Big Lots 2008 Annual Report Download - page 49

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Awards under the 2005 Incentive Plan may be granted to any salaried employee, consultant or advisor of Big
Lots or its affiliates. The number of common shares available for grant under the 2005 Incentive Plan consists
of: (i) an initial allocation of 1,250,000 common shares; (ii) 2,001,142 common shares, the common shares that
were available under the 1996 Incentive Plan upon its expiration; (iii) 2,100,000 common shares approved by
our shareholders in May 2008; and (iv) an annual increase equal to 0.75% of the total number of issued common
shares (including treasury shares) as of the start of each fiscal year during which the 2005 Incentive Plan is in
effect. No more than one-third of all common shares awarded under the 2005 Incentive Plan may be granted in
the form of restricted stock, restricted stock units and performance units, and no more than 5,000,000 common
shares may be granted as ISOs. A participant may receive multiple awards under the 2005 Incentive Plan. Awards
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 in cash through performance
units per participant during any three consecutive calendar years. Also, the 2005 Incentive Plan provides that the
total number of common shares underlying outstanding awards granted under the 2005 Incentive Plan, the 1996
Incentive Plan, the Big Lots, Inc. Executive Stock Option and Stock Appreciation Rights Plan (“ESO Plan”), and
the DSO Plan may not exceed 15% of the Company’s issued and outstanding common shares (including treasury
shares) as of any date. The 1996 Incentive Plan, the ESO Plan and the DSO Plan have terminated, and there are no
awards outstanding under the ESO Plan.
Each stock option granted under the 2005 Incentive Plan allows the recipient to acquire our common shares, subject
to the completion of a vesting period and continued employment with us through the applicable vesting date. Once
vested, these common shares may be acquired at a fixed exercise price per share and they remain exercisable for
the term set forth in the award agreement. Pursuant to the terms of the 2005 Incentive Plan, the exercise price of a
stock option may not be less than an average trading price of our common shares on the grant date or, if the grant
date occurs on a day other than a trading day, on the next trading day.
Under the restricted stock awards granted pursuant to the 2005 Incentive Plan (other than those made to the outside
directors), if we meet the first trigger and the recipient remains employed by us, the restricted stock will vest at
the opening of our first trading window that is five years after the grant date. If we meet the second trigger for
any fiscal year ending prior to the fifth anniversary of the grant date and the recipient remains employed by us,
the restricted stock will vest after we file with the SEC our Annual Report on Form 10-K for the year in which
the second trigger is met. The restricted stock will also vest on a prorated basis in the event that the recipient dies
or becomes disabled after we meet the first trigger but before the lapse of five years. The restricted stock will be
forfeited, in whole or in part, as applicable, if the recipient’s employment with us terminates prior to vesting. See
the “Our Executive Compensation Program for Fiscal 2008 – Equity for Fiscal 2008” section of the CD&A and
the “Potential Payments Upon Termination or Change in Control – Rights Under Post-Termination and Change
in Control Arrangements” section below for more information regarding the equity awards made under the 2005
Incentive Plan in fiscal 2008.
Upon a change in control (as defined in the 2005 Incentive Plan), all awards outstanding under the 2005 Incentive
Plan automatically become fully vested. For a discussion of the change in control provisions in the named executive
officers’ employment agreements and the 2005 Incentive Plan, see the narrative disclosure accompanying the
Potential Payments Upon Termination or Change in Control tables below.