Dollar General 2011 Annual Report Download - page 39

Proxy
For each 1% adjusted EBITDA increase between the threshold performance level and 110% of
the target performance level, the corresponding payout increases by 9% of the target payout amount
(based upon the officer’s target payout percentage). For each 1% adjusted EBITDA increase above
110% of the target performance level, the corresponding payout increases by 11.67% of the target
payout amount (based upon the officer’s target payout percentage). For adjusted ROIC, each .014%
increase in performance between the threshold performance level and the target performance level
increases the payout percentage by 1%. For each .093% increase in adjusted ROIC performance above
the target performance level, the bonus payout increases by 1%, and above 200% of the target payout
level, the bonus payout increases by 1.3%. Payout percentages greater than 200% of the target payout
levels are based on an approximate sharing between Dollar General (80%) and the Teamshare
participants (20%) of the incremental adjusted EBITDA dollars earned above the 110% of the adjusted
EBITDA performance level, split 90% to adjusted EBITDA and 10% to adjusted ROIC.
This proration schedule, through 110% of the target performance level, is consistent with the
schedule approved by the Committee in 2007 in reliance upon benchmarking data which, at that time,
indicated that the typical practice was to set the threshold payout percentage at half of the target and
the maximum payout percentage at twice the target. The Committee determined in 2008 that the
proration schedule for adjusted EBITDA performance above 110% of target should approximate a
sharing between Dollar General (80%) and the Teamshare participants (20%) of the adjusted EBITDA
dollars earned above that level.
(b) 2011 Teamshare Results. The Committee approved the adjusted EBITDA and adjusted
ROIC performance results at $1.848 billion (101.79% of target) and 22.07% (100.78% of target),
respectively, which equate to a payout of 117.98% of individual bonus targets under the 2011
Teamshare program. Accordingly, a 2011 Teamshare payout was made to each named executive officer
at the following percentages of base salary earned: Mr. Dreiling, 153.37%; and each of Mr. Tehle,
Ms. Guion, Mr. Vasos and Ms. Lanigan, 76.69%. Such amounts are reflected in the ‘‘Non-Equity
Incentive Plan Compensation’’ column of the Summary Compensation Table.
(c) 2012 Teamshare Structure. The Committee has approved a 2012 Teamshare structure
similar to that which was approved for 2011. The Committee approved certain adjustments to the
graduated scale of payouts pertaining to adjusted ROIC which will be further discussed in our proxy
statement for the 2013 annual meeting.
The applicable percentage of each named executive officer’s salary upon which his or her
bonus is based for the 2012 Teamshare plan is also the same as in 2011. Those percentages continue to
approximate the median of the payout percentages for the 2012 market comparator group. Ms. Guion
is not eligible to participate in the 2012 Teamshare program per the terms of her retirement agreement.
Long-Term Equity Incentive Program. Long-term equity incentives motivate named executive
officers to focus on long-term success for shareholders. These incentives help provide a balanced focus
on both short-term and long-term goals and are important to our compensation program’s recruiting
and retention objectives. Such incentives are designed to compensate named executive officers for a
long-term commitment to us, while motivating sustained increases in our financial performance and
shareholder value.
Equity awards are made under our 2007 Stock Incentive Plan and are always granted with a
per share exercise price equal to the fair market value of one share of our common stock on the date
of grant.
Until March 2012, the Committee had not made annual equity awards since our 2007 merger
because the long-term equity granted at the time of that merger or at the time of hire has been
sufficiently retentive and otherwise have adequately met our compensation objectives. However, in
connection with the amendment of his employment agreement in April 2010, Mr. Dreiling also received
a special one-time stock option grant that fully vested in April 2011. The options granted to the named
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