Dollar General 2011 Annual Report Download - page 25

Proxy
The CNG Committee is responsible for recommending the form and amount of director
compensation for our Board of Directors’ consideration and approval. The CNG Committee may
consult with Meridian Compensation Partners, its independent consultant (‘‘Meridian’’), regarding the
form and amount of director compensation. The CNG Committee also welcomes the input of our CEO
and our Chief People Officer, but the CNG Committee and the Board retain and exercise ultimate
decision-making authority regarding director compensation. With certain exceptions described below,
our 2011 director compensation program remained unchanged from 2010. We do not compensate for
Board service any director who also serves as a Dollar General employee. We will reimburse directors
for certain fees and expenses incurred in connection with continuing education seminars and for travel
and related expenses related to Dollar General business.
For 2011, each non-employee director received quarterly payment of the following cash
compensation, as applicable:
• $75,000 annual retainer for service as a Board member;
• $17,500 annual retainer for service as chairman of the Audit Committee;
• $15,000 annual retainer for service as chairman of the Compensation Committee;
• $10,000 annual retainer for service as chairman of the Nominating and Corporate
Governance Committee; and
• $1,500 for each Board or committee meeting in excess of an aggregate of 12 that a director
attends during each fiscal year.
In addition, each non-employee director received an equity award under our 2007 Stock
Incentive Plan with an estimated value of $75,000 on the grant date as determined by Meridian using
economic variables such as the trading price of our common stock, expected volatility of the stock
trading prices of similar companies, and the terms of the awards. Sixty percent of this value consisted
of non-qualified stock options to purchase shares of our common stock (‘‘Options’’) and 40% consisted
of restricted stock units payable in shares of our common stock (‘‘RSUs’’). The Options will vest as to
25% of the Option and the RSUs will vest as to 331⁄3% of the award on each of the first four and three
anniversaries of the grant date, respectively, in each case subject to the director’s continued service on
our Board. Directors may elect to defer receipt of shares underlying the RSUs.
We anticipate granting similar equity awards annually to those non-employee directors who are
elected or reelected at each applicable shareholders’ meeting. Any new director appointed after the
annual shareholders’ meeting but before February 1 of a given year will receive a full equity award no
later than the first CNG Committee meeting following the date on which he or she is appointed. Any
new director appointed on or after February 1 of a given year but before the next annual shareholders’
meeting shall not receive a full or pro-rated equity award, but rather shall be eligible to receive the
next regularly scheduled annual award.
In 2011, after reviewing with Meridian our Board compensation program relative to our market
comparator group, the CNG Committee determined that total compensation was approximately 29%
below the market median, with all of the shortfall in the equity component. Accordingly, the CNG
Committee recommended, and the Board approved, a $50,000 increase in the estimated value of the
equity component of Board compensation effective on the next scheduled grant date (June 2012) and
that we maintain the 60/40 split between Option and RSU awards. In addition, as a result of the
combination of the Compensation Committee and the Nominating and Corporate Governance
Committee into one committee effective January 26, 2012, the chairman of the combined CNG
Committee will receive a $17,500 annual retainer for fiscal year 2012.
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