Dollar General 2011 Annual Report Download - page 32

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• We revisited our form of employment agreement for executives, considering the practices of
our market comparator group and evolving compensation practices, which resulted in, among
other things, the elimination from the form agreement of the Internal Revenue Code
Section 280G gross-up for any newly hired executive and the elimination of such gross-up
provision effective April 1, 2015 for any existing executive who enters into the new form of
agreement upon the expiration of his or her existing agreement. Mr. Todd Vasos, our
Executive Vice President, Division President and Chief Merchandising Officer, entered into
such new form agreement effective December 1, 2011 in connection with the approaching
expiration of the term of his prior agreement. Mr. Tehle and Ms. Lanigan are expected to
enter into the new form agreement in April 2012.
• We proposed revisions to our 2007 Stock Incentive Plan to, among other things, generally
prohibit, without shareholder approval, the repricing of any stock option or stock
appreciation right, prohibit dividend equivalent rights on unearned or unvested performance
share grants, add a compensation ‘‘clawback’’ provision, and extend the term of the Plan.
• We proposed revisions to our Annual Incentive Plan to, among other things, increase the
cash maximum payable under such Plan for purposes of deductibility under Internal Revenue
Code Section 162(m), add the ability to measure performance at operating divisions or units
and to consider relative performance measures, and add a compensation ‘‘clawback’’
provision.
• We entered into a retirement agreement with Ms. Guion that sets forth the terms of her
employment through her retirement date in July 2012, the transition of her current duties,
and her role and responsibilities with the Company through her retirement date. As a result
of the retirement agreement, Ms. Guion’s employment agreement with us will not be
renewed or extended beyond her retirement date.
• We achieved adjusted EBITDA and ROIC performance levels at 101.79% and 100.78% of
the targeted levels under our Teamshare bonus program.
• The 2011 tranche of the outstanding performance-based equity awards vested as a result of
our achievement of the adjusted EBITDA performance goal.
• We modified our market comparator group for 2012 to reposition the Company at the
median of the group in terms of revenues, to ensure that the constituent companies more
closely represent the retail companies with which we compete for executive talent, and to
ensure that the group continues to include companies whose business models are similar to
ours.
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 2011 and 2012 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
market comparator group.
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