Dollar General 2012 Annual Report Download - page 34

Proxy
• Our shareholders voted to approve revisions to our Annual Incentive Plan to increase the
cash maximum payable under such Plan for purposes of deductibility under Internal
Revenue Code Section 162(m), add the ability to measure performance at operating
divisions or units and to consider relative performance measures, and add a compensation
‘‘clawback’’ provision.
• Our Board approved share ownership guidelines for our senior officers, including the
named executive officers, to further enhance alignment with shareholders’ interests.
• In March 2012, the 162(m) Subcommittee of our Compensation Committee awarded
Mr. Dreiling 326,037 performance-based restricted shares both to further incent him to
continue to drive superior financial performance and to retain him in light of the full
vesting of his 2008 equity award and the July 2012 expiration of the equity transfer
restrictions under his Management Stockholder’s Agreement.
• We implemented a new long-term equity incentive program that is more in line with the
equity grant practices of our market comparator group and that we believe will further our
recruiting and retention objectives.
• After reviewing practices of our market comparator group and considering current
governance best practices, our Compensation Committee authorized one-time base salary
adjustments for each of our officers, including our named executive officers, in exchange
for the elimination of tax reimbursements and tax gross-ups on Company-provided life
insurance and financial services, as applicable. Mr. Dreiling received a further one-time
base salary adjustment in exchange for waiving his rights under his employment agreement
for gross-ups on taxes for professional club memberships and legal consultation fees
relating to future amendments to his employment agreement.
• In April 2012, each of Mr. Tehle and Ms. Lanigan entered into the new form of
employment agreement, which form was developed in 2011 to, among other things,
contemplate the elimination of the Internal Revenue Code Section 280G tax gross-up
provision effective April 1, 2015. These agreements replaced the prior agreements which
were expiring in order to help retain such officers in light of the full vesting of their 2007
equity awards.
• In March 2012, Mr. Sparks entered into an employment agreement which does not contain
the Internal Revenue Code Section 280G tax gross-up provision.
• We achieved adjusted EBITDA and ROIC performance levels at 97.3% and 111.0% of the
targeted levels under our Teamshare bonus program.
• The 2012 tranche of the outstanding performance-based equity awards granted prior to
2012 vested as a result of our achievement of the 2012 adjusted EBITDA performance
goal, and our level of adjusted EBITDA and ROIC achieved for 2012 resulted in
determination of performance share unit amounts, granted in March 2012, of slightly less
than target.
Executive Compensation Philosophy and Objectives
We strive to attract, retain and motivate persons with superior ability, to reward outstanding
performance, and to align the long-term interests of our named executive officers with those of our
shareholders. The material compensation principles applicable to the 2012 and 2013 compensation of
our named executive officers included the following, all of which are discussed in more detail in
‘‘Elements of Named Executive Officer Compensation’’ below:
• We generally target total compensation at the benchmarked median total compensation of
comparable positions within our market comparator group, but we make adjustments based
on circumstances, such as unique job descriptions and responsibilities as well as our
particular niche in the retail sector, that are not reflected in the market data. For
competitive or other reasons, our levels of total compensation or any component of
compensation may exceed or be below the median of our market comparator group.
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