Big Lots 2008 Annual Report Download - page 44

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- 31 -
Internal Pay Equity
In the process of reviewing each element of executive compensation separately and in the aggregate, the Committee
directed our human resources department to prepare an internal pay equity analysis comparing the relative
compensation of our CEO to the other EMC members. This analysis was considered to ensure that our executive
compensation program is internally equitable, which we believe promotes executive retention and motivation. The
comparison included all elements of compensation. The relative difference between the compensation of our CEO
and the compensation of our other named executive officers did not change significantly in fiscal 2008, and it has
not changed significantly since hiring Mr. Fishman in 2005. The Committee believes that the disparity between
Mr. Fishman’s compensation and the compensation for the other EMC members is appropriate in light of his
responsibilities and remains necessary to retain and motivate a chief executive with Mr. Fishman’s experience.
Minimum Share Ownership Requirements
Prior to March 2008, we encouraged, but did not require, our directors and executives to own our common shares.
We have, however, had a holding period that requires all directors and EMC members to refrain from selling net
shares acquired upon any exercise of stock options accelerated in November 2005 until the date on which the
stock option would have vested under its original vesting terms or, if earlier, the recipient’s death, disability or
termination of service.
The Board adopted minimum share ownership requirements for all outside directors and EMC members effective in
March 2008. These requirements are designed to ensure that outside directors’ and executives’ long-term interests
are closely aligned with those of our shareholders. Under the requirements, the outside directors and EMC members
must, at a minimum, own common shares having an aggregate value equal to the following multiple of his or her
Board retainer or salary (as is in effect at the time compliance with the requirements is evaluated), as applicable:
Title Multiple of Retainer or Salary
Director 4x
Chief Executive Officer 4x
Executive Vice President 2x
Senior Vice President 1x
Shares counted toward these requirements include common shares held directly or through a broker, common
shares held under the Savings Plan or Supplemental Savings Plan, unvested restricted stock, and vested but
unexercised in-the-money stock options. Each outside director that served on the Board when these requirements
were adopted must meet the requirements on the date of the 2013 annual meeting of shareholders and at subsequent
annual meetings. Each EMC member that was an EMC member when these requirements were adopted must
meet the requirements on the date that adjustments to annual executive compensation are made in 2013 and on
subsequent annual adjustment dates. Directors elected and executives hired or promoted after the adoption of the
requirements must meet the requirements on the first testing date for directors or executives following the fifth
anniversary of their election, hire or promotion, as applicable.
Equity Grant Timing
Pursuant to the terms of the 2005 Incentive Plan, the grant date of equity awards must be the later of the date
the terms of the award are established by corporate action or the date specified in the award agreement. In fiscal
2008, the outside directors, after consultation with the Committee, specified that the grant date of the equity
awards made in connection with the annual performance reviews of the EMC members was the second trading day
following our release of fiscal 2007 results. This future date was established to allow the market to absorb and react
to our release of material non-public information, and to avoid any suggestion that the Board, the Committee or any
employee manipulated the terms of the equity awards. For equity awards made throughout the fiscal year, which
generally are made as a result of a hiring or promotion, the grant date is the date of the related event (i.e., the first
day of employment or effective date of promotion). We have no policy of timing the grant date of these mid-year
equity awards with the release of material non-public information, and we have not timed the release of material
non-public information for the purpose of affecting the value of any equity awards.