Dollar General 2012 Annual Report Download - page 33

Proxy
EXECUTIVE COMPENSATION
We refer to the persons listed in the Summary Compensation Table below as our ‘‘named
executive officers.’’ References to the ‘‘merger’’ or the ‘‘2007 merger’’ mean our merger that occurred
on July 6, 2007 as a result of which substantially all of our common stock became owned by Buck
Holdings, L.P. (‘‘Buck LP’’), a Delaware limited partnership controlled by investment funds affiliated
with KKR.
Compensation Discussion and Analysis
Executive Overview
The overarching goal of our executive compensation program is to serve the long-term interests
of our shareholders. A competitive executive compensation package is critical for us to attract, retain
and motivate persons who we believe have the ability and desire to deliver superior shareholder
returns. We strive to balance the short-term and long-term components of our executive compensation
program to incent achievement of both our annual and long-term business strategies, to pay for
performance and to maintain our competitive position in the market in which we compete for executive
talent. We believe the success of our program is evidenced by the following key financial and operating
results for 2012 (2012 was a 52-week year and 2011 was a 53-week year):
• Total sales increased 8.2% over 2011. Sales in same-stores increased 4.7% following a 6.0%
increase in 2011.
• Operating profit increased 11.0% to $1.66 billion, or 10.3% of sales, compared to
$1.49 billion, or 10.1% of sales, in 2011.
• We reported net income of $953 million, or $2.85 per diluted share, compared to net
income of $767 million, or $2.22 per diluted share, in 2011.
• We generated approximately $1.13 billion of cash flows from operating activities, an
increase of 8% compared to 2011.
• We opened 625 new stores, remodeled or relocated 592 stores, and closed 56 stores,
resulting in a store count of 10,506 on February 1, 2013.
• Adjusted EBITDA, as defined and calculated for purposes of our annual Teamshare bonus
program, our outstanding performance-based stock option awards and our outstanding
performance share unit awards, was $1.99 billion versus $1.85 billion in 2011.
• ROIC, as defined and calculated for purposes of our annual Teamshare bonus program
and our outstanding performance share unit awards, was 21.06%.
2011 Say on Pay Vote. In 2011 our shareholders voted on an advisory basis with respect to our
compensation program for named executive officers. Of the total votes cast (excluding abstentions and
broker non-votes), 96.5% were cast in support of the program. We continue to view this vote as
supportive of our compensation policies and decisions and, accordingly, do not believe the results
required consideration of changes to our compensation program in 2012 or 2013.
The most significant compensation-related actions or achievements in 2012 pertaining to our
named executive officers include:
• Our shareholders voted to approve revisions to our 2007 Stock Incentive Plan to generally
prohibit, without shareholder approval, the repricing of any stock option or stock
appreciation right, prohibit dividend equivalent rights on unearned or unvested
performance share grants, add a compensation ‘‘clawback’’ provision, and extend the term
of such Plan.
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