Big Lots 2008 Annual Report Download - page 42

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- 29 -
After several meetings with Watson Wyatt, we developed a group of retailers that we believe are similarly situated
to us and with whom we compete for talent. Based, in part, on a review of comparative compensation data from the
new retailer-only peer group and the recommendations offered by Watson Wyatt, we made changes in the amount
of salary awarded for fiscal 2008 (as reflected in the named executive officers’ fiscal 2008 salaries discussed
above) and implemented the minimum share ownership requirements (as discussed below).
Comparative Compensation Data
The Committee uses data regarding the compensation paid to executives at other companies. For fiscal 2008,
the Committee worked with Watson Wyatt to develop a group of retailers that we believe is similarly situated
to us and with whom we compete for talent. When considering the composition of the group, the Committee
selected retail companies that have median and average financial measures similar to ours. Among the financial
measures considered were revenues, market capitalization, net income, earnings per share, price-to-earnings ratio
and shareholder return. After we developed this new retailer-only peer group with Watson Wyatt, Watson Wyatt
provided the Committee with comparative executive compensation data it obtained from the proxy statements and
other reports made public by these retailers. Additionally, the Committee reviewed executive compensation data
from a broader base of companies that was aggregated in one or more of the compensation surveys obtained from
Mercer Human Resource Consulting, Towers Perrin, Hewitt Associates and Watson Wyatt. This broader peer
group was comprised of Standard & Poor’s Retail Stores Index companies and other companies, including non-
retailers, with whom we believe we also compete for talent and whose revenues or operations are similar to ours.
We believed it was prudent to consult both sets of information, because the broader group includes compensation
information on more executives, including executives who are not included in publicly-available documents. This
broader peer group also provides a larger basis on which to compare the compensation of the EMC members,
particularly EMC members whose responsibilities, experience and other factors are not directly comparable to
those executives included in the publicly-available reports of the retailer-only group. These peer groups vary from
year to year based on the Committee’s assessment of which companies we believe compete with us for talent and
are similar to us in terms of operations or revenues and the continued availability of compensation information
from companies previously included in either peer group.
The Committee and our human resources department reviewed each EMC member’s responsibilities and mapped,
where possible, the compensation of each executive to 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 groups. For purposes of this evaluation,
no specific weight was given to one peer group over the other and total direct compensation was comprised of
salary, bonus at the targeted level and equity awards.
While we often award total direct compensation in the range of the fiftieth to seventy-fifth percentile of total
direct compensation paid by the peer groups, this range is not a determinative factor for setting our executives’
compensation and, as discussed in this CD&A, compensation is subjectively determined based on numerous
factors. Rather, we believe that this range provides a point of reference and market check 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.