Dollar General 2011 Annual Report Download - page 75

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if shareholders approve the plan at the Annual Meeting). The CNG Committee can base performance
goals on one or more of the following performance measures which may related to Dollar General, one
or more of our affiliates or one or more of our or our affiliates’ divisions or units, or any combination
thereof, and may be applied on an absolute basis and/or be relative to one or more peer group
companies or indices, or any combination thereof:
• Net earnings or net income (before or after taxes) • Earnings per share
• Net sales or revenue growth • Gross or net operating profit
• Return measures (including, but not limited to, • Cash flow (including, but not limited to,
return on assets, capital, invested capital, equity, operating cash flow, free cash flow, and cash
sales, or revenue) flow return on capital)
• Earnings before or after taxes, interest, • Share price (including, but not limited to,
depreciation, and/or amortization growth measures and total shareholder return)
• Productivity ratios • Gross or operating margins
• Expense targets • Margins
• Operating efficiency • Customer satisfaction;
• Working capital targets • Economic Value Added
• Volume • Capital expenditures
• Market share • Costs
• Regulatory ratings • Asset quality
• Net worth • Safety
To the extent allowable under Section 162(m), the performance goals may be calculated without regard
to extraordinary or non-recurring items, as the CNG Committee may determine in its sole discretion.
No award can be paid under the plan unless and until the CNG Committee certifies in writing
that the previously established performance goal(s) have been satisfied. The CNG Committee may
reduce or eliminate any award in its discretion despite achievement of the performance goal(s) but may
not increase the amount of bonus payable to any participant. The plan allows a participant to elect in
writing to defer the payment of his or her award in accordance with the terms of our CDP/SERP Plan
as it exists from time to time. For a description of the CDP/SERP Plan, please see ‘‘Executive
Compensation—Nonqualified Deferred Compensation.’’ The plan does not limit our ability to make
payments or awards to employees (including executive officers) under any other plan or arrangement.
What are the Federal income tax consequences of payments under the Annual Incentive Plan?
Payments made under the Annual Incentive Plan will be taxable to the recipients when paid as
ordinary compensation income. If a participant properly elects to defer receipt of all or a portion of the
bonus award under our CDP/SERP Plan, or any successor plan, the participant will generally be
entitled to defer the recognition of income. As described above, we intend payments under the plan to
qualify as ‘‘performance-based’’ compensation under Section 162(m). As a result, we will generally be
entitled to a Federal income tax deduction corresponding to the amount of income recognized by the
participant. Any bonuses payable under the Annual Incentive Plan that may be deferred under the
CDP/SERP Plan must be deferred in a manner that complies with Section 409A of the Internal
Revenue Code. Section 409A provides specific rules for deferral elections, distributions and funding
mechanisms under non-qualified deferred compensation plans. Failure to comply would result in
significant penalties and interest for the individual but would not impact our tax deduction for deferred
compensation.
Who administers the Annual Incentive Plan?
The CNG Committee administers the Annual Incentive Plan. The CNG Committee has full
authority to interpret the plan, to establish rules and regulations relating to the plan’s operation, to
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