historical cost and included in Other shareholders’ equity,
prior to the Merger. Also, prior to the Merger, the deferred compensation liability related to the
Company stock for active plan participants was included in shareholders’ equity and subsequent
changes to the fair value of the obligation were not recognized, in accordance with the provisions
of EITF 97-14. However, as a result of the Merger, Plan participants no longer have the option of
investing in the Company’ s stock. The deferred compensation liability related to the Mutual
Funds Option is recorded at the fair value of the investments held in the trust. The current portion
of these balances is included in Accrued expenses and other and the long term portion is included
in Other liabilities in the consolidated balance sheets.
The Company sponsored through 2007 a supplemental executive retirement plan for the
Chief Executive Officer (called the Supplemental Executive Retirement Plan for David A.
Perdue) and accounted for the plan in accordance with SFAS 158. As a result of the Merger,
which constituted a change in control under the terms of this plan and the grantor trust
agreement, and Mr. Perdue’ s subsequent resignation, Mr. Perdue became 100% vested. A
deposit of $6,208,966 was made to the trust representing Mr. Perdue’ s lump sum vested benefit
and accumulated interest, which amount was paid to Mr. Perdue on January 7, 2008 effectively
terminating the plan.
Prior to the Merger, non-employee directors could defer all or a part of any fees normally
paid by the Company to a voluntary nonqualified 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 deferred compensation was
credited to a liability account, which was then invested at the option of the director, in deemed
investments which mirrored either the Mutual Fund Options or the Common Stock Option and
the deferred compensation was to be paid in accordance with the director’ s election. All deferred
compensation was immediately due and payable upon a “change in control” of the Company, as
defined by the Plan. As a result of the Merger, which constituted a change in control under the
Plan, all accounts held in the Deferred Compensation Plan for Non-Employee Directors were
distributed.