Dollar General 2013 Annual Report Download - page 37

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. In March 2014,
Messrs. Dreiling, Tehle, Vasos and Flanigan entered into amendments to their employment agreements
that eliminated gross-up payments on any excise taxes imposed under Section 280G of the Internal
Revenue Code effective immediately, as this elimination represents the best practice among our market
comparator group. Mr. Sparks’ employment agreement already disallowed payment of excise tax
gross-ups.
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. However, its subcommittee, consisting entirely of independent directors at such times
as the Compensation Committee did not consist entirely of independent directors, approved any
portion that was intended to qualify as ‘‘performance-based compensation’’ under Section 162(m) of
the Internal Revenue Code or that was intended to be exempt for purposes of Section 16(b) of the
Securities Exchange Act of 1934 (the ‘‘Exchange Act’’).
Use of Outside Advisors. The Compensation Committee has selected Meridian Compensation
Partners (‘‘Meridian’’) to serve as its independent compensation consultant. Meridian (or its
predecessor) 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 availability for attendance at select Committee meetings and
associated preparation work, risk assessment assistance, assisting with the Committee’s decision making
with respect to executive and director compensation matters, providing advice on our executive pay
philosophy, compensation market comparator group and incentive plan design, providing competitive
market studies, and apprising the Committee about emerging best practices and changes in the
regulatory and governance environment.
A Meridian representative attends or is on call to join such Committee meetings and private
sessions as the Committee requests. The Committee’s members are authorized to consult directly with
the consultant as desired. Meridian, along with management, provides market comparator group data
to the Committee for use in making decisions on items such as base salary, the Teamshare bonus
program, and the long-term incentive program.
Meridian did not provide any services to the Company in 2013 unrelated to executive or Board
compensation. The Committee has determined that Meridian is independent from Dollar General and
that no conflicts of interest exist related to Meridian’s services provided to the Committee. The
Committee made these decisions after reviewing information regarding (1) Meridian’s policies and
procedures to prevent conflicts of interest; (2) the fees received from Dollar General in Meridian’s
most recently completed fiscal year, which represented less than 1% of Meridian’s revenues; (3) the
lack of business or personal relationships between Meridian or any Meridian advisor with any of our
executive officers or Committee members during fiscal 2013; and (4) the lack of Dollar General stock
ownership by any Meridian advisor during fiscal 2013.
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