Dollar General 2015 Annual Report Download - page 37

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Proxy
Committee meetings and private sessions if the Committee requests, and Committee members are free
to consult directly with Meridian as desired.
The Committee (or its Chairman) determines the scope of Meridian’s services and has
approved a written agreement that details the terms under which Meridian will provide independent
advice to the Committee. The approved scope generally includes availability for Committee meeting
attendance and associated preparation work; assistance with risk assessment and with decision making
regarding executive and director compensation matters; advising on our Board and executive pay
philosophy, compensation market comparator group, incentive plan design, emerging best practices and
changes in the regulatory environment; and providing competitive market studies. Meridian, along with
management, also prepares benchmarking data for consideration by the Committee in making decisions
on items such as base salary, the Teamshare bonus program, and the long-term incentive program.
Management’s Role. Financial performance targets used in our incentive compensation
programs typically are derived from our annual financial plan that is prepared by our executive
management team and reviewed and approved by our Board of Directors. Messrs. Dreiling, Vasos and
Ravener and non-executive members of the human resources group provide assistance to the
Compensation Committee and Meridian regarding executive compensation matters, including
conducting research, compiling data and making recommendations regarding amount, mix and program
structure alternatives, market comparator group composition and compensation-related governance
practices, as well as providing information to and coordinating with Meridian as requested, and
Ms. Taylor may provide legal advice to the Committee regarding executive compensation matters and
contractual arrangements from time to time. Although these recommendations may impact each of
such officers’ compensation to the extent they participate in the plans and programs, none of such
officers make recommendations regarding their specific compensation. For the role of management in
named executive officers’ performance evaluations, see ‘‘Use of Performance Evaluations’’ below.
Although the Committee values and solicits management’s input, it retains and exercises sole authority
to make decisions regarding named executive officer compensation.
Use of Performance Evaluations. The Compensation Committee, together with the Chairman
of the Board, assesses the performance of the CEO, and the CEO evaluates and reports to the
Committee on the performance of each of the other named executive officers, in each case versus
previously established goals. These evaluations are subjective; no objective criteria or relative weighting
is assigned to any individual goal or factor.
The Committee historically has used the overall performance rating as an eligibility threshold
for an annual base salary increase and Teamshare bonus payment. Although an unsatisfactory rating
generally would preclude an annual base salary increase or a Teamshare bonus payment, performance
ratings have not been used to determine the amount of the Teamshare bonus payment for a named
executive officer. Rather, such amount has been determined solely based upon the level of achievement
of the applicable financial performance measure and the terms of the Teamshare bonus program
described below.
In addition to functioning as an eligibility threshold, the performance rating may impact the
amount of a named executive officer’s annual base salary increase. The Committee typically starts with
the percentage base salary increase that equals the overall budgeted increase for our U.S.-based
employee population, and considers whether adjustments are necessary to reflect performance,
responsibilities or qualifications; to bring pay within a reasonable range of the market comparator
group; due to a change in role or duties; to achieve a better balance between base salary and incentive
compensation; or for other reasons the Committee believes justify a variance from the overall budgeted
increase.
An unsatisfactory performance rating also would result in a reduction in the number, or a total
elimination, of RSUs and stock options awarded to the named executive officer in the following year.
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