Dollar General 2011 Annual Report Download - page 63

Proxy
Approval of the 2007 Stock Incentive Plan will, among other things, extend the term of the
plan to the tenth anniversary of the date of shareholder approval, which will preserve what we believe
is an essential tool to provide an incentive for management and other personnel and key service
providers to contribute to our future growth and success. If this proposal is not approved at the annual
meeting, the plan will expire by its terms on July 6, 2017.
In addition, if this proposal is not approved at the annual meeting:
• any future awards of stock options, stock appreciation rights and restricted stock granted
under the plan to our covered employees after the end of our transition reliance period, and
any future awards of other types of equity-based compensation granted under the plan to our
covered employees which are paid or settled after the end of our transition reliance period
will not qualify as performance-based compensation and will count against the $1 million
deductible compensation limit otherwise imposed by Section 162(m); and
• the performance share units granted on March 20, 2012 under the plan will be automatically
forfeited.
How does the 2007 Stock Incentive Plan compare to compensation best practices?
The 2007 Stock Incentive Plan includes a number of important provisions, summarized below,
that are designed to protect our shareholders’ interests and that reflect our commitment to best
practices and effective management of equity compensation:
•Plan Limits and Additional Shares. A fixed number of shares is authorized under the plan,
and shareholder approval would be required to increase that share limit. The plan does not
contain an evergreen provision or other feature which would periodically add new shares for
grant under the plan. Subject to adjustment in connection with certain significant corporate
events, the maximum number of shares that can be awarded in the form of stock options and
stock appreciation rights to any plan participant is 4.5 million per fiscal year, and the
maximum number of shares that can be awarded in the form of other stock-based awards to
any plan participant is 1.5 million per fiscal year.
•No Discount Stock Options or Stock Appreciation Rights. All stock options and stock
appreciation rights must have an exercise price that is equal to or greater than the fair
market value of one share of our common stock on the date of grant.
•No Repricing. Repricing of stock options and stock appreciation rights (including reduction
in the exercise price of stock options or replacement of an award with cash or another award
type) is prohibited without shareholder approval.
•Limitation on Amendments. No material amendments that would increase the aggregate
number of shares that may be issued under the plan can be made without shareholder
approval.
•Section 162(m) Eligibility. The committee administering the plan maintains the flexibility to
approve equity and cash awards eligible for treatment as performance-based compensation
under Section 162(m).
How does the 2007 Stock Incentive Plan work?
A description of the plan’s provisions is set forth below. This summary is qualified in its
entirety by reference to the 2007 Stock Incentive Plan attached as Appendix A.
Administration. The plan is administered by the CNG Committee, which may delegate some
or all of its authority to a subcommittee consisting solely of at least two directors who qualify as
‘‘non-employee directors’’ for purposes of Rule 16b-3 of the Securities Exchange Act of 1934 (or any
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