Dollar General 2008 Annual Report Download - page 104

102
a select group of management and highly compensated employees. The supplemental retirement
plan is a noncontributory defined contribution plan with annual Company contributions ranging
from 2% to 12% of base pay plus bonus depending upon age plus years of service and job grade.
Under the CDP, participants may defer up to 65% of base pay and up to 100% of bonus pay. An
employee may be designated for participation in one or both of the plans, according to the
eligibility requirements of the plans. The Company matches base pay deferrals at a rate of 100%
of base pay deferral, up to 5% of annual salary, with annual salary offset by the amount of
match-eligible salary in the 401(k) plan. All participants are 100% vested in their CDP accounts.
Effective May 22, 2008, CDP eligibility changed as follows: to be eligible for CDP salary
deferrals, individuals must earn compensation in excess of the IRS limit under IRC 401(a)(17)
and to be eligible for CDP bonus deferrals, individuals must earn compensation in excess of the
IRS highly compensated limit under Section 414(q)(1)(B). Also, effective May 28, 2008, SERP
eligibility was frozen and management or highly compensated employees hired on or after that
date are not eligible for SERP participation.
As a result of the Merger which constituted a “change in control” under the CDP/SERP
Plan, all previously unvested amounts under the SERP vested on July 6, 2007. For newly
eligible SERP participants after July 6, 2007, the SERP accounts vest at the earlier of the
participant’ s attainment of age 50 or the participant’ s being credited with 10 or more “years of
service”, upon termination of employment due to death or “total and permanent disability” or
upon a “change in control”, all as defined in the CDP/SERP Plan. The Company incurred
compensation expense for these plans of approximately $1.2 million in 2008, $0.3 million in the
2007 Successor period, $0.5 million in the 2007 Predecessor period, and $0.8 million in 2006.
The CDP/SERP Plan assets are invested at the option of the participant in an account that
mirrors the performance of a fund or funds selected by the Company’ s Compensation Committee
or its delegate (the “Mutual Fund Options”) or, prior to the Merger, in an account that mirrored
the performance of the Company’ s common stock (the “Common Stock Option”). Effective
August 2, 2008, the deemed fund options under the CDP/SERP Plan were changed to mirror the
same fund options offered under the 401(k) plan. A participant’s CDP and SERP account
balances will be paid in accordance with the participant’ s election by (a) lump sum, (b) monthly
installments over a 5, 10 or 15 year period or (c) a combination of lump sum and installments.
The vested amount will be payable at the time designated by the plan upon the participant’ s
termination of employment or retirement, except that participants may elect to receive an in-
service distribution or an “unforeseeable emergency hardship” distribution of vested amounts
credited to the CDP account. Account balances deemed to be invested in the Mutual Fund
Options are payable in cash and, prior to the 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 as of the Merger date 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.