Dollar General 2011 Annual Report Download - page 44

Proxy
Considerations Associated with Regulatory Requirements
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to any
publicly held corporation for individual compensation over $1 million paid in any taxable year to each
of the persons who were, at the end of the fiscal year, Dollar General’s CEO or one of the other
named executive officers (other than our Chief Financial Officer). Section 162(m) specifically exempts
certain performance-based compensation from the deduction limit.
If our CNG Committee determines that our shareholders’ interests are best served by the
implementation of compensation policies that are affected by Section 162(m), our policies will not
restrict the Committee from exercising discretion to approve compensation packages even though that
flexibility may result in certain non-deductible compensation expenses.
We believe that our 2007 Stock Incentive Plan currently satisfies, and if Proposal 2 is approved,
will continue to satisfy the requirements of Section 162(m), so that compensation expense realized in
connection with stock options and stock appreciation rights, if any, and in connection with
performance-based restricted stock and restricted stock unit awards, if any, will be deductible. However,
restricted stock or restricted stock units granted to executive officers that solely vest over time are not
‘‘performance-based compensation’’ under Section 162(m), so that compensation expense realized in
connection with those time-vested awards to executive officers covered by Section 162(m) will not be
deductible by Dollar General.
In addition, any salary, signing bonuses or other annual compensation paid or imputed to the
executive officers covered by Section 162(m) that causes non-performance-based compensation to
exceed the $1 million limit will not be deductible by Dollar General.
The Committee administers our executive compensation program with the good faith intention
of complying with Section 409A of the Internal Revenue Code, which relates to the taxation of
nonqualified deferred compensation arrangements.
Compensation Committee Report
The CNG Committee of our Board of Directors has reviewed and discussed with management
the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on
such review and discussions, the CNG Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this document.
This report has been furnished by the members of the CNG Committee:
• Michael M. Calbert, Chairman
• Raj Agrawal
• Warren F. Bryant
• Adrian Jones
• William C. Rhodes, III
The above Compensation Committee Report does not constitute soliciting material and should not
be deemed filed or incorporated by reference into any other Dollar General filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent Dollar General specifically incorporates
this report by reference therein.
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