Dollar General 2011 Annual Report Download - page 26

Proxy
DIRECTOR INDEPENDENCE
Is Dollar General subject to the NYSE governance rules regarding director independence?
Prior to April 2, 2012, Buck Holdings, L.P. controlled a majority of our outstanding common
stock. As a result, we were a ‘‘controlled company’’ within the meaning of the NYSE corporate
governance standards. Under the NYSE rules, a company of which more than 50% of the voting power
is held by an individual, group or another company is a ‘‘controlled company’’ and may elect not to
comply with certain NYSE corporate governance standards, including the requirements that:
• a majority of the Board of Directors consist of independent directors; and
• we have a compensation committee and a nominating/corporate governance committee that
are composed entirely of independent directors.
Controlled companies are, however, subject to the NYSE and SEC rules that require full
independence of the Audit Committee. As a result, our Audit Committee is entirely comprised of
independent directors, but we do not have a majority of independent directors on our Board, and our
CNG Committee does not consist entirely of independent directors.
As a result of a secondary offering of our common stock that was completed on April 2, 2012,
Buck Holdings, L.P. no longer holds more than 50% of our common stock and we may no longer rely
upon the exemption for controlled companies. Accordingly, applicable NYSE rules provide that we
must achieve majority independence of the membership of our CNG Committee by July 1, 2012 and
majority independence of the membership of our Board and full independence of the membership of
our CNG Committee by April 2, 2013.
How does the Board determine director independence?
The Board of Directors affirmatively determines the independence of each director and
director nominee in accordance with guidelines it has adopted, which include all elements of
independence set forth in the NYSE listing standards as well as certain Board-adopted categorical
independence standards. These guidelines are contained in our Corporate Governance Guidelines
which are posted on the ‘‘Investor Information—Corporate Governance’’ portion of our web site
located at www.dollargeneral.com.
The Board first analyzes whether any director has a relationship covered by the NYSE listing
standards that would prohibit an independence finding for Board or Audit Committee purposes. The
Board then analyzes any relationship of the remaining eligible directors to Dollar General or to our
management that falls outside the parameters of the Board’s separately adopted categorical
independence standards to determine whether or not that relationship is material. The Board may
determine that a director who has a relationship that falls outside of the parameters of the categorical
independence standards is nonetheless independent (to the extent that the relationship would not
constitute a bar to independence under the NYSE listing standards). Any director who has a material
relationship is not considered to be independent.
Are all of the current directors and nominees independent?
No. Our Board of Directors consists of Raj Agrawal, Warren Bryant, Mike Calbert, Richard
Dreiling, Adrian Jones, Bill Rhodes and Dave Rickard. Messrs. Bryant, Rhodes and Rickard serve on
our Audit Committee. Messrs. Agrawal, Bryant, Calbert, Jones and Rhodes serve on our CNG
Committee.
Our Board of Directors has affirmatively determined that Messrs. Bryant, Rhodes and Rickard,
but not Messrs. Agrawal, Calbert, Dreiling or Jones, are independent from our management under
both the NYSE’s listing standards and our additional standards. Any relationship between an
independent director and Dollar General or our management fell within the Board-adopted categorical
standards and, accordingly, was not reviewed or considered by our Board.
18