Dollar General 2015 Annual Report Download - page 39

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Base Salary. Base salary promotes our recruiting and retention objectives by reflecting the
salaries for comparable positions in the competitive marketplace, rewarding strong performance, and
providing a stable and predictable income source for our executives. Our employment agreements with
the named executive officers set forth minimum base salary levels, but the Compensation Committee
retains sole discretion to increase these levels from time to time.
(a) Routine Salary Adjustments. Our Compensation Committee routinely considers annual
base salary adjustments in March. In light of the market benchmarking data and each named executive
officer’s 2014 satisfactory performance rating, all such officers received the 2.95% base salary increase
that was budgeted for our U.S. based employee population. Ms. Taylor, who was promoted to Executive
Vice President in March 2015, received an additional 13.72% base salary increase (for a total
adjustment of 16.67%) in recognition of her role and to maintain her total compensation within a
reasonable range of the market median for her new position, and Mr. Garratt, who served as Senior
Vice President at the time, received an additional 0.29% base salary increase (for a total adjustment of
3.24%) in further recognition of his 2014 performance (see ‘‘Use of Performance Evaluations’’ and
‘‘Use of Market Benchmarking Data’’). The Committee chose to forego any adjustments beyond the
2.95% increase to Mr. Vasos’s base salary until it was determined whether he would succeed
Mr. Dreiling as CEO.
(b) Non-Routine Salary Adjustments. As a result of the evaluations discussed above
pertaining to their promotions, Mr. Vasos received a salary increase from $791,042 to $1,000,000 and
Mr. Garratt received a salary increase from $309,708 to $500,000, in each case effective upon the
applicable promotion date and to reflect his new role and expanded responsibilities and to provide
compensation that was more appropriately aligned with the market comparator group data for his new
role.
Short-Term Cash Incentive Plan. Our short-term cash incentive plan, called Teamshare, is
established under our shareholder-approved Amended and Restated Annual Incentive Plan. The
Teamshare program provides an opportunity 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 targets. Accordingly, Teamshare fulfills an important part of our pay for
performance philosophy while aligning the interests of our named executive officers and our
shareholders.
(a) 2015 Teamshare Structure. The Compensation Committee uses adjusted EBIT as the
Teamshare financial performance measure because it is a comprehensive measure of our corporate
performance and so is aligned with our shareholders’ interests. For purposes of the 2015 Teamshare
program, adjusted EBIT is defined as our operating profit as calculated in accordance with U.S.
generally accepted accounting principles, but excludes:
• the impact of (a) costs, fees and expenses directly related to consideration, negotiation,
preparation, or consummation of any transaction that results in a Change in Control
(within the meaning of our Amended and Restated 2007 Stock Incentive Plan) or to any
securities offering; (b) gain or loss recognized as a result of any derivative instrument
transactions or hedging activities; (c) gains or losses associated with any early retirement of
debt; (d) charges resulting from significant natural disasters; and (e) any significant gains
or losses associated with our LIFO computation; and
• unless disallowed by the Committee, (a) non-cash asset impairments; (b) any significant
loss as a result of an individual litigation, judgment or lawsuit settlement; (c) charges for
business restructurings; (d) losses due to new or modified tax, legislation or accounting
changes enacted after the start of fiscal 2015; (e) significant tax settlements; and (f) any
significant unplanned items of a non-recurring or extraordinary nature.
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