Dollar General 2011 Annual Report Download - page 34

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with named executive officer compensation (as described below under ‘‘Management’s Role’’). The
Committee reviewed benchmark information provided by Meridian regarding 2011 executive
compensation and discussed with Messrs. Dreiling and Ravener their executive compensation
recommendations. In an effort to decrease costs, the Committee chose to rely more heavily upon
management to provide benchmarking data and resulting recommendations with respect to 2012 annual
base salary and short-term cash incentive decisions. However, Meridian, along with management,
assisted the Committee in developing the new long-term annual incentive program and provided
detailed data from the market comparator group upon which the Committee relied in determining the
size of the grants under the program.
Management’s Role. Mr. Ravener and non-executive members of the human resources group
have assisted Meridian in gathering and analyzing relevant competitive data and identifying and
evaluating various alternatives for named executive officer compensation (including his own). At the
Committee’s request, management’s role in collecting this type of data is anticipated to expand
beginning in 2012, including increased reliance on management with respect to recommendations for
certain portions of 2012 executive compensation. Messrs. Dreiling and Ravener also discuss with the
Committee their recommendations regarding named executive officer pay components, typically based
on benchmarking data; however, Mr. Dreiling does not participate in the Committee’s deliberations 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. Annually, the Committee assesses the performance of
Mr. Dreiling, and Mr. Dreiling assesses the performance of each of the other named executive officers,
in each case 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 subjective; no objective criteria or
relative weighting is assigned to any individual factor.
The Committee uses the performance evaluation results as an eligibility threshold for annual
base salary increases and Teamshare bonus payments for named executive officers. A performance
rating below ‘‘good’’ (i.e., ‘‘unsatisfactory’’ or ‘‘needs improvement’’) for the last completed fiscal year
would generally preclude a named executive officer from receiving any annual base salary increase or
Teamshare bonus payment (although the Committee retains discretion to approve a Teamshare bonus
payment in the event of a ‘‘needs improvement’’ rating). The performance evaluation results have not
been used to determine the amount of the Teamshare bonus payment for any named executive officer;
rather, the Teamshare bonus amount is determined solely based upon the Company’s level of
achievement of pre-established financial performance measures and the terms of the Teamshare
program (see discussion below). Each named executive officer received a satisfactory (i.e., ‘‘good,’’
‘‘very good,’’ or ‘‘outstanding’’) overall performance evaluation with respect to each of 2010 and 2011.
The performance evaluation results also may impact the amount of an officer’s annual base
salary increase. Any named executive officer who receives a satisfactory performance rating is given a
percentage base salary increase that equals the overall budgeted increase for the Company’s U.S.-based
employee population unless:
• the executive’s performance evaluation relative to other executives supports a higher or lower
percentage increase;
• the market benchmarking data indicate that an upward market adjustment would more
closely align compensation with the median of the market comparator group; and/or
• an additional or exceptional event occurs, such as an internal equity adjustment, a promotion
or a change in responsibilities, or a similar one-time adjustment is required.
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