Big Lots 2008 Annual Report Download - page 129

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The nonvested restricted stock awarded to Mr. Fishman upon the commencement of his employment as our
Chairman, Chief Executive Officer and President in 2005 vested in one-third increments upon the attainment
of mutually agreed common share price targets. In 2006, the first common share price target was achieved
and one-third of this award vested. During the first quarter of 2007, the second and third common share price
targets of this award were met, resulting in the vesting of the remaining 66,667 common shares underlying this
restricted stock award and related expense of $0.7 million.
The nonvested restricted stock awarded in 2004 to certain of our officers as a retention package upon the
transition of the former Chief Executive Officer and President to a different position vested equally over
three years. The 2004 restricted stock grants were forfeited, in whole or in part, as applicable, if the employee
voluntarily terminated his or her employment or if the employee was terminated for cause. Of the 172,000
shares originally underlying these restricted stock awards, 10,000 were forfeited in 2005 and the remaining
162,000 vested equally in January 2006, 2007 and 2008.
During 2008, 2007, and 2006, the following activity occurred under our share-based compensation plans:
2008 2007 2006
(In thousands)
Total intrinsic value of stock options exercised ........................ $13,510 $45,987 $30,416
Total fair value of restricted stock vested ............................. $ 37 $11,822 $ 1,970
The total unearned compensation cost related to share-based awards outstanding at January 31, 2009, is
approximately $20.3 million. This compensation cost is expected to be recognized through January 2013 based
on existing vesting terms with the weighted average remaining expense recognition period being approximately
2.3 years from January 31, 2009.
Note 8 — Employee Benefit Plans
Pension Benefits
We maintain the Pension Plan and Supplemental Pension Plan covering certain employees whose hire date was
on or before April 1, 1994. Benefits under each plan are based on credited years of service and the employee’s
compensation during the last five years of employment. The Supplemental Pension Plan is maintained for certain
highly compensated executives whose benefits were frozen in the Pension Plan in 1996. The Supplemental
Pension Plan is designed to pay benefits in the same amount as if the participants continued to accrue benefits
under the Pension Plan. We have no obligation to fund the Supplemental Pension Plan, and all assets and amounts
payable under the Supplemental Pension Plan are subject to the claims of our general creditors. See note 1 to our
consolidated financial statements for a discussion of our pension accounting policy and the impact of adopting
SFAS No. 158, which resulted in changing the measurement date of our plans to the last date of our fiscal year.
The $42.3 million and $48.2 million of investments owned by the Pension Plan at January 31, 2009 and
December 31, 2008, are managed with the primary objective to maximize income and capital appreciation while
also protecting the funded status of the Pension Plan. The return expectation is to outperform a benchmark
constructed in a manner that reflects the portfolio’s risk and return objectives. Investment results are compared
to market performance metrics on a quarterly basis. Changing market cycles require flexibility in asset
allocation to allow movement of capital within the asset classes for purposes of increasing investment return
and/or reducing risk. All assets must have readily ascertainable market value and be easily marketable. The
actual portfolio weightings may differ from target ranges due to market appreciation or depreciation but will be
re-balanced annually at a minimum. The investment managers have the authority to invest in financial futures
contracts and financial options contracts for purposes of implementing hedging strategies. There were no futures
contracts owned by the Pension Plan at January 31, 2009 or February 2, 2008. Fixed income investments of a
single issuer (with the exception of U.S. Government or fully guaranteed agencies) must not exceed 10% of the
total fixed income portfolio. The aggregate credit quality of the fixed income portfolio must always be a rating
of Aa or higher. Cash reserves must be invested in interest bearing securities and must be instantly saleable.
Note 7 — Share-Based Plans (Continued)