Big Lots 2007 Annual Report Download - page 58

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The complete text of the 2005 Incentive Plan, marked to show the proposed amendments, is attached to this Proxy
Statement as Appendix I. The following summary of the 2005 Incentive Plan, as proposed to be amended, is
qualified in its entirety by reference to Appendix I.
Administration
The 2005 Incentive Plan is administered by the Committee. The selection of participants in the 2005 Incentive
Plan, the level of participation of each participant and the terms and conditions of all Awards are determined by
the Committee. Though not required by the 2005 Incentive Plan, the Committee generally seeks the approval of
all outside directors when granting Awards to our executives, as we believe this approach represents best practices
in corporate governance. The Committee has discretionary authority to interpret the 2005 Incentive Plan, to
prescribe, amend and rescind rules and regulations relating to the 2005 Incentive Plan, and to make all other
determinations necessary or advisable for the administration of the 2005 Incentive Plan. The Committee may
delegate authority to administer the 2005 Incentive Plan as it deems appropriate, subject to the express limitations
set forth in the 2005 Incentive Plan.
Term, Termination and Amendment
The 2005 Incentive Plan will expire on May 16, 2012, unless terminated earlier by the Board. Although the Board
may amend or alter the 2005 Incentive Plan, it may not do so without shareholder approval of any amendment to
the extent shareholder approval is required to comply with NYSE listing requirements. In addition, no amendment,
alteration or termination of the 2005 Incentive Plan may adversely affect any outstanding Award without the
consent of the participant other than amendments (i) to cause the 2005 Incentive Plan to comply with applicable
law, (ii) to permit us a tax deduction under applicable law, or (iii) designed for us to avoid an expense charge.
Share Limitations
With the approval of the proposed amendments, the number of common shares available for issuance under the
2005 Incentive Plan will equal the sum of: (i) 1,250,000 common shares; plus (ii) the 2,001,142 common shares
that remained available for use under the 1996 Incentive Plan on December 30, 2005; plus (iii) an annual increase
equal to 0.75% of the total number of issued common shares (including treasury shares) as of the start of each of the
Company’s fiscal years that the 2005 Incentive Plan is in effect; plus (iv) 2,100,000 newly issued common shares.
The 2005 Incentive Plan provides that the total number of common shares underlying Awards granted under the
2005 Incentive Plan, the Director Stock Option Plan, the expired 1996 Incentive Plan, and the expired ESO Plan
may not exceed 15% of all of our issued and outstanding common shares (including treasury shares) as of any date.
If our shareholders approve the proposed amendments to the 2005 Incentive Plan, we anticipate that the 2,100,000
additional common shares that may then be granted thereunder will be registered by us under the Securities Act of
1933, as amended, during fiscal 2008.
The aggregate number of common shares underlying restricted stock, restricted stock units and performance units
granted under the 2005 Incentive Plan shall not exceed one-third of all common shares underlying Awards granted
under the Plan. The maximum aggregate number of common shares that may be granted under the 2005 Incentive
Plan shall not exceed 5,000,000.
The 2005 Incentive Plan is designed to meet the requirements for deductibility of executive compensation under
Section 162(m) with respect to stock options, SARs, restricted stock and other Awards that are intended to qualify
as “performance based compensation” under Section 162(m). In order to meet Section 162(m) requirements, the
2005 Incentive Plan provides limits on the number and type of common shares that any one participant may
receive. Awards granted to a covered employee (as that term is used within Section 162(m)) that are intended
to qualify as “performance based compensation” under Section 162(m), are limited to: (i) 2,000,000 shares of
restricted stock per participant annually; (ii) 3,000,000 common shares underlying stock options and SARs per
participant during any three consecutive calendar years; and (iii) $6,000,000 through performance units per
participant during any three consecutive calendar years.
Common shares issued under the 2005 Incentive Plan will be authorized but unissued common shares of the
Company, treasury shares, or shares purchased in the open market. To the extent that any Award payable in
common shares is forfeited, cancelled, terminated or relinquished, the common shares covered thereby will no
longer be charged against the maximum share limitation and may again be made subject to Awards under the 2005