Dollar General 2014 Annual Report Download - page 46

Proxy
Mr. Dreiling’s outstanding equity awards will continue to vest, if at all, in accordance with the
terms of the applicable award agreements. The Transition RSU Award is a time-based award scheduled
to vest in full as of Mr. Dreiling’s voluntary termination of employment on or after the Retirement
Date, subject to accelerated vesting in the event of his termination of employment by the Company
without cause or by Mr. Dreiling for good reason or in the event of death or disability or a change in
control. Once vested, the Transition RSU Award is scheduled to be paid as to fifty percent of the
award on each of the first two anniversaries of the grant date, subject to accelerated payment in the
event of death or disability or a change in control prior to a payment date. Each of ‘‘cause,’’ ‘‘good
reason,’’ ‘‘disability’’ and ‘‘change in control’’ are as defined in the award agreement. The Transition
RSU Award will be payable in an equal number of shares of Company common stock, subject to
reduction, cancellation, forfeiture or recoupment, in whole or in part, upon various events specified in
the award agreement, including but not limited to the breach of the business protection provisions set
forth in the employment transition agreement.
Severance Arrangements
As noted above, we have an employment agreement with each of our named executive officers
and an employment transition agreement with Mr. Dreiling that, among other things, provides for such
executive’s rights upon a termination of employment. We believe that reasonable severance benefits are
appropriate to protect the named executive officer against circumstances over which he does not have
control and as consideration for the promises of non-disclosure, non-competition, non-solicitation and
non-interference that we require in our employment agreements. A change in control, by itself, does
not trigger any severance provision applicable to our named executive officers, except for the provisions
related to long-term equity incentives under our Amended and Restated 2007 Stock Incentive Plan.
Considerations Associated with Regulatory Requirements
Section 162(m) generally disallows a tax deduction to any publicly held corporation for
individual compensation over $1 million paid in any taxable year to each of the persons who were, at
the end of the fiscal year, Dollar General’s CEO or one of the other named executive officers (other
than our CFO). Section 162(m) specifically exempts certain performance-based compensation from the
deduction limit.
If our Compensation Committee determines that our shareholders’ interests are best served by
the implementation of compensation policies that are affected by Section 162(m), our policies will not
restrict the Committee from exercising discretion to approve compensation packages even though that
flexibility may result in certain non-deductible compensation expenses.
We believe that our Amended and Restated 2007 Stock Incentive Plan currently satisfies the
requirements of Section 162(m), so that compensation expense realized in connection with stock
options and stock appreciation rights, if any, and in connection with performance-based restricted stock
and restricted stock unit awards, if any, can be deductible. However, restricted stock or restricted stock
units granted to executive officers that solely vest over time are not ‘‘performance-based compensation’’
under Section 162(m), so that compensation expense realized in connection with those time-vested
awards to executive officers covered by Section 162(m) will not be deductible by Dollar General.
In addition, any salary, signing bonuses or other annual compensation paid or imputed to the
executive officers covered by Section 162(m) that causes non-performance-based compensation to
exceed the $1 million limit will not be deductible by Dollar General. However, we believe that our
Amended and Restated Annual Incentive Plan currently satisfies the requirements of Section 162(m),
so that compensation expense realized in connection with short-term incentive payments under our
Teamshare program, if any, will be deductible.
The Committee administers our executive compensation program with the good faith intention
of complying with Section 409A of the Internal Revenue Code, which relates to the taxation of
nonqualified deferred compensation arrangements.
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