Dollar General 2012 Annual Report Download - page 35

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• We set base salaries to reflect the responsibilities, experience, performance and
contributions of the named executive officers and the salaries for comparable benchmarked
positions, subject to minimums set forth in employment agreements.
• We reward named executive officers who enhance our performance by linking cash and
equity incentives to the achievement of our financial goals.
• We promote share ownership to align the interests of our named executive officers with
those of our shareholders.
We utilize employment agreements with the named executive officers which, among other
things, set forth minimum levels of certain compensation components. We believe such arrangements
are a common protection offered to named executive officers at other companies and help to ensure
continuity and aid in retention. The employment agreements also provide for standard protections to
both the executive and Dollar General should the executive’s employment terminate.
Named Executive Officer Compensation Process
Oversight. Our Board of Directors has delegated responsibility for executive compensation to
its Compensation Committee. The Compensation Committee approves the compensation of our named
executive officers, while its subcommittee consisting entirely of independent directors at such times as
the Compensation Committee did not consist entirely of independent directors (the ‘‘162(m)
Subcommittee’’) approves any portion that is intended to qualify as ‘‘performance-based compensation’’
under Section 162(m) of the Internal Revenue Code or that is intended to be exempt for purposes of
Section 16(b) of the Securities Exchange Act of 1934.
Use of Outside Advisors. The Compensation Committee has selected Meridian Compensation
Partners (‘‘Meridian’’) to serve as its independent compensation consultant. Meridian (including its
predecessor Hewitt Associates) has served as the Committee’s consultant since our 2007 merger. The
written agreement with Meridian details the terms and conditions under which Meridian will provide
independent advice to the Committee in connection with matters pertaining to executive and director
compensation. Under the agreement, the Committee (or its chairman) shall determine the scope of
Meridian’s services. The approved scope generally includes attendance at select Committee meetings
and associated preparation work, risk assessment assistance, guiding the Committee’s decision making
with respect to executive and Board of Directors compensation matters, providing advice on our
executive pay philosophy, compensation peer group, incentive plan design and employment agreement
design, providing competitive market studies, and apprising the Committee about emerging best
practices and changes in the regulatory and governance environment. In 2012, the Committee
decreased the amount of work performed by Meridian, primarily with respect to benchmarking and risk
assessment assistance, which work was performed by management.
Meridian did not provide any services to the Company in 2012 unrelated to Board or executive
compensation.
A Meridian representative attends such Committee meetings and private sessions as requested
by the Committee. The Committee’s members are authorized to consult directly with the consultant at
other times as desired. During 2012, the Committee’s Chairman periodically consulted directly with
Mr. Bob Ravener, our Executive Vice President and Chief People Officer, and other non-executive
members of our human resources group, in connection with named executive officer compensation (as
described below under ‘‘Management’s Role’’). In an effort to decrease costs, the Committee chose to
rely more heavily upon management than it had in prior years to provide benchmarking data and
resulting recommendations with respect to 2012 and 2013 annual base salary and short-term cash
incentive decisions. Meridian, along with management, assisted the Committee in developing the new
long-term annual incentive program and provided detailed data from the market comparator group
upon which the Committee relied in determining the size of the grants under the program.
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