Dollar General 2012 Annual Report Download - page 38

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(a) Named Executive Officers Other than Mr. Dreiling. In each of 2012 and 2013, the
Compensation Committee determined, with Mr. Dreiling’s recommendation, that the named executive
officers’ performance assessments relative to other executives supported a percentage increase equal to
that which was budgeted for our entire U.S.-based employee population (see ‘‘Use of Performance
Evaluations’’) as such increases, along with the other compensation components, would maintain total
2012 compensation within the median of the market comparator group. Accordingly, each of the named
executive officers received the budgeted 2.7% and 2.75% annual base salary increase in 2012 and 2013,
respectively, except that Mr. Sparks joined our Company in 2012 and, accordingly, did not receive a
base salary increase in 2012. All such increases were effective as of April 1 of the applicable year.
In March 2012, Mr. Sparks was hired as our Executive Vice President of Store Operations. The
Compensation Committee determined his base salary based on consideration of the 2011 market
comparator group data provided by Meridian, his compensation with his prior employer, the
relationship of his position to similar executive positions and the amount we believed necessary to
entice him to accept our offer of employment.
(b) Mr. Dreiling. In each of 2012 and 2013, the Compensation Committee took into account
Mr. Dreiling’s performance assessment, the amount budgeted for our entire U.S.-based employee
population (see ‘‘Use of Performance Evaluations’’), and the benchmarking data of the market
comparator group (see ‘‘Use of Market Benchmarking Data’’). With respect to Mr. Dreiling’s 2012 and
2013 base salary increase, the Committee determined that Mr. Dreiling should receive the same 2.7%
(2012) and 2.75% (2013) increase that was awarded to each of the other named executive officers
which, along with the other components of Mr. Dreiling’s 2012 compensation, maintained his total
compensation at the median range of the market comparator group.
(c) One-Time Base Salary Adjustments. In 2012, the Compensation Committee decided to
reduce tax reimbursements and tax gross-ups relating to Company-provided perquisites. As a result, to
address the change in the policy equitably, the Committee authorized one-time base salary adjustments
for all officers, including Mr. Dreiling and each of the other named executive officers, effective
January 1, 2013, in an amount equal to the actual 2012 individual tax and gross-up costs paid by Dollar
General for life insurance and financial services, as applicable, in exchange for the elimination of such
tax and gross-up benefits as of December 31, 2012. Mr. Dreiling also received an additional one-time
salary adjustment of $5,000 in exchange for his agreement to waive the provisions in his employment
agreement that provide for a gross-up on taxes for Company-paid professional club memberships (to
date, Mr. Dreiling has not invoked his right to require the Company to pay for any such professional
club memberships) and legal consultation fees relating to future amendments to his employment
agreement.
Short-Term Cash Incentive Plan. Our short-term cash incentive plan, called Teamshare,
provides an opportunity for each named executive officer to receive a cash bonus payment equal to a
certain percentage of base salary based upon Dollar General’s achievement of one or more
pre-established financial performance measures. This Teamshare program is established pursuant to our
Amended and Restated Annual Incentive Plan, under which certain employees, including our named
executive officers, may earn up to $5 million ($10 million for 2013 and thereafter) in respect of a given
fiscal year, subject to the achievement of certain performance targets based on any of the performance
measures listed in the Amended and Restated Annual Incentive Plan.
As a threshold matter, a named executive officer’s eligibility to receive a bonus under the
Teamshare program depends upon his or her receiving an overall individual performance rating of
satisfactory (see ‘‘Use of Performance Evaluations’’). Accordingly, Teamshare fulfills an important part
of our pay for performance philosophy while aligning the interests of our named executive officers and
our shareholders.
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