Big Lots 2007 Annual Report Download - page 35

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Salary for Fiscal 2007
The salaries paid to the named executive officers for fiscal 2007 are shown in the “Salary” column of the Summary
Compensation Table. Annual increases were made in the discretion of the Committee and the other outside
directors. Salary adjustments for the named executive officers were generally based upon the factors discussed
in this CD&A, with an emphasis on individual and corporate performance and the competitive market. However,
salary adjustments were subjectively determined and were not formally tied to specific performance criteria.
The Committee has chosen not to adopt any specific schedule of salary increases, and made adjustments to the
named executive officers’ respective salaries without regard to adjustments in the salaries of other executives.
At its annual review in March 2007, the Committee and the outside directors approved the following fiscal 2007
salaries for the named executive officers: Mr. Fishman: $1,025,000; Mr. Cooper: $400,000; Mr. Waite: $535,000;
Mr. Martin: $500,000; and Ms. Bachmann: $415,000. These increases reflected strong corporate and individual
performance in fiscal 2006.
Bonus for Fiscal 2007
The bonuses paid to the named executive officers for fiscal 2007 are shown in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table. To formulate bonus compensation for the EMC
members, the Committee and the other outside directors considered the same information used to set salary
and the annual corporate operating plan set by the Board. In March 2007, when the Committee and the other
outside directors approved the financial measures and corporate performance amounts applicable to the target
and stretch bonus opportunities awarded under the 2006 Bonus Plan, we believed those measures represented
strong, but reasonable, levels of performance that would be a challenge to achieve. However, our fiscal 2007
performance exceeded the targeted expectations of the Board, the Committee and management, thus a bonus was
earned between the target and stretch levels. The primary aim in setting the goals was to reward 2006 Bonus Plan
participants while encouraging strong corporate earnings growth.
The specific financial measures selected by the Committee and the other outside directors for fiscal 2007 bonus
determinations were the greatest of: (i) income from continuing operations; (ii) income from continuing operations
before extraordinary item and/or cumulative effect of a change in accounting principle (as the case may be);
(iii) income before extraordinary item(s); and (iv) net income. Each such measure is adjusted to remove the effect of
all equitable adjustments for the unusual or non-recurring events, transactions or accrual items set forth in the 2006
Bonus Plan, and may be further reduced in the Committee’s discretion. These financial measures were selected
because the Committee and the other outside directors believe they provide a good indication of our profitability,
ongoing operating results and financial condition. Of these financial measures, net income was the greatest for
fiscal 2007.
The outside directors typically establish corporate performance amounts that are slightly below (for the floor bonus),
at or near (for the target bonus), and above (for the stretch bonus) our annual corporate operating plan. Because the
outside directors consider the specific circumstances that we expect to face in the coming fiscal year (e.g., year-
over-year comparable performance, general economic factors, and performance of the retail sector), the relationship
between the corporate performance amounts and our annual corporate operating plan may vary significantly from
year to year. The corporate performance amounts set for fiscal 2007 bonuses represent an increase of approximately
192% to 305% over the amounts set for fiscal 2006. We believe this large increase is appropriate in light of our high
levels of performance in fiscal 2006, during which we exceeded our stretch bonus corporate performance amount,
and our objective to promote sustained profitability while providing objectives that motivate our executives.
The following table reflects the payout percentage for each bonus level and the corporate performance amount
required to achieve the corresponding bonus level, with the results for fiscal 2007 noted:
Bonus Level
and
2007 Results
Payout Percentage
(% of salary)
Corporate Performance
Amount
($)Mr. Fishman Mr. Cooper Mr. Waite Mr. Martin Ms. Bachmann
No Bonus 0.0 0.0 0.0 0.0 0.0 0 – 117,942,999
Floor 50.0 25.0 37.5 30.0 25.0 117,943,000
Target 100.0 50.0 75.0 60.0 50.0 128,814,000
Stretch 200.0 100.0 150.0 120.0 100.0 155,195,000
2007 Results 176.7 88.3 132.5 106.0 88.3 149,038,050