Big Lots 2008 Annual Report Download - page 45

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- 32 -
Tax and Accounting Considerations
The Committee reviews and considers the impact that tax laws and accounting regulations may have on the
executive compensation awards, including the deductibility of executive compensation under Section 162(m) of
the IRC (“Section 162(m)”). In doing so, the Committee relies on guidance from members of our finance and legal
departments, as well as outside accountants and attorneys.
Section 162(m) generally limits the tax deductions for compensation expense in excess of $1 million paid to our
CEO and our three other highest compensated executives (excluding the principal financial officer). Compensation
in excess of $1 million may be deducted if it is “performance-based compensation” within the meaning of Section
162(m). We believe that compensation paid under our equity and bonus compensation plans is generally fully
deductible for federal income tax purposes. However, in certain situations, the Committee may approve compensation
that will not meet these requirements in order to ensure competitive levels of total compensation for our executives
or to otherwise further our executive compensation philosophy and objectives. When considering whether to
award compensation that will not be deductible, the Committee compares the cost of the lost deduction against the
competitive market for executive talent and our need to attract, retain and motivate the executive, as applicable.
For fiscal 2008, the Committee believes it has taken the necessary actions to preserve the deductibility of all
payments made under our executive compensation program, with the exception of a portion of the compensation
paid to Mr. Fishman. If the IRC or the related regulations change, the Committee intends to take reasonable steps
to ensure the continued availability of deductions for payments under our executive compensation program, while
at the same time considering our executive compensation philosophy and objectives and the competitive market for
executive talent.
Our Executive Compensation Program for Fiscal 2009
At its meeting in March 2009, the Committee: (i) certified that a bonus was payable for fiscal 2008 under the
2006 Bonus Plan; (ii) reviewed the tally sheets and compensation history for all EMC members; (iii) reviewed an
internal pay equity analysis and comparative compensation data from our retailer-only and broader peer groups; (iv)
reviewed the at-risk incentive compensation as a percentage of the total executive compensation awarded for fiscal
2008 for each named executive officer; and (v) formulated its recommendations to the other outside directors for
fiscal 2009 executive compensation. The Committee also reviewed drafts of this CD&A and the other compensation
disclosures required by the SEC. At the subsequent Board meeting, the Committee recommended, and the outside
directors approved, the following fiscal 2009 equity awards for the named executive officers (with the salaries and
bonus payout percentages remaining the same as fiscal 2008 for each of the named executive officers):
Name
Common Shares Underlying
Stock Option Award
(#)
Common Shares Underlying
Restricted Stock Award
(#)
Mr. Fishman 330,000 200,000
Mr. Cooper 48,750 20,000
Mr. Waite 37,500 15,000
Mr. Martin 37,500 15,000
Mrs. Bachmann 48,750 20,000