Big Lots 2009 Annual Report Download - page 34

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executives for health-related costs incurred but not covered under the Benefit Plan, up to an annual
maximum reimbursement of $40,000 per family. Amounts received by named executive officers
under the Executive Benefit Plan are treated as taxable income, and we reimburse each executive
the approximate amount of his or her income tax liability relating to the benefits received under the
Executive Benefit Plan.
We also offer short-term disability coverage to all full-time employees and long-term disability
coverage to all salaried employees. For the named executive officers, the benefits provided under the
long-term disability plan are greater than for employees below the vice president level. Under the long-
term disability coverage, a named executive officer may receive 67% of his or her monthly salary, up to
$25,000 per month, until the executive is no longer disabled or turns age 65, whichever occurs earlier.
We also pay the premiums for this long-term disability coverage and the amount necessary to hold the
named executive officer harmless from the income taxes resulting from such premium payments.
All employees at or above the vice president level have the option of the use of an automobile or
accepting a monthly automobile allowance. The value of the automobile and the amount of the
automobile allowance are determined based on the employee’s level.
In fiscal 2009, the Compensation Committee authorized Mr. Fishman to use corporate aircraft for
non-business flights up to a limit of $80,000, which amount represents the aggregate incremental cost
incurred by us to operate those flights. Given the delays associated with early check-in requirements,
security clearances, baggage claim and the need for additional time to avoid missing a flight due to
possible delays at any point in the process, commercial travel has become even more inefficient in
recent years. Accordingly, making the aircraft available to Mr. Fishman allowed him to efficiently
and securely conduct business during both business and non-business flights and to maximize his
availability to conduct business before and after his flights. In approving this benefit, the Compensation
Committee took into account Mr. Fishman’s extensive travel schedule, which, whether primarily for
business or non-business purposes, frequently included a business element (e.g., visits to our stores
or potential store locations). We also believe that the value of this benefit to Mr. Fishman, in terms of
convenience and time savings exceeded the aggregate incremental cost that we incurred to make the
aircraft available to him and, therefore, was an efficient form of compensation for him. We reported
imputed income for income tax purposes for the value of Mr. Fishman’s non-business use of corporate
aircraft based on the Standard Industry Fare Level in accordance with the Internal Revenue Code
of 1986, as amended (“IRC”), and the regulations promulgated thereunder. We did not reimburse or
otherwise “gross-up” Mr. Fishman for any income tax obligation attributed to his non-business use of
corporate aircraft.
Employment Agreements
Each named executive officer is party to an employment agreement with us. The terms of the employment
agreements are substantially similar and are described collectively herein except where their terms materially differ.
We entered into the employment agreements because the agreements provide us with several protections (including
non-competition, confidentiality, non-solicitation and continuing cooperation provisions) in exchange for minimum
salary levels and target and stretch bonus payout percentages, potential severance and change in control payments
and other benefits. Further, we believe it is in our best interests and the best interests of our shareholders to enter
into the employment agreements to assure the undivided loyalty and dedication of the named executive officers.
We entered into revised employment agreements with each named executive officer in fiscal 2008 for the principal
purpose of conforming the named executive officers’ prior employment agreements to the substantive and
procedural requirements of Section 409A (“Section 409A”) of the IRC and the regulations promulgated thereunder.
We negotiated the terms of each employment agreement, including the minimum salary levels and minimum target
and stretch bonus payout percentages set forth therein, with the executive. In those negotiations, we considered
many factors, including:
• our need for the executive;
• the executive’s level of responsibility and the potential impact that the executive could have on our
operations and financial condition;