Big Lots 2007 Annual Report Download - page 38

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- 24 -
Independent Compensation Consultant
Pursuant to the authority granted to the Committee by its charter, the Committee retains independent compensation
consultants and subscribes to executive compensation surveys as it deems necessary. The surveys are also shared
with our human resources department. In establishing executive compensation for fiscal 2007, the Committee did
not retain a compensation consultant for specialized advice, but did subscribe to multiple compensation surveys.
As discussed below, the Committee engaged Watson Wyatt Worldwide (“Watson Wyatt”) in May 2007 to provide
information and services that first impacted our executive compensation program in fiscal 2008. Aside from
completing work at the direction of the Committee, Watson Wyatt did not provide any other services for us during
fiscal 2007.
Comparative Compensation Data
One tool that the Committee uses to make executive compensation decisions is data regarding the compensation
paid to executives at peer group companies. For fiscal 2007, the Committee obtained from independent
compensation consultants executive compensation surveys of selected Standard & Poor’s Retail Stores Index
companies and other companies with whom we compete for talent and whose revenues or operations are similar to
ours. The peer group varies from year to year based on the Committee’s assessment of which companies compete
with us for talent and are similar to us in terms of industry or revenues and which companies participate in the
compensation surveys that we receive from independent compensation consultants.
The Committee and our human resources department reviewed each EMC member’s responsibilities and mapped,
where possible, the compensation of each executive to data that represents the compensation awarded to similarly-
situated executives at peer group companies. The Committee compared the total direct compensation levels for our
EMC members to the total direct compensation of similarly situated executives within the peer group. For purposes
of this evaluation, total direct compensation is comprised of salary, bonus at the targeted level and equity awards.
While we often award total direct compensation in the range of the 50th to 75th percentile of total direct
compensation paid by the peer group, this range is not the sole determinative factor for setting our executives’
compensation. Rather, we believe that the application of this range provides a point of reference for measurement
while retaining the flexibility necessary to make adjustments for performance and experience, to attract, retain and
motivate top talent, and to reward executives who we believe excel or take on greater responsibility than executives
at peer group companies.