Dollar General 2010 Annual Report Download - page 33

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appropriate return on our invested capital and (2) the management and level of investments
necessary to achieve superior business performance.
• We achieved adjusted EBITDA and ROIC performance levels at 105.5% and 100.9% of the
targeted levels under our Teamshare bonus program.
• The 2010 tranche of the outstanding performance-based equity awards vested as a result of
our achievement of the adjusted EBITDA performance goal.
Our Compensation Committee will continue to evaluate our executive compensation program
and make changes when it believes it to be appropriate and in the best interests of our shareholders.
Executive Compensation Philosophy and Objectives
We strive to attract, retain and motivate persons with superior ability, to reward outstanding
performance, and to align the interests of our named executive officers with the long-term interests of
our shareholders. The material compensation principles applicable to the 2010 and 2011 compensation
of our named executive officers included the following, all of which are discussed in more detail in
‘‘Elements of Named Executive Officer Compensation’’ below:
• We generally target total compensation at the benchmarked median of our market
comparator group, but we make adjustments based on circumstances, such as unique job
descriptions and responsibilities as well as our particular niche in the retail sector, that are
not reflected in the market data. For competitive or other reasons, our levels of total
compensation or any component of compensation may exceed or be below the median of our
comparator group.
• We set base salaries to reflect the responsibilities, experience, performance and contributions
of the named executive officers and the salaries for comparable benchmarked positions,
subject to minimums set forth in employment agreements.
• We reward named executive officers who enhance our performance by linking cash and
equity incentives to the achievement of our financial goals.
• We promote share ownership to align the interests of our named executive officers with
those of our shareholders.
The Compensation Committee utilizes employment agreements with the named executive
officers which, among other things, set forth minimum levels of certain compensation components. The
Committee believes such arrangements are a common protection offered to named executive officers at
other companies and help to ensure continuity and aid in retention. The employment agreements also
provide for standard protections to both the executive and to Dollar General should the executive’s
employment terminate. In 2010, after achieving tremendous financial results, we entered into an
amended and restated employment agreement with Mr. Dreiling, described under ‘‘Compensation of
Mr. Dreiling’’ below.
Named Executive Officer Compensation Process
Oversight. The Compensation Committee of our Board of Directors approves the
compensation of our named executive officers, while its subcommittee consisting entirely of
independent directors (the ‘‘162(m) Subcommittee’’) approves any portion that is intended to qualify as
‘‘performance-based compensation’’ under Section 162(m) of the Internal Revenue Code or that is
intended to be exempt for purposes of Section 16(b) of the Securities Exchange Act of 1934.
Messrs. Calbert, Agrawal, Jones, Rhodes, and Bryant serve on our Compensation Committee, and
Messrs. Rhodes and Bryant make up the 162(m) Subcommittee.
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