Dollar General 2012 Annual Report Download - page 61

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• If the change in control occurs after the completion of the applicable performance period,
all previously earned but unvested performance share units that have not previously
become vested and nonforfeitable, or have not previously been forfeited, will immediately
vest, become nonforfeitable and be paid upon the change in control.
• Mr. Dreiling’s performance-based restricted shares that have not previously become vested
and nonforfeitable, or have not previously been forfeited, shall be deemed fully earned and
shall become vested and nonforfeitable if the change in control occurs on or before any
date on which it is determined that the applicable performance measure required for
vesting has been achieved.
• All CDP/SERP Plan benefits will become fully vested (to the extent not already vested).
If the named executive officer is involuntarily terminated without cause or resigns for good
reason following the change in control, he or she will receive the same severance payments and benefits
as described above under ‘‘Voluntary Termination with Good Reason or After Failure to Renew the
Employment Agreement.’’ However, the named executive officer will have 1 year from the termination
date in which to exercise vested options that were granted in 2012 if he or she resigns or is
involuntarily terminated within 2 years of the change in control under any scenario other than
retirement or involuntary with cause (in which cases, he or she will have 5 years from the retirement
date to exercise vested options and will forfeit any vested but unexercised options held at the time of
the termination with cause).
If any payments or benefits in connection with a change in control (as defined in Section 280G
of the Internal Revenue Code) would be subject to the ‘‘golden parachute’’ excise tax under federal
income tax rules, we will pay an additional amount to the named executive officer to cover the excise
tax and any other excise and income taxes resulting from this payment. However, other than with
respect to Mr. Dreiling and Mr. Sparks, if after receiving this payment the named executive officer’s
after-tax benefit would not be at least $50,000 more than it would be without this payment, then this
payment will not be made and the severance and other benefits due to the named executive officer will
be reduced so that the golden parachute excise tax is not incurred. In Mr. Sparks’ case, his employment
agreement provides for a capped payment (taking into consideration all payments covered by
Section 280G of the Internal Revenue Code) of $1 less than the amount that would trigger the golden
parachute excise tax unless he signs a release and his after-tax benefit would be at least $50,000 more
than it would be without the capped payment, but we would not pay an additional amount to cover the
excise tax.
For purposes of the CDP/SERP Plan, a change in control generally is deemed to occur (as
more fully described in the plan document):
• if any person (other than Dollar General or any of our employee benefit plans) acquires
35% or more of our voting securities (other than as a result of our issuance of securities in
the ordinary course of business);
• if a majority of our Board members at the beginning of any consecutive 2-year period are
replaced within that period without the approval of at least 2⁄3 of our Board members who
served as directors at the beginning of the period; or
• upon the consummation of a merger, other business combination or sale of assets of, or
cash tender or exchange offer or contested election with respect to, Dollar General if less
than a majority of our voting securities are held after the transaction in the aggregate by
holders of our securities immediately prior to the transaction.
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