Dollar General 2010 Annual Report Download - page 34

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Use of Outside Advisors. In March 2010, the Compensation Committee entered into a new
written agreement with Hewitt Associates (‘‘Hewitt’’) and reaffirmed the selection of Hewitt, which had
served as the Committee’s consultant since our 2007 merger, as its compensation consultant. In
December 2010, after Meridian Compensation Partners (‘‘Meridian’’) was formed as a spin-off of
Hewitt’s executive compensation consulting business and after undertaking an independence analysis
pertaining to Meridian, the Committee entered into a written agreement with Meridian and selected
Meridian to serve as its independent compensation consultant. The written agreement details the terms
and conditions under which Meridian will provide independent advice to the Committee in connection
with matters pertaining to executive and director compensation. Under the agreement, the Committee
shall determine the scope of Meridian’s services, which is anticipated to include but not be limited to
guiding the Committee’s decision making with respect to executive compensation matters, providing
advice on our executive pay philosophy, compensation peer group and incentive plan design, providing
competitive market studies, and apprising the Committee about emerging best practices and changes in
the regulatory and governance environment. Throughout this document, when we refer to the
Committee’s consultant we are referring to either Hewitt or Meridian, depending upon the applicable
time period.
In addition to services relating to director and executive compensation, from time to time
Hewitt has provided consulting services to management for various projects and assignments pertaining
to general employee compensation, benefits, and other matters. Under the agreement with Meridian,
Committee approval would be required before Meridian could provide such additional services to
management. Fees incurred for services and products provided by Meridian and/or Hewitt unrelated to
director and executive compensation did not exceed $120,000 in 2010.
The Committee’s consultant attends such Committee meetings and private sessions as
requested by the Committee. The Committee’s members also are authorized to consult directly with the
Committee’s consultant at other times as desired. During 2010, the Committee’s Chairman periodically
consulted directly with the Committee’s consultant, as did Mr. Dreiling and Mr. Ravener and other
non-executive members of our human resources group, in connection with named executive officer
compensation (as described below under ‘‘Management’s Role’’). The Committee reviewed benchmark
information provided by its consultant regarding 2010 executive compensation and discussed with
Messrs. Dreiling and Ravener their executive compensation recommendations. With respect to 2011
executive compensation decisions thus far, Meridian has met directly with the Committee to review the
2010 compensation benchmark study and its application in 2011.
Management’s Role. Messrs. Dreiling and Ravener, along with non-executive members of the
human resources group, assist the Compensation Committee’s consultant in gathering and analyzing
relevant competitive data and identifying and evaluating various alternatives for named executive officer
compensation (including their own). Messrs. Dreiling and Ravener discuss with the Committee their
recommendations regarding named executive officer pay components, typically based on benchmarking
data compiled by the Committee’s consultant; however, Mr. Dreiling does not participate in the
Committee’s discussions of his own compensation. Mr. Dreiling subjectively assesses performance of
each of the other named executive officers (see ‘‘Use of Performance Evaluations’’ below).
Although the Committee values and welcomes such input from management, it retains and
exercises sole authority to make decisions regarding named executive officer compensation.
Use of Performance Evaluations. At the end of each fiscal year, the Committee assesses the
performance of Mr. Dreiling, and Mr. Dreiling assesses the performance of each of the other named
executive officers. These evaluations are designed to determine each such officer’s overall success in
meeting or exhibiting certain enumerated factors, including our four publicly disclosed operating
priorities and certain core attributes on which all of our employees are evaluated. These evaluations are
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